2018 (2) TMI 6 - AT - Central Excise

CENVAT credit - capital goods/inputs - Diesel Locomotive used for conveyance of the raw materials and finished goods within the factory premises - Held that - the appellants have availed the CENVAT Credit on diesel locomotive, which is admittedly used for handling of raw material/finished goods in the factory of the appellant - there is no dispute that the said goods is used in or in relation to the manufacture of the final product. Therefore, it qualifies as an input and credit is admissible - appeal allowed.

Summary

Issues:
Availment of CENVAT Credit on Diesel Locomotive as capital goods, denial by adjudicating authority, appeal before Tribunal, admissibility of credit as input, reliance on previous judgments, findings of the impugned order, handling of raw materials/finished goods, definition of capital goods, use of diesel locomotive in manufacturing process, admissibility of CENVAT Credit, consideration of previous Tribunal decisions, admissibility of credit on MBC sleepers, limitation issue, disclosure of credit details in ER-1 returns, suppression of facts, mala fide conduct, extended period invocable or not.

Analysis:
The case involved the appellants availing CENVAT Credit on a Diesel Locomotive under capital goods, which was denied by the adjudicating authority. The Commissioner (Appeals) upheld this disallowance, leading the appellants to approach the Tribunal. The appellant argued that the credit was availed under the belief that the locomotive was material handling equipment essential for the manufacturing plant. Additionally, they contended that even if the diesel locomotive did not qualify as capital goods, it should be considered an admissible input due to its undisputed use in the manufacturing process. The appellant cited previous judgments to support their case.

Upon careful consideration, the Tribunal found that the diesel locomotive, although not covered under capital goods as per chapter heading 86, was undeniably used for handling raw materials/finished goods in the factory, making it qualify as an input for which credit was admissible. The Tribunal referred to a previous case involving a similar issue and quoted the findings that supported the admissibility of CENVAT Credit on such essential equipment used in the manufacturing process. The Tribunal highlighted the importance of the diesel locomotive in enhancing the effectiveness of carrying molten metal, crucial for the manufacturing activity, and upheld the view that it was an accessory to capital goods.

In a related issue concerning the admissibility of credit on MBC sleepers, the Tribunal again relied on previous judgments and the appellant's explanations regarding the essential use of the sleepers within the factory for transportation of raw materials and finished goods. The Tribunal found in favor of the appellant, holding that credit was admissible on the sleepers. Additionally, the Tribunal addressed the limitation issue, noting the appellant's disclosure of credit details in ER-1 returns and the absence of evidence proving suppression of facts or mala fide conduct. Consequently, the Tribunal ruled that the extended period was not invocable and set aside the impugned order, allowing the appeal with consequential reliefs.

In conclusion, based on the aforementioned judgments, observations, and legal analysis, the Tribunal held that the diesel locomotive was admissible for CENVAT Credit. As a result, the impugned order was set aside, and the appeals were allowed.