2014 (12) TMI 774 - HC - Central Excise

Eligibility for CENVAT Credit - Plastic Crates - Capital goods or inputs - Held that - Question raised in this appeal is squarely covered by a decision of this Court in M/s.P.K.P.N. Spinning Mills (P) Ltd. - Vs The Commissioner of Central Excise (2013 (3) TMI 345 - MADRAS HIGH COURT), wherein a Division Bench of this Court, accepting the Larger Bench decision of the Ahmedabad Tribunal in Bango Products (India) Ltd. - Vs Commissioner of Central Excise, Vadodara (2009 (2) TMI 101 - CESTAT AHMEDABAD), had decided the issue in favour of the assessee and allowed the appeal. A copy of the said order has also been placed before this Court. As submitted by either side, the issue being covered by the above judgement of the Division Bench, this Court is in agreement with the above rational laid down - Decided in favour of assessee.

Summary

Issues:
1. Whether plastic crates are considered accessories of machines in terms of the definition of capital goods under the Cenvat Credit Rules, 2002.

Analysis:
The judgment involves a dispute regarding the eligibility of plastic crates for availing Cenvat credit under the Cenvat Credit Rules, 2002. The respondent, a manufacturer of cotton yarn and man-made yarn, availed credit of duty paid on plastic crates used for carrying intermediate goods for further processing. The Revenue contended that plastic crates are not capital goods and sought to recover the credit availed by the appellant. The adjudicating authority initially ruled in favor of the appellant, holding that the plastic crates are eligible for credit.

Subsequently, the Commissioner (Appeals) overturned the decision, stating that the goods are ineligible for Cenvat credit and must be recovered with interest. This led the assessee to appeal before the Appellate Tribunal. The Tribunal, in its final order, set aside the decision of the Commissioner (Appeals) and allowed the appeal, considering the plastic crates as accessories used for transferring intermediate products from one stage to another, thus meeting the definition of capital goods under Rule 2 (b) of the Cenvat Credit Rules.

The Revenue, dissatisfied with the Tribunal's decision, approached the High Court challenging the order. During the hearing, both parties referred to a previous decision of the Court in a similar matter, where the issue was decided in favor of the assessee. The Court, in line with the previous decision and the rationale provided, upheld the Tribunal's order, ruling in favor of the assessee and against the Revenue. Consequently, the Court dismissed the appeal, finding no grounds for interference with the Tribunal's decision.

In conclusion, the judgment clarifies the classification of plastic crates as capital goods eligible for Cenvat credit under the Cenvat Credit Rules, 2002. The Court's decision was based on the interpretation of the definition of capital goods and the specific use of plastic crates in the manufacturing process, aligning with previous judicial precedents on similar matters.