2014 (10) TMI 637 - HC - Central Excise

CENVAT Credit - Capital goods or Inputs - items falling under Chapter 73 - Held that - Rule 57 of the Central Excise Rules deals with credit of duty paid on the excisable goods used as inputs. Rule 57Q relates to credit of duty paid on capital goods used by the manufacturer of specified goods. The Tribunal had relied on assessee s own case reported in Madras Aluminium Co. Ltd. (2000 (12) TMI 607 - CEGAT, CHENNAI). The said order deals only with 57A of the Central Excise Rules, where many of the inputs were considered for credit. Therefore, the Tribunal is correct in holding that the inputs are used directly or indirectly for the manufacture of final product as per Rule 57A of the Central Excise Rules during the relevant period. assessee is entitled for credit for the above said items - Decided against Revenue.

Summary

Issues:
Interpretation of eligibility criteria for availing credit under Rule 57A of Central Excise Rules for specific items used in manufacturing final products.

Analysis:
The case involved a dispute regarding the eligibility of credit for 15 items used in manufacturing final products by a manufacturer of Aluminium and Articles under Chapter 76 of the Central Excise Tariff Act 1985. The Revenue contended that 11 out of the 15 items were not considered as inputs under Rule 57A, leading to a show cause notice. The original authority rejected the credit claim for these items. The Commissioner (Appeals) allowed credit for only 4 items and disallowed the remaining 11 items, prompting the assessee to appeal to the Tribunal.

The Tribunal, in its decision, allowed the appeal for the disputed 11 items, citing relevant case laws. The Revenue challenged this decision, arguing that the Tribunal's reliance on previous cases concerning Rule 57Q for capital goods was not applicable to the current case under Rule 57A. Substantial questions of law were framed regarding the interpretation of rules governing eligibility for credit.

During the hearing, the appellant's counsel argued that the inputs were not directly or indirectly used in manufacturing final products, citing a relevant Supreme Court decision. However, the respondent's counsel referenced previous cases where inputs were deemed essential for effective functioning and maintenance of machinery, thus eligible for credit under Rule 57A.

The court examined each disputed item individually. It found that items like Alfoc Powder, Agromore rodine, and Aquachem were essential for maintaining plant machinery, making them eligible for credit. Similarly, the Tribunal's decisions in previous cases confirmed the eligibility of items like Steel Wire rope, MS Plates, gases, and welding electrodes. The court upheld the Tribunal's decision, emphasizing that the inputs were used directly or indirectly in the manufacturing process, aligning with Rule 57A requirements.

Ultimately, the court dismissed the appeal, confirming the Tribunal's decision to allow credit for the disputed items. The judgment highlighted the correct interpretation of Rule 57A and affirmed the eligibility of the inputs for availing credit, settling the dispute in favor of the assessee.