2019 (3) TMI 411 - AT - Central Excise

CENVAT Credit - inputs or capital goods? - M.S. plates - Held that - In this case, the fact is not under dispute that the duty paid plates were received and used by the appellant in its registered factory premises. Since the plates are used in the mason manufacturing cement bricks and blocks within the factory of the manufacturer of final product, the same should clarify as input as per the definition provided in the rules. Further, it has not been specifically alleged by the authorities below that the disputed plates are falling under the excluded category provided in such definition clause. Thus the disputed plates should merit consideration as input for the purpose of availment of the Cenvat benefit. Credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Classification of disputed plates as capital goods or inputs for Cenvat Credit.
2. Applicability of Rule 2(a) and Rule 2(k) of the Cenvat Credit Rules, 2004.
3. Interpretation of the definition of capital goods and inputs under the Cenvat Credit Rules.

Analysis:
1. The appellant, engaged in manufacturing Ready Mix Concrete, availed Cenvat Credit for central excise duty paid on M.S. plates during the disputed period. The department disputed this credit, leading to an adjudication order confirming the demand and imposing a penalty. The Commissioner (Appeals) upheld this decision, stating that the plates, used as platforms by the appellant, cannot be considered as capital goods or inputs. The appellant appealed to the Tribunal challenging this decision.

2. The appellant argued that the disputed plates function as fixtures in the manufacturing process, making them parts of machinery and qualifying as capital goods as per the Cenvat statute. Additionally, since the plates are used within the factory, they should be considered as inputs for Cenvat benefits. The Revenue, however, supported the findings of the impugned order.

3. The Tribunal examined Rule 2(a) and Rule 2(k) of the Cenvat Credit Rules, 2004. Rule 2(a) defines capital goods to include specific chapters and components, spares, and accessories of certain goods. The disputed plates, classified under heading 72 of the CETA, do not fall within the eligible chapters for consideration as capital goods. Moreover, based on their use, they do not qualify as components, spares, or accessories of the specified chapters, leading to the conclusion that the plates cannot be deemed as capital goods.

4. Regarding the definition of "input" under Rule 2(k), all goods used in the factory by the manufacturer, except for excluded items, are considered inputs for Cenvat benefits. As the duty-paid plates were used in manufacturing cement bricks and blocks within the factory, they should be classified as inputs. The authorities did not allege that the plates fell under the excluded category, further supporting their classification as inputs.

5. Consequently, the Tribunal found no merit in the impugned order's denial of Cenvat Credit to the appellant based on the classification of the disputed plates. The order was set aside, and the appeal was allowed in favor of the appellant.