2016 (2) TMI 287

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....liable to Central Excise duty. They are availing CENVAT Credit on inputs, capital goods and input services. After audit of the records of the appellant, the Revenue initiated proceedings against them by issue of show cause notice dated 18/7/2011. The notice sought to recover an amount of Rs. 34,72,87,308/- towards ineligible CENVAT Credit availed by the appellants on capital goods. The notice mentioned two main grounds for the demand:  (a) The capital goods were used in the thermal power plant which is meant for generation of electricity. Since, electricity is exempted, such credit of capital goods are not available  (b) The capital goods were in possession of contractor who did the erection, commissioning and in....

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.... of CENVAT Credit Rules, 2004 and as such the credit cannot be denied. The ground taken up by the original authority to consider different contracts between the appellant and the Chinese company involved (supplier of capital goods) in supply and machinery and erection, commissioning thereafter is not legally deniable. It is also not contemplated in the demand issued by the department. 3. He further submitted that totally irrelevant issues have been taken up for discussion in the impugned order. The nature of service contract executed by the contractor for the appellant relating to setting up of thermal power plant, the nature of valuation involved for such service or eligibility of notification no. 12/2013-ST for such service contract, a....

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.... of the case. In fact, the show cause notice in para 12 and 13 talks about the eligibility of the contractor for CENVAT Credit on these impugned goods which is absolutely nothing to do with the appellants eligibility on these items. The impugned order goes a step further and takes up the issues which were never brought up or alleged in the show cause notice. The background of different agreements and the need for combined reading of these agreements were all under the propositions discussed in the impugned order. 9. We find that the ld. Counsel for the appellant is correct to that extent that the order-in-original proceeded on a mis-directed path to arrive at the present conclusion. Certain essential facts have been ignored. 10. We f....