2017 (2) TMI 890

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....No.32/2001 C.E. dated 28-6-2001 (w.e.f. 1-7-2001). As per the para 8(5) of the Notification, the independent textile processors opting for the notification shall not be eligible to avail of any credit of duty paid on input or capital goods under the Cenvat Credit Rules, 2001. As per above provision, the appellant was issued a show cause notice dated 14-3-2005 proposing denial of Cenvat credit. The adjudicating authority confirmed the demand of Rs. 4,25,440/- along with interest under Section 11AB of Central Excise Act, 1944. A penalty of Rs. 4,25,440/- was also imposed under Rule, 13 of the Cenvat Credit Rules, 2002 read with Section 11AC of the Central Excise Act, 1944. Being aggrieved by the Order-in-Original dated 20-6-2006, the appellan....

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....ey were opted out from the compounded levy scheme. The issue to be decided is whether the credit on capital goods should be considered on the date of its receipt or any date subsequently. This issue has come up in various decisions and there were contrary judgments of this Tribunal. Therefore the matter was referred to the Larger Bench of this Tribunal in case of Spenta International Ltd Vs Commissioner of Central Excise, Thane[2007(216) ELT 133(Tri. LB)] wherein it was held that credit eligibility to be determined with reference to dutibility of the final product on the date of receipt of the capital goods. In the present case on the date of receipt of the capital goods i.e. before March, 2002 the appellant was under compounded levy scheme....

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....of which the capital goods had been taken, were not used for manufacture of dutiable goods on the date of receipt in the factory, capital goods credit is not available on such machinery. 9. The ACE Timez decision reported in 2004 (170) E.L.T. 371, which takes a contrary view from those set out above, considers Rules 4(2)(a) & (b) of the Cenvat Credit Rules, 2002 and holds that these rules do not provide for denial of credit on the ground that it is not taken in the same financial year in which capital goods were received, and only restricts credit to 50% of the duty paid, in the financial year of receipt of capital goods, and do not provide for lapsing of credit if the balance 50% is not taken in the same financial year in which the capi....