TaxTMI 
TaxTMI 
2022 (1) TMI 760
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....al No. 601 of 2012 has been filed by the appellant for setting aside the aforesaid order dated 13.04.2012 passed by the Commissioner. 4. The refinery project of the appellant was conceptualized sometimes in the year 1994 and was expected to be commissioned in the year 1998. However, for some reasons, the refinery project was put on hold in the year 1999 and it was only in the year 2004/2005 that it was revived and the manufacturing activities commenced sometimes in the year 2006. 5. The appellant has stated that CENVAT credit of Rs. 7,56,56,794/- availed in the months of January and February 2010 on steel plates, which were used for fabrication of Storage Tanks/LPG spheres at the refinery, was denied to the appellant. The said steel plates were procured between November 1997 to December 1998 and the fabrication of the Tanks/LPG spheres could be completed in 2007, as the work for setting up the refinery was suspended from 1999 till 2004-05. The appellant had applied for excise registration in the year 1997 but it was refused by a letter dated 14.02.1997 by the Excise Authorities on the premise that registration can be granted only when the factory is ready for manufacturing th....
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....s much as the steel plates were used in the manufacture of Storage Tanks which was not specified as eligible 'capital goods' under rule 57(Q) of the Excise Rules. It was only w.e.f. 01.03.2001 that the definition of 'capital goods' was amended to provide for Storage Tanks as one of the specified capital goods; b) Under rule 57(G) of Excise Rules, a manufacturer intending to take credit was required to file a declaration with the Assistant Commissioner having jurisdiction over his factory, which was not done in the instant case; and c) It is only after 01.03.2011 that the definition of 'inputs' was amended by inserting Explanation-2 in clause (d) of rule 57(AA) of the Excise Rules to provide that 'inputs' would include goods used in the manufacture of 'capital goods' further used in the factory of the manufacturer. 8. The show cause notice, after pointing out that credit had not been earned under Excise Rules, also sought to rule out the eligibility of the appellant to avail credit under rule3(2) of 2004 Credit Rules. According to the notice, in terms of the said provision, a manufacturer of final product is allowed to take CENVAT credit of the duty paid on inputs lying in ....
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.... the case records, Show Cause Notice, written submission and oral submissions made during the personal hearing. The main issue to be decided in this case is whether the Noticee is eligible to take Cenvat Credit on inputs i.e. steel plates received in 1997 and 1998 i.e. much before their taking Central Excise registration in November, 2006 and on which Cenvat credit was taken in the year 2010. The other linked issues, are its recovery, chargeability of interest thereon, confiscation of said steel plates and imposition of penalty upon the Noticee under the various provisions of Central Excise Law. ****** 22. I have examined the above submissions and find that the gist of judgments referred above is that in case of receipt of goods prior to registration, the date of registration is to be construed as the relevant date for deciding eligibility or otherwise to Cenvat credit as prior to registration, no place could be called "factory" without manufacturing activity. ****** 24. Since the case on hand and one decided by my predecessor pertains to the same Noticee and involving issue of availment of Cenvat credit on goods received prior to taking registra....
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...., it is an admitted fact by the Noticee themselves, that the steel plates received in 1997 and 1998 were no longer in existence or in stock on the date of their taking Central Excise registration in November, 2006 as the same had already been issued or consumed for fabricating storage tanks. Therefore, the steel plates had already been used and converted into something new and in that process, it had lost their identity completely. Therefore, the question of granting any benefit of Cenvat credit to such non existent steel plates even under this stretched interpretation of Rule 3(2) of Cenvat Credit Rules, 2004 does not arise. ****** 32. The Noticee has also taken a plea that the steel plates were used in fabrication of storage tanks which are capital goods and therefore, the steel plates are eligible for Cenvat credit being inputs for manufacture of capital goods. In this regard, I find that eligibility of any inputs used in the manufacture of capital goods is also governed by same set of rules i.e. Cenvat Credit Rules, 2004, as discussed above. Since it is a fact admitted by the Noticee that these steel plates had been utilized prior to taking their registration,....
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....dit Rules, 2004, therefore, I find that they are liable for penalty under Rule 15(1) of Cenvat Credit Rules, 2004. (emphasis supplied) 14. The gist of the findings of the Commissioner in the aforesaid order dated 13.04.2012 are as follows: i. The appellant would be governed by the provisions of the 2004 Credit Rules, which were in force when the applicant was granted registration in November 2006; ii. Rule 3(1) of the 2004 Credit Rules permits taking of CENVAT credit paid on any inputs received in the factory of manufactures of final products on or after the 10th day of September, 2004, but rule 11(1) provides that any amount of CENVAT credit earned under 2002 Credit Rules and remaining unutilized on that day shall be allowed as CENVAT credit. Similarly rule 9(1) of the 2002 Credit Rules provides that any amount of CENVAT credit earned under the 1944 Excise Rules, remaining unutilized shall be allowed as CENVAT credit. However, the benefit of these transitional provisions would be available only to a manufacturer registered under the 2002 Credit Rules or the 1944 Excise Rules. Thus, the appellant would not be entitled to CENVAT credit on any goods received prior to 10.0....
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....x., Calcutta-I [1996 (86) E.L.T. 613 (Tribunal) ]; iii. The Commissioner committed an error in holding that CENVAT credit was not admissible for the reason that steel plates were not in existence on the date central excise registration was taken in November 2006. It is not necessary that the goods on which credit is availed should be received in the same form as on which the duty is paid. Reliance has been placed on the decisions of the Tribunal in Essar Oil Ltd. vs. Commr. of Central Excise & Service Tax, Rajkot [2014 (309) E.L.T. 336 (Tri.-Ahmd.) ] and Beico Industries Pvt. Ltd. vs. Commr. of C. Ex. & Service Tax, Vapi [2014 (36) S.T.R. 551 (Tri.-Ahmd.)]; iv. The Commissioner committed an error in holding that the appellant had not furnished details of inputs in stocks, even though the same had been requested by letter dated 22.02.2007; v. The Commissioner committed an error in holding that the appellant had not discharged the burden of proof cast upon it under rule 9(5) of the 2004 Credit Rules; vi. The Commissioner committed an error in holding that CENVAT credit should have been availed by the appellant under rule 4(1) of the 2004 Credit Rules immediately upon the ....
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....definition of 'capital goods' in the erstwhile rule 57(Q) of the Excise Rules 1944 and was included only by the Notification dated 01.03.2001; and vi. The adjudicating authority should have also invoked rule 14 of the 2004 Credit Rules for charging interest. 18. The submissions advanced by the learned counsel for the appellant and the learned authorized representative appearing for the Department have been considered. 19. It is not in dispute that though the refinery project of the appellant was expected to start in the year 1998, but it was put on hold and was revived only in the year 2005, after which the manufacturing activities commenced sometimes in the year 2006. The appellant claims to have availed CENVAT credit in the months of January and February 2010 on steel plates which were used in the fabrication of Storage Tanks. These steel sheets were procured by the appellant between November 1997 to December 1998 but the fabrication of the Storage Tanks could be completed only in the year 2007. The appellant had applied for registration before the Excise Department on 08.11.2006, as it had earlier been informed that CENVAT credit could be availed by the appellant only a....
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....annot be accepted in view of the definition of 'inputs' in rule 2(k) of the 2004 Credit Rules. A perusal of the definition would indicate that 'inputs' has been defined to mean all goods used in or in relation to the manufacture of final products. In view of this expansive definition, 'inputs' would include any goods required for manufacture of the final product. It cannot be doubted that in a refinery, manufacturing operations cannot be undertaken till Storage Tanks are fabricated as all the raw materials, intermediate products and the finished goods are required to be stored in such tanks. In this connection it would be appropriate to refer to the decision of the Supreme Court in Collector of Central Excise vs. Solaris Chemtech Limited [2007 (214) E.L.T. 481 (S.C.)], wherein the expression 'in the manufacture of goods' has been held to cover the entire process of converting raw material into finished goods and that the use of the expression 'in relation to' results in widening and expanding the scope, meaning and content of the expression 'inputs' so as to cover goods used not only for the mainstream manufacturing but also to something which is used for rendering the final produc....
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....n relying upon Rule 9 of the Cenvat Credit Rules, 2002 to hold that the appellant assessee herein is not a manufacturer as per the provisions of central excise law till he got registration certificate. 9. While trying to deny the Cenvat credit to the appellant on this ground, we find that the adjudicating authority has taken a diagonally opposite direction, as against the principles of the reducing the cascading effect of taxes. It is a common sense that unless a factory is setup, trial runs are taken, an assessee will be unable to manufacture excisable products. The entire exercise of the assessee for setting up of factory is for manufacturing excisable goods which can be done so only when he erects, installs and commissions the capital goods with the help of various agencies. In the case in hand, we find that there is no dispute that appellant has received the capital goods and the input services, utilized them for setting up the manufacturing facilities. To deny credit of the central excise duty paid and Service Tax paid, would be travesty of justice, more so when the assessee herein is discharging appropriate excisable duty on the finished goods cleared after taking th....
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....the fabrication activity of tanks have taken considerable time as the information/ documents were required to be collated from the old records as the construction activity of the storage tanks was kept on hold for 6 to 7 years since the total refinery project had passed through difficult times. This was also necessary as in most of the cases the contractors returned the balance material left out with them to the warehouse after the fabrication activity was completed. Further, we wanted to ensure that credit is availed only on the quantity of steel plates consumed in the fabrication of storage tanks and this could not have been done prior to completion of fabrication activity. We are enclosing details of the credit availed by us in January 2010 and February 2010 as below:- 01. Statement of Cenvat Credit availed during January 2010 on Steel plates imported during 1997-1998. We have also mentioned the exact quantity in MTs imported at the material point of time. The said information was furnished to your office along with ER-1. The same is attached again & marked as Annexure - A 02. Statement of Cenvat Credit availed during February 2010 on Steel pl....
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....e verified at our refinery site by your good-self or any other officer deputed for this purpose. We also wish to add that although the cenvat credit is availed only on the quantity consumed in the fabricated tanks, we have been paying excise duty on all the Steel Scrap generated out of the fabrication process. We trust the matter stands clarified, Receipt of this letter may please be acknowledged." 32. The submission of this letter has not been denied by the Commissioner nor the correctness of the facts stated therein have been denied and it is only in a cursory manner, that a finding has been recorded that the appellant did not discharge the burden of proof. The Commissioner, therefore, committed an error in so concluding. 33. The Commissioner also observed that CENVAT credit should have been availed by the assessee under rule 4(1) of the 2004 Credit Rules, immediately upon the receipt of the inputs in the factory. 34. It would, therefore, be appropriate to reproduce rule 4(1) of the 2004 Credit Rules and it is as follows: "Rule 4. Conditions for allowing CENVAT credit. - (1) The CENVAT credit in respect of inputs may be taken immediately on receipt o....
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....CE, Chennai reported in 2000 (122) E.L.T. 256 (Tri.) held that when there is no time limit prescribed, time limit should not be read by implication. The Tribunal in the case of Steel Authority of India Ltd. v. Commissioner of Central Excise, Raipur reported in 2001 (129) E.L.T. 459 (Tri.-Del.) while considering the fact of taking Modvat credit after a period of 3 to 4 years from the date of issue of duty paid documents, which was disallowed by the lower authority held that there was no time limit prescribed for taking credit during the material period and therefore the credit could be taken. This was followed in the case of Tamil Nadu Petro Products Ltd. v. CCE, Chennai - 2003 (160) E.L.T. 199 (Tri.-Chennai). Further, we find that there was sufficient reasons for the appellants for not taking credit during the relevant period in view of the uncertainty in the matter. When the law is settled on the issue, there is no justification to deny the credit on the ground that it is availed after a long time. In any case, the Cenvat Credit Rules have not prescribed any outer time limit. In view of this, we do not find any merit in the impugned order. We set aside the same and allow the appea....
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....d learned authorized representative appearing for the Department relate to cases where a demand is raised by an authority under the provisions where no time limit is prescribed. In such circumstances the view that has been taken is that it should be raised within a reasonable period of time. These decisions do not relate to cases where availment of CENVAT credit has been denied. Infact, the two decisions in Coromandel Fertilizers Ltd. and Steel Authority of India Ltd., squarely deal with this issue. 39. In the present case, it is seen that the appellant has explained as to why it could not immediately avail CENVAT credits on Tanks fabricated in the year 2007. It has been stated that the process of collating and mapping the actual quantity of steel plates issued and consumed in the fabrication of Storage Tanks took some time as the goods were received between 1997-1998 and the fabrication work of Storage Tanks was completed only in the year 2007. 40. It needs to be noted that under rule 4(1) of the 2004 Credit Rules, it was only in September 2014 that a time limit of 6 months/1 year was prescribed for availing CENVAT credit. 41. The observations made by the Commissioner in ....