Winsome Yarns Ltd Vs Commissioner of Central Excise (Punjab and Haryana High Court)
The Punjab and Haryana High Court heard an appeal under Section 35G of the Central Excise Act, 1944 against the CESTAT order dated 20.02.2017, which had rejected the appellant’s claim for CENVAT credit on GP coils, GP sheets and aluminium sections used in manufacturing air ducts for an air humidification machine installed in its factory. The appellant, a manufacturer of cotton yarn, had availed CENVAT credit on these goods during the period August 2006 to April 2007 under the CENVAT Credit Rules, 2004. Fol-lowing an audit, a show cause notice was issued alleging irregular availment of credit, and the adjudi-cating authority confirmed a demand with interest and penalty. The First Appellate Authority granted partial relief, while the Tribunal upheld denial of credit relating to GP sheets, GP coils and aluminium sec-tions.
The appellant contended that these goods were used in fabricating ducts for the air humidifier, which was undisputedly capital goods falling under Chapter 84 of the Central Excise Tariff Act. It argued that the goods qualified as components or accessories under Rule 2(a)(A)(iii) of the CENVAT Credit Rules, 2004 and, alternatively, as inputs under Rule 2(k). The Revenue maintained that the goods fell under Chapters 72 and 76 of the Tariff Act and could neither be treated as capital goods nor as components, spares or accessories, relying on the Tribunal’s decision in Modern Steels Ltd.
