2018 (3) TMI 101 - AT - Central Excise

CENVAT credit - capital goods - drums/barrels - Held that - inputs used in any activity pertaining to manufacturing process would be entitled to CENVAT credit and likewise the definition of capital goods is of sufficiently wide coverage to include storage tanks - There is no dispute that the drums /barrels procured by the appellant and are mobile storage tanks for transporting raw materials from the supplier to the appellant. While this may not conform to the definition of inputs , it is undeniable that these are, therefore, capital goods - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues: Availment of CENVAT credit on drums/barrels procured for transportation of input material.

Analysis:
The issue in the appeals of M/s Tien Yuan (India) Pvt Ltd and the Director of the assessee revolves around the availment of CENVAT credit on drums/barrels procured by them for the transportation of their input material, specifically menthe oil. The Revenue's contention is that these drums/barrels are not packing material as defined in the CENVAT Credit Rules, 2004, as they are used for products manufactured by an entity other than the assessee. The appellant allegedly sent the drums/barrels to their supplier instead of bringing them into their factory, which led to concerns regarding the misuse of documentation and the invocation of the extended period for scrutiny.

The appellant's counsel relied on the decision in Banco Products (India) Ltd. v. Commissioner of Central Excise, Vadodara, which broadened the interpretation of 'in or in relation to manufacture' as defined by the Supreme Court in previous cases, thereby supporting the eligibility of items like plastic crates for credit. The CENVAT Credit Rules, 2004, clearly state that inputs used in any manufacturing activity are eligible for credit, and the definition of 'capital goods' is broad enough to include storage tanks. The drums/barrels in question, serving as mobile storage tanks for transporting raw materials, are deemed capital goods as they are repeatedly utilized until they are scrapped, reinforcing their categorization as such. The lower authority's orders did not raise any concerns about the quantum of credit availed, focusing solely on the eligibility for credit. Given the limited nature of the allegation against the appellant, the denial of eligibility under the CENVAT Credit Rules, 2004, was deemed unsustainable.

In conclusion, both appeals were allowed, and the judgment was pronounced on 29/01/2018.