2011 (2) TMI 415 - AT - Central Excise

CENVAT Credit - Elements of pre-fab building of wall roof etc. made of structural insulated expanded polystyrene panels (EPS panel) classified under Chapter sub-heading 9406 00 99 and taken credit as capital goods - Show-cause notice dated 13-8-2009 alleging that the such items could not be treated as capital goods and consequently proposing demand of duty by disallowing the credit and proposing imposition of penalty was issued - the components have been used for fabricating goods falling under Chapter 84. In view of the above, the order of the Commissioner (Appeals) in allowing credit treating the said EPS panel as covered by the extended meaning given to the term capital goods is legally correct and does not call for any interference.

Summary

Issues:
Department's appeal against Commissioner (Appeals) order disallowing credit for EPS panels classified under Chapter 9406 as capital goods.

Analysis:
1. Issue: Classification of EPS panels as capital goods.
- The department contended that EPS panels classified under Chapter 9406 cannot be considered capital goods under CENVAT Credit Rules.
- The original authority confirmed a demand and penalty, which was later set aside by the Commissioner (Appeals).
- The Advocate for the respondents argued that the EPS panels, although classified under Chapter 9406, were components for manufacturing a cold storage plant falling under Chapter 84.
- The extended definition of capital goods includes "components, spares and accessories" of goods specified under certain chapters, which covers the EPS panels used for fabricating goods under Chapter 84.

2. Legal Analysis:
- Rule 2(a) of the CENVAT Credit Rules, 2004 defines capital goods to include specific chapters and categories, along with components, spares, and accessories of those goods.
- The judgment emphasized that the components used for fabricating goods falling under Chapter 84 can be considered capital goods, even if they are classified under a different chapter.
- The Commissioner (Appeals) decision to allow credit for EPS panels as capital goods based on the extended definition was deemed legally correct and justified.

3. Conclusion:
- The Tribunal rejected the department's appeal, affirming the Commissioner (Appeals) decision to treat the EPS panels as capital goods eligible for credit.
- The judgment highlighted the importance of the extended definition of capital goods and the relevance of components used in manufacturing processes, irrespective of their specific classification under chapters.
- The legal analysis supported the decision to allow credit for EPS panels, emphasizing compliance with the CENVAT Credit Rules and the specific provisions regarding capital goods classification.