2017 (7) TMI 52 - AT - Central Excise

CENVAT credit - dumpers and locomotive - manufacturer of Cement - Held that - reliance was placed in the case of COLLECTOR OF CENTRAL EXCISE Versus RAJASTHAN STATE CHEMICAL WORKS 1991 (9) TMI 73 - SUPREME COURT OF INDIA , where it was held that dumpers tippers which are used within the factory will be entitled to Cenvat credit as capital goods - credit allowed. CENVAT credit - locomotives - Held that - reliance placed in the case of Commissioner of Central Excise, Customs & Service Tax, BBSR-I Versus M/s. Bhusan Steel Ltd. 2012 (10) TMI 306 - CESTAT, KOLKATA , where it was held that diesel locomotive used to carry molten metals in torpedo ladle car in the process of manufacturing of iron and steel products in the integrated steel plant, having railway siding within the factory premises and laid down lines within the factory connecting one plant to another plant for movement of raw material, semi-finished and finished goods, Cenvat credit of duty paid on the diesel locomotive is admissible in terms of Rule 3 of Cenvat Credit Rules, 2004 - credit allowed. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Entitlement to Cenvat credit on dumpers and locomotive for manufacturing cement.

Analysis:
1. The appellant claimed Cenvat credit on dumpers and locomotive used in their cement manufacturing process. The Adjudicating Authority rejected the claim without issuing a show cause notice, leading to an appeal before the Commissioner (Appeals).
2. The Commissioner (Appeals) remanded the case to the Assistant Commissioner, who again rejected the claim in the second round, prompting the appellant to file another appeal. The appellant argued that the dumpers and locomotive should be considered inputs under Rule 2(k) of the Cenvat Credit Rules, 2004.
3. The Commissioner (Appeals) rejected the appeal, stating that only goods used in or in relation to the manufacture of final goods within the factory can be treated as inputs. Dumpers and locomotive engines, falling under Chapter Heading No.87 and 86 respectively, were not considered capital goods or inputs as per the specified chapters.
4. The appellant cited precedents, including a Division Bench ruling and a Supreme Court case, to support their claim that dumpers and tippers used within the factory premises are entitled to Cenvat credit as capital goods. They also referenced a Tribunal ruling allowing Cenvat credit on a diesel locomotive used within factory premises for carrying molten metals in the manufacturing process.
5. After considering the arguments, the Tribunal found that the appellant's case aligned with the precedents cited. Following the Tribunal and Supreme Court rulings, the appeal was allowed, and the impugned order was set aside. The appellant was granted consequential benefits as per the law.

This detailed analysis covers the issues involved in the judgment regarding the entitlement to Cenvat credit on dumpers and locomotive for cement manufacturing, the progression of the case through appeals, the legal interpretations of inputs and capital goods, as well as the application of precedents in reaching the final decision.