Judgment:
The authorities below have disallowed CENVAT credit of Rs.2,07,636/- availed by the assessee of duty paid on pumps, electric motors and accessories received as samples on the ground that the goods were neither capital goods nor inputs eligible to credit. The period in dispute is April 2006 to December 2007. Penalty of amount equal to credit denied has also been imposed.
2. I have heard both sides. The assessee imported/purchased from manufacturers, electric motors and pumps etc. and dismantled the same to find out the technology used by other manufacturers of pumps etc. As per Rule 2(a) of CENVAT Credit Rules, 2004, capital goods - means the following goods namely :-
“i) all goods falling under Chapter 82, Chapter 84, Chapter 85 -
ii) -
iii) -
iv) -
v) -
vi) -
vii) -
used - (1) in the factory of the manufacturer of the final products, but does not include any equipment or appliance used in an office; or (2) for providing output services.”
There is no dispute that the goods fall under Chapter 84 and 85. There is no dispute that they were used in the factory of the assessee who manufactures the final products. In the light of language of the Rule, as well as the decision of the Tribunal in Toyota Kirloskar Motor Ltd. Vs CCE Bangalore [2002 (148) ELT 402] and in the light of the decision of the Tribunal in CCE Meerut Vs India Glycols Ltd. [2006 (196) ELT 221] wherein CENVAT credit was held to be admissible on research and development equipment eventhough it was not used for manufacturing or processing of goods in relation to the final product, which decision was upheld by the Hon’ble Uttarakhand High Court reported in 2008 (230) ELT 39 (Uttarakhand), I accept the contention of the assessee that the credit is admissible, and accordingly set aside the impugned order and allow the appeal.