2026-VIL-1448-CESTAT-KOL-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Eligibility to claim credit on structural materials used for manufacturing capital goods - Welding electrodes and oxygen used for repair and maintenance - Time-bar of demand - Appellant manufacturer of steel products claimed CENVAT Credit on MS Channels, MS Angles, Plates, welding electrodes and oxygen used during August 2008 to April 2009 for manufacturing capital goods used within factory premises - Appellant submitted Chartered Engineer's Certificate showing materials used in manufacturing capital goods within factory premises and cited case laws holding assessees eligible for credit - Whether structural materials like MS Channels and Angles used in fabrication of structures for capital goods fall within definition of inputs eligible for CENVAT credit despite being structures for support of capital goods - Whether welding electrodes and oxygen used for repair and maintenance of machinery constituting capital goods are eligible for credit - HELD - Vandana Global Ltd decision (Larger Bench) on which Department relied has been reversed by Chhattisgarh High Court. The High Court held that goods used in fabrication of structures embedded to earth should be treated as inputs for capital goods and CENVAT credit cannot be denied – The term ‘inputs’ under Rule 2(k) has wide coverage and includes all goods used in manufacture of final products including capital goods used in factory. Explanation 2 to Rule 2(k) amended by Notification No.16/2009 specifically excludes only angles, channels, TMT bars used for construction of factory shed, laying foundation or making structures for support of capital goods - In present case, materials in question were not used for foundation, construction of factory or support structure but for manufacturing capital goods like machines used within factory premises. Following Chhattisgarh High Court decision, materials are inputs for capital goods and eligible for credit. Welding electrodes and oxygen used in manufacturing capital goods are also eligible for credit. On merits, demand is not sustainable. On time-bar aspect, Show Cause Notice issued on 14.08.2012 for credit taken during August 2008 to April 2009 is barred by limitation - During relevant period different interpretations existed on CENVAT credit eligibility. No suppression and no justification for invocation of extended period of limitation – The demand is set aside and the appeal is allowed
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