2017 (8) TMI 784 - AT - Central Excise

CENVAT credit - department was of the view that appellants are not eligible for availing credit on the mixer-grinder assembly received by them - whether the appellants are eligible to avail credit on the mixer-grinder assembly received by them from M/s. Videocon Appliances Ltd.? - Held that - It is not disputed that at the time of clearance of the combi pack containing both refrigerator and mixer-grinder, the appellant have paid excise duty on the composite price. So also after receiving the mixer-grinder assembly, the appellants have unpacked the same and fixed power cord and wiring harness in order to complete the product. In such a case, the credit availed on the mixer-grinder assembly / parts by the appellant, in our view, appears to be legal and proper - reliance placed in the case of COMMR. OF C. EX., CUS. & ST., DAMAN Versus PRIME HEALTH CARE PRODUCTS 2010 (10) TMI 881 - GUJARAT HIGH COURT , where it was held that Provisions contained in Section 2(f) of the Central Excise Act, 1944 which defines the word manufacture . It includes any process in relation to the goods specified in the Third Schedule, which includes packing or re-packing of such goods in a unit container - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether the appellants are eligible to avail credit on the mixer-grinder assembly received from suppliers.

Analysis:
The appellants, engaged in manufacturing various products, received mixer-grinders from suppliers along with refrigerators. The department alleged that the appellants were not eligible to avail credit on the mixer-grinder assembly received. Show cause notice was issued, and the demand was confirmed by the original authority and upheld by the Commissioner (Appeals), leading to the current appeal.

The appellant's counsel argued that the mixer-grinders were not given free of cost but were part of a composite price with the refrigerators. The appellant assembled the refrigerators and connected the mixer-grinders before packing them together. The appellant paid excise duty on the composite price of the combi pack containing both items. The department contended that the mixer-grinders were assessed as finished goods and not eligible for credit.

After considering both sides, the Tribunal examined the invoices and relevant documents. The appellant's counsel clarified that the mixer-grinder was not shown as parts of the refrigerator but was a separate assembly. The Tribunal found the credit availed on the mixer-grinder assembly to be legal and proper. Reference was made to a judgment of the Hon'ble High Court of Gujarat in a similar case, supporting the appellant's argument.

The Tribunal concluded that the demand raised by denying the credit was unsustainable. The impugned order was set aside, and the appeal was allowed with consequential relief, if any. The judgment highlighted that the appellant's explanation regarding the invoices and the assembly process was convincing, leading to the decision in favor of the appellants.

This detailed analysis of the judgment showcases the arguments presented by both parties, the examination of relevant documents, and the legal principles applied to determine the eligibility of the appellants to avail credit on the mixer-grinder assembly received from suppliers.