Order Date – 09 February 2023

Parties: Ghcl Limited Vs C.C.E. & S.T.-Bhavnagar

Facts –

• The Appellant, Ghcl Limited, during the course of manufacture of soda ash the appellant manufactured intermediate goods i.e. coke briquettes from coke breeze. For manufacturing of Coke briquettes, the appellant has set up a plant for which certain plant and machinery were purchased and availed cenvat credit of excise duty paid on such plant and machinery by treating the same as capital goods.
• Show cause notices were issued denying the cenvat credit availed on such plant and machinery on the ground that capital goods have been used in the manufacture of exempted goods which attracts NIL rate of duty and some of the items doesn’t fall under the definition of Capital goods.

Issue –

• Whether the appellant is entitled to Cenvat credit on plant and machinery used in the manufacture of coke briquettes?

Order –

• The Tribunal held that the provision of Rule 6(4) of CCR is not applicable in the present case. The said provision is applicable only when the final product in which the capital goods is used is exclusively, cleared under exemption. The process of manufacture of soda ash is consist of various processes and the entire process is considered to be the process of manufacture of Soda ash which is indeed cleared on payment of duty.
• The issue was considered in the case of Ispat Metallics Ltd vs. CCE Raigad- 2005 (191) ELT 1107 (Tri. Mum) which held that so long as the entity is required to be used in the factory of the final product manufacturer, the machinery/plant would be eligible. When read with Rule 6(4) of the Cenvat Rules, the credit could not be denied even if the use is for manufacture of non-excisable entity. Therefore, even if the process of conversion of Iron ore “fines” to “Briquettes” does not amount to manufacture of excisable goods under the Central Excise law, the credit cannot be denied.
• Accordingly, the impugned order is set aside. Appeals are allowed.