2010 (10) TMI 550 - HC - Central Excise

Cenvat credit - Capital Goods in terms of Rule 2(b) of the Cenvat Credit Rules, 2002 - capital goods namely, Wear Plate, HRSS Plate, MS Plate, Angles, Channels etc - the Tribunal has held that the assessee was entitled for Modvat credit on capital goods namely, Wear Plate, HRSS Plate, MS Plate, Angles, Channels etc. used for connecting/fitting fans, casing, ducting in kilns for the manufacture of intermediate product clinker - he matter of Commissioner of Central Excise, Jaipur v. M/s. Rajasthan Spinning & Weaving Mills Ltd. 2010 (255) E.L.T. 481 (S.C.) argued that the issue sought to be raised by the revenue in this appeal stands concluded in favour of the assessee.

Summary

Issues:
1. Appeal under Section 35G of the Central Excise Act, 1944 against the order of Customs Excise & Service Tax Appellate Tribunal.
2. Disallowance of Cenvat credit on capital goods.
3. Interpretation of the term "Capital Goods" under Rule 2(b) of the Cenvat Credit Rules, 2002.
4. Applicability of previous judicial decisions on the case.

Analysis:

1. The appeal was filed under Section 35G of the Central Excise Act, challenging the order of the Customs Excise & Service Tax Appellate Tribunal. The substantial questions of law included whether the Tribunal erred in allowing the appeal to the respondent and granting them credit on the impugned items.

2. Cenvat credit was initially disallowed on capital goods like Wear Plate, HRSS Plate, MS Plate, Angles, Channels, etc. The Commissioner (Appeals) upheld this decision, but the Tribunal reversed it based on a precedent set by the Mumbai Tribunal in the case of Ispat Industries Ltd. v. CCE. The Tribunal ruled that structural items essential for machinery function and not for building construction are eligible for Cenvat credit.

3. The issue of defining the impugned items as "Capital Goods" under Rule 2(b) of the Cenvat Credit Rules, 2002 was crucial. The respondent argued that recent Supreme Court decisions, including the one in Commissioner of Central Excise v. Rajasthan Spinning & Weaving Mills Ltd., supported their entitlement to Modvat credit on these items, considering them as capital goods under the Rules.

4. Both parties relied on Supreme Court judgments, with the appellant conceding that the issue had been settled in favor of the assessee in previous decisions. The Tribunal's decision aligning with the interpretation of capital goods in relevant legal precedents was upheld, leading to the dismissal of the appeal. The court found no merit in the appeal and ruled in favor of the respondent, allowing them to avail Cenvat credit on the disputed capital goods.

This detailed analysis of the judgment highlights the key issues, legal arguments, and the court's decision, providing a comprehensive understanding of the case.