Applicability of definition of Capital goods u/CCR, 2004 to Another Notification issued under Customs

PJ/Case Law/2011-12/1141

Case: Commissioner of C. Ex, Chandigarh v/s Kejriwal Bee Care (I) Ltd

Citation: 2011 (266) ELT 233 (Tri-Del)

Issue:- The definition of “Capital goods” in Cenvat credit Rules cannot be applied for 100% EOU.

Brief Facts: -Respondent is a 100% EOU engaged in the production of honey and Beewax a by-product for export. Notification No. 22/03-CE dated 31.03.2003 allows the assessee to acquire duty free capital goods and their spares and accessories and other items as listed in Annexure-I to the said Notification. Accordingly, respondent applied for duty free procurement of capital goods namely pre-fabricated structures, PUFF doors, PUFF panels and RPF panels falling under heading 9406.00 under CT-3 certificate. These goods were required for cold room in the warehouse and to carry out the manufacturing activity in the cold room.

The Deputy Commissioner disallowed the request of the respondent on the ground that the items requested were not falling under the definition of “capital goods” as given in Rule 2 of CCR, 2002.

In appeal, the Commissioner (Appeal) allowed the appeal holding that production and processing of honey for export requires certain environment conditions and precautions for the purpose of which the processing machinery has to be installed in a cold room and the goods required by the respondent are required in a cold room.

Against this order, Revenue is in appeal before the Tribunal.

Appellant’s Contention: - Revenue contended that the goods in question are not capital goods and hence are not covered by Sl. no. 1 of Annexure-I to the exemption Notification. That since the Notification does not disclose any definition of the terms capital goods, the definition of the said term as given in CCR, 2002 has to be adopted. And the said items are not covered by the definition given in Rule 2 of CCR, 2002. That reliance placed by the Commissioner (Appeal) on the judgment given in CCE, Pune-I v/s Wakefield Agro Products [2002 (143) ELT 596 (Tri-Mumbai)] is not relevant as the items therein were not the items sought to be acquired free of duty by 100% EOU.

Respondent’s contention:- Respondent contended that cold room is a must foe a 100% EOU engaged in production of agricultural items for export. And the items in question are used in the cold room for production of honey.

Reasoning of Judgment: - The Tribunal held that the contention of Revenue is totally wrong as the definition of the term input and capital goods as given in CCR, 2002 or CCR, 2004 is relevant only for the purpose of Cenvat credit and there is no justification to apply the same to an exemption notification meant for 100% EOUs. It was held that since there is no definition of capital goods given in the exemption notification No. 22/03-CE, the term is to be interpreted in the sense in which it is understood in common parlance and on this basis, the pre-fabricated structures,PUFF doors, PUFF panels and RPF panels required by Respondent in cold room would have to be treated as items of capital goods. It was founded that the same view was taken by the Tribunal in the case of CCE, Pune-I v/s Wakefield Agro Products. No infirmity in the impugned order.

Decision:- Appeal dismissed.

Comments:- This is true that any definition under other Act cannot be brought under another set of Rules where no definition is given. General meaning of that word or term will be applicable. This is very landmark decision and is very beneficial for 100% EOU.

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PJ/Case Law/2011-12/1141

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