2015 (10) TMI 2063 - AT - Central Excise

Tribunal Allows Cenvat Credit on Capital Goods Used in Manufacturing

Commissioner of Central Excise, Trichy Versus M/s G.B. Engineering Enterprises Pvt Ltd

The Tribunal upheld the Commissioner (Appeals) decision, allowing the availing of Cenvat credit on capital goods installed outside the main unit's ... Availment of Cenvat credit - capital goods not installed in the appellants premises but installed at other units doing Job work - No intimation, No permission from the department - Held that:- Lower Authority has relied on the Supreme Court's decision in the case of M/s. Vikram Cements [2006 (2) TMI 1 - Supreme court]. There is no dispute on the fact that the respondents were discharged the central excise duty on the finished goods which were cleared by the main unit. The impugned order clearly brought out the fact that both the units were carrying out the job work and no finished goods were cleared from the unregistered units. The Hon'ble High Court in the case of HabasitIakoka Pvt. Ltd. (2011 (2) TMI 1345 - MADRAS HIGH COURT) on identical issue allowed cenvat credit on the capital goods installed in unregistered premises and used in the manufacture of the final product. - Ratio of the above decision squarely applicable to the present case as the capital goods were installed in the adjacent unregistered premises and used for job work of main unit and finished goods were cleared from the respondent's main unit on payment of duty. By respectfully following the decision of the Hon'ble High Court above, I do not find any infirmity in the order of the Commissioner (Appeals) in allowing the credit on the capital goods. Accordingly, the impugned order upheld - Decided against Revenue. Issues:1. Availment of Cenvat credit on capital goods installed outside the premises of the main unit.Analysis:The Revenue filed an appeal against the Order-in-Original, challenging the respondents' availing of ineligible cenvat credit on capital goods under Rule 14 of CCR. The adjudicating authority demanded the credit amount and imposed a penalty. The Commissioner (Appeals) allowed the appeal based on the Supreme Court decision in M/s. Vikram Cements Vs. CCE. The Revenue, disagreeing, filed the present appeal.The Ld. AR argued that the credit was wrongly availed on capital goods not installed in the appellants' premises, emphasizing the lack of intimation or permission for their removal to other units. He cited Eagle Flask Industries Ltd. Vs. CCE to support his stance. Conversely, the Ld. Advocate for the respondent contended that the capital goods were used in manufacturing final products, located 500 mts away from the main unit, which only conducted job work for the main unit. He relied on precedent cases to support this argument.The main issue was the availment of Cenvat credit on capital goods installed outside the main unit's premises. The Tribunal noted that the capital goods were used in the manufacture of final products by the respondent's main unit. Citing the decision in HabasitIakoka Pvt. Ltd., the Tribunal found no violation of Rule 57Q(1) of the Central Excise Rules. The report confirmed that the capital goods were used in the factory for manufacturing final products, with no alienation to any other entity. Consequently, the Tribunal upheld the Commissioner (Appeals) order, allowing credit on the capital goods, dismissing the Revenue's appeal and closing the cross-objection.In conclusion, the judgment affirmed the Commissioner (Appeals) decision, following the precedent set by the High Court regarding the usage of capital goods in adjacent unregistered premises for job work, with final goods cleared from the main unit. The Tribunal found no fault in allowing credit on the capital goods, aligning with the legal principles established in previous cases.