2005 (6) TMI 175 - AT - Central Excise

Summary

Issues:
1. Whether capital goods credit for plastic crates should be allowed.
2. Interpretation of the term "input" under Cenvat Credit Rules.
3. Applicability of previous case law on capital goods credit.
4. Eligibility for input duty credit on plastic crates.

Analysis:
1. The issue in this case revolves around the allowance of capital goods credit for plastic crates. The lower appellate authority had allowed a credit of Rs. 20,800 to the respondents for plastic crates under SH 3923.90. The department appealed against this decision.

2. The ld. Commissioner (Appeals) relied on the Supreme Court's judgment in J.K. Cotton Spinning and Weaving Mills Co. Ltd. v. STO, Kanpur, to interpret the term "in the manufacture of goods." The Commissioner treated the plastic crates as inputs and allowed input duty credit to the assessee based on this interpretation. The respondents argued that the definition of "input" under the Cenvat Credit Rules is broad enough to include goods used in or in relation to the manufacture of final products, which they believed included plastic crates.

3. The Tribunal examined Rule 2(b) of the Cenvat Credit Rules, which specifies "capital goods" eligible for credit. The exhaustive list includes various categories of goods used in the manufacturing process. However, plastic crates did not fall under any of the specified categories, making them ineligible for capital goods credit.

4. The Tribunal concluded that the plastic crates could not be considered as inputs eligible for credit. The judgment highlighted the distinction between capital goods and inputs, emphasizing that inputs should be wholly or substantially used-up during the manufacturing process. As the plastic crates were used as material handling equipment and did not fit the conventional definition of inputs, input duty credit was not applicable. Additionally, the Tribunal noted that the plea for input duty credit was raised for the first time before the Tribunal and was not included in earlier submissions.

In conclusion, the Tribunal set aside the impugned order and allowed the appeal, ruling against the eligibility of capital goods credit and input duty credit for plastic crates in this case.