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2007 (6) TMI 91 - AT - Central ExciseCenvat/Modvat Department alleged that since the machinery was not installed when the balance credit was raised, it is inadmissible - Commissioner is of the view that machinery was in the process of installation during relevant period, hence can be said to be in use entitling Cenvat credit correct and legal
Issues Involved:
Availment of Modvat credit on duty paid capital goods without installation. Analysis: The case revolves around the issue of availment of Modvat credit of 50% of the duty paid on capital goods by the respondent in the year 2003-2004. The revenue alleges that the appellants had not installed the machinery but still availed the credit. However, it is established that the machinery was in possession of the respondent since 2002, installed in September 2003, and used in manufacturing final products. The Commissioner (Appeals) found that the machinery being in the process of installation during the relevant period constituted "in use," as the term "use" has a broader interpretation beyond mere production of goods. The Commissioner relied on the case law of M/s. Mukund Ltd. v. CCE, Mumbai and Board's circular to support the decision. Consequently, the Commissioner allowed the appeal filed by the respondent against the original order, which the Tribunal upheld. The Tribunal concurred with the Commissioner (Appeals) and found no grounds to interfere with the impugned order. It was determined that the machinery being in the process of installation was indeed in use, making the credit admissible. Therefore, the appeal filed by the revenue was rejected. Additionally, the cross objection filed by the appellants in support of the impugned order was also disposed of in line with the decision. The judgment emphasizes the importance of interpreting the term "use" in a broader context to encompass activities beyond mere production, ensuring that the credit on duty paid capital goods is rightfully availed based on the factual circumstances of possession and installation.
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