2014 (8) TMI 980 - AT - Central Excise

Denial of CENVAT Credit - Captive consumption - whether the appellant is eligible to avail Cenvat credit on inputs used in the intermediate product jig wire and jig rods captively consumed in the manufacture of dutiable final products - Held that - jig wires and jig rods were consumed in the process of manufacture of Knitting Pins. The Commissioner (Appeals) also accepted that these goods are intermediate products. It is also noted that these goods are essential for the manufacture of final product. - these items are intermediate products captively used in the manufacture of dutiable final product and therefore, Cenvat credit cannot be denied - Decided in favour of assessee.

Summary

Issues:
Whether the appellant is eligible to avail Cenvat credit on inputs used in the intermediate product jig wire and jig rods captively consumed in the manufacture of dutiable final products.

Analysis:
The case involved the appellant, engaged in the manufacture of various products, availing Cenvat credit on inputs used in the manufacture of jig wires and rods, which were captively consumed in the production of final products. The Revenue contended that these items could be classified as "capital goods" but were not eligible for exemption under Notification No. 67/95 due to not being specified in Rule 57Q of the Central Excise Rules.

The Commissioner (Appeals) rejected the appellant's appeals and allowed the Revenue's appeal, leading to the filing of five appeals by the appellant. The central issue revolved around the eligibility of Cenvat credit on inputs used in jig wires and rods. The appellant argued that these items were intermediate products essential for the final product's manufacture, citing a previous order-in-appeal to support their contention.

The Revenue claimed that jig wires and rods were capital goods, but the Commissioner (Appeals) disagreed, stating they did not meet the criteria under Rule 57Q and thus were not entitled to the exemption under Notification No. 67/95. The appellant highlighted that these goods were partly consumed during the manufacturing process and were crucial for producing the final product.

The appellant relied on legal precedents, including the case of Escorts Ltd. v. CCE, Delhi, to support their argument that intermediate products used in the manufacturing process should not be denied Cenvat credit if the duty is paid on the final product. The Tribunal's decision in Shalimar Paints Ltd. v. CCE, Calcutta was also referenced to emphasize the concept of intermediate products in relation to the final product's manufacture.

Ultimately, the Tribunal found that the jig wires and rods were indeed intermediate products essential for the final product's manufacture. As a result, Cenvat credit could not be denied, and the impugned orders were set aside for all appeals except one, where the Commissioner (Appeals)'s decision was restored.

This comprehensive analysis of the legal judgment highlights the key arguments, legal precedents, and the Tribunal's decision regarding the eligibility of Cenvat credit on inputs used in intermediate products captively consumed in the production of final goods.