2008 (2) TMI 192 - AT - Central Excise

Inputs used in mfg. of spares for tyre press- On completion of the mfg., the appellants were also required to fit them in machines Revenue contended that appellants used the spares in the reconditioning of machinery so credit on inputs is not allowed held that, just because the machines were brought to their factory for fitting the spares, the credit cannot be denied - if it is proved that they had actually manufactured the spares, then they are entitled for the credit matter remanded

Summary

Issues: Denial of cenvat credit for inputs used in manufacturing spares for tyre press meant for a specific company.

Analysis:
The appeal in question arose from an Order-in-Appeal passed by the Commissioner of Central Excise, Bangalore, denying cenvat credit for inputs used in manufacturing spares for a tyre press meant for a specific company. The appellant argued that as per the purchase order, they were required to manufacture and supply spares for the company. The Revenue contended that the spares were used in reconditioning the machinery and were not cleared as standalone items, leading to the denial of cenvat credit. The Commissioner upheld the denial of credit based on this reasoning.

The appellant's advocate highlighted that the lower authorities failed to appreciate the facts. They emphasized that as per the purchase order, the appellants were required to manufacture various spares listed in the order, entitling them to cenvat credit for the duty paid on the inputs used for manufacturing those spares. The advocate argued that the focus should be on whether the appellants actually manufactured the spares, rather than on the reconditioning work mentioned in the remarks. The advocate contended that even if reconditioning was done, if it could be proven that the spares were manufactured, cenvat credit should be allowed. The appellate authority agreed with the appellant's arguments and remanded the issue to the Original Authority for a fresh decision within three months, emphasizing the need for a proper examination of whether the spares were indeed manufactured. The decision was to be made after granting the appellants an opportunity for a personal hearing.

In conclusion, the appellate tribunal found merit in the appellant's argument that the focus should be on whether the spares were actually manufactured, rather than on the reconditioning work mentioned in the remarks. The tribunal remanded the issue to the Original Authority for a fresh decision, emphasizing the need for a proper examination of the manufacturing process of the spares to determine the eligibility for cenvat credit.