TaxTMI 
TaxTMI 
2023 (5) TMI 599
X X X X Extracts X X X X
X X X X Extracts X X X X
....ted within the factory premises of the appellant. The appellant informed to the Range officer that the Cenvat credit on the said capital goods sold to M/s. JK Envirotech Limited has been availed and utilized amounting to Rs. 1,23,67,128/-. A show cause notice dated 09.10.2012 was issued for the period April 2007 to March 2009 wherein the demand of Cenvat credit of Rs. 1,23,67,128/- was raised on the capital goods which was sold to M/s. JK Envirotech Limited. Subsequently on the same issue periodical show causes notices dated 22.05.2013, 25.09.2013, 29.04.2014, 11.03.2013 and 09.03.2015 were issued for the period from May 2012 to September 2014 demanding Cenvat credit on the capital goods sold to M/s. JK Envirotech Limited. The show cause notice dated 09.10.2012 was adjudicated by the Commissioner vide order-in-original dated 19/20.03.2013. Subsequent show cause notices were adjudicated for the periodical show cause notices. In all the adjudication the demand of Cenvat credit was confirmed and except the order passed in show cause notice dated 09.10.2012, the appellant filed appeals before the Commissioner (Appeals) who also upheld the demand. Accordingly, the appellant filed the pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n Limited - (2014) 51 Taxmann 34 (Karnataka) (p) CCE vs. Tuticorin Alkali Chem. & Fertilizers Limited - (2012) 21 Taxmann 341 (Chennai-CESTAT) (q) ST Electricals Pvt. Limited vs. CCE 2019 (20) GSTL 273 (Tri.) (r) CCE vs. Ballarpur Industries Limited - 2007 (215) ELT 489 (S.C) (s) CCE vs. Gas Authority of India Limited - 2008 (232) ELT 7(SC) (t) Commissioner vs. Reliance Ports and Terminal Limited - 2016 (334) ELT 630 (Guj) 3. He further submits that in the present case, there is no suppression of facts for the reason that the appellant had informed the department as early as in 2008 itself vide letter dated 24.08.2008 that the Lime Kiln plant would belong to M/s. JK Envirotech Limited but the appellant would be availing credit on capital goods pertaining to the same. The department did not dispute the availment of credit at that time. Subsequently the sale of the Lime Kiln plant was reflected in the balance sheet in 2008 and there was no objection by the department even then. In this fact, there is no suppression of fact on the part of the appellant. Therefore the demand for the extended period is not sustainable on the ground of time....
X X X X Extracts X X X X
X X X X Extracts X X X X
....year @ 5% for each quarter in the fourth and fifth year @ 1% (b) for capital goods, other than computers and computer peripherals @ 2.5% for each quarter: Provided that if the amount so calculated is less than the amount equal to the duty leviable on transaction value, the amount to be paid shall be equal to the duty leviable on transaction value." From the plain reading of the above Rule, it is clear that the assessee is required to pay duty on the use of capital goods only when it is removed from the factory of the assessee. In the present case, since the plant was remained installed in the factory of the appellant and moreover the same was undisputedly used for conversion of lime sludge into lime and the said lime was used in the manufacture of the final product of the appellant. The demand in terms of sub-Rule (5A) of Rule 3 of Cenvat Credit Rules, 2004 is not legal and correct. In the present case, first the capital goods was not removed from the factory consequently the same was exclusively used in or in relation to manufacture of final product of the appellant. Therefore, in this position, Rule 3(5A) has no application. The Revenue's only contention i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he second appeal was filed before the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench, Ahmedabad ("the Tribunal"). The Tribunal has held that there is nothing in CENVAT Rules which supports the view that credit will be available only if the burden of duty is borne by the input purchasing manufacturers. Applying the aforesaid ratio to the facts of the case, the Tribunal has allowed the appeal holding that the denial of credit was not correct. CENVAT Credit Rules, 2002, define "capital goods" under Rule 2(b) of the Rules. Rule 3, as is material for the present, reads as under : "(1) A manufacturer or producer of final products shall be allowed to take credit (hereinafter referred to as the CENVAT credit) of - (i) the duty of excise specified in the First Schedule to the Tariff Act, leviable under the Act; (ii) the duty of excise specified in the Second Schedule to the Tariff Act, leviable under the Act; (iii) the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Textile and Textile Articles) Act, 1978 (40 of 1978); (iv) the additional duty of excise leviable under section 3....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es, 2004. The original authority held that the appellant deemed to have removed said capital goods from their premises to a new and separate factory premises of M/s. RCIPL consequent upon the sale and transfer of Chain Division. The relevant provision of Rule 3(5) of Cenvat Credit Rules, 2004 relied upon by the original authority is reproduced as below :- "(5) When inputs or capital goods, on which CENVAT credit has been taken, are removed as such from the factory, or premises of the provider of output service, the manufacturer of the final products or provider of output service, as the case may be, shall pay an amount equal to the credit availed in respect of such inputs or capital goods and such removal shall be made under the cover of an invoice referred to in rule 9 : Provided that such payment shall not be required to be made where any inputs are removed outside the premises of the provider of output service for providing the output service : Provided further that such payment shall not be required to be made when any capital goods are removed outside the premises of the provider of output service for providing the output service and the capital good....
X X X X Extracts X X X X
X X X X Extracts X X X X
....contemplates shifting of a thing from one place to another. In other words, it contemplates physical movement of goods from one place to another." The word "removal" has not been defined under CCR, 2004 either. In the circumstances, the above observation of the Apex Court assumes significance and has to be followed as binding ruling. Accordingly, we are of the view that all the decisions cited by ld. Counsel in support of the assessee's contention that Rule 3(5) of the CCR, 2004 would not be invocable unless there was physical removal of capital goods/inputs are in accordance with the ruling of the Apex Court. ... ... ... ... 11. We are also in agreement with ld. Counsel's proposition that a deeming provision should be express. Any quasi-judicial authority, however learned, cannot deem the existence of a deeming provision where there is none in the text of the relevant statute. The Hon'ble Supreme Court's judgment rendered in Shyam Oil Cake Ltd. (supra) seems to support the assessee's case on this point." The said decision of the Tribunal was affirmed by the Hon'ble Madras High Court (supra). The High Court observed that when there is no removal ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ails of any removal, mode of transport, rate of duty, duty payable thereon, etc., as per the requirement of Rule 11(2) of Central Excise Rules, 2002. We also note that based on these invoices no credit can be availed by any buyer as these are not in terms of Rule 9 of Cenvat Credit Rules, 2004. In view of settled legal position regarding need for physical removal of capital goods or inputs, in order to attract the provisions of Rule 3(5) of Cenvat Credit Rules, 2004, we find that there is no justification to invoke such provision to demand and recover any amount from the appellant in this case. As such, we find no justification for the confirmation of demand towards capital goods. The same reasoning is applicable to the recovery of amount for the inputs amounting to Rs. 91,76,449/-. The demand towards such recovery is also not sustainable. There is no allegation or finding regarding any irregular credit availed on inputs or capital goods or usage of these goods for other than approved purposes. 11. Regarding demand of the amount equal to credit availed to LPG transferred to M/s. RCIPL by the appellant during Oct., '08 to Jun., '09, the appellant conceded that the said amou....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed. In the result, the appeal is dismissed in limine." (d) Tribunal Chennai in the case of Dalmia Cement (Bharat) Limited (supra) passed the following order:- "4. Ld. Sr. Advocate has cited case law in support of some of the above contentions of the assessee. Relying on the Apex Court's judgment in Shyam Oil Cake Ltd. v. CCE, Jaipur, 2004 (174) E.L.T. 145 (S.C.), he has argued that nothing can be deemed in the context of applying any provision of law to a given set of facts unless the law contains an express deeming provision. He has submitted that, under Rule 3(5) of the CCR, 2004, inputs or capital goods, on which Cenvat credit had been taken, were to be removed as such from the factory so as to make the manufacturer liable to pay an amount equal to the credit availed. Rule 3 does not contain any deeming provision which could support the Commissioner's view that the capital goods and inputs used in relation to the setting up of the power plant upon lease of the power plant by the assessee to M/s. KPPL can be deemed to have been removed from the assessee's factory. Ld. Counsel is heavily relying on the Tribunal's decision in Steel Authority of India Ltd. v. CCE, Bhuban....
X X X X Extracts X X X X
X X X X Extracts X X X X
....- Chennai) (2) Modernova Plastyles P. Ltd. v. CCE, Mumbai, 2004 (60) RLT 448 (CESTAT-Mum.) (3) JBM Sungwoo Ltd. v. CCE, Chennai, 2005 (70) RLT 69 (CESTAT - Chennai) 5. Ld. Consultant for the Revenue has expressed the view that the present case has to be decided on its own facts and circumstances without reference to any of the cases cited by ld. Counsel. He has submitted that, even before the power plant in question was commissioned, M/s. DCL had transferred it on lease, along with the land on which it stood, to another legal entity viz. M/s. KPPL. The capital goods and inputs used in relation to the setting up of the power plant, thus, ceased to be in the actual possession or use of M/s. DCL. Therefore, according to ld. Consultant, the capital goods and inputs must be deemed to have been removed from the cement factory of M/s. DCL, for purposes of sub-rule (5) of Rule 3 of the CCR 2004. In this connection, he has referred to paragraphs 38 and 39 of the Apex Court's judgment in J.K. Spinning and Weaving Mills Ltd. v. UOI, 1987 (32) E.L.T. 234 (S.C.), wherein certain deeming provisions of Rules 9 and 49 of the erstwhile Central Excise Rules, 1944 were exam....
X X X X Extracts X X X X
X X X X Extracts X X X X
....factory and the same was set up for generating electricity for captive use for the manufacture of cement and ancillary purposes. In other words, it was set up as a captive power plant. The main issue arising in this case is whether, on account of the power plant having been leased out to another company (KPPL) w.e.f. 15-3-2005 for generation of electricity and supply thereof to the assessee at prescribed rates, the aforesaid capital goods and inputs should be held to have been removed as such from the assessee's factory and whether, consequently, they should be directed under Rule 3(5) ibid to pay an amount equal to the sum of the capital goods credit, input duty credit and input service tax credit utilized for payment of duty on their final product (cement) from 15-3-2005. Ld. Commissioner held that, as the land on which the power plant was situated had also been transferred together with the power plant and ancillary equipments to M/s. KPPL under the lease deed, the power plant ceased to be part of, or stood excluded from, the factory premises of M/s. DCL and thereby attracted provisions of Rule 3(5) of the CCR, 2004. On the above facts, ld. Commissioner further held that the cap....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y paid thereon. Sub-rule (1) of Rule 57S imposed a liability on the manufacturer of final product to pay appropriate duty of excise on his capital goods when removed from the factory for home consumption as if such capital goods had been manufactured in the said factory. Sub-rule (2) of Rule 57S prescribed the extent to which such duty of excise was payable. This sub-rule reads as under :- "(2) In a case, - (a) where capital goods are removed without being used from the factory for home consumption, on payment of duty, or for export on payment of duty of excise, such duty of excise shall in no case be less than the amount of credit that has been allowed in respect of such capital goods under Rule 57Q ; (b) where capital goods are removed after being used in the factory for home consumption on payment of duty of excise or for export under rebate on payment of duty of excise, such duty of excise shall be calculated by allowing deduction of 2.5 per cent of credit taken for each quarter of a year of use or fraction thereof, from the date of availing credit under Rule 57Q ; and (c) where capital goods are sold as waste and scrap, the manufacturer shal....
X X X X Extracts X X X X
X X X X Extracts X X X X
....fied under Rule 11 of the CER, 2002 which stipulates that excisable goods shall be removed from a factory/warehouse only under an invoice signed by the owner of the factory or his authorised agent. Contextually, it may also be noted that, while Rule 7 of the CCR, 2002 employs the word 'clearance', Rule 11 of the CER, 2002 uses the word 'removal'. Elsewhere in the CER as well as in the parent statute also, 'clearance' and 'removal' have been used synonymously. Removal of excisable goods under Rule 11 of the CER, 2002 is, beyond doubt, physical removal of the goods. Rule 4 of the CER, 2002 (which corresponds to Rule 9 of the erstwhile CER, 1944) mandates that no excisable goods, on which any duty is payable, shall be removed from factory/warehouse without payment of duty, the scheme is quite clear. Duty of excise can be collected only at the stage of removal of the excisable goods from the factory/warehouse and such removal must be effected under an invoice issued by the owner of the factory or his authorised agent. Interpretation of sub-rule (4) of Rule 3 of CCR, 2002 has to be harmonious with this scheme. Accordingly, for a manufacturer of final products to be asked to pay an amoun....
X X X X Extracts X X X X
X X X X Extracts X X X X
....asion to consider a similar factual situation under the erstwhile Rule 57S of the CER, 1944. In both the cases, the assessees had sold their factories with capital goods therein after availing credit on such goods. The Tribunal held that the credit so availed was not recoverable in the absence of removal of capital goods from factory. In the case of Metzeller Automotive Profiles (supra), the question was whether, under sub-rule (1) of Rule 57AB of the CER, 1944, the assessee was liable to pay duty equivalent to the Modvat credit taken on their capital goods, consequent upon transfer of their factory to another company. It was held that they had no such liability in the absence of removal of the capital goods from the factory. A similar view as taken by the Tribunal in the case of Associated Cement Co. Ltd. v. Commissioner of Central Excise, Belgaum [2004 (173) E.L.T. 210 (Tri.-Bang.)] cited by learned Counsel. All these decisions were followed by the Tribunal in the case of Tata Motors Pvt. Ltd. v. Commissioner of Central Excise, Jamshedpur [2005 (190) E.L.T. 269 (Tri.-Mumbai)] cited by learned Counsel. However, the decision in Majestic Auto (supra) relied on by learned SDR is to t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....invocable unless there was physical removal of capital goods/inputs are in accordance with the ruling of the Apex Court. 10. In the present case, it is also pertinent to note that the assessee's contention that the power plant continued to be their captive power plant even after its lease to KPPL has not been successfully rebutted. It is their definite case that the land on which the power plant is situate remained part of the approved ground plan of their cement factory even after 15-3-2005. For want of rebuttal, we have got to sustain this case of the assessee and to hold that the power plant remained a part of the assessee's cement factory and could be called "captive power plant". Consequently, it has also to be held that the capital goods in question, which formed an integral part of the power plant, remained within the factory premises of M/s. DCL even after the lease of the power plant to M/s. KPPL. In other words, there was no physical removal of any capital goods from the cement factory. 11. We are also in agreement with ld. Counsel's proposition that a deeming provision should be express. Any quasi-judicial authority, however learned, cannot deem the exi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s admitted that the capital goods, on which Modvat Credit was taken by the appellant remained installed in the same premises, which was leased out and continued to be engaged in the manufacture of I.C. Engine, which was further used in the manufacture of two wheelers and that a separate registration certificate was obtained by HBSA Pvt. Ltd., there was no removal of goods. The capital goods remained installed in the same premises and thus even if the premises were transferred on lease, the capital goods even if they were deemed to be installed in the premises of HBSA Pvt. Ltd., Rule 57-S, would not be attracted." 16. On a plain reading of Rule 3(5) of the Cenvat Credit Rules, 2004, we find that Rule 3(5) only speaks about the removal of goods under cover of invoice referred to in Rule 9 on inputs or capital goods on which cenvat credit has been taken and if such goods are removed as such from the factory or premises of the provider of output service, the manufacturer of the final products or provider of output service, shall be liable to pay an amount equal to the credit availed in respect of such inputs or capital goods. 17. In this case, we find there is no remo....