2015 (10) TMI 2397 - AT - Central Excise

CENVAT Credit - use of Capital goods in different premises - Suppression of facts - Held that - The appellant shifted the machine to another premises near to the factory and returned the same within 180 days. The movement of machine as well as semi finished material from the factory and finished material from the rented premises are by challans. According to the appellant, the shifting was done only due to paucity of space, and that no job work was done. The Counsel for appellant submitted that the movement of goods on challans were done as for job work though no job work was done. - appellant has taken semi finished goods outside their factory premises for completion of manufacturing process due to shortage of space in the factory, and the finishing work of stitching and packing is being done by the appellant without hiring or engaging another person for doing the said work. That as no job worker is involved the provisions of Rule (5) of Cenvat Credit Rules do not apply. - The fact that machine was used in a premises near to the factory is not disputed. So also it was used for connected process of manufacture. The process in these premises was carried out by the appellant themselves. The machine was used by appellants for the production of final products. Thus the activity of appellants in using the machine (capital goods) can be said to be part of its manufacturing activities of final products in its registered factory premises. There is no justification for denying credit. - there is no suppression of facts on the part of the appellant as he intimated the department about removal of machine by proper documents, I am of the view that the cenvat credit cannot be denied to the appellant. - Decided in favour of assessee.

Summary

Issues:
Challenge to denial of cenvat credit on capital goods.

Analysis:
The appellant, engaged in manufacturing HDPE woven bags, challenged the denial of cenvat credit on a hydraulic bale press machine. The dispute arose as the machine was used in another premises temporarily, besides the factory. The appellant argued that due to space constraints in the factory, the machine was shifted to a nearby premises for stitching bags. The movement was covered by challans and goods were returned within 180 days. The appellant contended that no job work was done, and they were eligible for the credit. The Department contended that the premises should be registered if job work was conducted there.

The Commissioner (Appeals) noted that the appellant used the nearby premises due to space shortage, and no job worker was involved in the finishing process. As the movement of goods was under challans and no suppression was alleged, the Cenvat Credit Rules did not apply. The machine was used for the appellant's manufacturing activities, and there was no justification for denying credit. Citing relevant case laws, the judgment emphasized that as long as the capital goods were used for manufacturing final products within the appellant's units, credit cannot be denied. Considering no suppression of facts and proper documentation of the machine's movement, the Tribunal held that the cenvat credit cannot be denied.

In conclusion, the appeal challenging the denial of cenvat credit on capital goods was allowed based on the appellant's genuine use of the machine for manufacturing activities, absence of fraud or suppression, and compliance with documentation requirements.