2017 (1) TMI 1405 - AT - Central Excise

CENVAT credit - dumpers/tippers - manufacture of MS TMT Bar - Held that - such equipment has been used for processing and handling of raw materials and finished products within the factory of the appellant - The Hon ble Supreme Court in the case of CCE Vs. Rajasthan State Chemical Works 1991 (9) TMI 73 - SUPREME COURT OF INDIA observed that the processing and handling of raw materials is also in or in relation to manufacture, if integrally connected with further operation leading to manufacture of goods. The dumpers/dippers which are used within the factory will be entitled to Cenvat credit as capital goods - appeal allowed - decided in favor of appellant.

Summary

Issues:
Dispute over Cenvat credit availed for dumpers/tippers used in factory for movement of raw materials and finished products.

Analysis:
The appeal was filed against the Order-in-Appeal dated 11.12.2012, concerning the eligibility of Cenvat credit for dumpers/tippers used in the factory for movement of raw materials like ingots and coal. The Revenue contended that the appellant was not entitled to credit for dumpers/tippers classified under Tariff Heading No. 8704 23 19. The Original authority disallowed the credit amounting to ?5,19,960 along with interest and penalty, a decision upheld by the Commissioner (Appeals), leading to the present appeal.

During the hearing, the appellant's counsel argued that Tribunal cases supported the allowance of Cenvat credit on dumpers/tippers. The Revenue, however, opposed this view, stating that credit is only permitted when such equipment is used as capital goods. The appellant had indeed utilized dumpers/tippers for the internal movement of raw materials and finished products within the factory, including ingots, billets, and coal.

The Tribunal analyzed the definition of capital goods under the Cenvat Credit Rule, 2002, which includes components, spares, and accessories of goods specified as capital goods falling under certain chapters. Referring to a Supreme Court case, the Tribunal emphasized that processing and handling of raw materials within the factory are integral to manufacturing operations. Consequently, dumpers/tippers used within the factory were deemed eligible for Cenvat credit as capital goods, a stance supported by previous Tribunal decisions.

Therefore, the Tribunal set aside the Impugned order and allowed the appeal, ruling in favor of the appellant. The judgment was pronounced in the Open Court on 30.01.2017.