Tribunal grants appeal, overturns denial of Cenvat credit & penalty, ruling conveyor belt integral to factory.

The Tribunal allowed the appeal, overturning the denial of Cenvat credit and penalty imposed on the appellant for the amount of credit denied. The Tribunal held that the conveyor belt, including the disputed item, was used to move raw material within the factory premises, including the captive jetty, which was considered an integral part of the factory. The Tribunal considered the previous decisions overruling the Commissioner's reliance on an outdated Supreme Court decision and granted the appellants the credit, setting aside the impugned order with consequential relief.

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Issues:
Denial of Cenvat credit on capital goods used in the factory premises.

Analysis:
The appeal was filed against an order denying Cenvat credit and imposing a penalty on the appellant for the amount of credit denied. The credit was denied on the item 'Belt-Yule Cord Conveyor Belting Cord' used in the conveyor belt machinery, on the grounds that the capital goods were not used in the factory premises of the appellant.

The appellant's advocate argued that the Commissioner relied on a Supreme Court decision in the case of M/s. J.K. Udaipur Ltd., which was later overruled by a Larger Bench of the Supreme Court in the case of M/s. Vikram Cement. The appellant also cited a Tribunal decision in their own case where Modvat Credit was allowed on similar parts. The advocate contended that the jetty, being a captive jetty used by the company, is an integral part of the factory, supported by an approved ground plan showing the jetty and conveyor.

The learned SDR initially argued that the jetty was not part of the factory and not exclusively used by the appellant. However, this was countered by the appellant's advocate with the approved ground plan showing the jetty as part of the factory.

The Tribunal found that the conveyor belt was used to move raw material from the jetty to the storage point and, considering the jetty as a captive jetty integrated within the factory, held that the appellants were eligible for the credit. It was noted that at the time of the impugned order, the Commissioner did not have the benefit of the decisions in the Vikram Cement and Raj Cement cases. Given the circumstances and the previous rejection of the Revenue's appeal in the appellant's own case, the Tribunal set aside the impugned order and allowed the appeal with consequential relief to the appellant.

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