Tribunal grants CENVAT credit for capital goods used in manufacturing.

The Tribunal allowed the appeal, setting aside the denial of CENVAT credit on capital goods. It held that Rule 6(4) of the Cenvat Credit Rules, 2004, did not apply as the capital goods were used for manufacturing both dutiable and exempted goods. The appellant's simultaneous availment of multiple exemption notifications was deemed valid, as they paid duty on some clearances. The Tribunal emphasized the appellant's entitlement to CENVAT credit, consistent with previous rulings, and granted consequential relief.

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Issues Involved:
1. Denial of CENVAT credit on capital goods.
2. Applicability of Rule 6(4) of the Cenvat Credit Rules, 2004.
3. Simultaneous availment of multiple exemption notifications.
4. Maintenance of separate accounts for different notifications.
5. Admissibility of CENVAT credit when manufacturing both dutiable and exempted goods.

Issue-wise Detailed Analysis:

1. Denial of CENVAT Credit on Capital Goods:
The appellant was denied CENVAT credit on capital goods for the period February 2009 to December 2009, amounting to Rs. 3,03,30,950/-, on the grounds that their final product was exempted from payment of duty. According to Rule 6(4) of the Cenvat Credit Rules, 2004, no CENVAT credit is allowed on capital goods used exclusively in the manufacture of exempted goods or services. The appellant argued that they availed benefits under both Notification No. 29/2004-CE and Notification No. 30/2004-CE, paying duty on some goods while clearing others without payment of duty. They contended that capital goods were used in the manufacture of both dutiable and exempted goods, thus CENVAT credit should not be denied.

2. Applicability of Rule 6(4) of the Cenvat Credit Rules, 2004:
The appellant argued that Rule 6(4) of the Cenvat Credit Rules, 2004, which denies credit on capital goods used exclusively for exempted goods, was not applicable in their case. They maintained that the capital goods were used for manufacturing both dutiable and exempted goods. The Tribunal agreed, noting that the appellant had cleared goods on payment of duty during the impugned period, thus the capital goods were not used exclusively for exempted goods.

3. Simultaneous Availment of Multiple Exemption Notifications:
The appellant availed benefits under both Notification No. 29/2004-CE (partial exemption) and Notification No. 30/2004-CE (full exemption). The Revenue argued that the appellant did not maintain separate accounts for goods availing benefits under these notifications, as required by the Board’s Circular. The Tribunal found that the appellant had the option to choose the most beneficial notification for each type of clearance and had actually paid duty on some clearances, thus they were entitled to CENVAT credit on capital goods.

4. Maintenance of Separate Accounts for Different Notifications:
The Revenue contended that the appellant failed to maintain separate accounts for goods cleared under different notifications. The appellant countered that separate records were only required for inputs and input services, not for capital goods. The Tribunal agreed with the appellant, stating that Rule 6(2) of the Cenvat Credit Rules, 2004, required separate records for inputs and input services, but not for capital goods.

5. Admissibility of CENVAT Credit When Manufacturing Both Dutiable and Exempted Goods:
The appellant argued that they manufactured both dutiable and exempted goods, thus CENVAT credit on capital goods should not be denied. The Tribunal noted that the appellant had cleared goods on payment of duty during the impugned period and that similar issues had been decided in the appellant’s favor in previous cases. The Tribunal concluded that the appellant was entitled to CENVAT credit on capital goods, as they were not used exclusively for exempted goods.

Conclusion:
The Tribunal set aside the impugned order, allowing the appeal and granting consequential relief. It was determined that the appellant was entitled to CENVAT credit on capital goods during the impugned period, as they had used the capital goods for manufacturing both dutiable and exempted goods and had actually paid duty on some clearances. The Tribunal emphasized that the appellant’s case was consistent with previous rulings and that the Revenue could not take a divergent view on the same issue.

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