2017 (2) TMI 12 - AT - Central Excise

CENVAT credit on capital goods - Held that - It is an undisputed fact that the said Vertical Storage Tanks are installed in the premises of the Customers and not in the premises of the manufacturer. As per the definition of Capital Goods under rule 2(a) of CCR the said goods should be used in the factory of the manufacturer of the final products. As regards the credit availed on Portable Cryogenic Vessels I find that the said Vessels are used for supply/ transportation of gases in liquid form and not for packing. Hence the argument of the Appellants that they were packing materials cannot be accepted. Keeping in view the facts and circumstances of the case and the reasoning given by the learned Commissioner (A) I do not find any infirmity in the impugned orders and I therefore uphold the same by dismissing all the four appeals of the appellants.

Summary

Issues:
- Irregular CENVAT credit availed on capital goods
- Eligibility for credit of duty paid on storage tanks and cryogenic vessels
- Interpretation of rules under CENVAT Credit Rules, 2004

Analysis:
The judgment by the Appellate Tribunal CESTAT Bangalore involved the appeal against the rejection of appeals by the Commissioner (A) regarding irregular CENVAT credit availed on capital goods. The appellant, engaged in manufacturing liquid oxygen and related products, had procured goods for which the Department alleged irregular credit availed. The Department contended that the goods were not used in or in relation to the manufacture of final products. The appellant argued that the goods were used for taxable services and as packing material, thus eligible for duty credit. The Commissioner (A) had held that the credit availed on vertical storage tanks and portable cryogenic vessels was irregular as they were not used in the factory for manufacturing final products. The Commissioner also rejected the argument that the vessels were used for packing. The appellant's reliance on a previous case was deemed inapplicable. The judgment emphasized that the containers were not considered inputs as per the rules. The AR argued that the case was a clear instance of wrong credit availed on capital goods. The Tribunal upheld the Commissioner's decision, citing that the appellant could not introduce new arguments at this stage, leading to the dismissal of all four appeals.

The key issue revolved around the eligibility of the appellant for duty credit on specific goods under the CENVAT Credit Rules, 2004. The Tribunal analyzed the usage of vertical storage tanks and portable cryogenic vessels by the appellant and whether they qualified as capital goods under the rules. The Commissioner (A) had previously denied the credit, stating that the goods were not used in the manufacturing process. The appellant's argument that the goods were used for taxable services and as packing material was refuted by the Commissioner, emphasizing the lack of inclusion in the assessable value. The Tribunal concurred with the Commissioner's findings, highlighting the importance of adhering to the rules and the inadmissibility of introducing new arguments during the appeal. Consequently, the appeals were dismissed based on the established interpretation of the rules and the specific usage of the goods in question.

Overall, the judgment provided a detailed analysis of the appellant's contentions regarding the irregular CENVAT credit availed on capital goods. The Tribunal carefully considered the arguments presented by both parties, focusing on the specific usage of the goods in question and their alignment with the provisions of the CENVAT Credit Rules, 2004. The Commissioner's decision to reject the appeals was upheld based on the lack of compliance with the rules and the failure to demonstrate the goods' direct relation to the manufacturing process. The judgment underscored the importance of adhering to established rules and procedures in claiming duty credits, ultimately leading to the dismissal of the appeals.