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2012 (10) TMI 306 - AT - Central ExciseCENVAT Credit on 700 HP Diesel Locomotive - Commissioner (Appeals) allowed the credit - revenue appeal - Held that - Commissioner (Appeal) has given clear and cogent findings that the transportation of molten iron from blast furnace conarc furnace and thereafter to the pig casting machine is an essential part of manufacturing process. Without carriage of such molten metal from one place to another, the manufacturing cannot take place - Recording the concern of the appellant in this regard that the locomotive engines are used usually for pulling the passenger/goods trains that Diesel Locomotive torpedo ladle car carrying molten metal up to 300-350 MT is not only enhances the effectiveness, but without it the handling, and in turn production of finished goods would not be possible. Thus the view of Commr. (A) holding Diesel locomotive as accessory of capital goods is upheld. No merit in the appeal filed by department - in favour of assessee.
Issues:
1. Classification of Diesel Locomotive as capital goods for availing CENVAT Credit. 2. Interpretation of the definition of capital goods under CENVAT Credit Rules, 2004. 3. Determining the role of Diesel Locomotive in the manufacturing process. Issue 1: Classification of Diesel Locomotive as capital goods for availing CENVAT Credit. The case revolved around the appellant availing CENVAT Credit on a Diesel Locomotive, which the department disallowed, leading to an appeal by the Revenue against the Order-in-Appeal. The primary contention was whether the Diesel Locomotive qualified as capital goods under the CENVAT Credit Rules, 2004. The department argued that the Diesel Locomotive did not meet the criteria of being classified under specified chapters, having components or accessories of goods falling under specified chapters, or being specified by name. The appellant, on the other hand, claimed that the Diesel Locomotive was essential for transporting molten metal within the manufacturing process, enhancing the effectiveness of carrying out manufacturing activities. Issue 2: Interpretation of the definition of capital goods under CENVAT Credit Rules, 2004. The respondent argued that the Diesel Locomotive served as an accessory to the torpedo ladle car, facilitating the movement of molten metal within the factory premises. They contended that the Diesel Locomotive was crucial for handling the torpedo ladle car and that manual handling would not be feasible for transporting 300 to 350 MT of molten metal. The appellate authority found that the Diesel Locomotive increased the convenience of carrying molten metal and was, therefore, an accessory to the various machines used in the factory, qualifying it as capital goods under Chapter 84. The authority relied on previous judgments to support the classification of the Diesel Locomotive as an accessory enhancing manufacturing processes. Issue 3: Determining the role of Diesel Locomotive in the manufacturing process. The judgment emphasized the importance of the Diesel Locomotive in the manufacturing process, particularly in transporting molten metal between different stages of production. It was noted that without the Diesel Locomotive, the handling and production of finished goods would not be possible, highlighting its integral role in the manufacturing activities. The appellate authority upheld the view that the Diesel Locomotive was an accessory to capital goods, essential for the effective operation of the manufacturing process. Consequently, the appeal filed by the department was dismissed, affirming the classification of the Diesel Locomotive as capital goods for availing CENVAT Credit. This detailed analysis of the judgment provides insights into the classification of the Diesel Locomotive as capital goods under the CENVAT Credit Rules, emphasizing its role as an essential accessory in the manufacturing process.
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