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2015 (9) TMI 1159 - CESTAT AHMEDABAD

2015 (9) TMI 1159 - CESTAT AHMEDABAD - TMI - Denial of CENVAT Credit - whether appellant is entitled to avail Cenvat Credit on inputs and capital goods used exclusively for R & D and Quality Control Laboratory situated inside the factory premises - Held that:- Appellant is using the Laboratory for carrying out tests regarding necessary colour texture to the plastic granule as per specifications and requirements of the customers, to match the specifications as per global norms and also for develo .....

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No. A/11105/2015 - Dated:- 22-7-2015 - H K Thakur, Member (T), J. For the Appellant : Shri Willinggon C, Adv For the Respondent : Shri Govind Jha, AR ORDER Per H K Thakur This appeal has been filed by the appellant against OIA No. PJ/593/VDR-I/2012-13 Dated 20.03.2013 passed by commissioner (A), Vadodara under which OIO No. 01/Dem/JC/Div. - iv/2012 dated 16.02.2012 passed by Adjudicating authority, has been upheld in toto. The issue involved in the present appeal is whether appellant is entitle .....

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, PBT falling under Chapter - 39 of the Central Excise Tariff Act 1985. That certain tests are carried out on 'Injection Moulding Machine' and the tests are matched with the samples supplied by the customers. That resultant Samples manufactured and tested are sent to customers for approval and on approval regular batches are manufactured and supplied to the customers. Learned Advocate argued that as per the definition of 'capital goods' under Rule - 2(a) of Cenvat credit Rules 20 .....

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nds that capital goods and inputs are not used in the manufacture of finished excisable goods and has not given any cognizance to the earlier OIA dated 20/22.12.2011 passed by Commr (A) on the same issue Appellant relied upon the following case Laws:- (i) Tata Engineering and Locomotive Co. Ltd. vs. CCE Pune [2010 (256) ELT 56 (Bom.)] (ii) USV Ltd. vs. CCE Mumbai - [2006 (195) ELT 158 ( Tri.-Mumbai)] (ii) Sudarshon Chemicals Inds. Ltd. vs. CCE, Pune-II [2010 (262) ELT 974 (Tri.-Mumbai)] (iv) CCE .....

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priately. 4. Heard both sides and perused the case records. The issue involved in these proceedings is whether appellant is entitled to Cenvat Credit on Capital goods and inputs used in the R&D and quality Control Laboratory of the appellant situated in the factory premises. It is observed from the provisions of Rule - 2(a) (A) (1) of Cenvat Credit Rules 2004, that specified goods should only be used "in the factory of the manufacture of final products". The requirement in Rule - 2 .....

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to be in relation to the manufacture of finished goods. It is observed that Appellant is using the Laboratory for carrying out tests regarding necessary colour texture to the plastic granule as per specifications and requirements of the customers, to match the specifications as per global norms and also for developing new products for the customers etc. Appellant will have to meet the specifications of the customers, before the products are manufactured and cleared on payment of duty, by suitabl .....

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- "2. As per the facts on records, the appellants are engaged in the manufacture of medicines falling under Chapter 30 of Schedule to Central Excise Tariff Act, 1985 and were availing the benefit of Modvat credit on the inputs as also on the capital goods used in the manufacture of the said goods. The appellant has a Molecular Medicines Research Laboratory (MMRL) within their licensed factory premises. During the period April to December, 1998, they imported/indigenously procured capital go .....

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ble during the period, allowed Modvat credit on capital goods installed in the factory and there was no condition of their actual use in the manufacture of final products. For the above proposition, they referred to Finance Minister's speech as also to the Trade Notice No. 40/96 issued by the Bombay-I Commissionerate. 4. After hearing both sides, we find that as per definition of capital goods contained in Rule 57Q, the same applied to the various goods described in the table annexed to the .....

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capital goods, the disputed items in question earn the credit irrespective of their not being actually used in the production of the final products. 7. The said decision stands confirmed by the Hon'ble Supreme Court [2001 (132) E.L.T. 3 (S.C.)]. Though the period before the Supreme Court was different when the definition of capital goods meant differently. However, the said definition underwent a change as already observed by us and the earlier requirement of the various capital goods being .....

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y the definition of capital goods under Rule 57(2) as they existed at the relevant time and would earn the credit." 4.2 Similarly on admissibility of Cenvat Credit on inputs used in such Laboratories Bombay High Court in the case of Tata Engineering & Locomotive Co. Ltd. (Supra) held as following paras 33 to 35:- "33. Having seen the judicial pronouncements expanding the scope of Rule 57A and accepted by the Board vide its Circular dated 4th May, 1994 referred to hereinabove, one h .....

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trol in the age of global competition, no manufacturer could afford to push its product in the national or international market without achieving certain level of quality in the product. The quality control has become integral part of the manufacturing process, which is required to be undertaken either before the commencement of actual production or subsequent thereto depending upon the nature of the product. 35. Laboratory test or quality check is always in relation to the manufacture of finish .....

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