2015 (6) TMI 1069 - AT - Central Excise

Tribunal grants Cenvat credit for lubricants used in dumpers, broadening input definition

The Tribunal allowed the appeal in favor of the appellant, holding that the Central Excise duty paid on lubricants used in dumpers should be eligible for ... Cenvat credit on lubricants used in dumpers - Definition of 'input' under the Cenvat Credit Rules - Eligibility of Cenvat credit for goods used in or in relation to productionCenvat credit on lubricants used in dumpers - Definition of 'input' under the Cenvat Credit Rules - Whether Central Excise duty paid on lubricants used in dumpers deployed within the mining area in or in relation to production of coal is eligible for Cenvat credit and refundable after reversal. - HELD THAT: - The Tribunal accepted the appellant's contention that the definition of 'input' in Rule 2(k) of the Cenvat Credit Rules has a wide scope and encompasses all goods used in the factory by the manufacturer/producer for the purpose of taking Cenvat credit, subject only to the specifically excluded items. The departmental objection rested on the premise that dumpers under Chapter 87 are capital goods only for certain service providers and, therefore, lubricants used in such dumpers by the manufacturer are ineligible. The Tribunal rejected this narrow approach, noting that lubricants are not listed among the excluded goods in the definition of 'input' and that the dumpers were used within the mining area in or in relation to production of coal. Applying the governing definition, the Tribunal concluded that Central Excise duty paid on lubricants is an input duty eligible for Cenvat credit, and that the refund claim arising from the reversal was therefore maintainable.Impugned order rejecting the refund was set aside; appeal allowed and Cenvat credit/refund in respect of duty on lubricants held allowable with consequential relief as per law.Final Conclusion: The Tribunal allowed the appeal, holding that duty paid on lubricants used in dumpers within the mining area for coal production falls within the wide definition of 'input' under the Cenvat Credit Rules and is eligible for Cenvat credit (and refund where reversed), and set aside the order rejecting the refund. Issues:1. Availment of Cenvat credit on lubricants used in dumpers.2. Rejection of refund application for Central Excise Duty reversed on lubricants.3. Interpretation of the definition of 'input' under Cenvat Credit Rules.Analysis:The appellant, a coal producer registered with the Central Excise Department, availed Cenvat credit on Central Excise duty paid on lubricants used in dumpers during March 2011 to March 2012. The Internal Audit Wing objected to this credit, leading the appellant to reverse it. Subsequently, the appellant filed a refund application, contending that the reversal was improper as lubricants should be considered inputs eligible for Cenvat credit. The refund application was rejected, prompting the appeal before the Tribunal.The Tribunal considered the definition of 'input' under the Cenvat Credit Rules, which includes all goods used in the factory by the manufacturer for the purpose of taking Cenvat credit, except excluded goods. The appellant argued that since lubricants were not excluded from the definition of input, denying Cenvat credit on them was unjustified. The Tribunal agreed with the appellant, emphasizing the broad scope of the input definition and the absence of lubricants in the excluded category, concluding that the Central Excise duty on lubricants should be eligible for Cenvat credit.The Department's position was that dumpers used by manufacturers of excisable goods were not specifically classified as capital goods, making lubricants used in them ineligible for Cenvat credit. However, the Tribunal found merit in the appellant's argument that dumpers were used within the mining area for coal production, falling under the expansive definition of 'input' in the Cenvat Credit Rules. As lubricants were not listed as excluded goods, the Tribunal held that the Central Excise duty paid on lubricants should indeed be eligible for Cenvat credit.In light of the above analysis, the Tribunal set aside the impugned order, allowing the appeal in favor of the appellant and directing any consequential relief as per the law.