2007 (3) TMI 112 - AT - Central Excise

Tribunal grants credit for manufacturing inputs; emphasizes correct classification rule

The Tribunal ruled in favor of the appellant, allowing the appeal and granting credit for items like Welding Electrodes, Shapes & Sections, MS Bars, ... Cenvat/Modvat credit - Appellant contended that they entitle for credit in respect of Wielding Electrodes, Shapes and Sections, MS bars, HR coils and Steel plants - Held that in respect to wielding electrodes credit not admissible but in respect to all others credit allowed Issues: Denial of credit for Welding Electrodes, Shapes & Sections, MS Bars, HR Coils, and Steel plates.In the judgment, the issue of credit denial for Welding Electrodes is discussed. The Tribunal refers to previous cases where it was held that credit for Welding Electrodes as capital goods or inputs is not available. Citing the case law, the Tribunal finds no error in denying credit for Welding Electrodes.Regarding the credit on shapes and Sections, the appellant argues that these items are used in the fabrication of capital goods for the treatment plant and Methane Reactor, which are further used in the manufacturing process. The appellant relies on Central Excise Rules to claim credit for inputs used in the production of capital goods, even if such goods are temporarily exempt from duty. The revenue, however, contends that the items in question do not qualify as capital goods and the resulting goods are non-excisable as they become immovable property. The denial of credit is based on the argument that these items are raw materials for capital goods.The judgment clarifies that the denial of credit was solely based on the fact that the items were used as raw materials in the production of capital goods. Referring to Rule 57D of Central Excise Rules, which allows credit for inputs used in manufacturing capital goods even if they are temporarily exempt from duty, the Tribunal rules in favor of the appellant. The items in question are deemed to be used in the fabrication of capital goods for the treatment plant and refractor, leading to the setting aside of the credit denial. The appeal is allowed, and the appellants are entitled to consequential relief as per the law.Overall, the judgment addresses the denial of credit for specific items used in the manufacturing process, highlighting the importance of understanding the classification of goods as inputs or capital goods under the Central Excise Rules to determine the eligibility for credit.