2018 (7) TMI 976 - AT - Central Excise

CENVAT Credit - Capital Goods not installed in the premises but in a different unit situated elsewhere - Held that - The appellants have informed the concerned Assistant Commissioner of Central Excise vide their letter dated have 07.07.2010 vide which they have informed that due to space problem they have purchased new premises at 48 & 49, Industrial area, Tumkur for doing certain operations and have shifted the machineries - further, at the said premises the machineries have been used only for the captive consumption of the appellant and it is in the name of the appellant s own name and it is also a fact that clearance has not happened from the job-workers premises and the appellants have cleared the goods on payment of duty. The contention of the Revenue that they are huge machines and cannot be removed from one premises to other premises is not born out by any evidence whereas the appellant has produced the delivery challan for transfer of the machineries from the main premises to the job-worker premises and it is returned to the main factory. the Hon ble Supreme Court in the case of Vikram Cement 2006 (2) TMI 1 - SUPREME COURT has held that if the mines are captive mines so that they constitute one integrated unit together with the concerned cement factory, then cenvat credit on capital goods are available. Credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Availment of cenvat credit on capital goods not physically present at manufacturing premises
- Appellant's claim of using additional premises for job-work basis and captive consumption
- Compliance with Rule 4(5)(a) of Cenvat Credit Rules 2004
- Time-barred demand due to issuance of show-cause notice

Analysis:
1. Availment of cenvat credit on capital goods: The case involved the appellant availing cenvat credit on capital goods without physically receiving them at their manufacturing premises. The Revenue contended that the appellant had installed the capital goods in a different unit and availed credit without physical verification during audit. This led to the issuance of a show-cause notice, resulting in the confirmation of duty, interest, and penalty by the lower authorities. The Commissioner (Appeals) upheld this decision.

2. Appellant's claim of using additional premises: The appellant argued that due to space constraints, they established an extension of their factory for job-work purposes at a nearby location. They claimed that the capital goods were used for captive consumption and were shifted between the main and additional premises using delivery challans. The appellant cited various decisions supporting their position, emphasizing the integral nature of both premises for factory operations.

3. Compliance with Rule 4(5)(a) of Cenvat Credit Rules 2004: The appellant followed the procedure under Rule 4(5)(a) for sending capital goods to the additional premises treated as job-worker premises and returning them to the main factory. They provided details of these movements through delivery challans, asserting that they were eligible for cenvat credit on the capital goods used at the additional premises.

4. Time-barred demand: The appellant contended that the substantial demand was time-barred, as the show-cause notice was issued in 2013 for invoices related to capital goods from 2007 and 2011-2012. This raised the issue of whether the demand was within the statutory time limit for raising such demands.

In the final judgment, the Tribunal considered the submissions of both parties and found merit in the appellant's arguments. Citing precedents and the provisions of Rule 4(5)(a) of the Cenvat Credit Rules 2004, the Tribunal concluded that the appellant's case aligned with previous decisions. By applying the principles established in those cases, the Tribunal set aside the impugned order, allowing the appeal of the appellant. The judgment highlighted the importance of compliance with legal provisions and established precedents in determining the outcome of the case.