2018 (9) TMI 631

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....l Cenvat credit on the inputs used for manufacture of capital goods, consequently, they are required to reverse the said Cenvat credit on these inputs which have been used for manufacture of dairy machinery under Rule 6 of Cenvat Credit Rules, 2004. It was alleged that the appellant has availed Cenvat credit of Rs. 17,67,816/- as capital goods on angles, channel, CR coil, plates, etc. which do not qualify as capital goods as per Rule 2(a) of Cenvat Credit Rules, 2004. Therefore, the appellant is required to reverse the said amount which the appellant has reversed before issuance of show cause notice. In these set of facts, a show cause notice was issued to the appellant to deny Cenvat credit of Rs. 78,67,427/- and Rs. 17,67,816/- along with interest and penalties were also proposed in the show cause notice. The matter was adjudicated and proposals made in the sow cause notice were confirmed. Aggrieved from the said order, the appellant has filed this appeal before this Tribunal. 3. Ld. Counsel for the appellant submits that the appellant was entitled to avail Cenvat credit on inputs used in the manufacture of capital goods within the factory in terms of Rule 2(k) of Cenvat Credit ....

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....re further used in the factory of the manufacturer. 9. Explanation 2 to Rule 2(k) of Cenvat Credit Rules, 2004 is relevant to decide the issue. As per Explanation 2 to Rule 2(k), the inputs used in the manufacture of capital goods which are further used in the factory of manufacturer are entitled to avail Cenvat credit. Admittedly, in the case in hand, the inputs have been used by the appellant for fabrication of capital goods which are ultimately used in their factory for manufacture of final goods. In that circumstance, it is clear that in terms of Explanation 2 to Rule 2 (k), the appellant is entitled to avail Cenvat credit. The same view was taken by this Tribunal in the case of Hindalco Industries Ltd.(supra) wherein this Tribunal has observed as under:- 7. I have examined the issue very carefully. If in terms of the M/s. Vikram Cement‟s case, the goods cannot be treated as capital goods, one should examine whether they can be considered as inputs. In the definition of input in Rule 2(k) of the Cenvat Credit Rules, explanation 2 is very relevant and the same is reproduced herein below : Explanation 2. - Input include goods used in the manufacture of capital goods wh....

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....so on the ground that Notification No. 67/95 exempted the 'inputs' manufactured in a factory and used within the factory of production in or in relation to the manufacture of final products." This Tribunal has observed as under:- "4. Since revenue's case is based on the exclusion contained in the proviso, we may read the relevant portions of Notification No. 67/95: GENERAL EXEMPTION NO. 6 Exemption to all capital goods and inputs if captively consumed within the factory of production:- (i) capital goods as defined in rule 57Q of the Central Excise Rules, 1944 manufactured in a factory and used within the factory of production; (ii) goods specified in column (2) of the Table hereto annexed (hereinafter referred to as 'inputs') manufactured in a factory and used within the factory of production in or in relation to manufacture of final products specified in column (3) of the said Table: from the whole of the duty of excise leviable thereon which is specified in the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986): Provided that nothing contained in this notification shall apply to inputs used in or in relation to the manufacture of final products (other than....

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....nst that scheme of the notification and would force the assessee to resort to payment of duty at every stage and take credit of duty paid, thus, availing the same benefit through the circuitous route of credit. Thus, the whole exercise would only cause more elaborate account keeping without any benefit to the revenue. The benefit that the exemption notification sought to give directly should not be made available only indirectly through Cenvat credit." 12. Further, in the case of Vaidyanath SSK Ltd. (supra), again this issue came up for consideration before this Tribunal wherein this Tribunal has observed as under:- 5. In so far as the demand on the HR sheets used for manufacture of biogas storage tank is concerned it is seen that biogas tank is a part of biogas plant. Biogas plant is covered under list 5 attached to the Notification No.6/2006 dated 01/03/2006. Parts of biogas plant also are covered under Sl.No.21 of the list 5. In view of the above, it is apparent that biogas storage tank is examined under Notification No.6/2006 dated 01/03/2006. The said tank is also exempted under Notification No.67/95. The term input is defined under Cenvat Credit Rules, under Rule 2 (k) exp....