2018 (4) TMI 1224 - AT - Central Excise

CENVAT credit - For import and receipt of ethylene through sea, they have put up a jetty in Karaikal Port along with all connected facilities - denial on the ground that these are located in the unregistered premises and further they have no direct role in the manufacturing process of excisable final products - Held that - the appellant have put up jetty and connected facilities in the sea near Karaikal Port only to facilitate the receipt and transfer of their essential raw materials ethylene to bring it to the factory for further manufacture. Apparently, such handling and receipt of essential raw materials is to be considered as part of integral manufacturing process. Tribunal in Finolex Industries Ltd. Vs. Commissioner of Central Excise, Pune 2003 (5) TMI 102 - CESTAT, MUMBAI examined a similar dispute and held that the jetty put up by the appellant was part of the premises and the same should be considered as falling within the scope of section 2(e) factory as defined under the Central Excise Act, 1944. Credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Denial of credit on capital goods for the construction of jetty and connected facilities due to their location in unregistered premises and alleged lack of exclusive use by the appellant.

Analysis:
The appellant, engaged in manufacturing Caustic Soda Lye and Ethylene-di-Chloride, constructed a jetty in Karaikal Port for importing ethylene, claiming credit on related items as capital goods under CENVAT Credit Rules, 2004. The Revenue objected, citing the unregistered premises' location and lack of direct role in the manufacturing process of excisable final products. The original authority upheld Revenue's view, denying credit of ?97,42,868 and imposing a penalty under Rule 15(2) of CENVAT Credit Rules, 2004 r/w section 11AC of Central Excise Act, 1944.

The appellant argued that the jetty and facilities were essential for receiving raw materials, integral to the manufacturing process, and funded solely by them. They emphasized that the facility's potential shared use was a provision not exercised, and relied on legal precedents to support their position.

The Tribunal noted that the jetty and facilities were crucial for receiving essential raw materials, constituting an integral part of the manufacturing process. Citing the Hon'ble Bombay High Court's decision in Reliance Industries Ltd., it held that such systems are eligible for credit as capital goods. Referring to the Supreme Court's decision in Jayaswal Neco Ltd., the Tribunal emphasized the importance of processes essential for manufacturing, allowing credit for items integral to those processes.

Drawing from the analysis of relevant case laws, including the decision in Finolex Industries Ltd. Vs. Commissioner of Central Excise, Pune, the Tribunal concluded that the denial of credit in the present case was legally unsustainable. As a result, the impugned order was set aside, and the appeal was allowed with any consequential relief.

In a miscellaneous application, the change of cause title of the respondent to Commissioner, GST & Central Excise, Puducherry was permitted.