2007 (8) TMI 225 - AT - Central Excise

Inputs were used for manufacture of capital goods for ultimate use in the factory Appellant having followed statutory mandate should not be denied of credit.

Summary

Issues: Denial of Cenvat Credit for goods used in manufacturing capital goods.

Analysis:
The appellant argued that there was no factual dispute regarding the use of goods for manufacturing capital goods for their own factory. They contended that since the law did not prohibit Cenvat Credit in such a scenario, the authorities should not have denied the credit. The Ld. Commissioner (Appeal) had disallowed the credit based on a previous Tribunal decision in a different case. However, the appellant's situation was deemed distinguishable due to the manufacturing activity carried out to produce capital goods.

The Tribunal found that the goods were indeed used for manufacturing capital goods for the appellant's factory, falling under Rule 2(g) and explanation 2. The previous decision relied upon by the Ld. First Appellate Authority involved a different scenario of using a GC sheet for roofing, which was not applicable to the appellant's case. The Tribunal concluded that the appellant, having followed the statutory requirements, should not be denied the Cenvat credit they were entitled to. Therefore, the decision denying the benefit was reversed, and the appeal was allowed.

The judgment highlights the importance of considering the specific circumstances of each case when determining eligibility for Cenvat Credit. It emphasizes the need to differentiate between various situations and apply the relevant legal provisions accordingly. The Tribunal's decision serves as a reminder to the authorities to carefully assess the facts and statutory compliance before denying such credits to eligible parties.