Tribunal denies cenvat credit for mining equipment tires.

The Tribunal upheld the impugned order dated 31.01.2017, dismissing the appeal concerning the dispute over availing cenvat credit on tyres used in material handling equipment for mining operations. The appellant's argument that the tyres should be considered as spares of motor vehicles similar to dumpers was rejected. The Tribunal determined that the tyres of the vehicle in question were not eligible for cenvat credit as they did not qualify as inputs under the Cenvat Credit Rules. Consequently, the appeal was dismissed on 20.12.2017.

---

---

Issues:
Cenvat credit on tyres used in material handling equipment for mining operations.

Analysis:
The appeal was filed against the order-in-appeal dated 31.01.2017 concerning the dispute period of March to September, 2012. The appellant, engaged in manufacturing zinc & lead concentrates, used mining machinery and material handling equipment in their captive mines. The dispute revolved around availing cenvat credit on tyres used in material handling equipment for mining operations. The department contended that such tyres did not fall under the definition of capital goods under Rule 2(a) of the Cenvat Credit Rules, resulting in disallowance of the credit along with penalties and interest.

During the hearing, the appellant argued that cenvat credit on dumpers had been consistently allowed by the Tribunal under the Cenvat Credit Rules, 2004. They claimed that since the vehicles in question were similar to dumpers, the credit should be permitted. The appellant cited relevant case laws to support their stance. On the other hand, the Revenue's representative justified the impugned order by stating that motor vehicles under Chapter 87 were not considered capital goods, thus parts of such vehicles, including tyres, were ineligible for cenvat credit.

After considering both arguments and examining the records, the Tribunal found that the dispute centered on the cenvat credit availed on tyres of the vehicle known as 'Normet RBO'. The appellant asserted that these vehicles were used in the mines connected to the factory and that the tyres were utilized in mining machinery, making them eligible for cenvat credit as inputs. However, the Tribunal pointed out that according to Rule 2(k) of the Cenvat Credit Rules, inputs encompass goods used in the factory for manufacturing final products, excluding capital goods and motor vehicles. Since tyres are parts of transport vehicles, they do not qualify as inputs.

The appellant contended that the tyres should be considered as spares of motor vehicles, citing cases where cenvat credit had been allowed for dumpers and dippers as capital goods. However, upon reviewing the technical data sheet of the 'Normet RBO' vehicle, the Tribunal concluded that these vehicles were not intended for material movement in mines, unlike dumpers and dippers. Consequently, the Tribunal held that such vehicles and their tyres did not fall under capital goods, and hence, cenvat credit was not permissible.

Ultimately, the Tribunal upheld the impugned order, dismissing the appeal on 20.12.2017.

---