2009 (10) TMI 346 - AT - Central Excise

Shop floor equipment- Revenue filed this Appeal against the impugned Order whereby the Commissioner (Appeals) set aside the demand of duty in respect of the capital goods manufactured or fabricated in the factory of production and also set aside the Order denying credit in respect of the inputs used in the manufacture of capital goods in the factory, which are further used in the manufacture of final products. Held that- The Notification exempts the specified capital goods manufactured in the factory of production. The goods are classifiable under Chapter 94 of the Tariff, which is not disputed by the Revenue and this Chapter is not excluded from the benefit of the Notification. The definition, Capital Goods , during the relevant period, includes plant, machine or machinery used in or in relation to the manufacture and processing of the goods. The definition also includes parts, accessories and components of the plant, machine, machinery etc. These item in question are Shop Floor Equipment which is used in the factory of production in or in relation to the manufacture of final product. In view of this, I find no infirmity in the impugned Order. The Appeal is dismissed.

Issues:
1. Appeal against the demand of duty on capital goods manufactured in the factory.
2. Denial of credit for inputs used in the manufacture of capital goods.
3. Classification of items as 'Shop Floor Equipments' or 'Steel furniture'.
4. Eligibility of goods for exemption under Notification No. 67/95-C.E.

Analysis:

1. The appeal was filed against an order setting aside the duty demand on capital goods manufactured in the factory. The Commissioner held that the disputed items like steel cabinets, tables, benches, racks, and tool holders were not meant for aesthetic or decorative use but for specific industrial purposes. These items were heavier, costlier, and not typical furniture. They were categorized as tailor-made products for shop floor operations, not for sale. The Commissioner referred to a previous judgment by the CEGAT Special Bench to support the classification of these items as 'shop floor equipment' rather than 'steel furniture'.

2. The Revenue contended that the items were 'Shop Floor Equipments' used in the factory but were not eligible for exemption under Notification No. 67/95-C.E. as they were considered storage devices with no direct relation to the manufacture of final products. However, the Tribunal found that the items fell under Chapter 94 of the Tariff, classified as 'Capital Goods'. The definition during the relevant period included machinery and components used in manufacturing. Since the disputed items were 'Shop Floor Equipment' used in the production process, they were eligible for the exemption under the Notification.

3. The Tribunal dismissed the appeal, upholding the Commissioner's order that the disputed items were indeed 'Shop Floor Equipment' used in the factory for manufacturing final products. The Tribunal found no fault in the classification of these items as capital goods under Chapter 94 of the Tariff. Therefore, the demand for duty on these items was set aside based on their usage in the production process.

4. In conclusion, the Tribunal upheld the Commissioner's decision to set aside the demand of duty on capital goods and allow the credit for inputs used in their manufacture. The items in question were classified as 'Shop Floor Equipment' essential for the manufacturing process, making them eligible for exemption under Notification No. 67/95-C.E. The appeal was dismissed, and the Cross Objection filed by the Respondent was also disposed of in the same terms.

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