2017 (8) TMI 353 - AT - Central Excise

CENVAT credit - appellants are drawing water from various dams in the vicinity of factory and pipelines have been laid from the tanks to the mines - denial of credit on the ground that the pipes were not used in the factory of the appellant - Held that - definition of Capital Goods u/r 2(a) of CCR, 2004 clearly includes the pipes and fittings thereof used in the factory of the manufacturer - It is fairly well settled that captive mines attached to the factory can be considered as a part of the factory premises. Since the pipe line is necessary for manufacturing process, such pipes will have to be considered as having been used in the factory premises - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Cenvat Credit eligibility for duty paid on pipes used outside the factory premises
- Invoices issued in the name of contractor for procurement of pipes

Cenvat Credit Eligibility for Pipes:
The case involved appeals against impugned orders related to the availing of Cenvat Credit on pipes used by the appellant in their mining operations. The Revenue contended that the credit was not allowable as the pipes were not used within the factory premises. The appellant argued that the pipes fell under the definition of capital goods and were essential for their manufacturing process. The Tribunal examined Rule 2(a) of the Cenvat Credit Rules, 2004, which includes tubes and pipes used in the factory of the manufacturer. Since the mines were considered part of the factory premises and the pipes were necessary for the manufacturing process, the Tribunal held that the Cenvat credit for the pipes would be allowable. The decision was supported by precedents where similar benefits were granted for pipes used outside the factory for essential processes.

Invoices Issued in Contractor's Name:
Another objection raised was regarding the invoices for the procurement of pipes being in the name of the contractor who laid the pipelines. The Tribunal reviewed the invoices and noted that the consignee was clearly indicated as the appellant. As a result, the Tribunal found no valid reason to deny the Cenvat credit based on the invoicing details and allowed the credit. Consequently, the appeals were allowed, and the judgment was pronounced in open court on 04.07.2017.