2008 (1) TMI 214 - AT - Central Excise

Manufacture of Cane Sugar, Molasses & DEA - whether Cenvat credit is admissible on HREC Sheet, G.P.Sheet and Plates as capital goods u/r 2(b) of CCR - functional use of the impugned goods would indicate that these are used as components, spares or accessories for repair and maintenance or for manufacture and fabrication of the machineries, which in turn are used for the manufacture of sugar and molasses credit allowed assessee s appeal allowed

Summary

Issues:
Admissibility of Cenvat credit on specific items as "capital goods" under Cenvat Credit Rules, 2002.

Analysis:
The appeal challenged an order-in-appeal where the penalty was set aside, but the disallowance of Modvat credit was upheld. The appellants, engaged in manufacturing Cane Sugar, Molasses, and DEA, questioned the admissibility of Cenvat credit on HREC Sheet, G.P. Sheet, and Plates under Rule 2(b) of Cenvat Credit Rules, 2002. The functional uses of these items were detailed, indicating their role in the manufacturing process. The Tribunal referred to previous cases where similar items were deemed eligible for Cenvat credit, establishing a precedent.

The Tribunal analyzed the functional use of the impugned goods, concluding that they were essential components for repair, maintenance, or manufacturing machinery used in sugar and molasses production. Citing various cases, including decisions by the Tribunal and the Rajasthan High Court, the Tribunal affirmed that items like Plates, Sheets, and Angles qualify as capital goods eligible for Modvat credit. The Tribunal dismissed Revenue's reliance on a previous case, emphasizing that specific uses of the items were provided in this instance, supporting their eligibility for Cenvat credit under Rule 2(b)(iii).

Based on the discussions and case law references, the Tribunal held that the Cenvat credit of Rs.1,39,113/- was admissible to the appellants. The appeal was allowed, affirming the eligibility of the appellants for the credit. The Tribunal's decision was pronounced in the open court, settling the matter in favor of the appellants.