2008 (9) TMI 723 - AT - Central Excise

Summary

Issues:
1. Waiver of pre-deposit of duty and penalty based on denial of credit for capital goods.
2. Interpretation of ownership and usage of capital goods in different units of the same company.
3. Application of Cenvat credit rules to capital goods installed in mines.

Analysis:
The case involved an application for the waiver of pre-deposit of duty and penalty amounting to Rs. 11,98,327/- due to the denial of credit for capital goods, specifically spares of Crusher and Ropeways. The dispute arose from the installation of these capital goods in the mining area of Unit-I, while the credit was availed by Unit II of the same company. The applicant argued that both units belonged to the same company as per the registration certificate, and the capital goods were essential for processing goods used in the final product's manufacture, thus credit should not be denied. Reference was made to a Supreme Court judgment in a similar case to support this contention.

The Revenue, represented by the DR, contended that since the capital goods were not used within the factory premises, they were not entitled to credit. Additionally, as the capital goods were installed in mines belonging to a separate unit, the demand for denial of credit was justified. The Revenue also cited a Supreme Court judgment to support their argument.

The Tribunal, after considering the arguments and the legal precedents, noted that the Supreme Court had previously ruled that if mines were captive, Cenvat credit on capital goods was permissible. In the present case, as both units belonged to the same proprietor and the capital goods were used in the manufacturing process without evidence of supplying goods to other companies, the Tribunal found a strong case in favor of the applicant. Consequently, the pre-deposit of duty and penalty was waived, and the stay petition was allowed. The decision was made in favor of the applicant based on the interpretation of ownership and usage of capital goods within the same company and the application of Cenvat credit rules to capital goods installed in mines.