Wooden pallets used for internal material handling were not eligible as capital goods or inputs for credit.

Wooden pallets used inside the factory for stacking and movement of finished goods were examined for eligibility as Cenvat-style creditable items. The Tribunal applied the Supreme Court's view that such pallets are not parts of fork-lift trucks, do not fall within the definition of capital goods under Rule 57Q of the Central Excise Rules, 1944, and are not inputs merely because they assist internal movement of goods. It also noted that Notification No. 67/95-C.E. covers only capital goods as defined in Rule 57Q and inputs used in or in relation to manufacture. Credit on the pallets was therefore not admissible.

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Issues: Whether wooden pallets used within the factory for stacking and movement of finished goods were eligible for credit as inputs or capital goods.

Analysis: The dispute turned on the treatment of pallets used as material handling equipment within the factory. The Tribunal followed the Supreme Court's ruling on similar pallets, which held that such pallets are not parts of fork-lift trucks, are not covered by the definition of capital goods under Rule 57Q of the Central Excise Rules, 1944, and do not qualify as inputs merely because they are used for internal movement of work-in-progress or finished goods. The Tribunal also noted that Notification No. 67/95-C.E. exempts only capital goods as defined in Rule 57Q and inputs used in or in relation to manufacture, and that the pallets in question did not satisfy either condition.

Conclusion: The credit on wooden pallets was not admissible and the issue was decided against the assessee.

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