Appellant entitled to Cenvat credit on capital goods procured during dutiable product period

The Tribunal held that the appellant was entitled to Cenvat credit on capital goods procured during a period when their final product was dutiable. The appellant's claim was supported by the decision in Spenta International Ltd. case, emphasizing that credit eligibility is determined by the date of procurement of capital goods. The Tribunal distinguished a previous case cited by the Revenue, stating that the facts were different. As a result, the appellant's appeal was allowed, the impugned order was set aside, and they were not required to reverse the Cenvat credit availed.

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Issues:
- Denial of Cenvat credit on capital goods procured during a period when the final product was dutiable.

Analysis:
The appellant appealed against an order denying Cenvat credit on capital goods procured during a specific period. The appellant procured capital goods between 1-4-2006 to 11-8-2006 and later extended their production capacity under an exemption notification. The Revenue contended that the capital goods were not used for manufacturing dutiable goods, thus challenging the appellant's entitlement to Cenvat credit. Proceedings were initiated against the appellant, leading to duty demand, interest, and penalty. The appellant argued that they correctly availed Cenvat credit as they were manufacturing dutiable final products when the capital goods were procured. The appellant cited the decision of Spenta International Ltd. v. CCE, Thane [2007 (216) E.L.T. 133 (Tri.-LB)] to support their claim.

In response, the Revenue opposed the appellant's contention, asserting that the capital goods were never used for manufacturing dutiable goods, thus disputing the appellant's eligibility for Cenvat credit. The Revenue relied on the decision of Hindustan Coca Cola Beverages Ltd. v. CCE, Ahmadabad-I [2014 (313) E.L.T. 152 (Tri.-Ahmd.)]. After hearing both parties' arguments and considering the submissions, the main issue was whether the appellant was entitled to Cenvat credit on capital goods procured during the period when their product was dutiable. The Tribunal referred to the decision in Spenta International case, emphasizing that the date of procurement of capital goods determines credit eligibility. Since the final product was dutiable when the capital goods were procured, the appellant was deemed entitled to Cenvat credit. The Tribunal distinguished the Hindustan Coca Cola Beverages Ltd. case, stating that it was irrelevant as the facts differed, particularly regarding the usage of capital goods for manufacturing dutiable goods.

Consequently, the Tribunal held that the appellant correctly availed Cenvat credit on the capital goods and was not required to reverse the same. The impugned order was set aside, and the appeal was allowed with any consequential relief.

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