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2019 (2) TMI 861 - AT - Central ExciseCENVAT Credit - inputs - HDPE Pipes - credit denied on the ground that it appeared that these HDPE pipes were only optional requirement and are not essential for the functioning of the goods manufactured - Held that - The HDPE pipes are supplied along with the FO integrated system and the excise duty is also paid on the same - further in the absence of HDPE pipes the final product of the appellant is not functional. Analyzing the definition of input as contained in rule 2(k) which include accessories of the final product cleared along with the final product and it is found that the HDPE pipes are accessories of the final products and is always cleared along with the final product as is reflected in the invoices produced by the appellant. Further in the case of CCE vs. Insulation Electrical (P) Ltd. 2008 (3) TMI 22 - SUPREME COURT the Hon ble Supreme Court has held that the difference between the accessories and parts is that accessory is something supplementary or subordinate in nature and need not be essential for the actual functioning of the product whereas part is an essential component of the whole without which the whole system cannot function. Credit allowed - appeal allowed - decided in favor of appellant.
Issues:
Appeals against rejection of appeals by Commissioner (A) regarding irregular availment of CENVAT credit for HDPE Pipes. Analysis: The appeals were directed against the common impugned order passed by the Commissioner (A) rejecting the appeals of the appellant. The issue involved in both appeals was identical, related to the irregular availment of CENVAT credit for HDPE Pipes. The appellants were engaged in the manufacture and clearance of excisable goods and were availing the benefit of CENVAT credit. The Departmental officers noticed that HDPE Pipes were being procured by the appellants and credit of duty paid on such inputs was being availed. Show cause notices were issued for contravention of CCR provisions. The original authority confirmed the demand, imposed interest and penalty, leading to the appellant's appeal before the Commissioner (A). During the proceedings, the appellant argued that HDPE pipes were integral to the goods manufactured, forming part of the final product. They explained the manufacturing process and highlighted that the HDPE pipes were essential for the functioning of the goods. The appellant contended that the HDPE pipes were always cleared along with the final product, constituting a complete system. On the other hand, the AR reiterated the findings of the impugned order. Upon analyzing the definition of 'input' as per Rule 2(k) of CCR, it was observed that HDPE pipes qualified as accessories of the final product cleared along with it. The Tribunal considered various decisions cited by the appellant, including CCE vs. Hero Honda Motors Ltd. and CCE vs. Insulation Electrical (P) Ltd., to support their argument. Notably, the Tribunal referred to a previous order in the appellant's case where the appeal was allowed. Based on the submissions and legal precedents, the Tribunal concluded that the impugned orders were not sustainable in law. Consequently, the impugned orders were set aside, and both appeals of the appellant were allowed. In conclusion, the Tribunal's detailed analysis of the definition of 'input' and the supporting legal precedents led to the setting aside of the impugned orders. The judgment emphasized the essential nature of HDPE pipes in the manufacturing process and their classification as accessories of the final product, ultimately resulting in the favorable outcome for the appellant.
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