TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 618
X X X X Extracts X X X X
X X X X Extracts X X X X
....ance of goods from the factory and the goods are taken for use inside the factory of production for purpose of stacking. Since the goods are not removed from the factory the question of payment of duty does not arise in this case. It was the allegation of the respondent that said items did not qualify for CENVAT credit under the category of 'capital goods' for the following reasons:- * The goods are not falling under any of the definitions of capital goods under Rule 2 of CENVAT Credit Rules, 2004 * The goods on which the credit has been taken by the assessee are finished goods of the assessee * The goods are not removed from the factory and are still in possession of the assessee and there was no requirement of payment of duty * Since the goods are not removed from the factory, the requirement for payment of duty does not arise and to avail CENVAT credit of such duty not payable is incorrect." Hence a Show Cause Notice dated 5.1.2015 and a statement of demand dated 26.3.2015 were issued to the appellant to recover the wrongly availed CENVAT capital goods credit and to demand interest and penalty. The Show Cause Notice and the statement of demand were taken up for adjudica....
X X X X Extracts X X X X
X X X X Extracts X X X X
....om the factory. The dunnage or pallets are thus used in or in relation to manufacture and clearance of the final products from the factory and are hence eligible for CENVAT Credit as "accessories" of such Capital Goods as defined in Rule 2 (a) (A) of the CCR, 2004. He hence prayed that their appeal may be allowed. 3.2 Shri Sanjay Kakkar, Ld. AR appearing for revenue submitted that the MS billets and rounds which were used as dunnage material in the factory cannot be considered as "accessories" of the capital goods. It could not be said that without these goods it would be extremely difficult for the material handling machinery or forklifts to function. While Forklifts fall under CETH 8427 1000, MS billets/rounds fall under CETH 7206 and are hence not capital goods. As rightly held by the Ld. Commissioner (Appeals) after referring to the Hon'ble Supreme Court's judgment in CCE Vs Allied Air-Conditioning Corporation [2006 (202) ELT) 209 (SC)], the billets and rounds are not joined to forklift nor are they connected to a forklift and cannot be considered as its accessory. He hence prayed that the appeal may be rejected. 4. We have gone through the appeal, the written submissions and....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eater or primary importance' 'additional', 'any of several mechanical devices that assist in operating or controlling the tone resources of an organ'. 'Accessories' are not necessarily confined to particular machines for which they may serve as aids. The same item may be an accessory of more than one kind of instrument." 7. We find that the dunnage or pallets enable heavy machinery and forklifts to easily lift and move steel billets, rounds, and similar materials within or out of the factory. These tools are essential for transporting semi-finished goods during manufacturing, as well as storing and shipping finished products, making them integral to the overall production and distribution process. They hence satisfy the criteria of accessory as discussed above. They are adjuncts or accompaniment to lifting machines/forklifts etc and add convenience or effectiveness to the said machines. They are thus devices that assist in operating machines. They are not necessarily confined to particular machines for which they may serve as aids and can be an accessory of more than one kind of machine. 8. In Banco Products (India) Ltd. v. Commissioner of C. Ex., Vadodara - I [2009 (235) E.L.T. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....al prior to commencement of actual process was held as use for powers in any process in or in relation to manufacture of final product. Accordingly, Hon'ble Supreme Court observed that the process of handling/ lifting/ pumping/ transfer /transportation of the raw material is also a process in or in relation to manufacture, if integrally connected with further operation leading to manufacture of the goods. By applying the ratio as enacted by Hon'ble Supreme Court to the issue disputed before us, it has to be held that the process of manufacture starts with the process of handling of the raw material and resultant use of plastic crates for movement of such raw material, in which case, the plastic crates would earn their status as inputs. 22. Similarly, in the case of Collr.of C.E. v. M/s. Solaris Chemtech Ltd. - 2007 (214) E.L.T. 481 (S.C.), it was reiterated that the expression "in or in relation to manufacture" of final product must be given a wide connotation. A reference, at this stage, may also be made to Larger Bench decision of the Tribunal in the case of M/s. Union Carbide India Ltd. v. CCE - 1996 (86) E.L.T. 613 (Tri.-LB), laying down that the words "in relation to the man....