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2016 (1) TMI 917 - CESTAT NEW DELHI

2016 (1) TMI 917 - CESTAT NEW DELHI - 2015 (330) E.L.T. 711 (Tri. - Del.) - Eligibility for CENVAT credit - iron and steel items used for fabrication of components / accessories of various machinery like rotary klin, rotary cooler, conveyor systems, raw material preparation plant, power plant and pollution control equipment - Held that:- As in the case of Rajasthan Spinning Mills (2010 (7) TMI 12 - SUPREME COURT OF INDIA ) held that steel plates and MS channels used in the fabrication of chimney .....

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essee. Applying this principles, we find that the allegation in the show cause notice that steel items used by the appellant are neither components nor spares nor accessories is not sustainable. Applying the principle of “user test” laid down by the Hon’ble Supreme Court in Jawahar Mills case (2001 (7) TMI 118 - SUPREME COURT OF INDIA ) the angles, beams and channels used in the making and fabrication of these capital goods are found eligible for Cenvat credit.- Decided in favour of assessee. - .....

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November, 2005. They have availed cenvat credit on various items received as per Cenvat Credit Rules, 2004. The Revenue, after examining the credit details availed by the appellants, initiated proceedings against them for denying the credit on various iron and steel items used in the fabrication of various capital goods like kilns, electrification and power plants, conveyor system etc. The notice cum demand was adjudicated resulting in the impugned order dated 23.1.2009. Learned Commissioner he .....

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tion of components / accessories of various machinery like rotary klin, rotary cooler, conveyor systems, raw material preparation plant, power plant and pollution control equipment are rightly eligible for Cenvat credit as they are specifically covered under Rule 2(a)A (i) (ii) and (iii). They have emphasized that they have taken cenvat credit only on those items which were used for fabrication of parts, components, accessories of various capital goods as defined under Rule 2(a) of Cenvat Credit .....

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civil structure on this ground. 3. During the arguments, learned counsel for the appellant relied on various case laws to emphasis that the various steel structural items like MS plates, channels sheet etc. are rightly eligible for credit. He specifically emphasized on the Hon ble Supreme Court decision the case of Rajasthan Spinning and Weaving Mills Ltd. reported in [2010 (255) ELT 481 (SC) and Jawahar Mills Ltd. case reported in [2001 (132) ELT 3 (SC)]. He further submits that appellant thems .....

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D G room, canteen building, weigh bridge etc. they have not contested ineligibility of credit and they had reversed the same. 4. Learned AR, on the other hand reiterated the finding in the impugned order and stated that cenvat credit cannot be allowed for steel items used in fabricating various structurals in the factory if the resultant product is an immovable product, ineligible to be called as goods. As such, the question of allowing the credit for fabricating items other than goods does not .....

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and includes all goods of chapter 82, 84, 85 and 90, a few other specific tariff headings of Central Excise Tariff. Apart from these, other specific items like pollution control equipment, tubes, pipes etc. storage tanks, the components, spare and accessories of specific goods etc. are also included. The appellant s contention is that steel items have been used in fabrication of components /accessories of specific capital goods namely, rotary klin, rotary cooler ( tariff heading 8417.10), convey .....

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hese items used are outside the purview of capital goods or inputs. We find that the Hon ble Supreme Court evolved user test to answer the question whether the items falls within the purview of capital goods and held that in the case of Rajasthan Spinning Mills (supra) that steel plates and MS channels used in the fabrication of chimney would fall within the ambit of capital goods. The Hon ble Karnataka High Court in the case of SLR Steels Ltd. [2012 (280) ELT 176 (Kar)] held as under: 7. A peru .....

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facturer of capital goods which are further used in the factory of the manufacture also falls within the definition of input. In 2009, this explanation has been amended to the following effect : but shall not include cement, angles, channels Centrally Twister Deform bar (C.T.D.) or Thermo Mechanically Treated bar (TMT) and other items used for construction of factory shed, building or laying of foundation or making of structures for support of capital goods. 8. Therefore, the notification of the .....

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redit. Similarly, though the assessee is entitled to cenvat credit of cement and steel used in the manufacture of capital goods viz., storage tank, if any structure for support of capital goods is constructed and steel and cement is used for such support, the assessee is not entitled to the benefit of cenvat credit on the duty paid on such cement and steel. Therefore, there is no ambiguity in any of these provisions. When once a storage tank and pollution control equipment constitutes capital go .....

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r, etc. can be considered as eligible for cenvat credit as component of capital goods. The Hon ble High Court held after examining the various case laws in favour of assessee. Applying this principles, we find that the allegation in the show cause notice that steel items used by the appellant are neither components nor spares nor accessories is not sustainable. 9. In the case of Associated Cement Company Ltd.[2011 (267) ELT 55(Chhattis), the Hon ble High Court of Chhattisgarh agreed with the fin .....

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