2008 (1) TMI 752 - AT - Central Excise

Summary

Issues involved: Admissibility of Cenvat credit on various items as "capital goods" under Rule 2(b) of Cenvat Credit Rules, 2002.

Issue 1: Admissibility of Cenvat credit on M.S. Plate, M.S. Channel, H.R. Sheet, Tor Steel, R.S. Joist, H.R. Coil, CTD Bars, Flat Steel, Shape and Section, and H.R. Slide Slitting.

The appellants, engaged in manufacturing Cane Sugar, Molasses, and DEA, contested the disallowance of Modvat credit amounting to Rs. 4,36,075. The functional uses of the items in question were detailed, showing their role in enhancing capacity, strengthening, and re-enforcing structures of equipment used in the manufacturing process. Previous tribunal decisions and court rulings were cited to support the eligibility of similar items as capital goods for Cenvat credit. The Hon'ble Rajasthan High Court's decision emphasized the essential role of such items in manufacturing processes, further supporting their classification as capital goods eligible for Modvat credit.

Issue 2: Comparison with precedent and specific use of the impugned goods.

The Tribunal differentiated the present case from a previous ruling where the specific use of Plain Plates, H.R. Sheets, and Angles was not established, leading to the disallowance of Cenvat credit. In contrast, the appellants provided detailed information on how the impugned goods were specifically used as components, spares, or accessories of machinery, making them eligible for Cenvat credit under Rule 2(b)(iii) of the Cenvat Credit Rules, 2002. Relying on the precedents and case laws cited by the appellants, the Tribunal concluded that the Cenvat credit of Rs. 4,36,075 was admissible, ultimately allowing the appeal filed by the appellants.

In conclusion, the Appellate Tribunal CESTAT, New Delhi ruled in favor of the appellants, holding that the impugned goods, including M.S. Plate, M.S. Channel, H.R. Sheet, and others, qualified as capital goods eligible for Cenvat credit under Rule 2(b)(iii) of the Cenvat Credit Rules, 2002. The Tribunal's decision was supported by previous tribunal rulings and court judgments emphasizing the essential role of such items in manufacturing processes. The specific use of the impugned goods as components, spares, or accessories of machinery was crucial in establishing their eligibility for Cenvat credit, distinguishing the case from previous rulings where such specific use was not demonstrated. Ultimately, the Tribunal allowed the appeal, granting the appellants the admissible Cenvat credit of Rs. 4,36,075.