Whether credit taken on goods received for repair deniable on the ground that goods were neither inputs nor capital goods?

PJ/Case Law/2013-14/2089

Case:- THE SUPREME INDUSTRIES LTD SHRI H K SHAH Vs COMMISSIONER OF CENTRAL EXCISE, LTU, MUMBAI

Citation:- 2014-TIOL-148-CESTAT-MUM

Brief facts:- The facts of the case were that the appellants were engaged in the activity of manufacture of moulds and dies and also undertook the activity of repairing the same. The issue involved in this case was relating to the activity of repairs only. The appellants were procuring moulds and dies from their own unit for repairing purpose and paying duty of the invoices issued to them. They were taking credit paid on moulds and dies. If there was any value addition, the appellant was discharging duty on the cost of the moulds and dies plus value addition. The revenue was of the view that as the moulds and dies received by the appellants was neither an input nor a capital good, therefore the appellants were not entitled for CENVAT credit on the said moulds. The appellants were in appeals against the denial of credit on moulds and dies which they received for repairs in their Andheri unit.

Appellant’s contentions:- The appellant’s submitted that they procured moulds and dies from their own unit for repairing purpose and paid duty of the invoices issued to them. They took credit paid on moulds and dies. If there was any value addition, the appellant was discharging duty on the cost of the moulds and dies plus value addition. The appellant’s were of the view that they had paid duty of the invoices issued to their unit, hence they were eligible for claiming cenvat credit.

Respondent’s contentions:- The Ld. Representative for revenue submitted that as the moulds and dies received by the appellants was neither an input nor a capital good, therefore the appellants were not entitled for CENVAT credit on the said moulds.

Reasoning of judgment:- Hon’ble judge after hearing both the sides found that whatever duty had been paid by the appellants while receiving the moulds and dies for repairing purpose they had taken the credit which were entitled to them as per Rule 16 Central Excise Rules, 2002. In these circumstances, he did not find any merit in the impugned order and hold that as the appellants were discharging duty equivalent or more than the credit availed by them therefore they were not require to reverse the credit taken on the moulds and dies.
In view of the above findings, the impugned order was set aside and the appeals were allowed with consequential relief.

Decision:- Appeals were allowed.

Comment:- The analogy drawn from the case is that the credit taken under Rule 16 of the Central Excise Rules cannot be denied merely on the ground that what was received for repairing was neither inputs nor capital goods as far as it was not disputed that the value addition made during the repair process was subsequently cleared on payment of excise duty. As such, the denial of credit was erroneous and moreover, credit under Rule 16 is also not dependent on whether the goods received for repair purpose are inputs or capital goods. The facility of credit under Rule 16 is available to facilitate proper discharge of duty and avoid double payment of duty on the same goods.

Comments

PJ/Case Law/2013-14/2089

Post a Comment

Query