2023 (12) TMI 844 - AT - Central Excise

Jig wires and jig rods qualify as intermediate goods eligible for CENVAT credit under Notification 67/95

The CESTAT Chennai held that jig wires and jig rods qualify as intermediate goods used captively in manufacturing dutiable final products, making them ... Eligibility for the benefit of exemption of Notification No. 67/95 dated 16.03.1995 read with CENVAT Credit Rules, 2004, on jig wires and jig rods - intermediate goods or not - definition of capital goods as per CENVAT Credit Rules, 2004 cover goods falling under Chapter Heading 76 or not - HELD THAT:- The issue stands decided in the appellant’s own case for earlier as well as subsequent periods - The Tribunal in NEEDLE INDUSTRIES (INDIA) PRIVATE LTD. VERSUS COMMISSIONER OF C. EX., SALEM [2014 (8) TMI 980 - CESTAT CHENNAI], held that these items are intermediate products captively used in the manufacture of dutiable final product and therefore, Cenvat credit cannot be denied. After appreciating the facts as well as evidence placed and following the decision of the Tribunal in the appellant’s own case, the demand cannot sustain - the impugned order is set aside. The appeals are allowed. Issues Involved:1. Eligibility for exemption under Notification No. 67/95 for jig rods and jig wires.2. Classification of jig rods and jig wires under CENVAT Credit Rules, 2004.3. Applicability of previous Tribunal decisions to the current period.Summary:Issue 1: Eligibility for Exemption under Notification No. 67/95The appellant manufactures various products and uses aluminium ingots as inputs. They also produce jig rods and jig wires, which are captively consumed in the manufacturing process without paying duty, claiming exemption under Notification No. 67/95 dated 16.03.1995. The Department argued that these items do not qualify for exemption as they do not fall under the definition of capital goods in CENVAT Credit Rules, 2004. Show Cause Notices were issued, and the original authority confirmed the duty demand along with interest and penalties. However, the appellant contended that jig rods and wires are intermediate products essential for manufacturing the final product and should be exempt under the said notification.Issue 2: Classification under CENVAT Credit Rules, 2004The appellant argued that jig rods and jig wires should be considered as inputs or capital goods under the CENVAT Credit Rules, 2004. The definition of capital goods includes 'moulds and dies, jigs and fixtures,' which should cover jig rods and wires. The authorities below erred in denying the exemption based on their classification under Chapter 76.Issue 3: Applicability of Previous Tribunal DecisionsThe Tribunal had previously decided in favor of the appellant for periods before and after the current period in question. The decisions held that jig rods and jig wires are intermediate products used in manufacturing the final product and are eligible for exemption. The Department did not appeal against these decisions. The Tribunal referenced the Supreme Court's decision in Escorts Ltd. and other relevant cases, which supported the appellant's position that intermediate products used in the manufacture of final products are eligible for exemption, even if duty is not paid on the intermediate products.Conclusion:The Tribunal, following its previous decisions and relevant judicial precedents, concluded that jig rods and jig wires are intermediate products captively used in manufacturing the final product and are eligible for exemption under Notification No. 67/95. The impugned orders were set aside, and the appeals were allowed with consequential reliefs.Order Pronounced:The order was pronounced in open court on 19.12.2023.