Can I use the 1098-E form I received for my student Loans which was paid through Fed. Consolidation in 2016, despite that I made No payment to the loan in 2016 ?

Yes, you can report the student loan interest on Form 198-E.  When you consolidated - you paid off the accrued interest on the loans, and this portion is deductible. 

If your brother claims you as a dependent, he cannot claim the student loan interest, unless he paid it, and he was legally obligated to pay.

You can only deduct student loan interest if all of the following apply:

• You paid interest on a qualified student loan in tax year 2015
• You are legally obligated to pay interest on a qualified student loan
• Your filing status is not married filing separately
• Your MAGI is less than a specified amount which is set annually, and
• You or your spouse, if filing jointly, cannot be claimed as dependents on someone else's return

Thanks for the response , please note I paid no interest , it was  paid through consolidation which I initiated , so it's okay for me still claim the interest in 1098E ??? , and if the interest in box one is way over 2500 allowed for interest deduction , then can I use the rest of the Not used interest deduction which could not be used for this tax return year on the next one ?

Yes, it is ok to use 1098-E; consolidation means you paid, even though it's done through consolidation.  Unfortunately, you are not allowed (IRS rules) to carryover an unused amount to the next year...