Structure and Foundations, which are Erected by using Steel and Cement are Integral Part of Capital

The Kolkata bench of Customs, Excise And Service Tax Appellate Tribunal ( CESTAT ) has held that structure and foundations, which are erected by using steel and cement are integral part of capital goods and eligible for CENVAT Credit

The assessee, M/s. Aryan Ispat& Power Private Limited is engaged in the manufacture of iron and steel items. They have availed CENVAT Credit on various inputs and capital goods used in connection with the erection and commissioning of the plant. The Additional Commissioner disallowed the credit and confirmed Central Excise Duty demand of Rs.1,04,84,292/.

The assessee filed appeal against the order, in which the Commissioner (Appeal) allowed credit of Rs. 79, 20,750/- and disallowed credit of Rs. 25,63,542/- on steel items by considering the same to be used for structural and mechanical support purpose. Aggrieved, both the asseesee and the revenue filed appeal before the CESTAT.

Mr. Kartik Kurmy, advocate for assessee, by relying the Supreme Court decision in the case of CCE Vs. Rajasthan Spinning & Weaving Mills Limited, submitted that the principle of “user test” also need to be considered while deciding the entitlement of assessee to avail CENVAT Credit.

The Tribunal observed that various steel items have been used for the purpose of setting up of sponge iron kiln along with the power plant as also certified by the Chartered Engineer have been duly verified by the lower authorities in the adjudication stage. Therefore, applying the “user test” principle, as followed by various High Courts, the assessee is entitled to avail credit on the steel items.

The division bench presided by Mr. P. K. Choudhary, Member(Judicial) and P. Anjani Kumar, Member(Technical) has held that “the assessee is entitled to avail credit and therefore, the Appeal filed by the assessee is allowed with consequential relief. The Appeal filed by the Revenue is rejected”.