capital goods or not

[Dalia Felix]

Dear Sirs,

We are manufacturers of certain dutiable final products.

we also conduct 'trading' of certain other goods. For trading, dutiable goods are purchased, cut them using special machines and sell to outside parties.

can we take the cenvat credit on the cutting machine used? (though the process conducted with the machines do not amount to manufacture, definition of capital goods as per Rule 2 of CCR, 2004 allows credit on all machinery used in the factory)

In connection with the credit availability on Gen set, many learned experts have referred the SC judgment CCE, Coimbatore Vs Jawahar Mills Ltd 2001 (7) TMI 118 - SUPREME COURT OF INDIA

Give your comments please.

AI Summary

Cenvat credit on capital goods used exclusively for exempted trading activities is not available under the CENVAT framework.
Trading is treated as an exempted activity for CENVAT purposes; accordingly, Cenvat credit on capital goods used exclusively in processing goods for trading (where the process does not constitute manufacture) is not allowable, and credit cannot be claimed on the dutiable goods merely cut in the trading activity.