2015 (11) TMI 356 - AT - Central Excise

Availment of CENVAT Credit - Capital goods - MS Roads - Held that - Issue was raised that M.S. Rod is not used in or in relation to the manufacture of the final product, whereas the Commissioner (Appeals) have decided revenue s appeal going completely beyond the show cause notice on the ground that the tote boxes which are manufactured within the factory are exempted from payment of excise duty therefore in terms of Rule 6(1) of CCR Cenvat credit is not admissible. - Even if it is presumed that on the findings of the commissioner whether the Cenvat credit is admissible or not, I find that even if capital goods manufactured within the factory of the appellant and admittedly it is exempted, Cenvat credit in respect of input used in the manufacture of such exempted capital goods is permissible. As per CCR, 2004 the Cenvat Credit is allowed on the input as per the Rule 2K explanation (2) input includes goods used in the manufacture of capital goods which are further used in the factory of the manufacture In view of this provisions in the present case M.S. Rod have been used in the manufacture of the capital goods and the capital goods in the manufacture of the final product, Cenvat credit on M.S. Rod is admissible as input. In the fact of the present case, it is undisputed that the final product manufactured by the appellant is cleared on payment of duty and no exemption was availed, therefore contention of the Ld. Commissioner (Appeals) is wrong as Rule 6(1) is applicable only when the final product is cleared under exemption. - appellant is legally entitle for the Cenvat credit in respect of M.S. Rod, therefore impugned order is not sustainable, hence the same is set aside - Decided in favour of assessee.

Summary

Issues:
1. Admissibility of Cenvat credit on M.S. Rod used for manufacturing tote boxes.
2. Interpretation of Rule 6(1) of CCR, 2004 regarding exemption of final products.
3. Application of legal precedents in similar cases to determine admissibility of Cenvat credit.

Analysis:
1. The appeal challenged an Order-in-Appeal that set aside an order allowing Cenvat credit on M.S. Rod used for making tote boxes. The appellant contended that the M.S. Rod was essential for manufacturing tote boxes, which were used for handling finished goods. The original authority allowed the credit, emphasizing the necessity of the M.S. Rod in the manufacturing process. The appellate tribunal concurred, stating that the M.S. Rod was used for manufacturing capital goods directly involved in the final product's manufacture. The tribunal held that the credit was admissible based on Rule 2K explanation (2) of CCR, 2004, which includes goods used in manufacturing capital goods used in the factory.

2. The Commissioner (Appeals) had ruled that Cenvat credit was not admissible as the tote boxes were exempted from excise duty under Rule 6(1) of CCR, 2004. However, the tribunal disagreed, noting that even if the capital goods were exempted, credit on inputs used in their manufacture was permissible. The tribunal clarified that Rule 6(1) applied only when the final product was cleared under exemption, which was not the case here. The original authority's findings supported the admissibility of credit, emphasizing the necessity of M.S. Rod in manufacturing the capital goods.

3. The tribunal considered various legal precedents cited by the appellant, where Cenvat credit for material handling equipment had been allowed. The tribunal found the judgments applicable to the present case, supporting the admissibility of credit on M.S. Rod. By analyzing the precedents, the original authority's findings, and the necessity of the M.S. Rod in the manufacturing process, the tribunal concluded that the appellant was legally entitled to the Cenvat credit. Therefore, the impugned order setting aside the credit was deemed unsustainable, and the appeal was allowed.

This detailed analysis of the judgment highlights the key issues of admissibility of Cenvat credit, interpretation of relevant rules, and application of legal precedents, providing a comprehensive understanding of the tribunal's decision.