2009 (1) TMI 694 - AT - Central Excise

Cenvat/Modvat credit - electrode assembly and needles which were used in the electric furnace - Inputs or capital goods? - Held that - In Monnet Ispat Ltd. v. C.C.E. Raipur reported in 2002 (148) E.L.T. 1202 (Tri.-Del) it was held that the consumable items used in the induction furnace for the manufacture of ingots are inputs - The items used by the appellants are also of the same category and therefore I do not find any merits in the appeal filed by the Revenue - decided against Revenue.

Summary

Issues involved: Eligibility for Cenvat credit of duty paid on electrode assembly and needles used in the electric furnace.

Analysis:
The primary issue in this case revolves around the eligibility of the respondents for Cenvat credit concerning duty paid on electrode assembly and needles utilized in the electric furnace. The Commissioner (Appeals) had previously allowed the appeals based on the premise that a similar issue had been decided in favor of the respondents in the past. However, the current contention put forth by the Revenue is that the disputed items should be categorized as capital goods rather than inputs. The advocate for the respondents argues that the electrodes and needles, although used in the furnace, are consumables and not integral parts of the furnace. He further supports his stance by referencing various Tribunal decisions.

Upon reviewing the arguments presented by both parties, it is noted that the Commissioner (Appeals) had previously determined that the items in question are indeed inputs eligible for credit. The Revenue now seeks to reclassify them as capital goods, leading to the dispute at hand. Referring to precedents such as Monnet Ispat Ltd. v. C.C.E., Raipur and Panjab General Manufacturing Works v. C.C.E, Kanpur, it was established that consumable items used in processes like induction furnaces and crucibles for molten metals are considered inputs. Drawing parallels, the items utilized by the appellants fall within the same category. Consequently, the appeal filed by the Revenue is deemed to lack merit, and it is rejected accordingly.

This judgment highlights the importance of correctly categorizing items such as electrodes and needles in the context of Cenvat credit eligibility. The decision emphasizes the precedents set by previous Tribunal rulings and underscores the distinction between consumables and capital goods within the manufacturing process.