2016 (7) TMI 1069 - AT - Central Excise

Cenvat credit on purchase of dumper falling under Chapter 87, which was used for shifting, handling and internal transportation of raw material and semi-finished goods inside their factory. - Held that - Considering the dumpers as capital goods which are used for the purpose of movement of material within the factory the purpose for which the Tribunal has allowed the Modvat/Cenvat credit for similar capital goods I find no justification to take a different view for dumpers. Accordingly, the impugned order is set aside. - Decided in favor of assessee.

Summary

Issues:
Dispute over availment of Cenvat credit for dumpers used in factory internal transportation.

Analysis:
The appeal challenged the disallowance of Cenvat credit by the Original Authority and upheld by the Commissioner (Appeals) regarding the classification of dumpers as capital goods. The appellant claimed the dumpers as accessories of capital goods under Chapter 85. The definition of capital goods under Rule 2 (a) excludes goods falling under Chapter 87, which covers the dumpers in question. The appellant cited precedents like Banco Products (India) Ltd., Tata Steel Ltd., and Malabar Cements Ltd., where credits for similar items were allowed. The Tribunal's decisions in these cases supported the appellant's argument that dumpers used for internal transportation should be considered capital goods. The Tribunal found no reason to deviate from this view and set aside the impugned order disallowing the credit.

The learned Counsel for the appellant relied on various judgments to support the claim that dumpers used for internal transportation within the factory should be considered capital goods. The Tribunal examined the definition of capital goods under Rule 2 (a) and noted that it does not cover goods falling under Chapter 87, which includes dumpers. However, considering the precedents and the essential role of dumpers in the manufacturing process, the Tribunal concluded that dumpers should be treated as capital goods. The Tribunal emphasized the purpose and usage of the dumpers in line with the decisions in similar cases, ultimately allowing the appeal and overturning the disallowance of Cenvat credit.

The dispute centered around whether dumpers used for internal transportation within the factory could be classified as capital goods for Cenvat credit purposes. The appellant argued that the dumpers were essential for the manufacturing process and should be considered accessories of capital goods under Chapter 85. The Tribunal analyzed relevant precedents and the definition of capital goods under Rule 2 (a), which excluded goods falling under Chapter 87. Despite this exclusion, the Tribunal found merit in the appellant's argument based on the functional role of the dumpers and the consistency in allowing credits for similar items in previous cases. By aligning with the principles established in prior judgments, the Tribunal allowed the appeal and rejected the disallowance of Cenvat credit for the dumpers, emphasizing their integral role in the manufacturing process within the factory.