2012 (5) TMI 535 - AT - Central Excise

Benefit of CENVAT Credit on capital goods - plastic racks - manufacture of Transformer and Parts - Following decision of Banco Products (India) Limited 2009 (2) TMI 101 - CESTAT AHMEDABAD - Decided against Revenue.

Summary

Issues:
1. Wrong availment of Cenvat credit on storage rack as capital goods.
2. Appeal against eligibility of storage racks as capital goods for Cenvat credit.

Issue 1:
The assessees, engaged in manufacturing Transformers and Parts falling under Chapter 84 of the Central Excise Tariff Act, wrongly availed Cenvat credit on storage racks, not specified as capital goods under the Cenvat Credit Rules, 2002. A show cause notice was issued to recover the wrongly availed Cenvat credit amounting to Rs. 3,34,479 under Rule 14 of the Cenvat Credit Rules, 2004, along with interest and penalty under the Central Excise Act, 1944.

Issue 2:
The Revenue appealed the decision allowing the respondent to claim Cenvat credit on storage racks as capital goods. The Commissioner (Appeals) relied on the decisions of the Larger Bench in the cases of Banco Products (India) Limited and Sonal Engineering Pvt Limited, where similar items were considered eligible for Cenvat credit as capital goods. The Appellate Tribunal found that the decision of the Larger Bench was applicable to the case, as in Banco Products (India) Limited, plastic crates used for raw material movement and storage were considered eligible for Cenvat credit.

In conclusion, the Appellate Tribunal, after considering the precedents and the definition of capital goods, rejected the Revenue's appeal, stating that the storage racks could be treated as capital goods for the purpose of availing Cenvat credit.