Whether the items used for making fabricated steel structures and fish plates covered within the definition of capital goods under Rule 2 of CCR?

PJ/Case Law /2016-17/3363

Case-TITAGARH WAGONS LTD. VersusCOMMISSIONER OF C. EX., KOLKATA-III
Citation- 2016 (342) E.L.T. 278 (Tri. - Kolkata)
Issue-Whether the items used for making fabricated steel structures and fish plates covered within the definition of capital goods under Rule 2 of CCR?
Brief Facts:-This appeal had been filed by the appellant against Order-in-Appeal No. 72/Kol-III/2012, dated 5-6-2012 passed by the Commissioner (Appeals-I) of Central Excise, Kolkata under which Order-in-Original dated 30-3-2009 passed by the Adjudicating Authority was upheld.
Appellant’s Contention:-None appeared on behalf of the appellant, when the case was taken up for disposal today.
Respondent’s Contention:-Shri S.S. Chatterjee, Supdt. (AR) appearing onbehalf of the Revenue submitted that during the period 24-11-2003 to 15-4-2004 appellant availed and utilised Cenvat credit to the tune of Rs. 4,26,582/- (Rupees four lakhs twenty-six thousand five hundred and eighty-two only) with respect to fabricated steel structures and fish plates. That the case of the Revenue was that the said items used for making fabricated steel structures and fish plates were not covered within the definition of capital goods under Rule 2 of Cenvat Credit Rules, 2002 (CCR). That the matter came up to CESTAT where appellant contested that the impugned items were capital goods. Ld. AR made the Bench to go through last para of Order-in-Appeal dated 5-6-2012 passed by the First Appellate Authority to argue that CESTAT while remanding the matter had clearly held that the fabricated steel structures and fish plates were not capital goods. That any inputs of such structures/fish plates were not eligible to Cenvat credit under Rule 2 of CCR.
Reasoning Of Judgement:-
The issue involved in the present proceedings was whether Cenvat credit with respect to items used in fabricated steel structures and fish plates are eligible to Cenvat credit as capital goods. It was observed from the case records that the items were used for making steel platform on which welding of railway wagons is undertaken by the appellant. Such a steel structure/fish plate cannot be considered either as capital goods or inputs of such structures under Rule 2 of the CCR and accordingly Cenvat credit had been correctly denied by the First Appellate Authority.
So far as imposition of penalties was concerned, itwas observed from the submissions made by the appellant before the First Appellate Authority that certain favourable case laws on the issue also existed. Accordingly, it was held that penalty imposed upon the appellant was not justified and was accordingly set aside.
Appeal filed by the appellant is allowed only to theextent of imposition of penalty.
Decision- Appeal partly allowed.
Comment-The gist of the case is thatthe Cenvat credit on items used for making fabricated steel structures and fish plates was not admissible as the said goods cannot be termed as inputs or capital goods. But as there were many favourable verdicts penalty was waived.
Prepared By- Praniti Lalwani

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PJ/Case Law /2016-17/3363

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