2022 (11) TMI 288 - AT - Central Excise

CENVAT Credit - availment of credit on remaining 50% unavailed credit in respect of capital goods which allegedly were not in possession and use of the manufacturer (RSP) since the RFP had stopped production at the time of availment of such CENVAT Credit - violation of Rule 4(2)(b) of the CENVAT Credit Rules - Suppression of facts or not - HELD THAT - Factory in terms of Section 2(e) of the Central Excise Act includes any number of inputs within the same premises irrespective of the number of Central Excise registrations. Thus no distinction between the Rourkela Steel Plant (RSP) and Rourkela Fertilizer Plant (RFP) can be inferred as both are one and the same factory - the Tribunal in the case of DHAMPUR SUGAR MILLS LTD. VERSUS COMMISSIONER OF C. EX., MEERUT 2001 (1) TMI 129 - CEGAT, COURT NO. IV, NEW DELHI held that the number of different plants manufacturing different excisable goods in the same premises would constitute one factory. Their separate registration under Rule 173G of Central Excise Rules, 1944 would not mean that they are different factories. Different units to be regarded as one factory if all excisable goods are manufactured in the same premises. The audit para No.2 of IR No.30/2004-05 on the basis of which the present issue was raised has been dropped by AG (Odisha) as held in the present Order-in-Original (para 5.9 at page 63). Intimation by the Department to the Appellant regarding dropping of the said para forms part of the Appeal Paper book. The Show Cause Notice dated 19.11.2007 was issued to the Appellant on the basis of said audit para. When the audit Memo itself has been dropped, the present proceeding which has been originated from the said audit Memo has become non est - Hon ble Supreme Court in the case of ANAND NISHIKAWA CO. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, MEERUT 2005 (9) TMI 331 - SUPREME COURT has held that when facts were known to both the parties, the omission by one to do what he might have done not that he must have done would not render it suppression. On identical issue the Show Cause Notice has been adjudicated in favour of the Appellant and has attained finality in the absence of any challenge by the Department. The subsequent notice cannot be issued beyond limitation as held by the Hon ble Supreme Court in the case of NIZAM SUGAR FACTORY VERSUS COLLECTOR OF CENTRAL EXCISE, AP 2006 (4) TMI 127 - SUPREME COURT . The impugned orders cannot be sustained and are accordingly set aside - Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Whether SAIL-RSP and SAIL-RFP are separate units for the purpose of CENVAT Credit Rules.
2. Whether the availment of CENVAT Credit by RSP for capital goods used in RFP is permissible.
3. Applicability of Rule 8 of the CENVAT Credit Rules, 2002.
4. Whether extended period of limitation is invokable.

Detailed Analysis:

1. Whether SAIL-RSP and SAIL-RFP are separate units for the purpose of CENVAT Credit Rules:
The Tribunal found that SAIL-RSP and SAIL-RFP are not separate units but part of the same legal entity, Steel Authority of India Limited, Rourkela Steel Plant, having the same PAN and located within the same premises. The Rourkela Fertilizer Plant (RFP) was simply a division of RSP and had no independent existence. The Tribunal cited the definition of "factory" under Section 2(e) of the Central Excise Act, 1944, which includes any premises where excisable goods are manufactured. It was held that different plants within the same premises constitute one factory, as supported by the case of Dhampur Sugar Mills Ltd. Vs. CCE Meerut.

2. Whether the availment of CENVAT Credit by RSP for capital goods used in RFP is permissible:
The Tribunal held that the availment of CENVAT Credit by RSP for capital goods used in RFP was permissible. The capital goods were in the nature of components, spares, and accessories, and thus, the condition of possession and use under Rule 4(2)(b) of the CENVAT Credit Rules was not applicable. The Tribunal relied on the Order-in-Original dated 28.04.2016, which had allowed the credit and had attained finality.

3. Applicability of Rule 8 of the CENVAT Credit Rules, 2002:
The Tribunal found that Rule 8 of the CENVAT Credit Rules, 2002, which deals with the transfer of CENVAT Credit in cases of factory relocation, merger, etc., was not applicable in this case. The Tribunal noted that the Show Cause Notice did not allege the applicability of Rule 8, and the grounds of appeal and the impugned order had traveled beyond the scope of the Show Cause Notice, violating the principles of natural justice.

4. Whether extended period of limitation is invokable:
The Tribunal held that the extended period of limitation was not invokable. The department was aware of the availment of the disputed credit as early as August 2004, and the Show Cause Notice was issued only on 19.11.2007. The Tribunal cited the case of Anand Nishikawa Co.Ltd. v. CCE, Meerut, where it was held that when facts were known to both parties, it does not amount to suppression. The Tribunal also noted that the audit para on which the issue was based had been dropped by AG (Odisha), rendering the proceedings non est.

Conclusion:
The Tribunal set aside the impugned orders and allowed the appeal filed by the Appellant with consequential relief, as per law. The decision emphasized that SAIL-RSP and SAIL-RFP are part of the same legal entity, and the availment of CENVAT Credit by RSP for capital goods used in RFP was in accordance with the law. The extended period of limitation was not applicable due to the department's prior knowledge of the facts.