Cenvat credit of Dumpers and tyres.

PJ/Case Law /2016-17/3397

Case:-COMMISSIONER OF CENTRAL EXCISE, BHOPAL Versus HINDUSTAN COPPER LTD.

Citation:- 2016 (342) E.L.T. 282 (Tri. - Del.)

Brief facts: -The appeal by Revenue is against the order dated 20-2-2008 of Commissioner of Central Excise, Bhopal.
The respondents are engaged in the manufacture of copper concentrate liable to central excise duty. They have availed Cenvat credit on tyres and dumpers. Proceedings were initiated against them to recover such credit on the ground that these goods do not fall under the category of “capital goods” in terms of Rule 2(a) of Cenvat Credit Rules, 2004. The original authority after due process dropped the demand issued to the respondent. Revenue is aggrieved and is in appeal.

Appellant’s contention:- Ms. Neha Garg, AR, appeared for the Appellant.

Respondent’s contention:- None appeared on behalf of the respondent.

Reasoning of judgment:- The Hon’able judge have perused the appeal records. The original authority allowed the credit on tyres and dumpers. The Department is contesting the finding on the ground that these items are not covered by the definition of “capital goods”. The dumpers are essentially material handling equipments and the tyres used for such dumpers also are not eligible for Cenvat credit. It is Revenue’s contention that the dumpers classifiable under Chapter 87 of Central Excise Tariff Act, 1985 and the tyres classifiable under Chapter 40 are not eligible for Cenvat credit. It was submitted that when the product in question is not at all covered by the definition of ‘capital goods’ the question of allowing credit does not arise. It was further contended that decision of the Tribunal in India Cements - 2005 (182)E.L.T.398 relying on Hon’ble Supreme Court’s decision in Rajasthan State Chemical Works - 1991 (55)E.L.T.444 (S.C.) is not applicable to the present case as the said decision did not examine the meaning of ‘capital goods’ in terms of Cenvat Credit Rules, 2004.
They find that the eligibility of credit for dumpers and tyres have been examined in details by the original authority. The Hon’ble Supreme Court in Vikram Cement - 2006 (197)E.L.T.145 (S.C.) and in Madras Cements Ltd. - 2010 (257)E.L.T.321 (S.C.) held that capital goods used in captive mines are eligible for Cenvat credit. The original authority applied the said ratio as the respondent manufacturer is having their own captive mine which constitute one integrated unit. They note that the ratios of the cited decisions are to the effect that the capital goods used in the factory of manufacturer of the final product are eligible for credit. The factory of manufacturer should, by extension, mean the captive mine of the manufacturer from where the ores are sourced. The material handing equipments are for moving the raw material which are integrally connected with the manufacture of the final product. They also note that the application of scope of capital goods are not different from the erstwhile Modvat Rules in the present Cenvat Credit Rules, 2004. The Board vide Circular dated 2-12-1996 clarified that all parts, components, accessories which are to be used with capital goods and classifiable under any Chapter heading are eligible for Modvat credit. The Tribunal in a recent decision in MSP Steel and Power Ltd. - 2016-TIOL-2054-CESTAT-DEL, held that the use of dumper is as capital goods and is an essential and integrated process required in the manufacture of final products. It has been noted that in Malabar Cements Ltd. - 2002 (149)E.L.T.751 (Tri.-Bang.), the Tribunal allowed the Cenvat credit on dumpers as capital goods under erstwhile Rule 57Q [similar to Rule 2(a) of Cenvat Credit Rules, 2004]. In Tata Steels Ltd. - 2012 (282)E.L.T.459 (Tri.-Kolkata), the Tribunal allowed credit on coke transfer cars used within the factory for movement of goods. The decision of Tribunal in Malabar Cements Ltd. (supra) has been upheld by Hon’ble Supreme Court reported in 2003 (153) E.L.T. A94 (S.C.).
Considering the above analysis and discussion and following the ratio of Hon’ble Supreme Court (supra), they find no merits in the present appeal filed by Revenue. Accordingly, the same is dismissed. Cross-Objection filed by the respondents also stands disposed of.

Decision:- Appeal dismissed

Comment:- The analogy of the case is that relying on the discussion and the ratio of Hon’ble Supreme Court capital goods used in the factory of manufacturer of the final product are eligible for credit. Therefore, Cenvat credit of Dumpers and tyres used by copper concentrate manufacture for transport of ore from captive mines is allowed. The material handing equipments are for moving the raw material which are integrally connected with the manufacture of the final product. Hence these are eligible for credit.
Prepared by:- Monika Tak

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PJ/Case Law /2016-17/3397

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