2016 (12) TMI 1321 - AT - Central Excise

CENVAT credit - wooden pallets used for stacking and movement of finished goods within the factory - denial on the ground that the said goods are neither inputs nor capital goods - Held that - the same issue was before the Hon ble Supreme Court in the case of Gajra Gears Ltd. 2015 (5) TMI 629 - SUPREME COURT where it was held that these pallets which are manufactured/assembled in the factory of the appellant are in the nature of material handling equipment, to keep and carry work in progress goods from one machine to the other. Thus, the use of the pallets is for carrying out the material from one machine to the other. It cannot, therefore, be said that these goods are used in relation to the manufacture in or in relation to the manufacture of the final products - denial justified - appeal dismissed - decided against assessee.

Summary

Issues involved:
1. Admissibility of CENVAT Credit on wooden pallets used for stacking and movement of finished goods within the factory.
2. Classification of wooden pallets as inputs or capital goods.
3. Applicability of exemption under Notification No.67/95-CE for manufactured goods used within the factory of production.

Detailed analysis:
1. The appellant, M/s Supreme Petrochem Ltd., availed CENVAT Credit on wooden pallets for internal movement of finished goods. A show-cause notice challenged this credit claiming the pallets were neither inputs nor capital goods, thus inadmissible.
2. The appellant argued that the wooden pallets should be classified as inputs based on a precedent involving plastic crates used for internal transportation within the factory.
3. The respondent cited a Supreme Court case discussing a similar issue regarding the classification of pallets used in manufacturing processes.
4. The Tribunal examined the Supreme Court's decision, which clarified that pallets used for material movement within a factory were not classified as parts of machinery, thus not falling under a specific chapter for classification.
5. Regarding the exemption under Notification No.67/95-CE, the Tribunal analyzed the definition of capital goods and inputs specified in the notification, concluding that the wooden pallets did not qualify for the exemption as they were not directly used in the manufacture of final products within the factory.
6. The Tribunal upheld the lower authorities' decision based on the Supreme Court's ruling, dismissing the appeal due to the clear precedent set by the higher court.

This detailed analysis addresses the issues of CENVAT Credit admissibility, classification of wooden pallets, and the applicability of the exemption under Notification No.67/95-CE, providing a comprehensive understanding of the judgment's key points and legal reasoning.