https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=768455 https://www.taxtmi.com/caselaws?id=768455 CENVAT Credit for the capital goods used in establishing a captive power plant of the respondent - delay in adjudication of SCN - HELD THAT:- It is a settled legal proposition that, the Revenue cannot improve their case beyond what has been shown in their show cause notices. Umpteen number of decisions have been rendered that, the Revenue must confine with the content of the show cause notice, as the show cause notice is the basis, based on which only adjudication process has to go on and to be decided. The Adjudicating Authority in the case of M/s.EID Parry (India) Ltd., has stated that the User Test theory propounded by the Hon'ble Supreme Court in the case of Rajasthan Spinning and Weaving Mills Ltd., [2010 (7) TMI 12 - SUPREME COURT] to satisfy that the materials, components have been used in the captive power plant was applied and therefore the Adjudicating Authority before whom infact, the Jurisdiction Range Officer had filed Verification Report dated 31.03.2023 after conducting the verification and inspection by the Chartered Engineer and thereafter, has allowed the case of the M/s.EID Parry (India) Ltd. Even in Jawahar Mills Ltd. [2001 (7) TMI 118 - SUPREME COURT], case, this kind of User Test Principle by requiring a User Test Certificate as a mandatory one before the Adjudication has not been propounded. What is the case of the Revenue right from the beginning is the matter. As the case of the Revenue should emanate from the show cause notice, where what was the stand that has been taken by the Revenue, that shall be taken into account. The case of the Revenue all through has been whether the goods utilised or used by the assessee are the capital goods or not and if they are capital goods, whether the assessee would be entitled to avail the CENVAT Credit or not are the only question to be answered by the Adjudicating Authority in every such case - Therefore based on the facts that has been emanated from the show cause notice, which are the basic content of the Revenue, applying the principle of Jawahar Mills Ltd., case that would not advance the case of the Revenue, instead that would advance the case of the assessee. The show cause notice dated 16.06.2009 having been perused, the relevant portions have already been extracted herein above, where it is the definite case of the Revenue that, the assessee had set up a co-generation plant in their factory premises. During the course of audit of the records and accounts maintained by the assessee, it was noticed that they have availed CENVAT Credit on capital goods used in co-generation plant as detailed below. By stating this, eight items have been mentioned as capital goods, which had been used in co-generation plant. The only reason for issuing these show cause notices by the Revenue is that, in the co-generation plant capital goods were used, for which CENVAT Credit was availed, however the co-generation plant generates electricity, which is an exempted product - merely because in respect of some other assessees, such a User Test Certificate was sought for or produced voluntarily or the User Test Theory has been adopted by the Adjudicating Authority, in each and every case, such an User Test Theory need not be adopted, as that kind of proposition has not been propounded in those two cases, i.e., in Jawahar Mills Ltd., case and Rajasthan Spinning and Weaving Mills Ltd., case. There are no hesitation to hold that, apart from the reason that has been given by the learned Judge, for the reasons and discussions herein above made, the show cause notices which were under challenge before the writ court cannot be adjudicated merely on the ground that the User Test Certificate has not been produced by the assessee. Conclusion - i) The Revenue's case must be clearly articulated in the show cause notices and cannot be expanded during adjudication. ii) The show cause notices could not be sustained for adjudication on the basis of the reasons originally cited by the Revenue. All these writ appeals are failed, therefore they are liable to be dismissed. As a result of which, all these writ appeals are dismissed. Case-Laws Central Excise Thu, 03 Apr 2025 00:00:00 +0530