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Commissioner Of C. Ex. vs Sugavaneswara Spinning Mills (P) ... on 9 December, 2005
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1. The short question arising for consideration in this appeal of the Revenue is whether input duty credit is admissible to the respondents in respect of plastic crates and bins for the period March-April, 2002 under Rule 2 of the Cenvat Credit Rules, 2002. There is no representation for the respondents despite notice, nor any request of theirs for adjournment. There was no representation for the party on the last occasion also despite notice. In the circumstances, I am inclined to dispose of this appeal after examining the records and hearing the learned SDR. In the impugned order, the learned Commissioner (Appeals) has relied upon the Hon'ble Supreme Court's judgment in J.K. Cotton Spinning & Weaving Mills Co. Ltd. v. STO Kanpur reported in 1997 (91) E.L.T. 34 (S.C.), wherein the expression "in the manufacture of goods" was interpreted

Court and it was held that it should normally encompass the entire process of converting raw material into finished goods. The learned Commissioner (Appeals) has, on this basis, treated the plastic crates as inputs and allowed input duty credit to the assessee, notwithstanding the fact that the assessee had not claimed such relief. In the present appeal, the rationale of the above view taken by the Commissioner (Appeals) has been questioned. It is pointed out that the Hon'ble Supreme Court's decision did not consider any machinery or part or accessory thereof, as input. This ground has been reiterated today by the learned SDR. The case of the assessee appears to be that the definition of "input" under Rule 2 of the Cenvat Credit Rules, 2002 is wide enough to include any goods (except High speed oil and motor spirit) used in, or in relation to, the manufacture of final product, whether directly or indirectly and whether contained in the final product or not. According to them, "plastic crates and bins" fit well into this definition.

held that plastic crates used by the said party as material handling machinery could hardly be treated as inputs as the definition of "input" under Rule 2 of the Cenvat Credit Rules, 2001/2002 could not be extended so to encompass the goods which were conventionally regarded as capital good Paras 4 and 5 of the above final order are reproduced below: 4. After giving careful consideration to the submissions, I find that under Rule 2(b) of the Cenvat Credit Rules, 2001/2002, "capital goods" for the purpose of Cenvat credit were specified in an exhaustive list, which reads as under: (i) all goods falling under Chapter 82, Chapter 84, Chapter 85, Chapter 90, Heading No. 68.02 and sub-heading No. 6801.10 of the First Schedule to the Tariff Act, (i) Components, spares and accessories of the goods specified at (i) above, (ii) moulds and dies, (iii) refractories and refractory materials, (iv) tubes and pipes and fitting thereof, (v) pollution control equipment; and (vi) storage tank, used in the factory) of the manufacturers of the final products, but does not include any equipment or appliance used in an office. 5. The 'plastic crates' under consideration are falling under

material. The term "input" has a conventional meaning. It should get wholly or substantially used-up by the time the output emerges. The plastic crates used by the respondents as material handling equipment can hardly be treated as inputs as the definition of "input" under Rule 2 of the Cenvat Credit Rules, 2001 /2002 cannot be extended so as to encompass the goods which are conventionally regarded as capital goods. There is a clear dividing line between the two and this aspect was not a subject matter of J.K. Cotton Spinning and Weaving Mills (supra). This apart, the alternative plea of input duty credit is being raised for the first time before the Tribunal. I have seen the respondents' reply to the show-cause notice and perused their Memorandum of Appeal filed with the Commissioner (Appeals). Neither of them contains the above plea for input duty credit on "plastic crates.