2017 (4) TMI 1126 - AT - Central Excise

CENVAT credit - input - Raw Die Blocks and Inserts - department entertained a view that Raw Die Blocks and Inserts used to manufacture Dies which are in turn used in the production of final products is not eligible for credit for the reason that the appellants are availing exemption of duty on the intermediate goods namely Dies under N/N. 67/95-CE dt. 16.03.95 - Held that - as per the Explanation-2 to the definition of inputs , it can be seen that inputs include any goods which are further used in the manufacture of capital goods . Appellants have availed the exemption notification treating the intermediate product as capital goods . The credit has been availed on subject items treating them as inputs used in the manufacture of capital goods - credit allowed - decided in favor of appellant.

Summary

Issues:
Disallowance of credit on Raw Die Blocks and Inserts as inputs for the manufacture of Dies leading to the production of finished excisable products.

Analysis:
The appellants, manufacturers of forgings, availed cenvat credit on Raw Die Blocks and Inserts used in the production of Dies for manufacturing steel forgings. The department disallowed the credit, citing exemption of duty on Dies under Notification No.67/95-CE. The original authority confirmed the demand, leading to the appeal before the Tribunal.

The appellant's counsel argued that since the appellants paid duty on Raw Die Blocks and Inserts, and these items were used in manufacturing Dies for producing steel forgings, they should be eligible for credit. Referring to the definition of capital goods and inputs, the counsel emphasized that the subject items fell under the definition of inputs, especially under Explanation-2. The counsel also highlighted previous judgments supporting their position.

On the other hand, the Revenue contended that since the Dies, manufactured using the inputs, were duty-exempt, the appellants were not entitled to credit on the inputs. The Revenue relied on past judgments to support their stance.

The Tribunal deliberated on the issue of whether the appellants could claim credit on Raw Die Blocks and Inserts used for manufacturing Dies for the final products. Acknowledging the exemption on Dies, the Tribunal interpreted the definition of inputs to include goods used in the manufacture of capital goods. Referring to a relevant judgment, the Tribunal concluded that the appellants were eligible for credit. Consequently, the impugned order disallowing credit was set aside, and the appeal was allowed with any consequential relief as per the law.

In conclusion, the Tribunal ruled in favor of the appellants, allowing them to claim credit on Raw Die Blocks and Inserts used in the production process, overturning the earlier decision disallowing the credit.