2013 (1) TMI 586 - HC - Central Excise

Goods used as paint on the shop floor - whether be treated as inputs under Modvat Credit Rules, 2001/2002? - Held that - As decided in Flex Engg. Ltd. Versus CCE 2012 (1) TMI 17 - SUPREME COURT OF INDIA the word input has to be examined with the word manufacture . From the definition of manufacture it is clear that not only the materials used in the final product but incidental and ancillary requirements for the completion of the final product are also falls within the definition of the manufacture. As such the materials used in making the dust free hall are incidental and ancillary for the completion of the manufactures of the final product. As decided in assessee s own case 2013 (1) TMI 554 - ALLAHABAD HIGH COURT the paints used on the floor of the production hall to make it dust free and fire retardant, was used for manufacture of final products. As such, the Cenvat Credit was admissible on it - in favour of assessee.

Summary

Issues:
1. Interpretation of the term 'input' under the CENVAT Credit Rules, 2001.
2. Eligibility of Cenvat Credit on materials used for the floor of the production hall.
3. Applicability of previous court judgments on similar matters.

Detailed Analysis:

1. Interpretation of the term 'input' under the CENVAT Credit Rules, 2001:
The central issue in this case revolved around the interpretation of the term 'input' under the CENVAT Credit Rules, 2001. The definition of 'input' as per the Rules includes all goods used for the manufacture of the final product or for any other purpose within the factory of production. The Court referred to the specific definition provided in the Rules to determine the admissibility of Cenvat Credit on various materials used by the respondent.

2. Eligibility of Cenvat Credit on materials used for the floor of the production hall:
The respondent, a manufacturer of color picture tubes, availed Cenvat Credit on materials like cement, paint, and other building materials used for the floor of the production hall. The dispute arose when the authorities disallowed the Cenvat Credit on these materials, claiming they were not directly used in the manufacturing process of the final product. However, the Tribunal held that the materials were essential for making the production hall dust-free and fire retardant, which was crucial for assembling the final product. The Court agreed with the Tribunal's interpretation that such materials fell within the definition of 'input' under the CENVAT Credit Rules, thereby justifying the availing of Cenvat Credit by the respondent.

3. Applicability of previous court judgments on similar matters:
The Court also considered a previous judgment in Central Excise Appeal No. 181 of 2006, where it was held that paints used on the floor of the production hall to make it dust-free and fire retardant were indeed used for the manufacture of final products, making the Cenvat Credit admissible. The Court reiterated the findings of the previous judgment and concluded that the materials used in making the production hall dust-free were incidental and ancillary for the completion of the manufacture of the final product. Therefore, the Court dismissed the appeal based on the consistency with the previous judgment and the interpretation of the term 'input' under the CENVAT Credit Rules, 2001.