TaxTMI 
TaxTMI 
2026 (1) TMI 1458
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....n 11A(4) of the Central Excise Act, 1944; (iii) I order for recovery of interest on the aforesaid outstanding amounts at point (i) & (ii) above, under Section 11AA of the Central Excise Act, 1944; (iv) I impose penalty upon the party total amounting to Rs.48,38,725/- under Rule 15 of Cenvat Credit Rules, 2004 read with Section 11AC of Central Excise Act, 1944." 2.1 Appellant is holding Central Excise Registration No.AAACI6297AXM035 and is engaged in the manufacture of Catalysts, Zinc Waste, Nickel Waste, Catalysts (Copper scrap), Spent Nitric Acid, Burnt Lube Oil etc., falling under the tariff heading 38151100, 38151900, 38159000, 69091990, 76020010, 75030010, 74040012 and 28080010 of the First Schedule to the CETA, 1985. They are availing Cenvat credit facility in respect of inputs, capital goods and input services. 2.2 During the course of Audit of the records of the Appellant it was observed that - • Cenvat credit of certain goods under the category of capital goods such as Sweeper Twinner 800, Teflon Hose Assembly, Plastic and Article Thereof, Mobil Nuto H46 & Mobil Nuto H68, Chart Ribbon Cassettee, Spectro Genesis Ical Solution, Z Fold Char....
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....ith the impugned order filed an appeal before this office on the following grounds- 1- Because the Adjudicating Authority has failed to analyze and examine the nature of goods and their use while confirming he demand against the appellant. The Adjudicating Authority has merely held that the goods do not fall under the chapters mentioned in Rule 2(a) of the Cenvat Credit Rules, 2004 and thus the appellant is not entitled to take credit. 2- Because as regard to Edu. Cess and S & H Edu. Cess the Adjudicating Authority has failed to appreciate that despite being exempt the same was charged by the customs authority in the Bill of Entry. 3- Because the Adjudicating Authority has failed to give any proper justification and has filed to deal with the relevant provisions of law in proper manner. 4- Because the Adjudicating Authority has passed the order without considering the submissions made by the appellant. The appellant has submitted that they submitted the copy of EPCG license to prove that the main item i.e. Inconel tray purchased is a capital goods. 5- Because items/ goods involved in the present case qualify as capital goods as per Rule ....
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....l sheet, etc., do not constitute the capital goods in terms of Rule 2(a) of the Cenvat Credit Rules 2004 as they falls under chapter heading 96, 39, 27, 38, 48, 28, 83, 73, 32, 29, 40, 63, 32, 75, 94, 30, 72 and 34 of CETA 1985. Further the observations of the Adjudicating Authority were also based on the fact that the goods mentioned in relevant purchase invoices specify the chapters with the description thereof which appears to be proper. In contrast the appellant have contended that the classification of the excisable goods in question is required to be considered on the basis of usage thereof and Cenvat Credit can also be allowed on inputs does not appear to be tenable. As per the strict interpretation of Rule 2(a) ibid, only those excisable goods falling under chapter heading 82, 84, 85, 90, 68 and 86 (partial) are covered under the definition of capital goods. Thus from above it manifests that the appellant has availed and utilized inadmissible Cenvat credit. 5.4 Now coming to the point of availing and utilizing Cenvat credit on Cess on CVD which were exempted in terms of Notification No.13/2012-CUS 14/2012-CUS both dated 17.03.2012, I find that the law is very clear....
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....he (i) of the definition of the capital goods as per Rule 2 (a) of the CENVAT Credit Rules, 2004. It does not consider the (iii) of the definition. The claim of the Appellant before for lower authorities was not under sub-clause (i) but was under sub-clause (iii) as it was their submissions that impugned goods are the parts, components, spares & accessories of capital goods which used by them. I find merits in the said submissions as it is evident from the above definition that the issue of the classification under the Chapters specified is provided only in respect of (i) and not (iii) if this in case of part, components, spares and accessories etc., not necessary that the goods should have been classified under any of these Chapters specified in (i). Further, I also observe that undisputedly these goods have been used within the factory of the Appellant. If in any case credit was not to be allowed under the category of capitals goods the same would be admissible as inputs. In case of Bharti Airtel [2025 (391) E.L.T. 3 (S.C.)] Hon'ble Supreme Court has observed as follows: "11.10 We now proceed to the next stage of consideration. Even if it is held that the mobile towers a....
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.... be treated as "capital good" by virtue of sub-clause (iii) of Rule 2(a)(A). Similar is the case with PFBs. 11.11.2 ....... 11.11.3 ...... 11.11.4 What is an accessory has been defined in Black's Law Dictionary, (Fifth Edition) as, "anything which is joined to another thing as an ornament or to render it more perfect, or which accompanies it, or is connected with it as an incident, or as subordinate to it, or which belongs to or with it, adjunct or accompaniment. A thing to subordinate importance. Aiding or contributing in secondary way of assisting in or contributing to as a subordinate." Similarly, Oxford Dictionary defines "accessory" as: "an extra piece of equipment that is useful but not essential or that can be added to something else as a decoration." 11.11.5 What comes out from the above dictionary meaning of "accessory" is that any such item which adds to the beauty, convenience or effectiveness of some other items can be said to be accessory of that other thing and it may or may not be essential for functioning of main machinery. Seen from the above perspective what is evident is that the tower is a struct....
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....accessories of antennas. The CESTAT did not find the said contention of Assessee acceptable on the ground that tower cannot be considered to be a part of antenna, since a component or part of any goods means something which is required to make such goods a finished item. The CESTAT held that only those articles which would go into the composition of another article can be considered to be component or part of the latter and that tower does not enter into the composition of the antenna and hence it is not a component/part of the antenna, relying on the decision of this Court in Saraswati Sugar Mills (supra). In the aforesaid case of Saraswati Sugar Mills (supra) it was held by this Court that anything required to make the goods a finished item can be described as component or part of the finished item. It was held that iron and steel structures would not go into the composition of vacuum pans, crystallizers etc. If an article is an element in the composition of another article made out of it, such an article may be described as a component of another article. Thus, structures in question in the said case did not satisfy the description of 'component'. 11.11.9 While ....
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....evenue, tower is needed to keep the antenna at an appropriate height and keep it stable. Without the tower, it is not possible to hoist the antenna at the requisite height and without it being securely fastened to the tower, antenna cannot be kept firm and steady for proper receipt and transmission of radio signals. Thus, there cannot be any doubt that a mobile tower can be treated to be an accessory of antenna and BTS. Accordingly, since in terms of subclause (iii) of Rule 2(a)(A), all components, spares and accessories of such capital goods falling under sub-clause (i) would also be treated as capital goods, a mobile tower can also be treated as "capital good". 11.11.12 We, therefore, agree with the conclusion arrived at by the Delhi High Court that towers and shelters (PFBs) support the BTS/antenna for effective transmission of mobile signals and thus enhance their efficiency and since these articles are components/accessories of BTS/antenna which are admittedly "capital goods" falling under Chapter 85 within sub-clause (i) of Rule 2(a)(A) of CENVAT Rules, these items consequently are covered by the definition of "capital goods" within the meaning of sub-clause (iii) re....
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....t can be said, without any doubt, that tower and PFBs are used for providing output service by way of inputs. The use of tower and PFB cannot be said to be so remotely connected with the output of service that these goods will go beyond the ordinary meaning of "use". Their usage in providing the output service is not remote but proximate. In fact, without the use of tower and PFB, it is inconceivable that the service provider can provide mobile services effectively. Rather, towers and PFBs are indispensable being accessories of antenna for providing mobile services. In this regard one may refer to the decision in Phelps & Co. (P) Ltd., (supra) wherein it was held that, "6. We have now to find out what exactly is the meaning of the expression "for use by him in the manufacture of goods for sale". Identical words are used in Section 8(b) of the Central Sales Tax Act 1956. This court was called upon to find out the scope of that expression in M/s. J.K. Cotton Spinning & Weaving Mills Co Ltd. v. Sales Tax Officer, Kanpur and Anr. (AIR 1965 SC 1310 ). Dealing with that expression this Court observed: The expression "in the manufacture of goods" would normally encompass....
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....n clauses does not explain it so elaborately but merely uses the simple expression i.e. "used for providing any output service". In our view, even if the definition of "input" with reference to output service may not have been explained in an expansive manner as in the case of manufacture of final product under Rule 2(k)(i), the definition of "input" with reference to providing output service under Rule 2(k)(ii) need not be given a restrictive meaning as sought to be done by the CESTAT by holding that tower is not used directly for transmission of signal. In our view since the subject matter is same, i.e., what amounts to "input" though the end use is for two different products, one tangible, in the form of final manufactured product, and one intangible i.e., output service, applying similar tests to determine what amounts to "input" would not be impermissible." I do not find any merits in the findings in this regard recorded in the impugned order. 4.7 In respect of Cenvat credit taken against Education Cess and Secondary & Higher Education Cess I observe that undisputedly Appellant had paid this amount as a cess and bill entry during the relevant period as they have....
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....oviso to Section 11A(1) of the Central Excise Act, 1944 and to show cause as to why interest and penalty should not be levied and as to why plant, machinery, building etc. should not be confiscated. 5. By the order-in-original dated 30th October 2000, the Commissioner of Central Excise & Customs, Aurangabad confirmed the demand of Rs. 13,08,701/- under Section 11A of the Act and imposed a penalty equivalent to the amount of duty under Section 11AC of the Act and also a penalty of Rs. 1,00,000/- under Rule 173Q of the Rules. Recovery of interest under Section 11AB of the Act was also ordered. 6. Aggrieved by the above order-in-original, the assessee preferred an appeal before the Tribunal which has been accepted by the impugned order. Revenue, being aggrieved, has filed the present appeal. 7. The Tribunal has come to the conclusion that in fact there was no loss of revenue. It accepted the appeal by recording the following reasons : "Reasons given by the appellants for the alleged inflation of the value of the intermediate goods are logical. What was required of the Commissioner was to examine the quantum of the loading of the assessable value by ....
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....aw materials supplied to the assessee and the department accepted this excise duty. The concept of Modvat is that if the raw material suffered duty then relief should be given so far as the excise duty on the final product is concerned. For instance, if a manufacturer of coat purchases cloth on which the manufacturer of cloth has paid excise duty say Rs. 20/-, then if the excise duty on the coat is say Rs. 100/-, the sum of Rs. 20/- has to be deducted from it and only Rs. 80/- is payable by the coat manufacturer. This is no doubt a rough and ready example but it illustrates the concept of Modvat. Since the very concept of Modvat is to mitigate double taxation, if the raw material has suffered excise duty then relief should be granted in respect of duty payable on the final product." 11. In the case of Balakrishna Industries Ltd. v. Commissioner of Central Excise., Jaipur-I - 2014 (309) E.L.T. 354 (Tri.-Delhi), the issue under consideration was whether the goods supplied to the appellant without availing the benefit of Notification No. 44/2001-CE (NT)/26-6-2001 and consequent credit passed on to assesse was eligible or not. The Tribunal followed the decision in the case of ....