2023 (2) TMI 477

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....Cenvat credit in respect of some spares and accessories of laser cutting machines which were used in Unit-2. The case of the department is that since the spares and accessories were used in Unit-2, Cenvat credit thereof shall not be admissible to appellants i.e. Unit-1. 2. Shri Mrugesh Pandya, learned Counsel appearing on behalf of the appellant submits that processing of both the units i.e. Unit-1 and Unit-2 are integrated and goods which are finally cleared from Unit-1 on payment of duty therefore, the Cenvat credit on spares and accessories used for the parts manufactured in Unit-1 should be allowed. He submits that in respect of capital goods i.e. Laser Cutting machines installed at Unit-1, a similar issue was raised earlier also but....

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....dwitch Beltings in its registered factory. By order dated 12-6-2000, the original authority held that the respondent had two units namely (1) Central Excise registered factory producing excisable final products and (2) another unit called Mother Roll Plant which was not registered under the Central Excise Rules; that they purchased capital goods and installed in their registered factory and took the credit of the duty paid thereon; that subsequently for want of space, they shifted the machinery to their another Unit namely Mother Roll Plant which was situated 500 mts away from the registered unit and that at the time of removal of the capital goods, they neither obtained permission nor reversed the credit of duty taken on the said capital g....

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....e Central Excise Tariff Act and used for the manufacture of the final products. Therefore, the only other question to be examined is whether the respondent has satisfactorily established the condition namely that the said capital goods were used in the factory for the manufacture of final products. The salient points noted in the report establishes beyond doubt that except the fact that the capital goods were used in the respondent's own premises situated just 500 mts away from the place of manufacture and that after carrying out necessary connected processes in that premises which is called as Mother Roll Plant, the same is brought to the place of manufacture where the final products is rolled out. Therefore, the activity of the respondent....

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....nt return of credit. 3. As against the contentions of the appellant, ld. SDR would submit that since the movement of the capital goods was without permission from the unit where the credit was taken to another unit, there was violation of the rules. He also emphasized that at the time of movement/receipt of the capital goods, the second unit was not registered with the Central Excise. 4. A perusal of the records makes it clear that capital goods were moved only between the appellant's own units and that too for use in the manufacture of the same final products. The case does not involve any disposal or alienation of Modvated capital goods, which would warrant return/denial of Modvat credit. There is no justification for de....

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....ceived capital goods and installed in the adjacent premises but it was indeed used for the goods manufactured by the appellant in his registered premises, therefore fact of Mangal Electricals Industries case is different from facts of the present case. In view of the above discussion, impugned order is modified and appeal of the appellant is allowed." From the above decisions it is apparent 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 appellan....