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2005 (12) TMI 179 - AT - Central Excise
Issues:
Admissibility of input duty credit for plastic crates and bins under Rule 2 of the Cenvat Credit Rules, 2002. Analysis: The appeal before the Appellate Tribunal CESTAT, Chennai questioned the admissibility of input duty credit for plastic crates and bins for the period March-April, 2002 under Rule 2 of the Cenvat Credit Rules, 2002. Despite the absence of representation from the respondents, the appeal was heard. The learned Commissioner (Appeals) had allowed input duty credit based on the interpretation of the expression "in the manufacture of goods" by the Hon'ble Supreme Court in a previous judgment. The Commissioner treated plastic crates as inputs, even though the assessee had not claimed such relief. The Revenue challenged this decision, arguing that machinery or parts were not considered as inputs in the Supreme Court's decision. The assessee contended that the definition of "input" under Rule 2 of the Cenvat Credit Rules, 2002 was broad enough to include goods used in the manufacture of the final product, including plastic crates and bins. The Tribunal referred to a previous case where it was held that plastic crates used as material handling machinery could not be considered inputs under the Cenvat Credit Rules, as they were conventionally regarded as capital goods. The exhaustive list of capital goods specified in the Rules did not include plastic crates. The Tribunal emphasized that the term "input" should be wholly or substantially used-up during the manufacturing process, which was not the case with plastic crates used for material handling. The Tribunal noted that the plea for input duty credit on plastic crates was raised for the first time before the Tribunal, not in the initial responses to show-cause notices or appeals. Based on the precedent and the distinction between inputs and capital goods, the Tribunal set aside the impugned order and allowed the appeal of the Revenue. The judgment highlighted the conventional meaning of "input" and the clear dividing line between inputs and capital goods, emphasizing that plastic crates used for material handling could not be considered inputs under the Cenvat Credit Rules.
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