By TIOL News Service

NEW DELHI, SEPT 30, 2016: THE CCE, Jaipur disallowed the CENVAT credit of Rs.2,02,68,866/- availed by the appellant on dumpers and parts thereof saying that the dumpers are classified as motor vehicles under TI 87041010 and are excluded from the purview of capital goods as defined under Rule 2 (a)(A) of CCR and they are also not 'inputs' under Rule 2 (k) of CCR, 2004.

The appellant is before the CESTAT and claimed that they are entitled to the credit as these are input used in or relation to the manufacture of dutiable final product and can also be considered as capital goods since material handling equipment. A plethora of case laws were relied in support.

The AR reiterated the findings of the adjudicating authority.

The Bench observed -

+ The subject goods, the assessee manufacturer is using for carrying raw materials like limestone etc. from the mining area to the site of the crusher. After examining the facts on record and the decisions of CESTAT, Bangalore in case of Malabar Cements Ltd. (supra) and CESTAT, Delhi in the case of Jindal Steel and Power Ltd. Vs. CCE, Raipur - 2015-TIOL-2376-CESTAT-DEL and considering the Hon'ble Supreme Court's decisions in the cases of CCE, Jaipur Vs. Rajasthan Spinning & Weaving Mills Ltd. - 2010-TIOL-51-SC-CX and Jawahar Mills Ltd - 2002-TIOL-87-SC-CX , where yardstick 'user test' has been mentioned, we are of the considered view that the dumpers as such are accessory to the capital goods involved in manufacture of final products.

Extracting passages from the CESTAT decision in Jindal Steel & Power Ltd. (supra) where it is held that 'transfer vehicles' used within the factory are eligible for cenvat credit; the decision in Aditya Cement Vs. Union of India where it is held that Railway track materials used for transport within the factory /mine premises are entitled to Modvat credit under Rule 57Q of erstwhile CER, 1944, the Bench concluded that the subject goods - dumpers and parts thereof are entitled to CENVAT credit.

The order was set aside and the appeal was allowed with consequential relief.

(See 2016-TIOL-2582-CESTAT-DEL)