2015 (12) TMI 844 - AT - Central Excise

Denial of CENVAT Credit - Capital goods - machine/machineries installed in the factory - Held that - Commissioner (Appeals) by relying on the report dated 06.12.2013 regarding the actual use of capital goods/inputs has allowed the cenvat benefit to the respondent. The stand of the Revenue in this appeal that since the heavy machines/machineries, where the disputed goods have been used as inputs /capital goods are permanently fastened to the earth, the same seized to be goods for the purpose of taking cenvat credit, I do not find any justification for the said ground. The cenvat credit rules entitles a manufacturer to take cenvat credit of duties paid on inputs, subject to the condition that the goods are used in or in relation to manufacture of the final product within the factory. Further, with regard to capital goods, it has not been disputed by the Department that the said goods are not confirming to the definition clause, entitling availment of cenvat credit. Since the disputed goods as per the verification report of the jurisdictional Range Superintendent are considered as capital goods/input as held by the Commissioner (Appeals), the same qualify for the cenvat benefit and as such the credit cannot be denied. Therefore, I do not find any infirmity in the impugned order passed by the Commissioner (Appeals) - Decided against Revenue.

Summary

Issues:
1. Eligibility of cenvat credit on disputed goods.
2. Classification of disputed goods as capital goods/inputs.
3. Reliability of verification report.
4. Interpretation of cenvat credit rules.
5. Dismissal of appeal by the Revenue.

Analysis:
The judgment revolves around the eligibility of cenvat credit on disputed goods, contested by the Revenue in an appeal against the Commissioner (Appeals) order. The Commissioner had allowed the cenvat credit based on a detailed verification report from the Central Excise Range Office. The Revenue argued that the disputed goods, used in a factory, do not qualify as capital goods/inputs under the Sale of Goods Act, 1930. The ld. DR for the appellant contended that the nature of use of the goods does not warrant cenvat benefit.

On the other hand, the ld. Advocate for the respondent highlighted that the denial of cenvat credit was based on a statement from 2007, whereas the disputed goods were used in the factory during a later period. The Advocate emphasized the verification report from 2013, which confirmed the actual use of the goods, leading to the Commissioner's decision in favor of the respondent.

The Tribunal, after hearing both sides, analyzed the situation. It noted that the Commissioner had relied on the 2013 verification report to allow the cenvat benefit to the respondent. The Tribunal disagreed with the Revenue's argument that the heavy machines in the factory, where the disputed goods were used, should not be considered goods for cenvat credit purposes. It emphasized that the cenvat credit rules permit manufacturers to claim credit on inputs used in manufacturing the final product within the factory. The Tribunal found no merit in the Revenue's claim that the disputed goods did not qualify as capital goods/inputs, as confirmed by the verification report. Consequently, the Tribunal upheld the Commissioner's decision and dismissed the Revenue's appeal.

In conclusion, the Tribunal's judgment focused on upholding the eligibility of cenvat credit on the disputed goods, emphasizing compliance with the cenvat credit rules and the significance of the verification report in determining the nature of the goods. The dismissal of the Revenue's appeal reaffirmed the Commissioner's decision in favor of the respondent.