Cenvat credit allowable on Capital goods used initially in the manufacturing of exempted goods but, at time of receipt, the Assessee had intention to use said Capital goods for manufacturing of both dutiable as well as exempted goods
Brindavan Beverages Pvt. Ltd. (the Appellant) was engaged in manufacturing of Aerated waters which are dutiable and also Maaza, a Fruit pulp based drink which is fully exempted from Excise duty. During the period from September 2004 to August 2005, the Appellant installed certain machinery (Capital goods) in one of their plants, which was being used exclusively for manufacturing of Maaza which was fully exempt from Excise duty. Thereafter, the Appellant took Cenvat credit on the Capital goods which was denied by the Department in terms of Rule 6(4) of Cenvat Credit Rules, 2004on the ground that the capital goods were used exclusively in the manufacture of exempted goods.
The Hon’ble CESTAT, Delhi also upheld the contentions of the Department against which the Appellant filed an appeal before the Hon’ble High Court of Allahabad. The Hon’ble High Court set aside the Tribunal’s order and remanded the matter back to the Tribunal for fresh consideration.
In remand proceedings, the Hon’ble Tribunal observed thataccording to the Appellant at time of availing Cenvat credit, they had intention to use the capital goods for the manufacture of fruit pulp based soft drink (exempted goods) as well as for the manufacture of aerated waters (dutiable goods) and for this reason only, they had availed Cenvat credit on the Capital goods. Accordingly, the Hon’bleTribunalheld that:
Accordingly, the Tribunal remanded the matter to the Commissioner for de novo adjudication.
(Bimal Jain, FCA, FCS, LLB, B.Com (Hons), Mobile: +91 9810604563, Email: email@example.com)