COMMISSIONER OF CENTRAL EXCISE. Vs. RAJASHRI PACKAGERS LTD.

JUDGEMENT

(1.) This appeal is filed by the revenue challenging the order passed by the Tribunal 2008 (229) E.L.T. 78 (Tribunal) which has held that CENVAT Credit cannot be denied on the capital goods when admittedly it is not used exclusively in the manufacture of exempted goods.

(2.) The Assessee - M/s. Rajashri Packagers Limited are engaged in the manufacture of refined vegetable oil and vanaspati by processing crude oil which are exempted from payment of excise duty. In the course of manufacture of vanaspati by-products emerge at different stages. These by-products are cleared on payment of duty. Certain capital goods were received which is utilized in the manufacture of these exempted goods and accordingly CENVAT Credit was taken. The revenue proceeded against the Assessee on the ground that these capital machineries were used in the plant which produces vanaspati, which is totally exempted. When the capital goods are used exclusively for manufacture of exempted goods, no credit would be available in terms of Rule 6 of the CENVAT Credit Rules. Therefore, the original authority confirmed the demand and imposed penalty.

(3.) The Assessee preferred an appeal to the Commissioner (Appeals). The Appellate Authority after examining the matter held that the availment of credit cannot be denied as long as the new plant is in the same factory and is connected to the process which produces the edible goods at any stage. Accordingly, the demand was set aside. Aggrieved by the same, the revenue preferred an appeal to the Tribunal.