The Commissioner of Central Excise vs Pallipalayam Spinners (P) Ltd.

R. Sudhakar, J.—Aggrieved by the order of the Appellate Tribunal in dismissing the appeal filed by it, the Revenue is before this Court challenging the said order by filing the present appeal. This Court, vide order dated 05.02.09, framed the following substantial question of law for consideration:-

"Whether the Tribunal is right in holding plastic crates as accessories of machines in terms of definition of capital goods in Rule 2(b) of Cenvat Credit Rules, 2002 and said goods are eligible for availing Cenvat credit of duty paid under the said rules?"

The respondent assessee is a manufacturer of cotton yarn and man made yarn falling under Chapter 52 and 55 of Central Excise Tariff Act, 1985 and has been availing credit of duty paid on inputs and capital goods in terms of Cenvat Credit Rules, 2002. During the period July, 2002 to October, 2003, the assessee availed credit of duty to the tune of Rs. 39,197/- paid on ''plastic crates'', which falls under Chapter 39 of the Central Excise Tariff Act. The crates are used to carry intermediate goods from one section to another for further processing.

Since the Revenue felt that the plastic crates are not capital goods and are not liable for cenvat credit, sought to recover the credit availed by the appellant. Therefore, a show cause notice dated 12.2.04 was issued. However, on adjudication, the adjudicating authority dropped the proceedings holding that the plastic crates are eligible for credit.

Aggrieved against the said order of the adjudicating authority, the department preferred appeal to the Commissioner (Appeals), who set aside the order of the lower authority and allowed the appeal holding that the goods are ineligible for cenvat credit and the same shall be recovered with interest. Against the said order, the assessee preferred appeal before the Appellate Tribunal.

The Appellate Tribunal, vide Final Order No. 528/2008 dated 30.5.08, set aside the order of the Commissioner (Appeals) and allowed the appeal holding that the impugned goods are accessories that are used for taking intermediate product from one stage to another and, therefore, satisfy the definition of capital goods specified under Rule 2(b) of the Cenvat Credit Rules. Aggrieved against the said order of the Tribunal, the Revenue is before this Court by filing the present appeal.

Heard Mr. Vijay Anand, learned standing counsel appearing for the appellant and Ms. Mithili, learned counsel appearing for the respondent/assessee.

It is brought to the notice of this Court by the learned counsel on either side that the question raised in this appeal is squarely covered by a decision of this Court in M/s. P.K.P.N. Spinning Mills (P) Ltd.-Vs.-The Commissioner of Central Excise (C.M.A. No. 4162 of 2006-Dated 14.02.2013), wherein a Division Bench of this Court, accepting the Larger Bench decision of the Ahmedabad Tribunal in Banco Products (India) Ltd.-Vs.-Commissioner of Central Excise, Vadodara (2009 (235) ELT 636 (Tri-LB), had decided the issue in favour of the assessee and allowed the appeal. A copy of the said order has also been placed before this Court. As submitted by either side, the issue being covered by the above judgment of the Division Bench, this Court is in agreement with the above rational laid down and, accordingly, the substantial question of law is answered in favour of the assessee and against the Revenue.

Accordingly, finding no merits warranting interference with the order of the Tribunal, the appeal is dismissed. However, there shall be no order as to costs.