TaxTMI 
TaxTMI 
2026 (6) TMI 798
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.... falling under the first schedule to the Central Excise Tariff Act, 1985. For manufacture of its final products, the appellant required oxygen and other industrial gases. Accordingly, it entered into an agreement dated 27.09.2006 with Inox Air Products Ltd., under such arrangement, Inox supplied various machinery, components, parts and accessories under the cover of Central Excise invoices specifically naming the appellant as the consignee. These goods were received in the appellant's factory at sarapaka and used for erection and commissioning of an Air Separation Plant with the factory premises. The appellant availed CENVAT Credit of duty paid on such goods during the period October 2007 to April 2009 and reflected the same in its statutory returns. 3. The Show Cause Notice dated 06.11.2012 was issued, alleging that: a) these parts and components lost their identity in the Air Separation Plant; b) these parts do not belong to M/s ITC; c) the said goods were procured by M/s Inox and the same were used in erection of a plant, which is attached to earth and ceased to be goods on erection and thus, the said Air Separation Plant cannot be treated as goods ....
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....ufactured in a factory and used within the factory for production. 8. Learned Counsel for the appellant submitted that the said equipment is also covered under the definition of 'inputs' as defined under Rule 2(k) of CENVAT Credit Rules. Now it is a settled position that the definition of 'inputs' is very wide and covers all goods used in the factory by the manufacture of the final product. Reliance in this regard has been placed on the following decisions: i) Dredging Corporation of India Vs Commissioner of Central Tax Visakhapatnam - GST, 2025 (10) TMI 616 (Tri-Hyd) ii) Dish TV India Ltd., Vs Commissioner of CGST, Noida, 2024 SCC Online CESTAT 508 (Tri-All) 9. Learned Counsel for the appellant submitted that the Air Separation Plant which provides oxygen and other industrial gases which are used in various phases of pulp and paper making process and hence, directly used in the manufacture of the final products. Hence, the equipment qualifies as 'inputs' and the appellant is eligible to take CENVAT Credit on the same. Learned Counsel for the appellant further submitted that credit is availed under the category of Capital goods, if credit is per se eligible ....
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....nt intimated the Department that the Air Separation Plant was taken on lease form Inox prior to issuance of Show Cause Notice, the Show Cause Notice never alleged that the appellant was not the owner of the equipment and thus cannot avail CENVAT Credit on the same. Thus impugned order travels beyond the Show Cause Notice. Hence, impugned order is not sustainable. 13. It is further submitted that the impugned order has confirmed the demand on one of the grounds that the Air Separation Plant is immovable. The Air Separation Plant is attached to earth through nuts and bolts for stability, functionality and vibration-free operation. Such fastening is universally recognized as a temporary and functional attachment, insufficient to classify the plant as immovable property. Reliance has been placed on the decision of the Hon'ble Supreme Court in the case of Bharati Airtel Ltd., Vs CCE, Pune 2024 (11) TMI 1042 (SC). 14. Learned Counsel for the appellant submitted that Board Circular No. 58/1/2002-CX dated 15.01.2002 clarifies that turnkey projects involving supply of large number of components, machinery, equipment, pipes and tubes etc. for their assembly/installation/erection/integr....
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.... Industries Ltd., 2023 (385) E.L.T. 481 (S.C.) iii) Principal Commissioner Vs Mammen Engineering Works, 2024 (2) TMI 1134-Chhattisgarh HC iv) Commissioner of Customs Excise and Service Tax Indore Vs Zyg Pharma Pvt Ltd., 2017 (358) E.L.T. 101 (M.P.) 17. Learned AR reiterates the finding of the Adjudicating Authority, inter alia, if there is no provision applicable to any particular situation, CENVAT Credit in such circumstances, would not be admissible as the legislature have not intended to extend the benefit of credit to such circumstances. 18. We have heard both the parties at length and peruse the records with their submissions. 19. The following issues arise for consideration:- i) Whether duty-paid goods received in the appellant's factory and used for erection of the Air Separation Plant qualifies as Capital goods under Rule 2(a) of the CENVAT Credit Rules of 2004. ii) Whether alternatively, they qualify as inputs under Rule 2(k) of the CENVAT Credit Rules, 2004. iii) Whether ownership of the goods by Inox disentitles the appellant from availing credit. iv) Whether the Air Separation Plant becoming attached to eart....
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....oods and these facts are not disputed. Merely because the various machinery, equipment, appliances and parts have been assembled at the site to set up the Oxygen Plant and such a plant being immovable property, Cenvat credit is sought to be denied. Nowhere in the Cenvat Credit Rules, it is envisaged that the machinery, equipment, appliances or their components should be used as such in the manufacture of excisable goods. The manufacturing plant facility in a factory would comprise of a number of capital goods and all these things have to be assembled together so that they act in unison to perform the required processes. For example, in a sugar factory there may be a Boiler plant for generation of steam, a crusher installed for crushing of the sugar cane, a distillation plant for undertaking the various chemical processes involved in the manufacture of sugar. The boiler, crusher and distillation equipment, all have to be assembled together to form a sugar plant. Merely because all have been assembled together to form a sugar plant, can it be said that the capital goods credit cannot be allowed on Boiler, Crusher or a distillation equipment. Such a view according to us results in an ....
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.... 5.3 As regards the reliance placed by the Revenue on the Vandana Global (supra), the said case did not deal with the admissibility of Cenvat credit on capital goods. The issue before the Larger Bench was whether angles, channels, cement, etc., used in the erection of structures for the support of capital goods would be eligible for capital goods credit as parts and components of capital goods. The Larger Bench held that such cement, angles, channels, components, etc., used in the fabrication of structures for installation of production machinery cannot be considered as inputs for the manufacture of capital goods and, therefore, it was held that they will not be eligible for the Cenvat credit of excise duty paid under the category of capital goods. In the said decision, there was no finding by the Larger Bench stating that capital goods credit is not admissible in respect of machinery, equipments and appliances used within the factory of production which were used in the assembly of the manufacturing plant. Therefore, the facts of the said case are completely different and distinguishable from the facts of the present case and, therefore, the ratio of the said decision is not....
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.... setting up a plant, to be utilised on payments of duty on the final products viz: iron and steel ingots cleared by the assessee, therein. This decision of the Tribunal is on all fours in the present facts and was accepted by the Central Board of Indirect Taxes & Customs on the ground that the same is legal and proper. This as was shown to us by the Respondent and not denied by the appellants. Moreover, no distinction in facts and law, is pointed out by the Revenue, which would justify its inapplicability to the present facts. In the face of the aforesaid decision taken by the Central Board of Indirect Taxes & Customs, we are unable to understand why the Revenue is agitating this issue before us when in another case, decided by the Tribunal, raising an identical issue, the decision of the Tribunal has been accepted. 22. We are of the view that Rule of law prevailing in this country is one of the key elements to determine ease of doing business. The Rule of law inter alia ensures absence of arbitraries in taking decisions, which would mean equal applicability of law to all concerned. Therefore, an issue as raised herein (being a pure question of law), would have all India i....
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....dual Capital goods. The purpose of fastening machinery to the earth by nuts and bolts is only to ensure operational stability and vibration-free functioning. Such attachment does not destroy the identity of the constituent machines. Hence, the conclusion that the Air Separation Plant is immovable and therefore, credit is inadmissible is wholly mis-conceived. 28. The Show Cause Notice did not allege that ownership of the goods remaining with Inox itself disentitle the appellant from availing credit. However, the Adjudicating Authority confirmed the demand substantially on this new ground. It is settled law that Adjudicating Authority cannot travel beyond the allegations contained in the Show Cause Notice. Any order founded upon a new ground violates the principles of natural justice and is liable to be set aside. 29. The disputed period is October, 2007 to April, 2009 i.e., entirely prior to the amendment made on 07.07.2009. The amendment is prospective and cannot be applied retrospectively to deny credit for earlier periods. Consequently, reliance on the post 07.07.2009 amendment is legally impermissible. 30. The entire demand pertains to a period beyond the normal limitat....