Cenvat Credit on Capital Goods when They are not Owned

Credit on capital goods allowable even if they are not owned by assessee

[2015] 57 taxmann.com 404 (Bombay)

HIGH COURT OF BOMBAY

Commissioner of Central Excise

v.

Modernova Plastyles (P.) Ltd.

Rule 57Q, read with rule 57R, of the Central Excise Rules, 1944, rule 4, read with Rules 2(a) and 3, of the Cenvat Credit Rules, 2004 - Cenvat Credit - Conditions for allowing of - Capital Goods - Period 1997-98 and 1998-99 - Assessee was engaged in manufacture of plastic articles using injection moulding machines - Moulds, used in manufacture, were supplied to assessee by Original Equipment Manufacturers - Assessee took credit of said moulds as 'capital goods' - Department denied credit on ground that capital goods were neither owned, nor taken on lease/finance/hire-purchase; hence, credit could not be allowed to assessee - HELD : For taking credit of duty paid on said goods, it would not be necessary that capital goods shall either be owned by assessee or those shall be acquired by finance from financing agency - Denial of credit based on such ground is unsustainable - Having regard to prevailing legal position applicable to case of assessee, credit cannot be disallowed to assessee and it would be entitled to same [Paras 5 to 16] [In favour of assessee]