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M/S.P.K.P.N.Shipping Mills (P) ... vs The Commissioner Of Central ... on 14 February, 2013
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Service Tax Appellate Tribunal, Shastri Bavan Annexe Building, No.26, Haddows Road, Chennai  600 006. .... Respondents Prayer: Civil Miscellaneous Appeal filed under Section 35G of the Central Excise Act, 1944 against the Order dated 24.06.2005 in Final Order No.888 of 2005 passed by the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench at Chennai. For Appellant : Mr.Mohammed Shafiq for M/s.R.Karthikeyan For Respondents : Mr.Vikram Ramakrishnan for R1 R2 - Tribunal JUDGMENT (Judgment of the Court was delivered by R.BANUMATHI, J.) Whether 'Plastic Crates' are eligible for credit under 'capital goods' and whether the appellant is entitled to cenvat credit for 'Plastic Crates' are the points falling for consideration in this appeal. 2. The appellants are engaged in manufacturing of Cotton Flax Yarn, Viscos Staple Fibre Yarn, Polyster Fibre yarn and Polyster Viscos Blender Yarn falling under Chapter 52 and 55. The appellants had taken Cenvat credit

goods  'Plastic Crates', falling under Chapter 3923.90 during the months of September 2001 to May 2002. Stating that the goods are neither specified under Rule 2 of Cenvat Rules 2001/2002 as "capital goods" nor can the same be considered as "spares and accessories of the machineries" used in the spinning of yarn in the factory, a show cause notice dated 27.09.2002 was issued to the appellant as to why (i) the credit of Rs.20,800/- should not be recovered under Rule 12 of the erstwhile Cenvat Credit Rules 2001 and Rule 12 of the Cenvat Credit Rules 2002 read with Section 11A(1) and 38A of Central Excise Act, 1944; (ii) interest as applicable should not be demanded under Rule 12 of the erstwhile Cenvat Credit Rules 2001 and Rule 12 of the Cenvat Credit Rules, 2002 and Sections 11AB(1) and 38A of the Central Excise Act, 1944 and (iii) penalty should not be imposed under rule 13(1) of the erstwhile Cenvat Credit Rules, 2001 and Rule 13(1) of the Cenvat Credit Rules, 2002 read with Section 38A of the Central Excise Act, 1944.

Plastic Crates have an individual role in the manufacture of finished excisable goods and is an essential input/goods. The scope and ambit of definition of "input" is very wide, which covers all goods used in or in relation to the manufacture of final product and the Cenvat Credit has to be allowed in respect of the goods used for such processes and denial of credit on 'Plastic Crates' is not justifiable.

Tribunal in the said case of BANGO PRODUCTS (INDIA) LTD. VS. COMMISSIONER OF C. EX., VADODARA-1 (2009 (235) E.L.T. 636 (Tri.- LB.) held that the 'Plastic Crates' used as material handling device within factory for internal transportation of goods was held to be accessory is the aid in increasing the effectiveness of the machinery and that Cenvat/Modvat credit on "Plastic Crates" are admissible as a capital goods. The Larger Bench of the Tribunal after referring to number of decisions held as under: