2017 (12) TMI 1306 - AT - Central Excise

CENVAT credit - locomotive - denial on the ground that locomotive is not falling under the definition of capital goods - Held that - Since locomotive in this case is considered as an input for the purpose of availment of Cenvat benefit, the Department cannot deny such benefit on the ground that locomotive is not defined as capital goods under the cenvat statue - Since the Department has not disputed the duty paid character of the subject goods i.e. locomotive and its receipt and utilization within the factory premises of the appellant, Cenvat credit cannot be denied on the procedural ground that taking of such credit under capital goods is not proper and justified - appeal allowed - decided in favor of appellant.

Summary

Issues: Denial of Cenvat Credit on locomotive under the definition of capital goods.

Analysis:
The judgment revolves around the denial of Cenvat Credit of Central Excise duty paid on a locomotive, with the authorities contending that it does not fall under the definition of capital goods as per the Cenvat Credit Rules, 2004. The appellant's advocate cited a previous case where the Tribunal extended the Cenvat facility on locomotive, treating it as an input. On the contrary, the Revenue argued that a locomotive does not qualify as capital goods under the Cenvat statute, specifically Chapter 86. The Tribunal, after hearing both sides and examining the records, referred to the previous case of Mangalam Cement Ltd. where locomotive was considered an input for Cenvat benefit. The Tribunal emphasized that under the Cenvat regime, credits on both inputs and capital goods can be used for paying Central Excise duty on manufactured products. Additionally, a precedent involving lubricants as capital goods but treated as inputs for Cenvat benefit was mentioned. Since the Revenue did not contest the duty paid nature of the locomotive and its use within the factory, the Tribunal ruled that denying Cenvat credit on procedural grounds was unjustified.

The Tribunal concluded that the impugned order lacked merit and proceeded to allow the appeal in favor of the appellant, setting aside the previous decision. The judgment highlights the interpretation of capital goods under the Cenvat Credit Rules, emphasizing the broader scope of inputs eligible for Cenvat benefits beyond strict definitions, based on precedents and the utilization of credits for excise duty payments on manufactured goods.