2008 (8) TMI 723 - AT - Central Excise

Summary

Issues involved: Interpretation of Cenvat Credit Rules regarding availing credit on capital goods used in manufacturing process; Classification of Clinker Silo as capital goods for Cenvat credit eligibility.

Interpretation of Cenvat Credit Rules: The appellant was required to pre-deposit a specific amount along with penalty under Rule 15 of the Cenvat Credit Rules for availing credit on certain steel items and cement used in the construction of a "clinker Silo" for storing clinkers used in cement manufacturing. The appellant argued that the Silo qualifies as capital goods as per Rule 2(a)(A)(vii) of the Cenvat Credit Rules, citing precedents like United Phosphorous Ltd. v. CCE & C, Vadodara and Mahalakshmi Glass Works Ltd. v. CCE, Mumbai-I to support their claim.

Classification of Clinker Silo: The learned JCDR contended that the item in question, the Clinker Silo, should not be considered as part of capital goods as it is not a storage tank but a distinct entity. It was argued that since the silo does not involve excisable goods, it is not entitled to Cenvat credit. However, the Tribunal found that the Clinker Silo, being a storage tank for clinkers used in cement production, prima facie qualifies as a capital good. Relying on previous judgments, including the case of CCE, Belgaum v. Industrial Oxygen Co. Ltd., the Tribunal granted a waiver of pre-deposit and stayed the recovery, scheduling the matter for final hearing on a specified date.

Conclusion: The Tribunal allowed the stay application, acknowledging the similarity of the case with previous judgments and the prima facie classification of the Clinker Silo as a storage tank for capital goods used in the manufacturing process. The matter was scheduled for final hearing, with both parties' request for early hearing accepted.