2006 (1) TMI 487 - AT - Central Excise

Summary

Issues:
1. Whether plastic crates and P.P. Sheet trays can be considered as 'inputs' under the CENVAT Credit Rules 2002.
2. Whether plastic crates and P.P. Sheet trays can be considered as 'capital goods' under the CENVAT Credit Rules 2002.

Issue 1: Plastic crates and P.P. Sheet trays as 'inputs':
The case involved M/s. Premier Instruments & Controls Ltd. availing Cenvat credit on plastic crates and P.P. Sheet trays as 'inputs'. The original authority disallowed the credit, but the Ld. Commissioner (Appeals) allowed it, considering the definition of 'input' to be wide enough. The question was whether these items could be classified as 'inputs' under the CENVAT Credit Rules 2002. The Tribunal referred to a similar case and held that plastic crates used for handling materials within the factory could hardly be treated as inputs. The Tribunal found that the plastic crates and trays were not covered under the exhaustive list of 'capital goods' specified in the Rules. The Tribunal emphasized that the term 'input' has a conventional meaning and should get wholly or substantially used-up during the manufacturing process. The Tribunal concluded that the plastic crates used by the assessee for material handling could not be considered as inputs, maintaining a clear distinction between inputs and capital goods.

Issue 2: Plastic crates and P.P. Sheet trays as 'capital goods':
The appellate authority considered the plastic crates and P.P. Sheet trays as 'capital goods' for a different period, leading to an appeal by the assessee. The Tribunal analyzed previous cases where items like aluminium sheets and chemicals were considered inputs due to their consumption in the manufacturing process. However, in this case, the plastic crates and trays were found to be permanently used for handling materials within the factory, unlike items that get consumed during the manufacturing process. The Tribunal noted that the plastic crates and trays were not integral to the manufacturing process and were solely used for material handling. The Tribunal rejected the plea to classify these items as inputs, as they did not meet the criteria set out in the CENVAT Credit Rules. Ultimately, the Revenue's appeal was allowed, and the assessee's appeal was dismissed.

In conclusion, the Tribunal ruled that the plastic crates and P.P. Sheet trays could not be classified as 'inputs' or 'capital goods' under the CENVAT Credit Rules 2002, based on the specific criteria and definitions outlined in the Rules.