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VST Industries Ltd. Versus Commissioner of Central Excise, Customs And Service Tax, Hyderabad-II

Benefit of CENVAT credit of duty paid on various capital goods - Subject items cannot be considered to be covered by the definition of capital goods inasmuch as they are classifiable under Chapters 29, 35 and 38 - Held that:- Traps in question are required to be used for avoiding the attack by the tobacco beetles. If the same are not used, raw materials as also the final products are likely to be damaged, in which case, they would not be in a position to be cleared. The items in question, may no .....

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easuring some of the final products. It is well settled law that where a particular process is integrally connected with the ultimate production of the goods, but for that process, manufacture of goods would be commercially inexpedient, articles required in that process would be considered as having been used in the manufacture of goods. It is nobody's case that tobacco beetle is required to be managed and if not managed the production of cigarettes cannot take place commercially, though theoret .....

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e engaged in the manufacture of cigarettes classifiable under chapter 22 of the Central Excise Tariff Act. They were availing the benefit of CENVAT credit of duty paid on various capital goods. The dispute in the present appeal relates to the three items i.e. 1) Lasiotrap Pheromone capsules 2) Insect Monitoring trap 3) New Serrico Pheromone involving total CENVAT credit of ₹ 77681/- availed by them during the period from August 2005 to May 2009. The authorities below have denied the CENVAT .....

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and Shri S. Teli, A.R. for the Revenue, I find that the limited dispute relates to the admissibility of CENVAT credit in respect of the above three items. As per the appellant, the same are extensively used in the food processing and tobacco industries. The same are in the nature of traps which are used in the places of storage of tobacco, cigarettes, processing lines and manufacturing lines to monitor the level of tobacco beetle infestation. If the said beetle infestation is not checked, the sa .....

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and planned pest management programme is undertaken, the manufacture of cigarettes is not feasible and is not possible. They have relied upon various decisions to impress upon their plea that any item used in the manufacture of the final product is required to be considered as an input, even though it may not form part of the final product. The appellants have also contested the demand on the point of limitation by submitting that the issue involved is a bonafide dispute of interpretation of th .....

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the appellant's alternative plea that they should be considered as inputs on the ground that they are not going into the manufacturing process at any stage. The appellant's plea of limitation also stands rejected by Commissioner (Appeals) by observing that they have taken the credit with malafide intention. For the same reason, he has upheld imposition of penalty and confiscation of goods. 4. The appellants have relied upon a certificate dated 17.02.2010 issued by the National Institute .....

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torage pests in tobacco and the attack of this pest will diminish the quality of finished products of tobacco. The Pheromone Traps are widely in use across the Tobacco Industry worldwide, for monitoring the occurrence and intensity of infestation in Tobacco Storage Areas. The tobacco beetle gets attracted to the lure and gets trapped on the sticky surface. The trend of number of beetles trapped indicates the distribution pattern of infestation levels. Based on Trap catches, the appropriate contr .....

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same are not used, raw materials as also the final products are likely to be damaged, in which case, they would not be in a position to be cleared. The items in question, may not be strictly covered by the definition of capital goods but admittedly they are required to be used for manufacture of final product and as such can be considered as inputs. The Hon'ble Karnataka High court in the case of Rane (Madras) Ltd Vs CCE Bangalore [2009(236) ELT 33 (Kar)] has allowed the CENVAT credit on uni .....

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