2008 (3) TMI 562 - AT - Central Excise

Summary

Issues involved: Interpretation of Notification No. 67/95 u/s Rules 57AB and 57AD regarding admissibility of Cenvat credit on inputs used in manufacture of exempted capital goods.

Issue 1: Interpretation of Notification No. 67/95

The appellants were engaged in manufacturing excisable goods and availed Cenvat credit on inputs used in the manufacture of capital goods exempted from duty u/s Notification No. 67/95. The lower authorities held the credit inadmissible. The appellant contended that since the capital goods were exempted, duty should be paid on the inputs. However, the Tribunal found that the Notification only applies to goods used captively and does not address the admissibility of credit on inputs used in manufacturing exempted final products. Rule 57AD prohibits credit on inputs used in manufacturing exempt final products, and since the capital goods were exempt and captively used, no credit on inputs used in their manufacture is permissible. The capital goods were for machinery repairs, not for manufacturing dutiable products.

In the case at hand, the Tribunal clarified the interpretation of Notification No. 67/95 in relation to the admissibility of Cenvat credit on inputs used in the manufacture of exempted capital goods. The appellant's argument that duty should be paid on inputs used in manufacturing exempt capital goods was dismissed. The Tribunal emphasized that the Notification only pertains to goods used captively and does not address the admissibility of credit on inputs used in manufacturing exempted final products. Rule 57AD prohibits credit on inputs used in manufacturing exempt final products, and since the capital goods were exempt and captively used, no credit on inputs used in their manufacture is permissible. Additionally, the capital goods were designated for machinery repairs, not for the production of dutiable finished products.

The Tribunal's decision reaffirmed that the provisions of Notification No. 67/95 are specific to goods used captively and do not extend to the admissibility of credit on inputs used in the manufacture of exempted final products. Rule 57AD explicitly prohibits the availing of credit on inputs used in the production of exempt final products. As the capital goods in question were exempt from duty and intended for machinery repairs, not for manufacturing dutiable finished products, the denial of credit on inputs used in their manufacture was upheld. The Tribunal found no merit in the appeal and consequently rejected it.