2007 (5) TMI 493 - AT - Central Excise

Summary

Issues involved: Denial of input duty credit on steel materials used in the manufacture of storage tanks under Notification No. 67/95-C.E.

Summary:
The appellants used duty-paid steel materials for manufacturing storage tanks, took credit of input duty, paid duty on the storage tanks, and availed credit of duty paid on the storage tanks while clearing final goods. The impugned Order denied input duty credit on steel materials used in the manufacture of storage tanks under Notification No. 67/95-C.E. as capital goods. The appellants argued that they did not avail the exemption under the said notification and paid duty on the storage tanks, making them eligible for credit under CENVAT Credit Rules. The Department contended that the storage tanks were exempt under the notification, thus no input duty credit should be allowed. The Tribunal found that the notification aimed to avoid duty on capital goods used in the production of final goods, allowing credit on inputs used in the manufacture of capital goods for dutiable final goods.

The Tribunal held that the credit of duty paid on inputs used in the manufacture of storage tanks is admissible under the Rules, even though the appellants paid duty on the tanks. The Tribunal considered the exercise as revenue-neutral and did not justify denying credit on inputs used for manufacturing capital goods for further production of dutiable final goods. Consequently, the impugned Order was set aside, and the appeal was allowed.