2015 (1) TMI 588 - AT - Central Excise

Tribunal Grants CENVAT Credit: Capital Goods Eligible Once Used in Factory

M/s. Nilkamal Ltd. Versus Commr. of Central Excise, Bolpur

The Tribunal allowed the appeal filed by the appellant, setting aside the Commissioner's order. It held that capital goods, once put to use in the factory ... 100% CENVAT Credit availed on capital goods in the same year - removal as such or not - On receipt of the said moulds in their factory, the appellant availed 50% of the eligible CENVAT Credit and put the same to use in their factory for further manufacture of finished excisable goods. The appellant, in the same financial year, at the time of clearance of the said moulds to their sister concern, availed balance 50% of the CENVAT Credit and cleared the said moulds, as such, by debiting the entire amount of CENVAT Credit availed on such moulds. The Revenue has denied the balance 50% of the CENVAT Credit in the same financial year on the ground that once moulds are put to use, the same loose the character as such, hence the appellant could not be eligible to avail CENVAT Credit on the balance 50% of the CENVAT Credit at the time of its clearance in the same financial year. Held that:- Appellant had reversed the entire amount of CENVAT credit availed before removal of the capital goods in the same financial year. In the result, we have no hesitation to conclude that the capital goods which were put to use and when cleared from the factory, would be eligible to the balance 50% of CENVAT credit available on such capital goods on its clearance from the factory in the same financial year. Consequently, we do not find merit in the order of the Ld. Commissioner(Appeal) and the same is set aside - Decided in favour of assesse. Issues:- Irregular availing of CENVAT Credit on moulds- Interpretation of Rule 4 (2) (a) of CENVAT Credit Rules, 2002/2004- Applicability of judgments in similar casesAnalysis:1. The case involves an appeal against an Order-in-Original passed by the Commissioner of Central Excise, Bolpur, regarding the irregular availing of CENVAT Credit on moulds by the appellant. The appellant availed 50% of the eligible credit on moulds upon receipt, used them in their factory, and then cleared them to other units in the same financial year after availing the balance 50% credit. The Revenue contended that once the moulds were put to use and cleared from the factory, they could not be considered 'as such' under Rule 4 (2) (a) of CENVAT Credit Rules, 2002/2004.2. The appellant argued that the clearance of moulds from the factory after use should still be considered 'as such,' citing a judgment by the Larger Bench of the Tribunal in a similar case. The Revenue reiterated the findings of the Commissioner, upholding the denial of the balance 50% CENVAT Credit in the same financial year. The Tribunal examined the facts and relevant legal provisions, including the interpretation of the term 'as such' under Rule 4 (2) (a) of CENVAT Credit Rules, 2002/2004.3. The Tribunal referred to previous judgments by the Larger Bench and High Courts in similar cases, including the Modernova Plastyles Pvt. Ltd. case and the Commr. of Central Excise, Hyderabad-III Vs. Navodhaya Plastic Industries Ltd. case. It also considered the judgment of the Madras High Court in the case of CCE, Salem Vs. Rogini Mills Ltd. for determining the quantum of depreciation post the November 2007 amendment to the Rule. The Tribunal found that the appellant had reversed the entire amount of CENVAT credit before removing the capital goods in the same financial year, making them eligible for the balance 50% credit upon clearance from the factory.4. Ultimately, the Tribunal concluded that the capital goods, once put to use in the factory and cleared from there, were eligible for the balance 50% of CENVAT credit in the same financial year. As a result, the Tribunal set aside the order of the Commissioner and allowed the appeal filed by the appellant, granting consequential relief as per law.