2019 (12) TMI 787 - AT - Central Excise

CENVAT credit - input - grinding wheel used for the finishing of their final products - HELD THAT - The issue decided in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS BOTLIBOI CO. LTD. 2009 (7) TMI 727 - GUJARAT HIGH COURT where it was held that the grinding wheels are definitely parts of the grinding machine used by the respondent assessee and they have to be considered as inputs under Rule-57A of the Central Excise Rules. By respectfully following the aforesaid decision of the Hon ble High Court, the impugned Order is set aside - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues: Alleged irregular availment of Cenvat Credit against grinding wheels used for finishing final products.

Analysis:

1. Issue of Cenvat Credit Eligibility: The appellant, engaged in manufacturing coil spring & ERC, faced a Show Cause Notice for irregular Cenvat Credit availment against grinding wheels. The Department contended that grinding wheels did not qualify as inputs. The Adjudicating Authority upheld this view, imposing duty, interest, and penalty. On appeal, the Ld. Commissioner (Appeals) affirmed the decision, leading to the current appeal before the Tribunal.

2. Arguments: The appellant's consultant argued that grinding wheels are integral to the grinding machine, thus constituting inputs. Citing Tribunal decisions and the Gujarat High Court's judgment in CCE Vs. Botliboi & Co. Ltd., the consultant supported the eligibility of grinding wheels as inputs.

3. Precedent and Legal Interpretation: The Tribunal noted that the issue was settled by the Gujarat High Court in the Botliboi case. The High Court's ruling emphasized the interpretation of Rule-57A of the Central Excise Rules, focusing on the definition of inputs for Modvat credit eligibility. The judgment referenced various cases to establish that items essential for manufacturing processes, even if part of machinery, qualify as inputs under Rule-57A.

4. Judicial Interpretation: The Gujarat High Court's decision, supported by previous Tribunal and Supreme Court rulings, clarified that components like grinding wheels, integral to machinery and crucial for the manufacturing process, are considered inputs. The Court's analysis emphasized that items contributing to the manufacturing process and indispensable for the final product's creation should be eligible for Modvat credit.

5. Decision and Outcome: Upholding the Gujarat High Court's judgment, the Tribunal set aside the impugned order, allowing the appellant's appeal with consequential relief. By aligning with the legal interpretation emphasizing the importance of components like grinding wheels in the manufacturing process, the Tribunal ruled in favor of the appellant, highlighting the eligibility of such components as inputs for Cenvat Credit.