2016 (8) TMI 494 - AT - Central Excise

Cenvat credit - entitlement - goods purchased by M/s CVL Sonepat but consigned to respondent which were ultimately used in manufacture and supply of boilers and other capital goods in the premises of the respondent - Held that - Commissioner (A) held that the ownership of the goods is not a pre-condition for the manufacture to be entitled to the credit of duty paid on the inputs. The only condition is that the goods should be duty paid and they are intended for use in or in relation to the manufacture of finished excisable goods. Further to enable the manufacture the credit there should be a duty paying document. In this case there is not dispute about the duty paid document wherein the name of the respondent is appearing as consignee. Thus the fact that ownership was with M/s CVL is not an impediment to avail the cenvat credit. Therefore on this count the appeal fails. I do not find any infirmity in the observation made by the Ld. Commissioner (A) in the impugned order. Therefore, the impugned order is upheld. - Decided against the Revenue

Summary

Issues:
1. Entitlement of cenvat credit on goods consigned to the respondent.
2. Eligibility of cenvat credit on goods used in the manufacture of capital goods.
3. Denial of cenvat credit based on the nature of the goods as immovable property.

Analysis:

Issue 1: Entitlement of cenvat credit on consigned goods
The case revolves around the respondent availing cenvat credit on goods consigned by M/s CVL Sonepat for the manufacture and supply of boilers and other capital goods. The Revenue alleged that since the respondent did not physically receive the goods, they were not entitled to the credit. However, it was established that the goods were used in the manufacturing process at the respondent's premises. The Ld. Commissioner (A) upheld that ownership of the goods is not a prerequisite for availing cenvat credit as long as the goods are duty paid and intended for use in manufacturing finished excisable goods. The presence of duty paying documents with the respondent's name as consignee supported the eligibility for cenvat credit.

Issue 2: Eligibility of cenvat credit on goods used in manufacturing capital goods
The Ld. Commissioner (A) addressed the objection raised by the Revenue regarding the goods being used in the creation of immovable properties, stating that the goods were utilized in the manufacture and commissioning of plant and machinery at the respondent's factory premises. As per rule 2(k) explanation 2 of cenvat credit rules, goods used in the manufacture of finished dutiable goods are eligible for input credit. The tribunal found that the goods in question were indeed used in the manufacturing process and thus qualified for cenvat credit.

Issue 3: Denial of cenvat credit based on the nature of goods as immovable property
The Revenue contended that since the boilers were considered immovable property, cenvat credit should be denied. However, the tribunal noted that this specific objection was not raised in the show cause notice. The Ld. Commissioner (A) rightly observed that the mere classification of boilers as immovable property does not disqualify the respondent from availing cenvat credit on the goods used in their manufacture. Consequently, the tribunal upheld the impugned order, dismissing the appeal filed by the Revenue.

In conclusion, the judgment clarifies the entitlement of cenvat credit on goods consigned to the respondent for manufacturing capital goods, emphasizing the importance of duty paid documents and the actual utilization of goods in the manufacturing process. The decision reinforces the eligibility of cenvat credit on goods used in the production of dutiable goods, irrespective of their classification as immovable property.