2013 (7) TMI 305 - AT - Central Excise

Cenvat Credit on Inputs and Capital goods destroyed in fire accident - Capital goods were used by the appellant and the inputs were also gone into manufacturing process Held that - As per Board s Circular No. 66/88-CX-6 dated 06.09.1988, the credit paid on inputs is permissible when the inputs are actually used in the manufacture of final products therefore, credit cannot be denied - A certificate from the National Insurance Company certifying that the Insurance Company has not considered the claim of the modvat/CENVAT credit of duty paid while entertaining their claim for damaged capital/input/work in-process was produced. Therefore, the ground on which the adjudicating authority denying the credit, is not sustainable. Facts of the case are distinguishable from the facts of the case of Monica Electronics 1994 (11) TMI 215 - CEGAT, NEW DELHI , inputs were damaged prior to issuance for manufacture, means inputs were not gone into manufacturing process, therefore, credit is inadmissible but in this case inputs gone in the process of manufacturing and capital goods were also in use therefore, credit cannot be denied Relying upon the decision in the case of CCE vs Indichem Electronics 2002 (9) TMI 195 - CEGAT, CHENNAI and Motor Industries Co Ltd. vs CCE- 2004 (1) TMI 492 - CESTAT, BANGALORE wherein this Tribunal has held that when the capital goods/inputs were in use for manufacturing of final products and lost during the fire accident, credit cannot be denied, allowed the appeal of the Assessee Decided in favor of Assessee.

Summary

Issues involved:
Appeal against denial of credit of CENVAT, denial of credit on the ground of insurance claim, interpretation of relevant legal provisions and precedents.

Analysis:
The appellant, a manufacturer of excisable goods, appealed against the denial of credit of Rs. 55,26,242/- due to a fire accident in their plant. The appellant had availed CENVAT credit on capital goods and inputs destroyed in the fire. The adjudicating authority denied credit citing insurance claim, which the appellant refuted with a certificate from the National Insurance Company stating no consideration of Modvat claim. The Commissioner (Appeals) relied on a previous decision but the Tribunal found the facts distinguishable. It was established that the inputs had been used in the manufacturing process, making credit permissible. Precedents like CCE vs Indichem Electronics and Motor Industries Co Ltd. supported this stance, leading to the setting aside of the impugned order and allowing the appeals with consequential relief.

This judgment primarily dealt with the denial of CENVAT credit following a fire accident in the appellant's plant. The key issue revolved around the admissibility of credit when the capital goods and inputs were destroyed, and the appellant had filed an insurance claim. The Tribunal emphasized the actual use of inputs in the manufacturing process as crucial for credit eligibility, distinguishing the case from precedents where inputs were damaged before use. The appellant's submission of a certificate from the National Insurance Company played a pivotal role in establishing that the insurance claim did not affect the Modvat claim, thus supporting the credit entitlement.

The legal interpretation in this judgment focused on the application of relevant provisions and precedents to determine the eligibility of CENVAT credit. The Tribunal scrutinized the facts to ascertain whether the inputs had genuinely contributed to the manufacturing process, emphasizing the distinction from cases where inputs were damaged before utilization. By referencing precedents like CCE vs Indichem Electronics and Motor Industries Co Ltd., the Tribunal reinforced the principle that credit cannot be denied when capital goods and inputs were actively used in manufacturing, even if lost in a fire accident. This analysis underscored the importance of factual evidence and legal precedents in resolving disputes related to credit entitlement under CENVAT rules.