2016 (11) TMI 825 - AT - Central Excise

CENVAT credit on capital goods - whether the ground that the appellant has not made any clearance by availing benefit of Notification No. 29/04, therefore, the appellant is not entitled to avail cenvat credit on capital goods or parts justified? - the decision in the case of Surya Roshni Ltd. (155) ELT 481 referred - Held that - I find that the appellant has availed cenvat credit on capital goods/parts, during the period March, 2005 to September, 2005 and not effected any clearance by availing benefit of notification 29/2004. In October, 2005 the capital goods has been used in manufacturing of goods cleared under notification 29/2004. The decision of this Tribunal in the case of Surya Roshini, Ltd. is not applicable to the facts of this case. As in the said case, at the time of procurement of capital goods, the assessee did not manufacture the any dutiable goods, they have started availing exemption w.e.f. 10.07.2004 of the notification no. 30/2004-CE - As the appellant is availing benefit of notification 29/2004 as well as notification 30/2004. In that circumstance, I hold that the appellant has correctly availed the cenvat credit on capital goods/parts, during the impugned period - CENVAT credit allowed -appeal allowed - decided in favor of appellant.

Summary

Issues:
Denial of cenvat credit on capital goods availed by the appellant during a specific period.

Analysis:
The appellant, engaged in manufacturing textile goods, availed benefits under Notification No. 29/2004-CE and Notification No. 30/2004-CE. They procured capital goods/parts between March 2005 to September 2005 and claimed cenvat credit. The Revenue contended that since the appellant did not clear goods under Notification No. 29/04 during that period, they were not entitled to cenvat credit on capital goods. A show cause notice was issued, leading to the demand of duty, interest, and penalties. The appellant appealed this decision.

The appellant argued that in a previous case, cenvat credit was allowed, so the current denial should be set aside. The Revenue countered by stating that the appellant reversed cenvat credit for inputs and work in progress in July 2004 and did not clear goods under Notification No. 29/2004 during the disputed period. They cited a Tribunal case and a Supreme Court decision to support their stance.

After hearing both parties, the Tribunal found that the appellant had indeed availed cenvat credit on capital goods during the disputed period without clearing goods under Notification No. 29/2004. However, in October 2005, the capital goods were used in manufacturing goods cleared under Notification No. 29/2004. The Tribunal distinguished the present case from the precedent cited by the Revenue, noting that the appellant was availing benefits under both Notification No. 29/2004 and Notification No. 30/2004. Consequently, the Tribunal held that the appellant correctly availed the cenvat credit on capital goods/parts during the disputed period and set aside the impugned order, allowing the appeal with any consequential relief.

In conclusion, the Tribunal ruled in favor of the appellant, holding that they were entitled to the cenvat credit on capital goods/parts despite not clearing goods under Notification No. 29/2004 during the specific period in question.