TaxTMI 
TaxTMI 
2023 (7) TMI 764
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.... Excise Appeal No. 315 of 2010 has been filed by Gautam Goel to assail that part of the aforesaid order dated 14.10.2009 that imposes a penalty of Rs. 10 lakhs upon him. 3. Excise Appeal No. 323 of 2010 has been filed by the appellant to assail the order dated 23.10.2009 by which the show cause notice dated 31.12.2008 for the period November 2007 to March 2008 has been adjudicated upon by denying CENVAT credit and ordering it to be recovered with interest and penalty. The order also imposes a penalty of Rs. 10 lakhs upon Gautam Goel, Managing Director of the appellant. 4. Excise Appeal No. 324 of 2010 has been filed by the Gautam Goel to assail that part of the aforesaid order dated 23.10.2009 that imposes a penalty of Rs. 10 lakhs on him. 5. The appellant manufactures V.P. sugar & molasses falling under Chapter Headings 1701 11 90 and 1703 10 00 of the First Schedule to the Central Excise Tariff Act, 1985. The appellant availed CENVAT credit of duty paid on inputs and capital goods used in the manufacture of the final products under rule 3 of the CENVAT Credit Rules, 2004 [the CENVAT Rules]. 6. A show cause notice dated 19.10.2007 was issued to the appellant and Gautam....
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....hould not be imposed upon him. 8. The show cause notice dated 29.04.2008 mentions that on scrutiny of ER-1 Returns filed by the appellant and the records submitted by the appellant for the period April 2007 to September 2007, it appeared that the appellant had availed CENVAT credit on items namely G.P. Coils (721049), G.P. Sheets (721049), HR Coils (720837), C.R. Sheet (720920), M.S. Angle (721621), M.S. Plates (720811), M.S. Channel (721631), Shape and Section (721650), Alloyed/Unalloyed cold Rolled Coil & Throughed Corrugated C R Sheet (Ch-76) and Primer & Pains (320890) by treating these items as 'capital goods'. The show cause notice also mentions that the said items appeared not to confirm to the definition of 'capital goods' and, therefore, CENVAT credit was not admissible to the appellant. It, therefore, called upon the appellant to show cause as to why CENVAT credit wrongly utilized should not be disallowed and recovered from the appellant. The show cause notice also calls upon Gautam Goel to show cause as to why penalty of Rs. 10 lakhs may not be imposed upon him. 9. The appellant filed a reply to both the show cause notices primarily contending that the appellant wa....
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....d on inputs (raw material) used in the manufacture or fabrication of capital goods mentioned in Rule 2 of Cenvat Credit Rules 2004 in view of explanation 2 of rule 2 of Cenvat Credit rules 2004. I also agree with Circular No.276/110/96-TRU, dated 02.12.96; vide which it was clarified that the tariff classification of parts & components (inputs) were immaterial, if the same were used in capital goods. To analyse the claim of the party that the Cenvat Credit on the above said goods is admissible as inputs used in the fabrication of Capital Goods as per explanation 2 to rule 2 of Cenvat Credit Rules, 2002, I have gone through the said explanation, which says that "Inputs include goods used in the manufacture of capital goods which are further used in the factory of the manufacture." I agree with their submission in view of explanation to of Rule 2 of Cenvat Credit Rules 2002, but the party did not produce any record / evidence about the capital goods so fabricated from the above said goods on which Cenvat credit taken and where the said fabricated capital goods were placed/entered and issued for captive consumption and without such records/ evidence it is difficult to establish t....
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.... had maintained all the records of receipts and issue of items. The issue slips which had been produced before the Commissioner show the names of the items, quality and place of use and even the Chief Engineer and the Chartered Engineer certified the use of each item in question. According to the learned counsel for the appellant, since the items in issue were used by the appellant in the expansion of the factory, CENVAT credit would be admissible on the items. Elaborating this submission, learned counsel for the appellant pointed out that the items in question have been used in fabrication of machine, machinery, accessory and support structure which are necessary to keep the heavy machinery/equipments like boiler, turbine, cane carrier, bagasse carrier, EOT crane at a calculated height to run the manufacturing process for manufacture of the final product. Thus, CENVAT credit, according to the learned counsel for the appellant, would be available on such items used in fabrication of support structure. In support of this submission learned counsel placed reliance upon certain decisions, to which reference shall be made at the appropriate stage. Learned counsel also pointed out ....
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....al 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 1. - The 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." 17. According to the appellant, it had used all the items mentioned in the two show cause notices for fabrication of 'capital goods' in the expansion of the factory. Learned counsel pointed out that the factory had installed Co-generation plant for which the items were fabricated and installed. The appellant claims that it maintained all the records of receipt and issue and inputs for fabrication of capital goods in the factory and had shown the availment of CENVAT credit in the relevant ER-I returns. 18. In this connection, learned counsel for the appellant placed reliance upon the letter dated 04.04.2008 sent by the appellant to the....
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....of these items involved in the said capital goods which in turn were used in the manufacture of finished goods. The Chartered Engineer is independent authority for the purposes of our claim on merit." 21. The inspection report which was submitted with the aforesaid letter is reproduced below:- "INSPECTION REPORT "In accordance with the request of Shri J.S. Sharma, Executive President (Commercial), Dhampur Sugar Mills Ltd., Dhampur, the undersigned visited the premises of the client at Dhampur to inspect the machinery/ plant/ equipments installed in the factory on 23.10.09. The various records of purchase of material for the use in the capital goods closely examined as to its quantity and use. Upon completion of assignment, I have to report as hereunder - 01. Name & Address of client : Dhampur Sugar Mills Ltd., Dhampur Distt. Bijnor 02. Date of Inspection : Conducted on 23.10.09 at Dhampur 03. Purpose of inspection : For submission to Central Excise Department 04. Upon having visited the factory site of M/s Dhampur Sugar Mills Ltd., Dhampur, I have physically verified the uses of the items on which Cenvat Credit under Centr....
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....decisions of Hon'ble Tribunal in our cases. Thanking you, Yours faithfully For The Dhampur Sugar Mills Limited" 24. The letter enclosed summary of the specific use of the items along with machinery they were used in. 25. The panchnama prepared by the panchas who had been called by the Central Excise Officers to witness the verification of inputs used in the manufacture of 'capital goods', also gives details of the verification that was conducted to establish that the parts were used in the machines for fabrication work. The panchnama also records that the Officers were provided photocopies of relevant purchase invoices along with store issue slips of material duly signed by the concerned technical authority. 26. It is, therefore, clear that the materials on which CENVAT credit had been taken had all been used for fabrication work of machines which are capital goods. 27. In any view of the matter the show cause notices do not allege that the raw materials on which CENVAT credit had been taken had not been utilized for fabrication of 'capital goods'. The Commissioner, therefore, could not have examined this issue. 28. It is, therefore, no....