2008 (11) TMI 463 - AT - Central Excise

Summary

Issues:
Classification of Evaporator Boats as input or capital goods for Cenvat credit.

Analysis:
The case involved an appeal by the Department against the order of the Commissioner (Appeals) regarding the classification of Evaporator Boats used by the respondent, a manufacturer of BOPP films. The respondent initially claimed these boats as input, but the Department rejected the claim. Subsequently, during the disputed period, the respondent claimed the boats as capital goods for availing Cenvat credit. The original authority disallowed the credit and ordered recovery along with interest and imposed a penalty. However, the Commissioner (Appeals) classified the goods under Heading 84.19, deeming them eligible for Cenvat credit as capital goods.

The Department argued citing the decision in the case of Melton India Ltd. v. C.C.E., Meerut, where it was held that Evaporator Boats are not inputs and thus not eligible for Cenvat credit as inputs. The Commissioner (Appeals) and the respondent contended that the boats should be classified under Heading 84.19, which covers machinery, plant, or refractory equipment for material treatment processes, including evaporation/vaporization. The Commissioner (Appeals) emphasized the function of the Evaporator Boats in the metallization process and their classification under Chapter 84, supporting the availed Cenvat credit as capital goods under the Cenvat Credit Rules, 2002.

The Tribunal upheld the decision of the Commissioner (Appeals) that the Evaporator Boats were not inputs but capital goods, in line with the classification under Heading 84.19. The Tribunal rejected the Department's appeal, affirming the eligibility of the respondent for Cenvat credit on the Evaporator Boats as capital goods.