2016 (9) TMI 1127 - AT - Central Excise

Cenvat credit - dumpers and parts thereof - dumpers used for carrying raw materials like limestone etc. from the mining area to the site of the crusher - Held that - dumpers are material handling equipments used for transportation of limestone from mining area to the crusher which is further used for the manufacture of cement; therefore, the dumpers are to be treated as used in or in relation to the manufacture of final products and thus, qualifies as an input . Therefore, in view of the various decisions of higher judicial fora and the case laws , the subject goods -dumpers and parts thereof are held to be entitled to cenvat credit. - Decided in favour of appellant with consequential relief

Summary

Issues:
Admissibility of cenvat credit on dumpers and parts thereof.

Analysis:
The appellant, a cement manufacturer, appealed against the disallowance of cenvat credit on dumpers and parts amounting to ?2,02,68,866 and imposition of a penalty of ?10 lakhs by the Commissioner of Central Excise, Jaipur-II. The appellant argued that the dumpers, used to transport limestone for cement manufacturing, qualify as "inputs" under Rule 2(k) of the Cenvat Credit Rules, 2004. The appellant cited various case laws to support their claim, emphasizing the dumpers' role in the manufacturing process. The appellant contended that dumpers should be considered inputs as they are used in or in relation to the manufacture of final products, citing precedents where similar material handling equipment was treated as capital goods. The Revenue, however, maintained that dumpers did not qualify as inputs or capital goods for cenvat credit purposes.

The Tribunal carefully considered the arguments presented by both parties and reviewed relevant case laws and precedents. The appellant's position was that dumpers, being material handling equipment used in the manufacturing process, should be classified as inputs. The Tribunal noted that the dumpers facilitated the transportation of raw materials within the factory premises, essential for the production of finished goods. Relying on decisions by CESTAT and the Supreme Court, the Tribunal held that the dumpers were accessories to the capital goods involved in the cement manufacturing process. The Tribunal referenced specific cases where similar vehicles were deemed eligible for cenvat credit, emphasizing the integral role of such equipment in the manufacturing process. Further, the Tribunal highlighted the decisions of the Hon'ble Rajasthan High Court, supporting the eligibility of material used for transportation within factory premises for cenvat credit.

In conclusion, the Tribunal ruled in favor of the appellant, holding that dumpers and their parts qualified for cenvat credit as they were integral to the manufacturing process. The impugned order disallowing the credit was set aside, and the appeal was allowed with consequential relief. The judgment emphasized the importance of considering the functional role of equipment in the manufacturing process when determining eligibility for cenvat credit, aligning with established legal principles and precedents.

[Order pronounced on 31.08.2016]