Appeal partially allowed: CENVAT credit for corrugated boxes allowed, printers and cartridges disallowed. Interest and penalty upheld.

The Tribunal partially allowed the appeal, holding the CENVAT credit of Rs.41,078/- for corrugated boxes admissible, while disallowing the credit of Rs.52,951/- for printers and cartridges. The demand for interest and penalty under Rule 15(2) read with Section 11AC of the Central Excise Act, 1944, was upheld to the extent of the disallowed credit. The judgment was pronounced on 11/10/2023.

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Issues Involved:
1. Denial of CENVAT credit on printers and cartridges used in the office.
2. Denial of CENVAT credit on corrugated boxes delivered outside the factory premises.

Summary:

Issue 1: Denial of CENVAT credit on printers and cartridges used in the office

The Commissioner (Appeals) upheld the denial of CENVAT credit on printers and cartridges used in the office, citing the exclusion clause under Rule 2(a)(A)(i) of the CENVAT Credit Rules, 2004, which specifically excludes "any equipment or appliance used in an office" from the definition of capital goods. The appellant's argument that printers and cartridges are essential for production and should be considered capital goods under Chapter 84 of the Central Excise Tariff Act was rejected. The Tribunal referenced the decision of the Mumbai Bench in Bharti Airtel Ltd, which affirmed that office equipment does not qualify as capital goods if not directly related to the output service. Consequently, the credit of Rs.52,951/- on printers and cartridges was disallowed.

Issue 2: Denial of CENVAT credit on corrugated boxes delivered outside the factory premises

The Commissioner (Appeals) denied CENVAT credit on corrugated boxes delivered to a warehouse at Lawrence Road, Delhi, rather than the factory premises. Rule 3 of the CENVAT Credit Rules, 2004, stipulates that credit is admissible for inputs received in the factory of the manufacturer. However, the Tribunal found that the warehouse acted as a depot from where the final product (sugar) was repacked and cleared, aligning with the principle that inputs used in relation to the manufacture and clearance of finished products are eligible for credit. Citing the case of Hawkins Cookers Ltd., the Tribunal allowed the CENVAT credit of Rs.41,078/- for the corrugated boxes.

Conclusion:

The appeal was partially allowed. The CENVAT credit of Rs.41,078/- for the corrugated boxes was held admissible, while the credit of Rs.52,951/- for printers and cartridges was disallowed. The demand of interest and penalty under Rule 15 (2) read with Section 11AC of the Central Excise Act, 1944, was upheld to the extent of the disallowed credit. The judgment was pronounced on 11/10/2023.

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