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2016 (8) TMI 1127 - AT - Central ExciseDenial of CENVAT credit on capital goods - tyres and dumpers - capital goods in terms of Rule 2(a) of Cenvat Credit Rules 2004 - whether denial of cenvat credit on the ground that tyres and dumpers are not capital goods justified? - Held that - the decision in the case of MADRAS CEMENTS LTD. Versus COMMISSIONER OF C. EX. CHENNAI 2010 (7) TMI 179 - SUPREME COURT relied upon where it was held that capital goods used in captive mines are eligible for Cenvat Credit. The respondent manufacturer is having their own captive mine which constitute one integrated unit. The factory of manufacturer should by extension mean the captive mine of the manufacturer from where the ores are sourced. The material handling equipments are for moving the raw material which are integrally connected with the manufacture of the final product. The Board vide Circular dated 2.12.1996 clarified that all parts components accessories which are to be used with capital goods and classifiable under any Chapter heading are eligible for Modvat Credit. It is to be noted that the application of scope of capital goods are not different from the erstwhile Modvat Rules in the present Cenvat Credit Rules 2004. The decision in the case of MALABAR CEMENTS LTD. Versus COMMISSIONER OF CENTRAL EXCISE COCHIN 2001 (12) TMI 737 - CEGAT BANGALORE where the Tribunal allowed the cenvat credit on dumpers as capital goods under erstwhile Rule 57Q similar to Rule 2(a) of Cenvat Credit Rules 2004 . CENVAT credit allowed on tyres and dumpers - appeal rejected - decided against Revenue.
Issues:
1. Eligibility of cenvat credit on tyres and dumpers under the category of "capital goods" as per Rule 2(a) of Cenvat Credit Rules, 2004. Analysis: The appeal before the Appellate Tribunal CESTAT NEW DELHI was brought by the Revenue against the order of the Commissioner of Central Excise, Bhopal, dated 20.2.2008. The issue revolved around the eligibility of cenvat credit on tyres and dumpers availed by the respondents, who are engaged in the manufacture of copper concentrate. The Revenue contended that these goods do not fall under the definition of "capital goods" as per Rule 2(a) of the Cenvat Credit Rules, 2004, and initiated proceedings to recover the credit. The original authority had allowed the credit, leading to the appeal by the Revenue. During the proceedings, the Revenue argued that dumpers, classified under Chapter 87 of the Central Excise Tariff Act, 1985, and the tyres used for such dumpers, classified under Chapter 40, are not eligible for cenvat credit as they do not meet the criteria of "capital goods." The Revenue relied on a Tribunal decision and a Supreme Court decision to support their contention that the items in question do not qualify as capital goods under the Cenvat Credit Rules, 2004. However, the Tribunal, after detailed examination, referred to previous Supreme Court decisions in Vikram Cements and Madras Cements Ltd., which held that capital goods used in captive mines are eligible for cenvat credit. The Tribunal noted that the material handling equipments, such as dumpers, are essential for the integrated manufacturing process of the final product, especially when the manufacturer has their own captive mine. The Tribunal also highlighted the continuity in the application of the concept of capital goods from the erstwhile Modvat Rules to the current Cenvat Credit Rules, 2004, emphasizing that all parts and components used with capital goods are eligible for credit. Citing various precedents, including decisions in MSP Steel and Power Ltd., Malabar Cements Ltd., and Tata Steels Ltd., the Tribunal concluded that the dumpers and tyres in question qualify as capital goods under the Cenvat Credit Rules, 2004. The Tribunal dismissed the appeal by the Revenue, upholding the eligibility of cenvat credit on dumpers and tyres used by the respondents in their manufacturing process. In the final order pronounced on 29.08.2016, the Tribunal dismissed the appeal by the Revenue and disposed of the cross-objection filed by the respondents, based on the analysis and discussion of the eligibility of cenvat credit on dumpers and tyres as capital goods.
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