TMI Blog2018 (11) TMI 493X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, the capital goods installed in the R&D Division are used in relation to the activity of manufacture and therefore, eligible for Credit. Disallowance of Credit on inputs - Held that:- The definition of inputs that the goods brought within the factory used for any purpose would be eligible for Credit. Thus, the definition of inputs has a wide ambit so as to cover all goods which have been brought into the factory - credit allowed. Appeal allowed - decided in favor of appellant. - Appeal No. E/41989/2018 - Final Order No. 42788/2018 - Dated:- 9-11-2018 - Ms. Sulekha Beevi C.S., Member (Judicial) Ms. S. Bharkavi, Advocate for the Appellant Shri. K. Veerabhadra Reddy, ADC (AR) for the Respondent ORDER Brief f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the capital goods are installed in the R D Division and are used for activities of quality testing and Research and Development of the finished products and therefore, being integral part of the manufacturing activity, are eligible for credit. 2.3 It is argued by her that the Tribunal in the case of M/s. Sudarshan Chemicals Inds. Ltd. Vs. Commissioner of C. Ex., Pune-III 2010 (262) E.L.T. 974 (Tri. Mum.) had analyzed a similar issue and held that the inputs and capital goods used for R D purposes were eligible for credit. So also that the Tribunal in the case of M/s. Orchid Health Care Vs. Commissioner of C. Ex., Chennai-IV vice versa vide Final Order Nos. 40337-40338/2018 dated 19.01.2018 had also held the issue in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for Credit. Thus, the definition of inputs has a wide ambit so as to cover all goods which have been brought into the factory. The Counsel for appellant has relied upon the decision in the case of M/s. Sudarshan Chemicals Inds. Ltd. (supra). The relevant portion which is noteworthy is reproduced as under : 9. After careful examination of the facts of the case, I find that the manufacturing activity of the appellant is as such that the input procured by the appellant is first to be tested and then they have to be taken into the manufacturing process. Moreover, if some variations found with regard to the quality of input, it is to be retested as per required composition. In that situation, the manufacturing activity explained by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tence of R D Section inside the manufacturing premises of the appellants. The only point that arises for consideratin is that whether the inputs and capital goods used in R D is eligible for exemption from duty and whether the input services used in R D is eligible for Cenvat credit. The ground on which the department proposes to deny the benefit is that R D activities are not part of manufacturing process. Thus, it is alleged that the products developed at R D Centre are either exported or sold in DTA. The relevant portion of the SCN is reproduced as under for better appreciation:- 7. Whereas it appears that M/s. OHC-EOU have imported/locally procured raw materials and capital goods and have installed in R D Centre and used the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... envat credit on input services in our view is fully in order. A similar issue was discussed by the Tribunal in the case of Dr. Reddy Laboratories Ltd. (supra), where the Tribunal observed as under:- 3. After hearing both sides and perusal of the records, we find that the adjudicating Commissioner has considered all aspects of the case and has passed a detailed speaking order. He has also taken note of the fact that for manufacturing and exporting pharmaceutical products certain amount of research and development is required for meeting the stringent requirement of the Certification Authorities in the export market before the goods can be actually exported. He has also taken into account the fact that the respondents have fulfilled th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We find that in the present case the appellants being a 100% EOU made import of certain raw material without payment of duty by availing the benefit of the above-mentioned Notifications. Part of the raw material is used for research and development activity which is essential for manufacture of human vaccines. The Tribunal in the case of Dr. Reddy Laboratories Ltd. (supra) rejected the contention of the Revenue that the manufacturer is liable to pay duty in respect of the raw material obtained without payment of duty, which is used for research and development purposes. In the present case, we find that there is no allegation that the raw material which is procured without payment of duty is diverted or not used within the 100% EOU as the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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