2008 (2) TMI 157 - AT - Central Excise

Assessee challenges denial of credit on material handling equipments i.e. trolleys - Revenue challenge the grant of credit on plastic crates Trolleys can t be classified u/h 94.03 as furniture but classifiable u/h 84.28 as material handling equipment hence cenvat credit is allowed on trolleys - assessee will reverse the credit taken on plastic crates penalty is not imposable as inadmissible credit on structural items reversed prior to issue of SCN

Summary

Issues:
1. Denial of CENVAT credit on material handling equipments (trolleys).
2. Penalty imposition on the assessee.
3. Grant of CENVAT credit on plastic crates to the assessee.

Analysis:
Issue 1: The denial of CENVAT credit on material handling equipments, specifically trolleys, was challenged by the assessee. The lower authorities had denied the credit based on the classification of the equipments under Heading 94.03 in the invoices, which was deemed ineligible for credit. However, the assessee contended that trolleys should be classified under Heading 84.28, making them eligible for CENVAT credit. The Managing Director of the supplier confirmed this classification, supported by an affidavit and a letter. The tribunal found that trolleys indeed fell under Heading 84.28, not under furniture as per Heading 94.03. As there was no contrary evidence from the department, the tribunal ruled in favor of the assessee, allowing the CENVAT credit on material handling equipments.

Issue 2: The penalty imposed on the assessee was related to their admitted liability concerning structural items. However, the CENVAT credit on these items had been reversed before the show-cause notice was issued. Therefore, the tribunal held that the penalty could not be sustained, and the assessee's appeal was allowed in this regard.

Issue 3: The Revenue's appeal contested the grant of CENVAT credit on plastic crates to the assessee. The tribunal noted that the amount in question was Rs. 5,867. The assessee agreed to reverse this credit voluntarily. Consequently, the Revenue's appeal succeeded on this point, and the denial of credit on plastic crates was upheld. The plea for enhancing the penalty was dismissed following the decision made in the assessee's appeal. The tribunal pronounced the operative part of the order on the specified date, resolving the issues raised by both parties comprehensively.