2017 (12) TMI 1297 - AT - Central Excise

CENVAT credit - Capital goods - N/N. 30/2004 dated 09.07.2004 - what is the relevant date for deciding the Cenvat credit eligibility whether date of receipt of capital goods or the date of its utilization? - Held that - the issue is no more res-integra and reliance placed in the case of M/s. Ankit Roofings Pvt. Ltd. Versus The Commissioner Central Excise & Customs 2016 (8) TMI 937 - CESTAT NEW DELHI , where it was held that there is no doubt that at the time of receipt of capital goods, the final products of the appellant were chargeable to nil rate of duty and therefore these capital goods fall within the purview of sub rule 4 of rule 6 and hence not entitled to Cenvat credit - appeal dismissed - decided against appellant.

Summary

Issues:
1. Denial of Cenvat credit on capital goods due to availing full exemption under Notification No.30/2004.
2. Entitlement to Cenvat credit based on utilization of capital goods for manufacturing goods cleared on duty payment.
3. Determining the relevant date for deciding Cenvat credit eligibility - date of receipt of capital goods or date of utilization.

Analysis:
Issue 1: The appellant's appeal challenged the denial of Cenvat credit on capital goods due to availing full exemption under Notification No.30/2004. The impugned order invoked Rule 6(4) of the Central Credit Rules, 2004, stating that no credit is allowable on capital goods exclusively used in manufacturing exempted goods. The appellant contended that despite availing exemption, they cleared goods on duty payment using the same machine under Notification No.29/2004, thus claiming entitlement to the credit.

Issue 2: The appellant's counsel argued for Cenvat credit entitlement based on utilizing the capital goods for manufacturing goods cleared on duty payment post-exemption period. The department justified the denial citing the credit availed during the exemption period and subsequent exemption availed by the appellant. The Tribunal examined the appellant's declaration proposing dual use of the machine for exempted and dutiable goods, noting the utilization for one consignment cleared on duty.

Issue 3: The Tribunal deliberated on the relevant date for determining Cenvat credit eligibility - the receipt or utilization of capital goods. Referring to precedent, the Tribunal emphasized that credit eligibility is tied to the duty liability of final products on the capital goods' receipt date. Citing Ankit Roofings Pvt Ltd and Spenta International Ltd cases, the Tribunal upheld that since the final products were duty-exempt at the capital goods' receipt, the appellant was ineligible for credit, dismissing the appeal in line with established jurisprudence.

In conclusion, the Tribunal upheld the impugned order, emphasizing the ineligibility for Cenvat credit on capital goods exclusively used for exempted goods despite subsequent utilization for dutiable goods. The judgment clarified the significance of duty liability status at the capital goods' receipt date in determining credit eligibility, following established legal precedents.