2013 (8) TMI 465 - AT - Central Excise

Cenvat credit on sil covers / sil sheet - sil covers / sil sheet are used to cover their final product malt for the purpose of protecting it from the rain and moisture Held that - Sil cover/ Sil sheets are used to cover the final product to protect it from rain / rainy water and the moisture. These are used after final product Barley malt is manufactured Cenvat Credit not allowed Decided against the Assessee.

Summary

Issues: Availability of Cenvat credit on sil covers used for protecting final product from rain and moisture.

The judgment involves an appeal filed by M/s. United Breweries Ltd. against the order passed by the Commissioner of Central Excise Chandigarh regarding the availability of Cenvat credit on sil covers used for protecting the final product. The appellants availed Cenvat credit on sil covers received by them, which the department argued were not covered under the definition of inputs or capital goods and were used solely for protecting the final product in the godown during the rainy season. A show cause notice was issued, and the Deputy Commissioner adjudicated the matter, which was further appealed by the appellant. Despite notice, no one appeared for the appellant during the proceedings.

The key issue in question was whether the sil covers used by the appellant to protect the final product 'malt' from rain and moisture qualified for Cenvat credit. The appellant contended that any inputs used in or in relation to the manufacture of final products are eligible for Cenvat credit. However, upon review, it was found that the sil covers were indeed used to protect the final product after the manufacturing process of Barley malt was completed. The Tribunal upheld the decision of the Commissioner (Appeals) that the sil covers were not used in relation to the manufacture of final products, as they were solely for protection against rain and moisture. Consequently, the appeal was rejected, and the original order was upheld.

The judgment highlights the importance of establishing a direct link between the use of goods and their role in the manufacturing process to claim Cenvat credit. In this case, the Tribunal found that the sil covers were not integral to the manufacturing process but served a separate purpose of protecting the final product. This decision emphasizes the strict interpretation of Cenvat credit rules and the need for goods to be directly related to the manufacturing activity to qualify for credit.