2014 (9) TMI 683
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....e, the appellant had availed capital goods cenvat credit of Rs. 4,65,89,435/- in respect of various items used for maintenance of the captive power plant. The cenvat credit has been taken mainly in respect of parts, spares and accessories used for replacing old and worn-out parts, spares and accessories. The department was of the view that captive power plant as such is not excisable goods and, hence, the same is not covered by the definition of 'capital goods' and also the electricity generated is not excisable product and hence no cenvat credit would be available in respect of the goods used for maintenance of the captive power plant. It is on this basis that show cause notice dt. 26.4.2011 was issued to the appellant for demand of allegedly wrongly availed capital goods cenvat credit of Rs. 4,65,89,435/- from the appellant along with interest thereon under section 11AB and also for imposition of penalty on them under section 15 (1) of CCR, 2004. 3. The above show cause notice was adjudicated by Commissioner of Central Excise, LTU, Chennai vide Order-in-Original dt. 28.2.2012 by which the Commissioner confirmed the cenvat credit demand of Rs. 2,34,07,480/- along with interest th....
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....lant installed in the factory is fixed to the earth has nothing to do with eligibility for cenvat credit in respect of the goods used for the maintenance of the captive power plant; that as repair and maintenance of the plant is necessary for smooth manufacturing operations, the goods which are used for smooth running of the plant and upkeep of the machinery would have to be treated as directly involved in the manufacturing of the final product; that the Tribunal in the case of Kothari Sugars & Chemicals Ltd. Vs CCE Trichy reported at 2007 (220) ELT 264 has held that parts and components of co-generation plant and the goods required for their maintenance are eligible for cenvat credit, even if electricity generated in the captive power plant is consumed only partly and the rest is transferred to the State Electricity Grid; that Tribunal in the case of Lloyds Metals & Engineers Ltd. Vs CCE Nagpur reported at 2002 (150) ELT 638 has held that steel plates, coils, bars, channels and electrostatic precipitator used in the manufacturing unit would be eligible for cenvat credit and the credit cannot be denied merely on the ground that the impugned goods have been used in the manufacture o....
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....to establish prima facie case in their favour and hence this is not a fit case for waiver from the requirement of predeposit. 7. We have considered the submissions from both sides and perused the records. The appellant manufacture cement and clinker chargeable to Central Excise duty. They have a captive power plant within the factory premises and there is no dispute that power generated by the plant is used in the factory for manufacture of cement and clinkers. The dispute in this case is regarding eligibility for cenvat credit of various items parts and accessories, components etc. used for maintenance of the captive power plant. In this regard, para-2 of the show cause notice is reproduced below :- "The taxpayer has constructed a captive power plant for generation of electricity. It is observed that they are taking CENVAT credit of the duty paid on goods (as capital goods) used for the maintenance of the said captive power plant. As per the details furnished by the tax payer vide their letter Mktg/2010/11506 dated 27/12/2010, the amount of such credit availed, during the period from April 2010 to Mar....
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....her constitute a manufacturing plant, is not relevant. In this case, it is not the contention of the department that the various machinery installed and which comprises of captive power plant is not covered by Chapter 84, 85 and 90 of the Central Excise Tariff. Just because this machinery has been installed and has become fixed to earth power plant, the same would not cease to be "capital goods". If the Department's plea is accepted, no item of machinery and instruments falling under Chapter 84, 85 and 90 of the tariff would be eligible for capital goods cenvat credit, as all such machinery have to be installed and after installation become part of fixed to earth plant. It is absolutely wrong to mix the issue of eligibility for capital goods cenvat credit of the items mentioned in Rule 2(a) of CCR, 2004 with the issue of excitability of the manufacturing plant. Therefore, just because the various items of machinery covered by Chapter 82, 84, 85 and 90 of the Tariff, pipes and tubes, tanks etc., all of which are covered by the definition of "capital goods", have been installed and after installation have become fixed to the earth power plant, the same would not cease to be the "....