2018 (2) TMI 458 - AT - Central Excise

CENVAT credit - capital goods/inputs - storage racks - Revenue denied the credit on the ground that the said storage racks are neither capital goods nor inputs for the appellant s final products and as such, benefit cannot be extended to them - Held that - Tribunal in the case of M/s. Banco Products (India) Ltd. Vs Commissioner 2009 (2) TMI 101 - CESTAT AHMEDABAD , has held that the steel rack used for raw material storage were held to be an integral part of the manufacturing activity and hence cenvatable - appeal allowed - decided in favor of appellant.

Summary

Issues:
Denial of Cenvat credit on storage racks used for raw materials in manufacturing activities.

Analysis:
The appellants, engaged in manufacturing construction and mining equipments, sought Cenvat credit for duty of excise paid on storage racks used for raw materials. Revenue denied the credit, contending that the racks were not capital goods or inputs for the final products, leading to a demand of around &8377; 1,79,228, along with interest and penalty.

The original adjudicating authority's decision, upheld by the Commissioner (Appeals), was challenged by the appellants. The appellate authority referred to a Tribunal decision in a similar case, stating that the racks were not cenvatable. However, subsequent cases before different benches of the Tribunal held that storage racks used for raw material storage were integral to the manufacturing process, allowing for Cenvat credit. The decision in the case of M/s. Kosi Plast P. Ltd. distinguished the earlier ruling and aligned with the Larger Bench decision in M/s. Banco Products (India) Ltd., emphasizing the racks' importance in the manufacturing process.

Considering the consistent Tribunal decisions establishing the racks as essential for manufacturing activities, the presiding member set aside the impugned order and allowed the appeal, granting consequential relief to the appellant. The judgment was dictated and pronounced in open court.