2023 (2) TMI 477 - AT - Central Excise

Tribunal grants Cenvat credit for spares used in different units, emphasizing capital goods usage.

The Tribunal allowed the appeal, setting aside the impugned order, and held that the appellant could claim Cenvat credit for spares and accessories used ... CENVAT Credit - appellant carrying out part of process in Unit-2 on the machinery installed therein and after the entire process is done, Unit-1 is clearing the final products on payment of duty - Cenvat credit availed in respect of some spares and accessories of laser cutting machines which were used in Unit-2 - objection of the department is that since spares and accessories procured by Unit-1 is used in Unit-2 where the Laser Cutting machines was installed, the credit for the same is in dispute. HELD THAT:- The excisable goods manufactured and cleared from the appellant’s Unit-1, therefore, it is undisputed that the spares and accessories were used in or in relation to the manufacture of excisable goods of the appellant - Secondly, the similar issue has been decided in the appellant’s own case in respect of capital goods i.e. machineries installed in the Appellant’s Unit-2 in M/S EIMCO ELECON INDIA LTD. VERSUS C.C.E. & S.T. -VADODARA-I [2019 (1) TMI 173 - CESTAT AHMEDABAD] and Tribunal held that the essential condition for availment of credit as interpreted by various courts is that the capital goods should be used in or in relation to manufacture of the final product and even if the same are used outside the factory for the said purpose the credit cannot be denied so long as the said capital goods are not alienated by the appellant. Thus, demand do not sustain - the impugned order is set-aside and the appeal is allowed. Issues Involved:Cenvat credit admissibility for spares and accessories used in different units of the same entity.Analysis:The appellant operates two units, Unit-1 and Unit-2, where Unit-2 processes goods on machinery and Unit-1 clears final products. The dispute arose regarding the admissibility of Cenvat credit for spares and accessories used in Unit-2 but claimed by Unit-1. The appellant argued that both units' processes are integrated, and goods cleared from Unit-1 are connected to Unit-2's activities. They cited a previous Tribunal order allowing credit for similar capital goods used in Unit-1. The Revenue contended that the spares used in Unit-2 should not grant credit to Unit-1. The Tribunal analyzed past decisions, including one involving the High Court, emphasizing that capital goods should be used in or in relation to final product manufacture, even if outside the factory, without alienation, to qualify for credit.The Tribunal found that the appellant's spares and accessories were used in the manufacture of excisable goods cleared from Unit-1. Notably, the appellant had applied for common registration, which the Revenue did not respond to, indicating compliance with Cenvat credit Rules. Referring to various court decisions, the Tribunal concluded that the spares' usage in Unit-2 did not disqualify Unit-1 from claiming credit, as long as the goods were not alienated. Consequently, the impugned order was set aside, and the appeal was allowed, aligning with previous Tribunal decisions and legal principles.The Tribunal's decision was based on the interpretation that capital goods should be utilized in or in relation to the final product's manufacture, even if used outside the factory, without alienation. The appellant's compliance with registration requirements and the absence of response from the Revenue supported the allowance of Cenvat credit for spares and accessories used in Unit-2 but claimed by Unit-1. The judgment emphasized consistency with past decisions and legal principles governing Cenvat credit eligibility, ultimately setting aside the impugned order and allowing the appeal.