2017 (2) TMI 433 - AT - Central Excise

CENVAT credit - denial on the ground that the credit was availed on inputs which were exclusively used in the manufacture of exempted goods - Held that - the fact that the respondent goods are cleared under exemption as well as dutiable goods is not under dispute therefore the entire basis of the demand does not sustain - appeal dismissed - decided against Revenue.

Summary

Issues:
- Cenvat credit availed on inputs exclusively used in exempted goods
- Admissibility of Cenvat credit for manufacturing both exempted and dutiable goods

Analysis:
1. The main issue in this case was the admissibility of Cenvat credit for inputs used in the manufacture of Wind Mill Gear Boxes, which were cleared under both duty payment and exemption. The department contended that the appellant was not entitled to the credit as the inputs were exclusively used in exempted goods, citing Rule 6(1) of the Cenvat Credit Rules, 2002.

2. The Assistant Commissioner for the Revenue argued that the Commissioner (Appeals) erred in allowing the appeal, emphasizing that the inputs were solely used in exempted goods, thus disallowing the Cenvat credit. On the other hand, the respondent's counsel highlighted that the Wind Mill Gear Boxes were cleared under both exemption and duty payment, indicating the mixed use of inputs in manufacturing both exempted and dutiable goods.

3. The Tribunal analyzed the submissions and upheld the Commissioner (Appeals)'s decision, stating that the Wind Mill Gear Boxes were indeed cleared under both exemption and duty payment, as evidenced by the details of clearances submitted by the respondent. The Tribunal referred to a previous order in the appellant's own case, where a similar issue was dismissed by the Tribunal, emphasizing the mixed nature of goods manufactured by the appellant.

4. Ultimately, the Tribunal concluded that since the Wind Mill Gear Boxes were cleared under both exemption and duty payment, the basis of the Revenue's demand for disallowing the Cenvat credit did not hold. As a result, the impugned order was upheld, and the Revenue's appeal was dismissed, with the cross-objection also being disposed of.