2012 (10) TMI 647 - AT - Central Excise

Demand of Cenvat credit - contention of the appellant is that Coke Transfer Cars is used for transfer of coke from oven to furnace. Therefore, they are accessory of the oven and they will be eligible for Cenvat credit Held that - Delivery of the raw material in time or increasing the effective working of the same and then removal of the finished goods from the vicinity of the machine contributes may be in a subordinate degree to attain a general result or effect. Same adds to definition of effectiveness of the machinery - when viewed and judged in the light of interpretation of the term accessory same would fall under Sl. No. 3 (i) of Rule 2(b) of the Cenvat Credit Rules, 2002 cenvat credit allowed

Summary

Issues:
1. Appeal against the order confirming demand of Cenvat credit on 'Coke Transfer Cars.'
2. Eligibility of 'Coke Transfer Cars' for Cenvat credit.
3. Interpretation of the term 'accessory' in the context of Cenvat credit rules.

Analysis:
1. The appellant filed an appeal against the order confirming the demand of Cenvat credit on 'Coke Transfer Cars.' The appellant contended that the cars are used for transferring coke from the oven to the furnace and should be eligible for Cenvat credit. The appellant had availed modvat credit on these cars during a specific period, leading to proceedings initiated by the officers of DGCEI for irregular credit availment. The lower adjudicating authority confirmed the demand and imposed penalties. The appellant appealed to the Commissioner (Appeal) who upheld the order, except for a specific penalty. Hence, the appeal was made to the Appellate Tribunal CESTAT, Kolkata.

2. The main contention of the appellant was that the 'Coke Transfer Cars' are accessories of the oven and are essential for transferring coke from the oven to the furnace. The appellant relied on previous tribunal decisions and a Larger Bench decision to support their argument. The Tribunal noted that the cars are used for material handling and are crucial for the transfer process. Referring to a previous case where modvat credit on material handling equipment was allowed, the Tribunal emphasized the importance of such equipment for effective functioning. The Tribunal highlighted the definition of 'accessory' as an object used for convenience and effectiveness, capable of advancing the working of the main unit. In this case, the 'Coke Transfer Cars' were deemed essential for the transportation process, contributing to the effectiveness of the machinery. Therefore, the Tribunal concluded that the appellant's contention was valid, and the order confirming the demand for Cenvat credit was set aside, allowing the appeal with consequential relief.

3. The Tribunal's decision was based on the interpretation of the term 'accessory' in the context of Cenvat credit rules. By emphasizing the necessity and effectiveness of the 'Coke Transfer Cars' in the manufacturing process, the Tribunal established that these cars qualified as accessories essential for the functioning of the machinery. The Tribunal's analysis of previous judgments and the definition of 'accessory' provided a clear framework for determining the eligibility of items for Cenvat credit. This case serves as a precedent for considering the role of accessories in enhancing the efficiency and convenience of manufacturing processes when assessing eligibility for Cenvat credit.