2008 (6) TMI 471 - AT - Central Excise

Summary

Issues Involved:
The issue involved in this case is the denial of credit on duty paid on components of a boiler received by the appellants in their factory premises, claiming Cenvat Credit as applicable to capital goods.

Judgment Summary:

Issue 1: Eligibility for Cenvat Credit on Components of Boiler

The appellants received parts of a boiler against their Purchase Order, manufactured within their factory premises for the production of steam used in generating electricity and manufacturing sponge iron. The appellants claimed Cenvat Credit on duty paid on the components of the boiler, stating they received it in CKD/SKD condition. The Tribunal found that the Rule at the material time included not only capital goods but also their components. Therefore, the appellants should be able to take credit for duty paid on the components used for fabrication/assembly of the boiler within the factory. The objection raised by the ld. SDR regarding the dutiability of steam and power generated by the boiler was dismissed, citing a previous case where Modvat credit was allowed on capital goods used in a similar setup for the production of sponge iron. Consequently, the impugned order was set aside, and the appeals were allowed, confirming the appellants' eligibility for Cenvat credit on duty paid components of the boiler used in their factory for the power plant's fabrication assembly.

Issue 2: Disposition

Both appeals were allowed in favor of the appellants based on the eligibility for Cenvat credit on the components of the boiler used in their factory premises for the production of steam and electricity ultimately utilized in the manufacture of sponge iron.

*(Dictated and pronounced in the open Court)*