2026-VIL-1827-CESTAT-MUM-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Eligibility to CENVAT credit on steel materials used for fabrication of spares, accessories and supporting structures of sugar manufacturing machinery under Rule 2(a) of CENVAT Credit Rules, 2004 - Appellant, a manufacturer of sugar and molasses, availed CENVAT credit of duty paid on steel materials such as beams, angles, channels and plates, and declared the same in its records and ER-1 returns - The Department sought reversal of the credit on the ground that these goods are not capital goods, and an SCN invoking the extended period proposed recovery with interest and equal penalty, which was confirmed by the adjudicating authority and the FAA - Appellant contended that the issue is covered by Tribunal decisions including that of the Larger Bench, whereas Revenue relied on the Supreme Court decision holding that such steel structures were not components of capital goods for MODVAT credit - Whether CENVAT credit is admissible on steel materials used for fabrication of spares, accessories and supporting structures of sugar manufacturing machinery - HELD - Capital goods under Rule 2(a) include components, spares and accessories of the specified goods falling under the listed Chapters of the First Schedule to the Central Excise Tariff Act. The major part of the steel materials was used for fabrication of spares, parts and accessories of sugar manufacturing machinery, and the rest for supporting structures. The Larger Bench has clarified that accessories of capital goods are eligible for CENVAT credit, so the Supreme Court decision, rendered for MODVAT credit, cannot be applied. As regards supporting structures, the High Court decision, more consistently followed, holds that machinery cannot be suspended in mid-air and must be suitably supported, so that structural items used for such supporting structures are covered as components, spares and accessories of capital goods - The denial of CENVAT credit is not sustainable, the order of the FAA is set aside and the appeal is allowed
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