2018 (2) TMI 455 - AT - Central Excise

CENVAT credit - inputs/capital goods - PTFE, Corrugate Hose Pipe, Anyhydrous Therminol 55, Fuel Pil, Additives, Well Glass fitting, Steam Joining sheet, Vee Belt, Epoxy Primer, Gland Packing Jointing Sheet etc. - Held that - the subject goods are in the nature of spare parts/ components/ accessories or are used for maintenance of capital goods which are used in the manufacturing activity by the appellant. Therefore the same are eligible for credit as Capital goods. The Appellant s reliance upon Larger bench judgment in case of Banco Products (India) Ltd. Vs. CCE, Vadodara 2009 (2) TMI 101 - CESTAT AHMEDABAD is absolutely applicable to the present case, where it was held that crates used for transportation of finished goods in to bonded store room, are eligible for credit as input. The subject goods fall within the definition of capital goods being spares/components/accessories of capital goods - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues: Disallowance of credit on capital goods

Analysis:
1. The Appellant, a manufacturer of excisable goods, availed Cenvat credit on various goods like PTFE, Corrugate Hose Pipe, Anhydrous Therminol 55, Fuel Pil, Additives, Well Glass fitting, Steam Joining sheet, Vee Belt, Epoxy Primer, Gland Packing Jointing Sheet, etc., during a specific period. The dispute arose when the credit was disallowed on the grounds that these goods were neither capital goods nor inputs.

2. A show cause notice was issued proposing to deny the Cenvat credit availed on the mentioned goods, and after adjudication, the demand along with interest and penalty was confirmed against the Appellant. The Commissioner (Appeals) upheld the decision, leading to the appeal before the Tribunal.

3. The Appellant argued that the impugned goods qualify as capital goods as they are spares/components/accessories of capital goods. The contention was that the order went beyond the scope of the show cause notice as it was based on the usage of goods not being produced. The Appellant maintained that the goods were eligible for credit.

4. On the other hand, the revenue authority reiterated that the subject goods did not meet the definition of capital goods and thus were not eligible for credit.

5. The Tribunal considered both arguments and examined the details provided by the Appellant regarding the usage of the impugned goods in capital goods/machinery within the factory.

6. After reviewing the details of usage provided by the Appellant, the Tribunal concluded that the subject goods were indeed spare parts/components/accessories used for the maintenance of capital goods in the manufacturing process. Therefore, the Tribunal held that the Appellant was eligible for the credit on these goods as capital goods.

7. The Tribunal distinguished a previous judgment cited by the Appellant, stating that it was not applicable in the present case. Instead, the Tribunal found the reliance on another judgment to be relevant and applicable to the current scenario.

8. Consequently, the Tribunal set aside the impugned order, allowing the appeal in favor of the Appellant and granting any consequential reliefs deemed necessary.

Conclusion:
The judgment by the Appellate Tribunal CESTAT, Mumbai ruled in favor of the Appellant, determining that the disputed goods qualified as capital goods and were eligible for the Cenvat credit. The decision highlighted the importance of considering the usage and nature of goods in relation to the definition of capital goods, ultimately leading to the allowance of the appeal and relief for the Appellant.