2016 (8) TMI 440 - AT - Central Excise

Interpretation of Cenvat Credit Rules: Eligibility of Goods for Credit

The judgment focused on the admissibility of Cenvat credit on goods classified under Chapter 72 & 39 of the Central Excise Tariff Act, 1985. The ... Cenvat credit - admissibility - goods not specified under the definition of capital goods under Rule 2(a) of Cenvat Credit Rules 2004 and also these goods were used in the machine which have immoveable in nature - Held that:- the ratio of judgments are directly applicable in the facts of the present case. Though the items are falling under Chapter 72 or 39 but all the items were used in the machines, therefore the same are parts of the machine. In the definition of capital goods under Rule 2(a) of Clause A (iii) the components, spare and accessories of the goods specified at item (i) & (ii) of Rule 2(a)(A) are also covered under the definition of capital goods. All the items were used as part in the machines which are covered under Rule 2(a) (A) (i). Therefore as per the clear language of the definition the appellant are entitled for the credit irrespective the Chapter Heading of the components, spares etc. does not fall under Rule 2(a)(A) (i). Therefore, the appellant has correctly availed the Cenvat Credit on the goods such as MS Round, PM Plate, MS Joist, Industrial Laminates, Plumbing Pipe etc. - Decided in favour of appellant Issues:- Admissibility of Cenvat credit on goods classified under Chapter 72 & 39- Interpretation of Rule 2(a) of Cenvat Credit Rules 2004- Applicability of the definition of capital goods- Judicial precedents supporting the appellant's caseThe judgment addresses the issue of the admissibility of Cenvat credit on goods classified under Chapter 72 & 39 of the Central Excise Tariff Act, 1985. The appellant, engaged in manufacturing steel products, availed Cenvat credit on items like MS Round, PM Plate, Industrial Laminates, Plumbing Pipe, etc. The Revenue contended that these goods were inadmissible as they did not meet the definition of Capital Goods under Rule 2(a) of the Cenvat Credit Rules 2004. The adjudicating authority disallowed the credit, leading to the appeal before the Commissioner (Appeals), who upheld the decision. The appellant argued that all the items were used in machines, making them parts of the machine, thereby entitling them to credit.The judgment delves into the interpretation of Rule 2(a) of the Cenvat Credit Rules 2004. The appellant asserted that all the items for which credit was taken were used as parts in machines, falling under Rule 2(a)(A)(i) of the definition of capital goods. Despite the goods falling under Chapter 72 & 39, the appellant contended that they were entitled to credit as per the clear language of the definition. The judgment highlights that the components, spares, and accessories of goods specified in Rule 2(a)(A)(i) & (ii) are covered under the definition of capital goods, supporting the appellant's claim for credit.The judgment also discusses the applicability of the definition of capital goods in the context of the case. By analyzing the details provided by the appellant regarding the use of each item in specific machinery, the judgment concludes that all the items were indeed used as parts in machines covered under Rule 2(a)(A)(i). This analysis aligns with the definition of capital goods, ultimately leading to the decision in favor of the appellant to set aside the impugned order and allow the appeal.Furthermore, the judgment references various judicial precedents that support the appellant's case. Citing judgments such as Commr. of C.Ex. Jaipur Vs. Rajasthan Spinning & Weaving Mills Ltd. and Commissioner of Central Excise, Raipur Vs. Hi-Tech Power & Steel Ltd., the judgment finds that the ratio of these judgments directly applies to the facts of the present case. By considering the precedents and the arguments presented, the judgment concludes that the appellant correctly availed the Cenvat Credit on the disputed goods, leading to the decision to allow the appeal.