TaxTMI 
TaxTMI 
2016 (6) TMI 761
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....l excise duty on goods cleared by them. Appellants are also availing credit on inputs, capital goods and input services. On scrutiny of records for the period October 2008 to August 2009, it was observed that appellants irregularly availed credit on MS items as inputs which was not admissible. Further, they took 100% credit in the same year on air slide, part of silo feeding arrangement, conveyor, bag divertor, part of roto packer, supply components, parts and accessories of bag filter, hopper etc. which are in the nature of capital goods. The Department observed that these being capital goods appellant ought to have taken only 50% credit of the duty in the year of receipt of goods and remaining 50% ought to have been taken in the subsequen....
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....gned herein, the Commissioner(Appeals) upheld the order passed by the original authority and in addition imposed penalty Rs. 1,60,000/- under Rule 15(1) of CENVAT Credit Rules, 2004 for the irregular credit availed on capital goods. Being aggrieved the appellants are before the Tribunal. 3. The learned counsel appearing for appellant submitted that the various parts of packing plant was brought into existence by process of assembling individual components and also using structures fabricated out of iron and steel were required to be fixed in an immovable condition on foundation for the operational requirement. The iron and steel items which were used in the form of raw material / input for assembly of various parts of packing plant fixin....
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....e allowed. 4. Per contra, the learned AR supported the findings in the impugned order. He submitted that admittedly the steel items were used for support structure, foundation and fixtures of the cement plant. That credit on these steel items is therefore not admissible and the disallowance of credit and demand of interest and penalty imposed is legal and proper. Secondly, the appellant has contravened the provisions of CENVAT Credit Rules and availed entire credit on capital goods in the same year. This was shown in the ER-1 returns as credit availed on inputs. These items like air slide, bucket elevator, part of roto packer, truck loading machine, conveyor belts are all capital goods / spares / accessories / parts. These goods fall int....
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.... manufacturing could not be done. Applying the ratio laid in the above judgments, I hold that the credit on MS items used as inputs is admissible. 6. The second issue is the irregular credit availed on capital goods. The appellants have taken credit on these items as inputs. In the Order-in-Original, it is stated that the appellant was directed to furnish the nature and use of goods on which credit was availed. As a follow-up action, the factory premises was visited by officers. The impugned capital goods procured from suppliers were erected as such at the respective places by integrating and interconnecting numerous parts / equipments. The usage is detailed as under:- It was seen that there are two SILOS installed vertically in....
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....appellants availed 100% credit in the same year. Appellants were eligible to take 50% credit in the year of receipt and 50% in subsequent year. Availing entire credit in the same year is in contravention of the provisions of the CENVAT Credit Rules, 2004. The authorities below have therefore ordered recovery of 50% of the irregular credit availed along with interest. I am of the opinion that it is only a case of premature availment of credit as the appellants could avail the credit in the subsequent year. Therefore, the recovery of the irregularly availed credit in excess of 50% (Rs.16,22,615/-) is not justified. Taking into consideration the violation of the provision, I find that appellants are liable to pay the interest on the irregularl....
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....d further that where the Commissioner (Appeals) is of opinion that any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, no order requiring the appellant to pay any duty not levied or paid, short-levied or short-paid or erroneously refunded shall be passed unless the appellant is given notice within the time-limit specified in Section 11A to show cause against the proposed order. 9. The said section speaks about enhancing the penalty already imposed. In the instant case, the adjudicating authority has not imposed any penalty for irregular availment of credit on capital goods. If no penalty is imposed, the department has to file an appeal challenging the non-imposition of penalty. O....