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TMI Blog2018 (9) TMI 631X X X X Extracts X X X X X X X X Extracts X X X X ..... (5) TMI 202 - CESTAT BANGALORE], where it was held that credit cannot be denied merely for the fact that steel tank are exempted under Notification No. 67/95. Thus, the appellant has correctly availed Cenvat credit on inputs i.e. steel items which have been used for manufacture of capital goods which are exempted from payment of duty and the said capital goods were further used in the manufacture of final products - appeal allowed - decided in favor of appellant. - Appeal No. E/652/2012 - A/62636/2018-EX[DB] - Dated:- 5-7-2018 - Mr. Ashok Jindal, Member (Judicial) And Mr. Devender Singh, Member (Technical) Present for the Appellant: Ms. Krati Somani, Advocate Present for the Respondent: Shri V. Gupta, AR ORDER PER: ASHOK JINDAL The appellant is in appeal against the impugned order wherein the Cenvat credit to the tune of ₹ 78,30,427/- has been denied along with interest and equivalent penalty is also imposed on them. 2. The brief facts of the case are that the appellant is engaged in the manufacture of diaries products such as Ghee, Whey, Proteins, Casein and Lactose. The appellant procured certain items like plates, coils, angles, etc. for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacture of capital goods which have been further used in the factory of production. The appellant is entitled to avail Cenvat credit in terms of Explanation 2 to Rule 2(k) of Cenvat Credit Rules, 2004. To support her contentions, he has relied on the decisions of this Tribunal in the case of Hindalco Industries Ltd. vs. CCE-2008 (230) ELT 649 (Tri.-Bang.), Hindustan Copper Limited vs. CCE- 2006 (206) ELT 276 (Tri.-Del.) and Vaidyanath SSK Ltd. vs. CCE- 2016-TIOL-2233-CESTAT-MUM. 4. On the other hand, Ld. AR submits that as these capital goods are exempted from payment of duty, therefore, the appellant is not entitled to avail Cenvat credit on the inputs used for fabrication of capital goods. 5. Heard the parties and considered the submissions. 6. On careful consideration of the submissions made by both sides, we find that short issue is to be decided by us as under:- Whether the appellant is entitled to avail Cenvat credit on inputs used in the fabrication of capital goods which are exempted from payment of duty in terms of Notification No.6/06-CE dt.1.3.2006 and Notification No.67/05-CE dt.16.3.1995 and further used in the manufacture of final products. 7. Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the capital goods fabricated using the steel plates and strips. In terms of the Explanation 2, the steel plates and strips should be considered as inputs. Therefore, the fact that the steel tank so manufactured are exempted under Notification No. 67/95 cannot be a reason for denying credit to the items, especially when they satisfy the definition of inputs in terms of Explanation 2. Therefore, there is no merit in the impugned order. I set aside the same and allow the appeal with consequential relief. 10. Further, the said decision has been affirmed by the Hon ble Karnataka High Court reported 2012 (286) ELT 503 (Kar.). 11. Further in the case of Hindustan Copper Ltd. (supra), again this Tribunal had an occasion to examine the issue in hand. In the said case, the facts are as under:- 1 . The issue raised in both these appeals is the same. The appellant manufactures several copper products in its factory from unrefined copper. Two such items are copper cooling elements‟ and copper launders‟. These are (captively) used as capital goods by the appellant in its factory for the manufacture of other goods. Accordingly, it claimed exemption under Notificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Central Excises and Salt Act, 1944 (1 of 1944). 5. The contention of the learned counsel for the appellant is that exemption is available to the assessee both in regard to copper cooling elements copper launders [under Sl. (i)] and unrefined copper rejected cathodes [under Sl. (ii)] in terms of exemption notification. Learned SDR would, however, contend that since use of unrefined and rejected cathodes are as inputs in the manufacture of final product (cooling elements and launders) which are exempt, the exemption is not available in view of the proviso to the notification. 6. It is clear from the above notification that capital goods produced in the factory of consumption is exempt. Similarly, inputs used in a factory is also exempt provided the final product is not exempt from the whole of duty of excise leviable thereon or are chargeable to nil rate of duty. The question that arises is whether the final product, which is capital goods covered under serial No.l of the Notification will also fall in the category of final product mentioned in the proviso. We are of the considered opinion that captively consumed capital goods cannot be treated in the excl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... empted under Notification 6/2006 dated 01/03/2006. The appellants have relied on the decision of the Tribunal in the case of KCP Ltd.(supra).= 2008-TIOL-2531-CESTAT-BANG. In the said case the inputs, namely, steel plants were used in the manufacture of clinker silos which are storage tanks for final products in the same factory. In the said case, the Tribunal observed as follows: One need not examine whether such silos are duty paid or not. That is not the point at issue. The silos may be dutiable or may not be dutiable under certain conditions. The Revenue has taken the point that they are immovable. Therefore they are not dutiable. Hence the credit can be denied. That is not the correct approach. In other words, the dutiability of the capital goods is irrelevant. So long as the inputs are used in capital goods which are used within the factory of production, input credit has to be given in terms of Explanation 2 to Rule 2(k). In other words, the said capital goods may be dutiable and if the duty is paid on such capital goods then the appellants would be entitled for Cenvat credit for the duty paid on capital goods. But when such capital goods or exempted or not dutiable, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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