TaxTMI 
TaxTMI 
2026 (5) TMI 710
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....resent case are that the appellant is engaged in the manufacturing of Sugar and Molasses falling under chapter sub heading 17019990 and 17031000 respectively of the Schedule to the CETA, 1985 and is availing the facilities/benefit of Cenvat credit of duty paid on inputs and Capital goods. During the course of audit of the appellant by AG (Haryana) from 15.04.2010 to 20.4.2010, it was found that the appellant has availed the Cenvat Credit amounting to Rs, 3,46,49,935/ during the period from April-2009 to March-2010 on the capital goods/inputs used exclusively in the manufacture of exempted goods (non-excisable) i.e. the Power Plant, installed and erected at site for generation of the electricity to be supplied for captive use and part of its supply to be made to UHBVPN from it. Further, the Department found that the appellant have actually brought the Power Plant in SKD condition to be erected and installed in their factory. In order to increase the existing capacity of Power generation from 8 MW to 24 MW and they have availed the Cenvat credit on the components and accessories of the said Power Plant to the tune of Rs. 4,97,13,725/-during the period from Jan-2009 to March-2010 as p....
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....excisable and exempted goods. He further submits that in the show cause notice, the Department has placed reliance on the Board Circular No. 58/1/2002-CX dated 15.02.2002 and the Supreme Court decisions in Triveni Engineering & Industries Ltd. v. CCE [2000 (120) E.L.T. 273 (SC) (cited supra). He further submits that the appellant in the present case is eligible to avail cenvat credit under the provisions of Cenvat Credit Rules, 2004. He further submits that the appellant has complied with all the conditions in the Cenvat Credit Rules which are relevant for availment of Cenvat credit on capital goods and inputs and there is no bar operating against the appellant. He further submits that they have fulfilled all the relevant conditions under Rules 2(a), 2(k), 3 and 4 of the Cenvat Credit Rules, 2004 for availment of Cenvat credit on capital goods and the goods in question undisputedly satisfy the definition of capital goods under Rule 2(a); that they have been received (the requirement under Rule 3) and used in the factory of manufacture; that inputs are used in the setting up of electricity generation plant used in manufacturing of dutiable goods and that credit has been correctly ta....
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.... further submits that the goods on which the credit has been availed are in fact movable goods and that no credit has been taken on immovable goods and immovability is not a legally tenable criteria for determination of whether credit on capital goods or inputs would be admissible or not. In this regard, he refers to the decision in the case of M/s Rajasthan Spinning & Weaving Mills Ltd. v. Commissioner of Central Excise, Jaipur, 2010 (255) ELT 481 (SC), the Hon'ble Supreme Court allowed credit on steel plates and M.S. channels used in fabrication of chimney for diesel generating set, even though a chimney is by its very nature immovable. He further submits that this issue is no longer res integra and has been settled by this Bench of the Tribunal in the case of M/s Indian Oil Corporation Ltd. v. CCE & ST, Panchkula vide Final Order No. A/61158-61161/2019 dated 17.12.2019, wherein the Tribunal dealt with an identical dispute where Cenvat credit on capital goods and inputs used for erection and commissioning of a Naphtha Cracker Plant was denied on the very same grounds now raised by the Department-viz., that the goods were used in setting up of an immovable plant and therefore ....
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....pal Zarda Udyog . Commissioner of Central Excise, New Delhi, 2005 (188) ELT 251 (SC) (iii) Anand Nishikawa Co. Ltd. v. Commissioner of Central Excise, Meerut, 2005 (188) ELT 149 (SC) (iv) Lubri-Chem Industries Ltd. v. Collector of Central Excise, Bombay, 1994 (73) ELT 257 (SC) (v) Cosmic Dye Chemical v. Collector of Central Excise, Bombay, 1995 (75) ELT 721 (SC) 4.4 He further submits that the appellant was and still is under a bonafide belief that the credit on invoiced capital goods availed by it is correct as per the Cenvat Credit Rules, 2004. He also submits that the issue in the present case involves interpretation of complex legal provision and the belief of the appellant that credit availed on capital goods is correct, is justified in view of the various judgments of the Tribunal, High Court and Supreme Court (cited supra) and in view of the Board Circular F.No. B-4/7/2000-TRU, dated 03.04.2000; therefore, he submits that the imposition of penalty is not warranted in the present case. He placed the reliance upon the following decisions: (i) CCE v. Sikar Ex-serviceman Welfare Coop. Society Ltd. 2006 (4) STR 213 (Tri.-Del.) (ii) Haldia Petrochemicals Ltd. v. ....
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....case is whether the appellant is entitled to Cenvat credit on capital goods/inputs used in the manufacturing of exempted goods i.e. Power Plant. Further, we find that as per the definition of capital goods as well as the inputs under Cenvat credit Rules is concerned, the appellant has satisfied the conditions which are necessary to fulfill for availvment of credit as per the provisions of Cenvat Credit Rules, 2004. We find that as per the requirement of the Cenvat Credit Rules, the appellant has fulfilled all the relevant conditions Rule 2(a), 2(k), 3 and 4 of the Cenvat Credit Rules, 2004 for availment of Cenvat credit on capital goods, the goods in question has to satisfy the definition of capital goods under Rule 2(a) and they have been received (the requirement under Rule 3) and used in the factory for manufacture; that inputs are used in the setting up of electricity generation plant used in manufacturing of dutiable goods. We have also examined minutely the definition of capital goods as provided in Rule 2(a) and Rule 3(1) of Cenvat Credit Rules, 2004; we find that the goods on which the credit has been taken fall within the categories of the goods listed in the definition of....
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....urer and how the items are not used relevant. The words used in Rule 2(a) are "used in the factory of manufacturer of the final product" not "used in the manufacture of final product". Therefore, once any item received in the factory is "capital goods" in terms of Rule 2(a) of the Cenvat Credit Rules, and is used in the factory, the manufacturer would be entitled to Cenuat Credit of excise duty paid in respect of the same. If the logic of the commissioner in the impugned orders are accepted, no capital goods Cenvat Credit can be allowed in respect of any item of capital goods enumerated in Rule 2(a) of the Cenvat Credit Rules, as all the items machinery covered under Chapter 84, 85 & 90 of the Tariff, pipes & tubes, various items of tanks, pollution control equipments refractors etc. have to be installed in the factory before being put to use and after installation, the same would become fixed to earth plant." 7. Further, we find that the reliance by the Department on the Board Circular No. 58/1/2002-CX dated 15.02.2002 and the judgment of the Supreme Court in the case of M/s Triveni Engineering & Industries Ltd. and M/s Quality Steel Tubes Pvt. Ltd (cited supra) is wholly mispl....