TaxTMI 
TaxTMI 
2019 (5) TMI 129
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....their Input Credit account on various items and components that are basically in the nature of capital goods falling under Chapter Heading Nos. 8431.3910, 8474.9000, 8474.3910, 8483.9000, 8428.9090, 8428.2011, 8501.5210, 8535.2121, 8544.6090 and 9031.8000 of the First Schedule to the Central Excise Tariff Act, 1985 to the extent of 100% in the same financial year contending that the impugned items are nothing but inputs for various items of machinery. The Department was of the view that the Credit availed on inputs is not eligible as the items do not qualify as inputs and do not qualify for Credit under the category of capital goods, as after assembly and erection, they are fixed to earth and become cement plant, which is immovable property and non-excisable. 2.2 The appellants had also availed Credit on various input services used for erection and commissioning of machinery. The Department was of the view that such services are not eligible for Credit. 2.3 Show Cause Notice was issued proposing to disallow the Credit and recover the same along with interest and also for imposing penalties. After due process of law, the Original Authority confirmed the demand of Rs. 25,55,70,35....
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....f Rs. 25,56,54,811/- 3.1.4 He submitted that the Original Authority has held that the Credit is not admissible on the following grounds. (a) Cement Plant (Line-II) had emerged in an immovable condition and the cement plant has not fulfilled the definition of "excisable goods"; (b) Cement Plant (Line-II) did not find place in any of the headings in First or Second Schedule in the Central Excise Tariff Act, 1985; (c) Cement Plant per se has not been subjected to duty of excise; (d) Credit for various input services was also denied on the ground that they were related to and restricted to the erection and installation of the plant and were not related to operational activities of the plant and as such, it has to be construed that these services were availed by the appellants for the manufacture of non-excisable goods. 3.1.5 Reliance placed by the Department on Board Circular No. 58/1/2002-CX dated 15.01.2002 is highly misplaced and erroneous. The said Circular is relevant only for the purpose of levy of duty on turn-key projects like steel plants and cement plants. It does not relate to availment of CENVAT Credit. The view of the Department that after assembling the ma....
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....7-HC-MAD-CX. 3.2.1 With regard to the Credit disallowed on input services, he submitted that the Show Cause Notice does not mention what are the input services which are not eligible for Credit. In fact, the major part of the service tax Credit availed by the appellant would fall under the category of Erection, Commissioning and Installation Services. These services have nexus with the manufacturing activity and would also fall within the definition of 'input service'. 3.2.2 Further, during the relevant period (prior to 01.04.2011), the Credit in respect of service tax paid for setting up of factory is eligible for Credit. Therefore, all the services which were used by the appellant for setting up of cement plant (Line-II) are eligible for Credit. 3.3 He put forward arguments on the ground of limitation also. It is submitted by him that though the audit as well as investigations were conducted in 2011, the Show Cause Notice has been issued much later only on 27.11.2014, invoking the extended period alleging suppression of facts with intention to evade payment of duty. The appellant had disclosed the entire Credit availed in their ER-1 returns. Further, prior to starting the c....
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....s', the reason for which the Credit has been disallowed is that after assembly and installation of such items, they become immovable property and therefore, are not eligible for Credit. From the Show Cause Notice as well as the impugned Order, it is seen that various items were used for setting up of the cement plant. Many of these items are components or small parts which go into assembly, installation or commissioning of machines and equipment. As per Explanation-2 of the definition of inputs, as it stood during the relevant period, 'input' includes the goods used in the manufacture of capital goods which are further used in the factory of the manufacturer. Thus, all those items which are brought into the factory and used for the manufacture of capital goods, which are further used for the manufacturing activity, would be eligible for Credit. 6.3 The Department does not have a case that the items are not used as part of the cement plant. Instead, the Credit has been disallowed observing that these items take the nature of immovable property after being fixed to earth. The Department has placed reliance on the Larger Bench decision in the case of M/s. Vandana Global Ltd. (supra)....