2022 (7) TMI 521 - AT - Central Excise

CENVAT Credit - capital goods - dutiable finished goods - applicability of Rule 6(4) of CCR or not - HELD THAT - The appellant is entitled to take Cenvat credit on the capital goods, as their finished goods falling under CTH 68109990 are dutiable under the Central Excise Tariff Act. Thus Rule 6(4) of CCR is not attracted. Thus, the show cause notice is mis-conceived. Further, it is rightly held that the appellant have rightly taken Cenvat credit on the capital goods. Credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Whether the appellant rightly took Cenvat credit on capital goods.

Analysis:
The appellant, engaged in manufacturing RCC pipes, availed Cenvat credit on capital goods during April to June 2017. The appellant also removed some capital goods on payment of duty during this period. The revenue contended that the appellant, clearing RCC pipes for a specific project under an exemption notification, was not eligible for Cenvat credit under Rule 6(4) of CCR. A show cause notice was issued proposing to demand Cenvat credit along with interest and penalty.

The show cause notice was adjudicated ex parte, confirming the demand with interest and penalty. The appellant appealed before the Commissioner (Appeals), who partially allowed the appeal by confirming the demand with interest but reducing the penalty amount. The appellant then approached the Tribunal, arguing that their finished products were dutiable under the Central Excise Tariff Act and only exempt for specific projects under a notification, thus justifying the Cenvat credit taken.

After considering the arguments, the Tribunal held that the appellant was entitled to take Cenvat credit on capital goods since their finished goods were dutiable under the Central Excise Tariff Act, not falling under the exemption criteria of Rule 6(4) of CCR. The Tribunal deemed the show cause notice as mis-conceived and allowed the appeal, setting aside the impugned order. The appellant was granted consequential benefits in accordance with the law.

In conclusion, the Tribunal ruled in favor of the appellant, allowing the appeal and confirming their right to Cenvat credit on capital goods, as their finished goods were dutiable under the Central Excise Tariff Act, not falling under the exemption criteria of Rule 6(4) of CCR.