2007 (2) TMI 401 - AT - Central Excise

Summary

Issues: Denial of Cenvat credit and demand for Education Cess.

In this judgment by the Appellate Tribunal CESTAT, CHENNAI, the issue revolved around the denial of Cenvat credit amounting to Rs. 89,749/- and the demand for Education Cess of Rs. 1,795/-, totaling to Rs. 91,544/-. The lower appellate authority had refused the Cenvat credit and demanded the Education Cess for the period between 10-9-2004 and 30-6-2005. The appellants had taken Cenvat credit on aluminum ingots used in the manufacture of jig wires and jig rods, which were considered capital goods for their final product. The appellants did not pay duty on these capital goods as they claimed the benefit of a specific notification. The Commissioner (Appeals) denied the Cenvat credit on aluminum ingots, arguing that duty was not paid on the capital goods manufactured from them. The appellants, however, relied on Tribunal decisions under previous rules. The Tribunal noted the difference between the previous rule and the current Cenvat Credit Rules, stating that the current rule merely defines 'input' without substantive provisions like the previous rule. The Tribunal questioned the classification of jig wires and rods as "intermediate" goods and found the Revenue treated them as such. Consequently, the Tribunal granted waiver of pre-deposit and stay of recovery regarding the disputed amount.

This judgment highlights the interpretation of Cenvat credit rules and the treatment of capital goods under specific notifications. It emphasizes the distinction between previous substantive provisions and the current definition of 'input' under the Cenvat Credit Rules, 2004. The Tribunal's analysis focused on the classification of goods as 'intermediate' and the Revenue's treatment of capital goods in this regard. The decision to grant waiver of pre-deposit and stay of recovery was based on the ambiguity surrounding the classification of capital goods and their relation to the final product. The judgment serves as a precedent for cases involving the denial of Cenvat credit and the interpretation of relevant provisions in the context of manufacturing processes and capital goods utilization.