CA Bimal Jain
Subic Innovative Plastics (P.) Ltd. (the Appellant) had taken Cenvat credit on inputs and capital goods used in Research and Development (R&D) and Quality Control Laboratory situated in the factory premises. Further, the said Laboratory was meant for testing inputs & the samples and on approval of the samples, orders were received from the customers. The Department denied the Cenvat credit on ground that the inputs and the capital goods used in the Laboratory cannot be said to be used in or in relation to manufacture of finished goods.
The Hon’ble CESTAT, Ahmedabad relied upon the following cases:
- USV Ltd. Vs. CCE [2006 (195) ELT 158 (Tri. – Mum.)];
- Tata Engg. & Locomotive Co. Ltd. Vs. CCE [2010 (256) ELT 56 (Bom.)];
- Sudarshan Chemicals Inds. Ltd. Vs. CCE [2010 (262) ELT 974 (Tri. – Mum.)].
and held that as per Rule 2(a) of the Credit Rules, only requirement in relation to capital goods is that they must be used within factory of the manufacture of final goods and there is no requirement as to use for manufacture. In the instant case, the Appellant is using the laboratory for carrying out test as per the specifications and requirements of the customers, to match the specifications as per global norms and also for developing new products for the customers, etc. Thus, such activity in R&D and Quality Control Laboratory is essential for manufacture of the finished goods and has to be held in relation to the manufacture of the excisable goods and therefore, eligible for Cenvat credit as per Rule 3 read with Rule 2(a) and Rule 2(k) of the Credit Rules.
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