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2013 (3) TMI 365
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....nst the order dated 19.5.2006 passed by the Commissioner of Central Excise, Meerut-I, Uttar Pradesh disallowing the CENVAT Credit. 3. In Central Excise Appeal No. 815 of 2012 the Commissioner by the impugned order confirmed the CENVAT credit demand of Rs.1,65,69,326; In Central Excise Appeal No. 816 of 2012 he had confirmed CENVAT credit demand of Rs. 1,90,52,382/- and in Central Excise Appeal No. 817 of 2012 the CENVAT credit demand of Rs.2,02,96,271/- was confirmed against the appellants along with interest imposing penalty of equal amount. The CENVAT credit had been taken by the three units of the appellant during the period from January, 2005 to June, 2005 in respect of M.S. Angles, Channels, Plates, Sections, Beams, Flats etc. claimed to have been used for fabrication of plant and machinery, for manufacture of sugar. 4. Brief facts, giving rise to these three appeals, are that M/s Bajaj Hindustan Limited-the appellant is engaged in the manufacture of V.P. Sugar and Molasses falling under Chapter 17 of the First Schedule to the Central Excise Tariff Act, 1985. The company has set up a unit in village Bhaisana, District Muzaffarnagar for manufacture of cane sugar, with ins....
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....nit of District Bijnor a show cause notice was issued on 7.2.2006 for the period from January, 2005 to June, 2005. 9. The appellants contested the show cause notices in all the three units on common grounds, alleging that these notices have been framed without verification of any records and physical verification of machineries and structures fabricated by the appellants in connection with the setting up of the new manufacturing units. The break-up of the entire CENVAT credit according to use of steel items in various sections of the plant is alleged to have been given along with the replies. The appellants submitted that they had not taken CENVAT credit on various steel items, which were earmarked from the very beginning for use in the civil/foundation purposes. The appellants did not take CENVAT credit on the base plates used between the mill equipments and foundations for the bolting of various machinery with base plates. Wherever the steel items were used for raising civil foundation/structure of for non-capital goods items such as staircases, purlins, partitions, buildings and roofing etc., the appellants have not taken CENVAT credit. 10. By a common order dated 19.5.200....
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....is also pasted in the stores ledger. The detailed documents were submitted, giving section-wise end use details giving the name and description of all capital goods. The section/department, in which these goods were installed, is also mentioned in these details. The credit amount is also mentioned and a separate note is filed on each capital good manufactured. The documents also disclosed the nature of contract work, and the name of capital goods. The Commissioner or the Tribunal has not disputed the correctness of these documents. 14. Shri Bagaria submits that the findings of the Commissioner and CESTAT, that the names, description, quantities and usage are not mentioned, are perverse and contrary to the records. It is one thing to say that out of claims made by the appellants, some items did not answer the definition of capital goods; it is a completely different thing to disallow the whole of the credit as if no capital goods were manufactured at all and as if the factory itself was not established. The Commissioner and the CESTAT did not even apply their minds to the documents on record. There is no findings with reference to these documents. The entire credit has been disal....
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.... far as imposition of penalty is concerned, Shri S.K. Bagaria submits that in a case like this there is no scope for levying any penalty under Section 11AC read with Rule 15 of Central Excise Rules. None of the ingredient of Section 11AC namely fraud, collusion, any willful mis-statement, suppression of fact, or contravention of the Act or Rules with intention to evade the tax has been made out. The entire show cause notice is on the basis of appellants own ER-I. He has relied upon Commissioner of Central Excise, Chandigarh vs. Pepsi Foods Limited (2011) 1 SCC 601 in support of his submission. 20. It is submitted that there was no suppression at all made by the appellants to impose any penalty. The Tribunal had itself consistently allowed CENVAT credit on inputs in similar cases. 21. Shri S.K. Bagaria submits that all the items in question were clearly covered by the definition of capital goods in Rule 2 (a) (A) (iii) of the CENVAT Credit Rules, 2004. These are all components, spares and accessories of capital goods. There was no necessity or requirement of these being covered by any heading or sub heading. This position is clear from the rule itself and has been clarified by....
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....by the definition of capital goods for being eligible for CENVAT credit. The appellant was required to establish that the items were actually used for manufacturing of capital goods. 24. We have considered the submissions and do not find any error of facts or of law, nor do we find that any substantial question of law arises from the order of the CESTAT to interfere in these appeals, raising common facts and grounds. 25. Explanation 2 to Rule 11 (k) of the CENVAT Credit Rules, 2004 provides:- "Input includes goods used in manufacture of capital goods while and further used in the factory of manufacture but shall not include cement, angles, channels, CTD or TMT bars, and if the item used for construction of factory shed, building or laying of foundation or making of structures for support of capital goods." In view of this Explanation, if the inputs have gone into the manufacture of capital goods, then only they are eligible for CENVAT credit. Such capital goods must be put to actual manufacture of final product. The CENVAT Credit Rules in order to avail CENVAT credit, require the assessee to establish that the items in question were actually put to use for manufacture, or in ....
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....ystallizers etc. It was held that such items used for raising structure to support various machines, parts of machineries of plant, would be covered by explanation to Rule 57Q as a capital goods, was partly allowed, disagreeing with the reasoning given by the Tribunal. Shri S.K. Bagaria has tried to distinguish the judgment on the ground that it relates to the old position under the unamended Act. He submits that by Notification no.23/2004-CE (NT) dated 10.9.2004 in excise of powers under Section 37 of the Central Excise Act, 1944 and Section 94 of the Finance Act, 1994, the CENVAT Credit Rules, 2004 were notified and which would be applicable to the present case. In these Rules the definition of capital goods under Rule 2 (a) would include under A, the goods, namely (iii) components, spares and accessories of the goods specified at (i) and (ii), and which would include in (i) all goods falling under Chapter 82, Chapter 84, Chapter 85, Chapter 90, heading No. 68.02 and sub-heading No. 6801.10 of the First Schedule to the Excise Tariff Act and (ii) pollution control equipments. It is submitted that the CENVAT credit is applicable for a manufacturer under Rule 3 (1) or purchaser of f....
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....y is concerned, we do not find any error in the findings that the penalty is attracted in this case as the appellants had taken CENVAT credit without satisfying the conditions set out and in violation of the CENVAT Credit Rules. Further on the issue, as to whether Section 11AC of the Central Excise Act, 1944 gives for any discretion on imposition, and on the determination of quantum of penalty, we find that the question has been considered by a coordinate Bench of this Court in Commissioner of Customs & Central Excise vs. M/s Majestic Auto Limited, Central Excise Appeal no. 142 of 2004 decided on 6.7.2012. This Court, considering the judgments in Union of India vs. Dharmendra Textile Processors 2008 (231) E.L.T. 3; Dilip N. Shroff v. Joint Commissioner of Income Tax, Mumbai and another 2007 (8) Scale 304, and the Union of India vs. Rajasthan Spinning & Weaving Mills, 1998 (99) ELT 33, held as follows: "From the proposition as laid down in above cases, the ratio deducible is that the quantum of the penalty equal to the duty determined as contemplated by Section 11AC is mandatory and there is no discretion in the adjudicating authority or the Tribunal to impose different amount of....