TaxTMI 
TaxTMI 
2025 (11) TMI 1091
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the Central Excise Tariff Act, 1985 and is availing the benefit of CENVAT Credit of duty/ tax paid on inputs, capital goods and input services under Rule 3 of the CENVAT Credit Rules, 2004. 2.1. During the course of audit, some discrepancies were noticed which were communicated to the Appellant vide audit report dated 09.01.2009, to which reply was furnished by the Appellant vide letter dated 22.06.2009. However, the Department did not accept the reply submitted by the appellant and after a gap of approximately 2 years, a Show Cause Notice dated 04.05.2011 was issued to the Appellant, by invoking extended period of limitation. In the Notice, five issues were raised proposing demand of central excise duty/ recovery of CENVAT credit totally amounting to Rs. 2,16,41,663/-under Section 11A of the Central Excise Act, 1944 read with the relevant provisions of the CENVAT Credit Rules, 2004 along with interest and equivalent penalty. 2.2. The above Show Cause Notice was adjudicated, and the impugned order was passed by Ld. Principal Commissioner of CGST and Central Excise, Ranchi wherein the demand for recovery of CENVAT Credit to the tune of Rs. 1,04,57,997/- was dropped and the ba....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... Principal Commissioner seems to make Rule 3(5A) of Credit Rules as charging provision for levy of excise duty on transaction value at the time of clearance of used capital goods as waste and scrap, which is not permissible being beyond the mandate and intent of the CENVAT Credit Rules, which is only to provide for availment, utilization and reversals of CENVAT Credit. In this connection, they point out that the charging provision under the Excise Act is Section 3, which provides for levy of excise duty (which is payable on transaction value) only on manufacture/ production of articles; therefore, in the absence of any manufacturing activity for the subject waste and scrap of capital goods, no duty on transaction value of such unmanufactured waste and scrap can be sought under Rule 3(5A) of the CENVAT Credit Rules. 3.2. In this regard, reliance is placed by the appellant on the decision of SRF LTD. Versus Commissioner of C. Ex. & Service Tax, Alwar [2018 (363) E.L.T. 1058 (Tri. - Del.)], wherein analyzing the provision applicable during the relevant period, it has been categorically stated that Rule 3(5A) of CCR shall be attracted only in case when credit has been availed on ca....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ant, there is no requirement on the part of the appellant to establish any further nexus of the capital goods with the manufacture of final products; the usage of the goods in question is sufficient nexus as sought in the CCR. Accordingly, the appellant argues that denial of credit on the ground that sodium vapour lamp and halogen lamp do not have nexus with the manufacturing process of the Appellant company and the other items allegedly fall under Chapters 73 and 94 of the CETA is grossly incorrect and untenable, in the absence of any allegation/ finding regarding non-use thereof in the factory of the appellant. Therefore, the appellant submitted that they have rightly availed CENVAT Credit on the items under consideration as capital goods under Rule 2(a) of CCR. 4.2. Without prejudice to the above submissions, the appellant further submits that the subject goods under consideration falls within the definition of capital goods and credit thereof has accordingly been correctly availed under Rule 2(a) of CCR. It is their pleading that such goods also qualify under the definition of 'inputs' under Rule 2(k) of CCR; Rule 2(k) of CCR inter alia defines the term 'input' as al....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ore, the appellant has taken the stand that the entire demand raised for the period 2006-07 to 2007-08 is liable to be set aside on the ground of being time-barred as the entire demand has been raised by invoking the extended period of limitation. In this regard, the appellant submitted that the Department was aware of the facts of non-payment of amount under Rule 3(5A) of CCR and availment of allegedly inadmissible CENVAT Credit in the instant case much earlier in the year 2009 itself, when an audit was conducted on the records of the Appellant and audit report issued on 09.01.2009; however, it was only on 04.05.2011 that the instant SCN was issued. Hence, they argue that the demand raised invoking extended period is untenable in the present facts and circumstances. Reliance in this regard is placed by the appellant on the following judgments: • Anand Nishikawa Co. Ltd. Versus Commissioner of Central Excise, Meerut [2005 (188) E.L.T. 149 (S.C.)] • Alstom Projects India Limited vs Commissioner of Central Excise, Bolpur, Excise Appeal No.315 of 2009 (Tri-Kolkata), affirmed by the decision pronounced by Hon'ble Calcutta High Court on 24.04.2024 in CEXA/7/202....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 3. The appellate authority while dealing with the above plea of the assessee observed as under : "From the above judgements it is clear that an amount equal to the duty leviable on transaction value is liable to be paid and it cannot be said that this amount is liable to be paid only when credit has been availed of on the capital goods, scrap of which is being sold. I find that the allegation of revenue that duty is payable on sale of scrap and waste generated out of capital goods cannot be belittled by the contention of the appellants that, since they have not taken the credit of duty on capital goods, they cannot be fastened with the liability to pay duty on transaction value of this waste and scrap of capital goods. Hence, even the submission of sample copies of sale as well as purchase invoices, by the appellants, which point towards non-availability of Cenvat credit of duty at the time of purchase of the said capital goods, would be of no help to the appellants." 4. As is seen from above, the Commissioner (Appeals) has confirmed the demand in terms of Rule 3(5A) by observing that even if the credit was not availed on the capital goods, out of which t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....urse of business. .... 5. Having considered the rival contentions and that the facts of the present case, I hold that the provisions of Rule 3(5A) read with Rule 3(5) are not applicable in view of the categorical assertion of the appellant that no Cenvat credit was availed, which fact is further corroborated by the memorandum of purchase of 1997.I also hold that the extended period of limitation is not invocable as no case of any suppression or misconduct is made out on the part of the appellant. Thus, the appeal is allowed with consequential benefits in accordance with law." 9.3. A similar view has also been expressed in the decision in the case of Commissioner of C.Ex., Allahabad vs. UP State Sugar Corporation [2012 (279) ELT 76 (Tri-Del)], which held as follows: "7. ....The respondents contested the show cause notice and stated that scrap or waste have arisen out of capital goods received minimum 15 years back i.e. prior to 1994 when the credit on capital goods were extended. Original authority held that the burden of proof that the goods were received prior to 1994 is on the assessee. At the same time, he has confirmed the duty under section 11A an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....onsideration have been used by the appellant within the factory premises for ensuring proper lighting in various production areas which is essential for carrying on the production processes round the clock. Hence, we are of the view that CENVAT Credit on such items qualifies under the definition of 'inputs' as defined under Rule 2(k) of CCR. We concur with the submission of the appellant that any goods which are commercially expedient, without which the process of manufacturing may be hampered, shall qualify for the definition of 'inputs'. In support of this view, we place our reliance on the decision in the case of J.K. Cotton Spg. & WVG. Mills Co. Ltd. Versus Sales Tax Officer, Kanpur [1997 (91) E.L.T. 34 (S.C.)], the relevant portion of which is extracted below, for ease of reference: "The expression "in the manufacture of goods" should normally encompass the entire process carried on by the dealer of converting raw materials into finished goods. Where any particular process is so integrally connected with the ultimate production of goods that but for that process, manufacture or processing of goods would be commercially inexpedient, goods required in th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tructures, lamps, high mast light, tubes/glass and fixtures. The eligibility for credit is thus satisfied. I find no substance in the reasoning of the Original Authority regarding light fittings becoming part of civil structure. I find this by itself is not a ground for denial of credit. Admittedly the various light fittings and fixtures were brought into the factory after duty payment and were installed for the intended purposes. To call these items as immovable property is without basis. These goods are used within the building premises, mills and shops to enhance illumination. This enables round the clock operation of the assessee." 10.4. It may also be pertinent to refer to the decision in the case of Commissioner of Cus. & C. Ex., Raipur Versus Bhilai Steel Plant [2010 (261) E.L.T. 612 (Tri. - Del.)], wherein credit on sodium vapour lamp has specifically been held to be admissible. Relevant extract of the judgment is given below, for ready reference: "28. As regards the sixth category of items, it has been observed that sodium vapour lamp has been used by the respondents for lighting purposes in the various shops and mills and even if the item is used for lighting ....