TaxTMI 
TaxTMI 
2018 (11) TMI 302
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.... above substantial question of law has been re-framed to bring out the exact nature of the dispute as under:- "Whether on the facts and circumstances of the case and in law, was the Tribunal justified in allowing CENVAT Credit on the machines/ equipments of a sugar plant?" 4. The Respondent is engaged in manufacturing of sugar and molasses (final products). These final products are cleared on payment of excise duty under the Act. The Respondent entered into two agreements with M/s. S.S. Engineers one for purchase of machinery and equipments required for a sugar plant and the other for setting up of a sugar plant out of the above purchased machinery and equipments at its site. As a result of the aforesaid two agreements M/s. S.S. Engineers supplied all equipments / machineries required for setting up the sugar plant at the factory of the Respondent. The above equipments/ machines are supplied by M/s.S. S. Engineers under cover of Central Excise (Cenvatable) invoices indicating the name and factory address of the Respondent. 5. In terms of the above agreements, M/s. S.S. Engineers erected/set up and commissioned a sugar plant at the Respondent's factory. This sugar plant....
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....liance upon the various decisions of the Tribunal rendered under the erstwhile Rule 57 Q of the MODVAT Credit Rules as part of the Central Excise Rules to contend that in similar circumstances this Tribunal has consistently held that where equipments/ machines are installed/ erected/set-up into a plant by a contractor, in the factory belonging to the another person, then such other person in whose premises the plant is installed/set up would be entitled to avail of the MODVAT credit under Rules 57 Q of the MODVAT Rules it was pointed out that the definition of capital goods given under Rule 57Q of the Central Excise Rules, 1944 (MODVAT Rules) are similar to the definition of capital goods in Rule 2(b) (i) of the Central Credit Rules, 2002. 10. On the other hand the only contention in support of the order dated 2nd March, 2005 urged by the Appellant - Revenue was that the machines / equipments have been used by M/s. S.S. Engineers to manufacture a sugar plant. Therefore, it is M/s. S.S. Engineers alone who would be entitled to take credit of duty paid on the inputs. Thus, the Appellant cannot take credit on the socalled capital goods. The decisions relied upon by the Respondent w....
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....des lubricating oils, greases, cutting oils, coolants, accessories of the final products cleared along with the final product, goods used as paint or as packing material, or as fuel, or for generation of electricity or steam used for manufacture of final products or for any other purpose, within the factory of production. Explanation -I The light diesel oil, high speed diesel oil or motor spirit, commonly known as petrol, shall not be treated as an input for any purpose whatsoever. Explanation-2 - Inputs include goods used in the manufacture of capital goods which are further used in the factory of the manufacturer; RULE 3. CENVAT Credit - (1) A manufacturer or producer of final products shall be allowed to take credit (hereinafter referred to as the CENVAT credit) of- (i) .... .... .... .... .... (ii) .... .... .... .... .... (iii) ..... ..... .... .... .... (iv) .... .... .... .... .... (v) .... .... .... .... .... (vi) .... .... .... .... .... paid on any inputs or capital goods received in the factory on or after the first day of March, 2002, including the said duties paid on any inputs used in the manufacture of....
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....in the factory of the Respondent. Thus, the goods on which the CENVAT Credit is claimed further satisfies the requirement of use in the factory as required under Rule 3 of the CENVAT Credit Rule, 2002. Thus, on bare reading of the provisions, the Respondent is entitled to avail of the CENVAT Credit as done by them; (b) The only contention of the Respondent was that the credit on the so-called capital goods would be available only to M/s. S. S. Engineers who had set up/ assembled the sugar plant. However, the Court having held that sugar plant is not chargeable to tax, does not in terms of the law as existing at the relevant time, deprive the Respondent of the credit of duty paid on the capital goods received and used in their factory; and (c) Lastly, the issue whether the CENVAT Credit of the duty paid on machines/ equipments used in setting up a immovable property is available to the Respondent in whose factory the immovable property is set up to take CENVAT credit and utilize the same in payment of duty on final product has been accepted by the Revenue in law. This has been so held by the Tribunal in Commissioner of Central Excise v/s. JSW Ispat Steel Ltd. 2013 - TIOL-17....
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....hese machines/ equipments loose their identity as they became a part of the set up plant and have to work along with other machines / equipments to manufacture final products. This submission of the subject equipment/ machines loosing its identity in the sugar plant is contrary to the show cause notice as it proceeds on the basis that it is capital goods, as it restricts the allowance only to 50% of the credit for each year of use. Rule 3 of the CENVAT Credit Rules, 2002 requires the receipt of the capital goods in the factory for use in or in relation to manufacture of final products. The subject equipments / machines are undoubtedly used in or in relation to the manufacture of final products. Thus, the literal rule of interpretation when applied to the CENVAT Credit Rules, 2002 would entitle the Respondent to the benefit of CENVAT Credit on the duty paid equipment / machines (capital goods). 19. The reliance by the Appellant on the decision of the S.S. Engineers (supra), Triveni Engineering & Industries Ltd., (supra) would have no application to the facts which arise for our consideration. In both the above cases the Court was concerned with the issue whether duty is payable o....