The Customs, Excise & Service Tax Appellate Tribunal New Delhi prerequisite for availment of CENVAT credit in respect of capital goods in the factory of manufacturer is its receipt in the factory and use in the manufacture of dutiable final product
Facts
The respondent is engaged in manufacture of Zinc ingots, lead etc. falling under Chapter 79 to the Central Excise Tariff Act, 1985.
In order to treat effluent/tail gases emitting from factory, the Respondent engaged M/s Thermax Ltd., Pune for setting up Tail Gas Treatment Plant (“TGT Plant”) inside the factory premises. TGT Plant was installed for removal of particles and Sulphur Dioxide mist from tail gas.
Upon complete commissioning and inspection of functional TGT Plant, the same was handed over by the Contractor to the Respondent.
A Show Cause Notice was issued to the Respondent, proposing to deny and recover Cenvat credit availed on duty paid parts, components, spares, accessories used in the TGT Plant, along with interest and penalty, during the period from February 2006 to January 2007.
Submissions
The Authorized Representative submitted that the Cenvat credit is not admissible to the respondent, as they were not the manufacturers of the final product TGT plant, as the contractor viz., Thermax Ltd. was the actual manufacturer.
He argued that TGT plant was handed over only after its commissioning and ownership passed on the respondent only after issuance of performance acceptance certificate.
Counsel for the respondent submitted that they have availed CENVAT credit correctly as the goods have been used within the factory of Production, and all conditions under the, CENVAT Credit Rules have been satisfied.
Decision
The two member bench of Justice Dilip Gupta) President and Hemambika R Priya Member (Technical) noted that the respondent had availed credit on goods mentioned in the invoices provided by the contractor to the respondent. The goods on which such credit was taken are components, spares and/or accessories of goods classifiable under chapter 84, 85 or 90 of the First Schedule to the Central Excise Tariff Act, 1985.
It was further noted that the Tribunal in several earlier decisions has held that the prerequisite for availment of CENVAT credit in respect of capital goods in the factory of manufacturer is its receipt in the factory and use in the manufacture of dutiable final product.
The bench restored the impugned order.
Case title: Commissioner of Central Excise and CGST, Udaipur v/s M/s. Hindustan Zinc Ltd.
Citation: Excise Appeal No. 50688 Of 2021
