2012 (12) TMI 29 - AT - Central Excise

Cenvat credit on aluminium sheets, flush partition, plush door, ceiling - denial as the items are neither inputs used in the manufacture nor capital goods - Held that - The case relied by assessee are distinguishable from the facts of the present case and also the Manager of the applicant s unit has already admitted in this case that the items are not covered under the definition of capital goods under Rule 2 of the Cenvat Credit Rules. The applicant has not able to make out a strong prima facie case in their favour. Order to pre-deposit of 25% of the duty within a period of eight weeks and compliance is to be reported.

Summary

Issues involved:
- Application for waiver of pre-deposit and stay of recovery of duty and penalty
- Availment of cenvat credit on specific items
- Interpretation of capital goods under Cenvat Credit Rules
- Applicability of previous tribunal decisions
- Admissibility of items as parts and accessories to capital goods

Analysis:

1. The applicant sought waiver of pre-deposit and stay of recovery of duty and penalty imposed and confirmed by the Commissioner of Central Excise (Appeals), Pune, amounting to Rs.6,30,872/-. The main issue revolved around the availment of cenvat credit on items like aluminium sheets, flush partition, plush door, and ceiling under Chapter Heading 7610 of the Central Excise Tariff.

2. The Revenue contended that the items in question were neither inputs for manufacturing P.P. Medicines nor capital goods as per the Cenvat Credit Rules. The applicant argued that these items were accessories to Air Handling Units, which constituted capital goods under Rule 2 of the Cenvat Credit Rules. The applicant relied on tribunal decisions and the definition of parts and accessories eligible for cenvat credit under Rule 2.

3. The Tribunal noted that the goods involved in the cited tribunal decisions differed from the items in the present case, making them distinguishable. The applicant had not availed credit for Air Handling Units, and the items were used for making partitions in the manufacturing area, not in the manufacture of Air Handling Units. The Manager of the applicant's unit admitted that the items did not fall under the definition of capital goods under Rule 2, weakening the applicant's case.

4. Consequently, the Tribunal ordered a pre-deposit of 25% of the duty within eight weeks, with compliance due by a specified date. Upon compliance, a stay against the recovery of the remaining dues confirmed by the lower authority was granted. The decision was based on the lack of a strong prima facie case in favor of the applicant, considering the specific circumstances and admissions made during the proceedings.

By analyzing the interpretation of capital goods, the applicability of previous tribunal decisions, and the admissibility of items as parts and accessories to capital goods, the Tribunal arrived at a decision regarding the waiver of pre-deposit and stay of recovery of duty and penalty in this case.