2017 (2) TMI 611 - AT - Central Excise

CENVAT credit - tyres used for dumpers - denial on the ground that the tyres used for the dumpers do not fall within the definition of capital goods - Held that - The Division Bench of the Tribunal in the recent decision rendered in the case of M/s Aditya Cement 2016 (9) TMI 1127 - CESTAT NEW DELHI had held that tyres are necessary accessory to dumpers which are capital goods used in the manufacturing activity and integrally connected in the manufacture of final products - It was further, held that the credit on tyres of dumpers is admissible under the category of inputs - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Allegation of irregular availment of credit under the category of capital goods on duty paid on tyres used for dumpers.
2. Eligibility of credit on tyres used for dumpers under the category of inputs.

Analysis:

Issue 1: Allegation of irregular availment of credit under the category of capital goods on duty paid on tyres used for dumpers
The appellants, engaged in the manufacture of Cement and Cement clinker, were issued a Show Cause Notice alleging irregular availment of credit under the category of capital goods on the duty paid on tyres used for dumpers during a specific period. The original authority dropped the proceedings, stating that the appellant is eligible for credit. However, the Department appealed the decision, and the Commissioner (Appeals) held that the tyres used for dumpers do not fall within the definition of capital goods, thereby disallowing the credit. The appellants challenged this decision before the Tribunal.

Issue 2: Eligibility of credit on tyres used for dumpers under the category of inputs
The appellant argued that the credit on tyres used for dumpers should be eligible under the category of inputs, not capital goods. The appellant contended that the tyres are essential inputs for the dumpers used to transport limestone from mines to the factory. The appellant relied on a previous decision in the case of M/s. Aditya Cement vs. CCE, Jaipur-II [2016-TIOL-2582-CESTAT-DEL]. The Tribunal, after considering the arguments from both sides, referred to the case law and held that tyres, being necessary accessories to dumpers, which are considered capital goods used in manufacturing activities and are integrally connected to the production of final products, should be eligible for credit under the category of inputs. Citing the decision in M/s. Aditya Cement, the Tribunal set aside the impugned order, allowing the appeal with any consequential reliefs.

In conclusion, the Tribunal ruled in favor of the appellants, holding that the credit on tyres used for dumpers is admissible under the category of inputs, overturning the decision of the Commissioner (Appeals) and providing consequential reliefs as necessary.