Steel items used in Fabrication of Capital Goods, their Accessories inside manufacturing premises are eligible for Cenvat Credit: CESTAT [Read Order]

The Kolkata Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that steel items used in the fabrication of capital goods, their accessories inside manufacturing premises are eligible for Cenvat credit.

The Appellant, M/s Jai Balaji Industries Limited is engaged in the manufacture of iron and steel products of different grades classifiable under Chapters 72 & 73 of the first schedule to the Central Excise Tariff Act, 1985. They had availed Cenvat credit on Angles, Channels, Joists, Beams, TMT Bars, Plate, H.R. Coils, H.R. Sheets, Rounds, Sheets. Billets, Flats, Paints, Rails, Castings, Coils, Electrode/Welding Electrode and Miscellaneous Chemical Products falling under different headings. Three periodical show-cause notices were issued by the department. In all the three show cause notices the allegations against the Appellant were that the impugned goods were not defined under Rule 2(a) of the Cenvat Credit Rules, 2004. It was alleged that the said items were not defined as capital goods under Rule 2(a) of the Cenvat Credit Rules, 2004. Accordingly, it was alleged that the credit availed and utilized by the Appellant was irregular.

The Appellant submits that the Cenvat credit was disallowed on Electrode/Welding Electrode which was also used in the manufacturing process without which it is not possible to manufacture the finished goods. It was further submitted that this Tribunal has already allowed the appeal in respect of their sister units where similar/identical items were involved.

The coram of Judicial Member P. K. Choudhary and technical member Raju ruled that eligibility of steel items for cenvat credit has been the subject matter of various decisions by the Hon’ble Supreme Court, various High Courts, and this Tribunal where it has been categorically held that the steel items when they were used in the fabrication of capital goods and their accessories inside the manufacturing premises are eligible for credit. We have gone through the usages of the disputed items in the fabrication of various sections of the plant.

In other words, the definition of Capital Goods includes components, spares, and accessories of such capital goods. Accordingly, applying the User Test to the facts in hand, we have no hesitation in holding that the structural items used in the fabrication of support structures would fall within the ambit of Capital Goods as contemplated under Rule 2(a) of the Cenvat Credit Rules, hence will be entitled to the Cenvat Credit.

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Jai Balaji Industries Limited vs Commissioner of Central Excise, Customs & Service Tax , 2021 TAXSCAN (CESTAT) 193 , Shri K.K. Anand & Shri S. Mohapatra , Shri H.S.Abedin