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2018 (1) TMI 342 - AT - Central ExciseCENVAT credit - insurance premium for capital goods - Held that - the denial of CENVAT credit of tax paid on insurance premium for capital goods belonging to the appellant used for manufacture of their vehicles at another location does not appear to be sustainable in law - appeal allowed.
Issues: Disallowance of CENVAT credit on insurance premium for capital goods used at another location
Analysis: 1. The appellant, a company having an arrangement with another company for manufacturing cars, installed plant and machinery at the latter's premises and claimed CENVAT credit of &8377; 2,50,923 for insurance premium expenses incurred from 2008-09 to 2010-11. The original authority disallowed this credit citing the absence of provisions in the CENVAT Credit Rules, 2004. 2. The Commissioner of Central Excise & Customs (Appeals) upheld the original authority's decision, emphasizing that the Rules did not contemplate such availment. The appellate tribunal noted that the impugned order relied on decisions without adequately aligning them with the specific facts of the case, resulting in dismissal of the appeal. 3. The first appellate authority's finding questioned whether the services related to manufacturing activities at a specific location were essential, mandated by law, and formed part of the final product's cost. Despite articulating these questions, the authority failed to provide a reasoned conclusion on them, ultimately basing its decision on perceived deficiencies in the rules rather than a thorough analysis of the case. 4. The tribunal concluded that the denial of CENVAT credit for insurance premium on capital goods used at a different location for manufacturing vehicles was not legally sustainable. The impugned order was deemed insufficient and lacking in detailed reasoning, leading to the allowance of the appeal and setting aside of the original decision. 5. The judgment highlighted the importance of consistent adjudication principles and criticized the authorities for not seeking responses on crucial questions from the appellant. Ultimately, the tribunal ruled in favor of the appellant, emphasizing the legal right to claim CENVAT credit on expenses related to manufacturing activities carried out at distinct locations.
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