2015 (10) TMI 1948 - AT - Central Excise

Denial of CENVAT Credit - Capital goods - Held that - All the items are used in the manufacturing of capital goods which are ultimately used in the manufacturing of final product. Therefore, as per the definition of inputs under Rule 2(k) of Cenvat Credit Rules, 2004, wherein it has been stated that any input which is used in the manufacturing of final product, directly or indirectly is entitled for input credit. As all the items are used by the respondent indirectly by way of capital goods in manufacturing of final product, therefore the respondents are entitled for input credit - Decided against Revenue.

Summary

Issues:
- Eligibility of input credit on steel plates, sheets, bars, angles, channels, tubes, welding electrodes used for manufacturing capital goods.

Analysis:
The judgment revolves around the eligibility of input credit on various items used in the manufacturing of capital goods. The Revenue appealed against an order allowing input credit on steel plates, sheets, bars, angles, channels, tubes, and welding electrodes for the period January 2004 to March 2004. The Revenue contended that since these items do not fall under specific chapters, they cannot be considered as capital goods and, therefore, input credit should not be allowed.

Upon hearing both parties, the Tribunal noted that all the items in question were used in the manufacturing of capital goods, which were subsequently utilized in the production of the final product. The Tribunal referred to Rule 2(k) of the Cenvat Credit Rules, 2004, which defines inputs as any material used in the manufacturing of the final product, directly or indirectly. Since the items under consideration were used indirectly as part of the capital goods in the manufacturing process, the Tribunal concluded that the respondent was entitled to input credit on these items.

In its decision, the Tribunal found no flaw in the impugned order and upheld the decision to allow input credit on the mentioned items. The Tribunal dismissed the Revenue's appeal, stating that it lacked merit. The judgment clarifies the interpretation of input credit rules and emphasizes the importance of the direct or indirect use of materials in the manufacturing process to determine eligibility for input credit.