2026-VIL-1647-CESTAT-MUM-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Eligibility to avail CENVAT credit on inputs exclusively used in Research and Development operations - Appellant, engaged in manufacture of motor vehicles and parts, IC engines and parts, availed CENVAT credit of central excise duty paid on inputs and service tax paid on input services - As goods manufactured in the R&D Centre of the appellant are not subject to levy of central excise duty, department alleged that CENVAT credit availed on inputs exclusively used in the R&D department was improper and initiated proceedings for recovery of such credit, which came to be confirmed along with interest and penalty and upheld in appeal - Whether the appellant is eligible to avail CENVAT credit on inputs exclusively used in research and development, and whether the adjudged demands are legally sustainable - HELD - The issue for the earlier period involving the self-same appellant and identical dispute stands already decided in favour of the appellant by a coordinate Bench. Inputs are not restricted to goods used in the factory for the final product, and there is no bar on availing credit of goods used in the research and development wing of the manufacturing facility where there is no allegation that research and development is unconnected with the excisable goods manufactured. Any activity incidental or ancillary to manufacture falls within the definition of manufacture, and the fruits of research and development ultimately find their way into the excisable product. Denial of credit would be warranted only on establishing that the R&D facility was not integral to the manufacturing process, which allegation was absent. Considering the wide latitude for availment of credit and absence of any allegation that research and development was unconnected with manufacture, disallowance of CENVAT credit does not find favour - Issue held no longer res integra. The impugned order is set aside and appeal allowed
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