2009 (8) TMI 1042 - AT - Central Excise

Summary

Issues:
- Disallowance of Cenvat credit on goods as capital goods instead of inputs.

Analysis:
The appellant, engaged in manufacturing Cast Iron Casting of Cylinder Blocks, faced disallowance of Cenvat credit on goods treated as capital goods. The dispute arose when the appellant availed 100% Cenvat credit on Temperature Tips and Carbon Cups, considering them as inputs. The Revenue alleged that these goods fell under the definition of capital goods as per Rule 2(a) of the Cenvat Credit Rules, 2004, leading to contravention of Rule 4(2)(a) and Rule 4(2)(b). Consequently, a demand was imposed under Section 11A of the Central Excise Act, 1944, along with penalties and interest.

Upon appeal, the Commissioner (Appeals) confirmed the demand but reduced the penalty. The appellant, dissatisfied with the decision, approached the Tribunal. The appellant's advocate argued that Carbon Cups and Temperature Tips were consumable goods essential in the manufacturing process, citing precedents where similar goods were considered as inputs eligible for credit. The Revenue contended that the goods were capital goods as they could be repeatedly used to contain molten metal at high temperatures.

After considering the submissions, the Tribunal concluded that the disputed goods, Carbon Cups, and Temperature Tips, were consumables as they were consumed in the manufacturing process. Therefore, the appellant was entitled to avail Cenvat credit on these goods as inputs. Consequently, the impugned order disallowing the credit on these goods as capital goods was set aside, and the appeal was allowed with consequential relief.