2014 (1) TMI 956 - AT - Central Excise

Diesel locomotive can be considered as capital goods under Rule 2a(A) of the CENVAT Credit Rules, 2004 or not Waiver of Pre-deposit Held that - The appellant has not been able to rebut a crucial finding that packing plant consisted of a group of machineries and that the appellant could not clarify as to which of these machineries the loco was accessory - As per Chapter 84 the goods classified thereunder to be goods used for loading, unloading or otherwise handling materials - Whether packing plant could be so classified is a debatable question - Storage silo is not one of the capital goods envisaged under clause (i) or clause (ii) of the definition of capital goods - Storage tank is an item which figures down below in the array of the various clauses of the said definition - the assessee is not able to make out a prima facie case in their favour - the appellant is directed to pre-deposit an amount of Rupees Ten lakhs as pre-deposit upon such submission rest of the duty to be stayed till the disposal Partial stay granted.

Summary

Issues: Application for waiver and stay of adjudged dues related to CENVAT credit on 'Diesel Locomotive' and its spares for the period from September 2007 to April 2009.

Analysis:
1. Extended Period of Limitation Invoked:
- The demand was raised in a show-cause notice invoking the extended period of limitation dated 14.2.2011.
- The challenge against the demand is primarily on merits.

2. Nature of Use of Diesel Locomotive:
- The diesel locomotive was used for transporting cement, clinker, and fly ash within the factory premises.
- Department argues it does not qualify as capital goods under Rule 2a(A) of the CENVAT Credit Rules, 2004.
- Appellant claims it is an accessory to capital goods like packing plant and storage silo.

3. Legal Precedents and Arguments:
- Appellant relies on Tribunal decisions allowing credit on items used as material handling equipment.
- Reference to cases where credit was allowed on items used for transfer within factory premises.
- Respondent cites cases where court was not convinced about the accessory status of claimed capital goods.

4. Analysis of Consultant's Arguments:
- Consultant failed to rebut the finding that the appellant could not clarify which machinery the locomotive was an accessory to.
- Argument that packing plant and storage silo are capital goods under Chapter 84 of CETA Schedule.
- Examination of Chapter 84 goods as handling materials and the classification of packing plant and storage silo.

5. Financial Hardships and Compliance:
- Appellant did not plead limitation against the demand and did not demonstrate financial hardships.
- Direction for appellant to pre-deposit a specified amount within a set timeline for waiver and stay of balance dues.
- Compliance reporting to the Deputy Registrar and subsequent reporting to the Bench for further action.

In conclusion, the judgment analyzed the nature of the diesel locomotive's use, legal precedents, and the appellant's arguments for CENVAT credit. The decision highlighted the failure to establish a clear case for waiver and stay based on the accessory status of the locomotive to capital goods. The order for pre-deposit and compliance within a specified timeframe was made to ensure justice and proper consideration of the financial aspects involved.