2013 (11) TMI 1096 - AT - Central Excise

Ineligible cenvat credit Whether plastic crates come under the capital goods heading or not Waiver of Pre-deposit - Held that - Following BANCO PRODUCTS (INDIA) LTD. Versus COMMISSIONER OF C. EX., VADODARA-I 2009 (2) TMI 101 - CESTAT AHMEDABAD - The plastic crates which played a role in the manufacturing of the final products, needs to be considered as eligible cenvat credit - there is no doubt that trolleys, on which central excise duty has been paid are being used in the factory premises for movement of components - even if it is not considered as a capital goods, the same can be considered under the definition of inputs as provided under Rule 2(l) of the Cenvat Credit Rules, 2004 - appellant has made out a prima facie case for waiver of the pre-deposit stay granted.

Summary

Issues:
Waiver of pre-deposit of an amount, eligibility of cenvat credit on trolleys under capital goods heading.

Analysis:
The judgment pertains to a stay petition seeking the waiver of pre-deposit of an amount, interest, and penalty. The lower authorities had confirmed the amounts as ineligible cenvat credit due to the appellant availing credit on trolleys not categorized under the capital goods heading. The tribunal referred to a previous case involving plastic crates and central excise duty, where it was established that items contributing to the manufacturing process could be considered eligible for cenvat credit. In the current case, trolleys on which central excise duty was paid were utilized within the factory premises for component movement. The tribunal found that even if trolleys were not strictly classified as capital goods, they could be deemed as inputs under Rule 2(l) of the Cenvat Credit Rules, 2004. Consequently, the tribunal concluded that the appellant had presented a prima facie case for the waiver of the pre-deposit amounts. Therefore, the application for waiver was granted, and recovery was stayed pending the appeal's disposal.

This judgment highlights the importance of interpreting the eligibility of cenvat credit within the framework of the Cenvat Credit Rules. It emphasizes the broader interpretation of inputs beyond traditional capital goods, especially when such items are integral to the manufacturing process. The decision underscores the tribunal's willingness to consider the practical application of rules to ensure fairness and prevent undue financial burden on appellants. The reference to a previous case sets a precedent for similar situations, providing clarity and consistency in decision-making. Overall, the judgment reflects a balanced approach in reconciling legal provisions with industry practices to promote a just outcome for the parties involved.