2017 (12) TMI 497 - AT - Central Excise

CENVAT credit - vehicles/truck chassis falling under chapter 87 of CETA 1985 - Held that - the dumpers/tippers/vehicles in question have been used by way of material handling system for moving the mined ore from the base of the mine to the stockyard at surface which is located within the mine area - the dumpers and tippers in the case of the present respondent are entitled to Cenvat credit being used as part of the material handling system - such mined ore is used by the appellant in their factory for production of dutiable outputs - credit allowed - appeal dismissed - decided against Revenue.

Summary

Issues: Allowability of Cenvat credit on vehicles/truck chassis under Chapter 87 of CETA 1985 during 2009-10 to 2012-13.

Analysis:
1. Issue of Cenvat Credit Eligibility: The appellant availed Cenvat credit on vehicles/truck chassis under Chapter 87 as capital goods. The revenue contended that these vehicles did not meet the definition of capital goods as per Rule 2(A) of CCR 2004. The Show Cause Notice proposed disallowing the credit, leading to adjudication and imposition of penalty by the revenue.

2. Ld. Commissioner (Appeals) Decision: The Ld. Commissioner (Appeals) allowed the appeal, noting that the vehicles were received and used by the appellant for transportation of mined goods within the captive mines. The appellant argued that the vehicles were part of the raw material handling system falling under Chapter 84/85, making them eligible for Cenvat credit.

3. Revenue's Appeal: The Revenue appealed, arguing that the vehicles, although used for raw material handling, did not qualify as capital goods under Rule 2(A) of CCR 2004. They relied on a Tribunal ruling to support their contention.

4. Respondent's Defense: The respondent's counsel distinguished the Tribunal ruling cited by the Revenue, emphasizing that the vehicles were essential for transporting mined goods within the mines to the surface for further processing. They compared the use of vehicles to a conveyor belt system, asserting that the vehicles were part of the material handling system and qualified as capital goods under Rule 2(A) of CCR 2004.

5. Final Decision: After considering the arguments, it was held that the vehicles were integral to the material handling system for transporting mined ore to the surface within the mine area. Since the ore was used in the appellant's factory for production, the vehicles were deemed eligible for Cenvat credit. The appeal by the Revenue was dismissed, upholding the impugned order in favor of the respondent. Consequential benefits were granted to the respondent as per the law.