2016 (3) TMI 614 - AT - Central Excise

Eligible to avail CENVAT Credit on cascades, various compressors installed at DBS for dispensing the CNG into the vehicles or otherwise - Held that - It is undisputed that the compression of natural gas takes place at Mother Station where the appellants have installed various machines where the compression of natural gas is considered as an activity of manufacturing. Hence, CENVAT Credit availed on such capital goods at mother station is quite rightly undisputed. Subsequent to compression, the CNG which comes into existence is filled in the cascades into bottle/cylinder which is used for transporting the CNG to DBS, wherein the same are filled by using compressors into the vehicles. These cascades are only transporting the CNG which has already come into existence as a manufactured product and is a marketable commodity. The argument of the learned Counsel that the CNG needs recompression into DNS in order to fill the product into vehicle is without any merits inasmuch CNG is already a marketable commodity, and the activity of recompression is neither incidental nor ancillary for manufacture of CNG at DBS as the recompression is of CNG. Secondly, reliance was placed on the Chapter Note 5 to the Chapter 27. The said Chapter Note will not be of any help to the appellant s case as the said Chapter Note talks about the compression of natural gas for the purpose of marketing the CNG would amount to manufacture, in the case in hand, the compression of natural gas takes place at mother station. At DBS the recompression of CNG does not bring into existence any new product which is distinct. It is his further submission that on limitation, the appellant having filed excise return was within the department s knowledge whey they granted the centralized registration to DBS. We find that this argument is without any merits inasmuch as the availment of CENVAT Credit of the capital goods at the Mother Station is only declared to the Revenue authorities but the credit of duty paid on cascades and compressor used at DBS, were not indicated as being installed and commissioned at DBS. - Decided against assessee

Summary

Issues:
1. Availment of CENVAT Credit on cascades and compressors at Daughter Booster Stations (DBS).
2. Determination of factory premises for DBS.
3. Consideration of recompression of CNG at DBS as a manufacturing activity.
4. Applicability of Chapter Note 5 under Chapter 27.
5. Legal precedents cited by the appellant.
6. Limitation period for show-cause notices.

Analysis:
1. The case revolved around the eligibility of the appellant to avail CENVAT Credit on cascades and compressors at DBS. The appellant argued that the compression of CNG at DBS was essential for marketing, while revenue authorities contended otherwise.

2. The Tribunal noted that compression of natural gas occurred at the Mother Station, where CNG was considered a manufactured product. Cascades transported the CNG to DBS for filling into vehicles. The Tribunal ruled that the recompression at DBS did not create a new product, as CNG was already marketable, rejecting the appellant's argument.

3. The appellant relied on Chapter Note 5 under Chapter 27, stating compression for marketing constituted manufacturing. However, the Tribunal clarified that compression at DBS did not align with this note, as the primary compression occurred at the Mother Station.

4. Legal precedents cited by the appellant, including judgments on capital goods usage and service tax credit, were deemed irrelevant to the current case. The Tribunal distinguished the facts of those cases from the present scenario, emphasizing the unique circumstances.

5. Regarding the limitation period for show-cause notices, the appellant argued that the second notice was time-barred due to the first notice indicating departmental awareness. However, the Tribunal found this argument lacking merit, as the credit details at DBS were not disclosed to the authorities.

6. Ultimately, the Tribunal upheld the original decision, stating that the appeals lacked merit. The impugned order was deemed correct and legally sound, leading to the rejection of the appeals.

This detailed analysis highlights the key arguments, legal interpretations, and conclusions drawn by the Tribunal in the judgment, providing a comprehensive understanding of the case.