2008 (10) TMI 596 - HC - Central Excise

CENVAT credit - capital goods - job-work - Held that - It is not the case of appellant-Revenue that even M/s. Pidilite Industries Limited had claimed credit for the same capital goods which were supplied by M/s. Pidilite Industries Limited to respondent-assessee - it is apparent that credit is available to a manufacturer or producer of final product, which means excisable goods manufactured or produced and such credit is for the duty paid on any inputs or capital goods received in the factory after the prescribed date. Admittedly, the capital goods in question were received in the factory of the respondent-assessee and were used for the purposes of manufacturing final product which is an excisable item - appeal dismissed - decided against appellant.

Summary

Issues:
1. Interpretation of CENVAT Rules regarding availing credit on capital goods not owned by the assessee.
2. Justifiability of the Tribunal's decision in allowing CENVAT credit despite ownership and installation issues.

Issue 1 - Interpretation of CENVAT Rules:
The case involved a dispute where the Revenue contended that an assessee, engaged in job work, wrongfully availed CENVAT credit on capital goods not owned by them. The Revenue argued that since the capital goods were owned by another entity and not reflected in the assessee's balance sheet, the credit should not have been allowed. However, the Tribunal, based on the CENVAT Rules, held that the credit can be availed by a manufacturer or producer of final products for duty paid on any inputs or capital goods used in manufacturing. The Rules do not mandate ownership or installation of the capital goods, only their use in manufacturing final products. As the assessee met all necessary conditions, the Tribunal allowed the appeal.

Issue 2 - Tribunal's Decision Justifiability:
The Tribunal's decision was challenged on the grounds that the capital goods were not owned by the assessee and were not installed in the factory premises of the actual owner. However, the Tribunal's interpretation of the CENVAT Rules was upheld by the High Court. The Court emphasized that the Rules do not require ownership or installation of capital goods for availing credit, only their use in manufacturing final products. Since there was no claim by the actual owner for credit on the same goods, the Tribunal's decision was deemed legally sound. Consequently, the appeal was dismissed for lack of any substantial question of law warranting interference.

In conclusion, the High Court upheld the Tribunal's decision, emphasizing that the CENVAT Rules allow credit for duty paid on capital goods used in manufacturing final products, irrespective of ownership or installation, as long as the necessary conditions are met. The Court found no legal flaw in the Tribunal's decision and dismissed the appeal accordingly.