2008 (9) TMI 784 - AT - Central Excise

Summary

Issues involved: Denial of Cenvat credit for MS BO SS Flanges and Textile Processing Machine under specific Chapter Headings.

Denial of Cenvat credit for MS BO SS Flanges:
The appeal concerned the denial of Cenvat credit for MS BO SS Flanges falling under Chapter Heading 94, based on Rule 2(a)(A) of the Cenvat Credit Rules, 2004. The Appellant argued that the Flanges were used in manufacturing final products and thus should not be denied credit. However, acknowledging the exclusion under Rule 2(a)(A), the Appellant sought benefit citing previous cases. The Respondent maintained that the Flanges were rightfully denied credit as per Rule 2(a)(A) and penalty imposition was justified.

Denial of Cenvat credit for Textile Processing Machine:
Regarding the Textile Processing Machine, the Appellant contended that it should be eligible for Cenvat credit as it was used in the manufacturing process, unlike the MS BO SS Flanges. The Respondent argued that the machine was not used in manufacturing and was solely for cleaning purposes, unrelated to the production process. The Appellant referenced cases where safety equipment was granted Cenvat credit to support their argument.

Judgment:
The Tribunal ruled that MS BO SS Flanges were not eligible for Cenvat credit due to explicit exclusion under Rule 2(a)(A). However, the Textile Processing Machine, used in the production process for cleaning linen/aprons, was considered a part of the manufacturing process making goods marketable. As it fell under Chapter Heading 84, not excluded under Rule 2(a)(A), Cenvat credit was granted for the machine. The penalty imposed was set aside as there was no deliberate intention to evade duty.