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2022 (11) TMI 1069 - AT - Central ExciseCENVAT Credit - inputs used for repair - appellant had received back forklift trucks in terms of Rule 16 of Central Excise Rules, 2002 - processes undertaken amounted to manufacture or not - HELD THAT - As a result of the processes undertaken, the goods as received were converted to different capacity and to different model number. They were even cleared to different customers. The adjudicating authority himself observed that the processes undertaken was incidental and ancillary to the completion of the manufactured products - Any process which is incidental or ancillary to completion of the manufactured products is to be held as the process of manufacture in terms of Section 2(f) - Same view has been held by the Tribunal in various cases - reliance can be placed in the case of M/S. NEW BHARAT FIRE PROTECTION SYSTEM PVT. LTD VERSUS COMMISSIONER OF CENTRAL EXICSE, THANE-I 2016 (11) TMI 1204 - CESTAT MUMBAI and JINDAL STAINLESS STEELWAY LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIGAD 2016 (6) TMI 760 - CESTAT MUMBAI . Appeal allowed.
Issues Involved:
1. Whether the processes undertaken on the forklift trucks amounted to manufacture. 2. Whether the appellant was entitled to Cenvat credit on inputs used for repair of the forklift trucks. 3. Whether the demands for recovery of Cenvat credit, interest, and penalties were justified. Issue-Wise Detailed Analysis: 1. Whether the processes undertaken on the forklift trucks amounted to manufacture: The appellant contended that the processes undertaken on the forklift trucks, which were initially cleared on payment of duty and later returned by the customers, amounted to manufacture. They argued that the processes led to the emergence of a new commodity with different capacity and model, thus qualifying as manufacture under Rule 16 of the Central Excise Rules, 2002. The adjudicating authority, however, held that merely increasing the payload capacity from 2 tons to 2.5 tons did not result in a new distinct product and thus did not amount to manufacture. The Commissioner (Appeals) supported this view, stating that repairing or reconditioning the forklifts did not change their basic structure or features, and thus, the process did not qualify as manufacture. The Tribunal, however, referred to Section 2(f) of the Central Excise Act, which includes any process incidental or ancillary to the completion of a manufactured product as manufacture. The Tribunal observed that the processes undertaken resulted in different capacities and models, and thus, should be considered as manufacture. 2. Whether the appellant was entitled to Cenvat credit on inputs used for repair of the forklift trucks: The Revenue argued that since the processes undertaken did not amount to manufacture, the appellant was not entitled to Cenvat credit on the inputs used for the repair of the forklift trucks. The Commissioner (Appeals) supported this view, stating that no Cenvat credit can be availed on inputs used in activities not amounting to manufacture. The Tribunal, however, found that the processes undertaken were incidental and ancillary to the completion of the manufactured products, and thus, the appellant was entitled to Cenvat credit as per Section 2(f) of the Central Excise Act. 3. Whether the demands for recovery of Cenvat credit, interest, and penalties were justified: The original authority confirmed the demands for recovery of Cenvat credit, interest, and penalties under various provisions of the Central Excise Act and Cenvat Credit Rules. The Commissioner (Appeals) upheld these orders. The Tribunal, however, set aside the impugned orders, stating that the processes undertaken amounted to manufacture and thus, the appellant was entitled to Cenvat credit. Consequently, the demands for recovery of Cenvat credit, interest, and penalties were not justified. Conclusion: The Tribunal concluded that the processes undertaken on the forklift trucks amounted to manufacture as they were incidental and ancillary to the completion of the manufactured products. Consequently, the appellant was entitled to Cenvat credit on the inputs used for the repair of the forklift trucks. The demands for recovery of Cenvat credit, interest, and penalties were set aside, and the appeals were allowed.
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