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2023 (10) TMI 1111 - HC - Central ExciseCENVAT Credit - machineries used in the co-generation/captive power plant - electricity - exempted product applying the terms of rule 6(4) of the CENVAT Credit Rules 2004 or not - Revenue had observed that the co-generation power plant is a turn-key project like power plants which are not excisable goods. HELD THAT - The show cause notices which are the subject matter of these writ petitions have been issued between the period 2009 to 2015 on the ground that the machineries/components which are used in the cogeneration plant is being used for generating electricity which is an exempted commodity and therefore the petitioners are not entitled to CENVAT Credit. This conclusion has been arrived at by applying the provisions of Rule 6(4) of the CENVAT Credit Rules 2004 which states that CENVAT Credit cannot be allowed on capital goods which are used exclusively in the manufacture of exempted goods other than the final products which are exempted from whole of duty of Excise duty leviable. Therefore, it is clearly seen that the respondents whose earlier show cause notices have reached finality are attempting to raise a new issue which was not pleaded earlier. The issue of producing a User Test Certificate not having been demanded in the impugned Show Cause Notices and the order dated 28.06.2023 having been passed on the joint submissions of the counsel where once again there was no reference to the User Test Certificate, the Review petitions have to be allowed and since the question of CENVAT Credit having reached finality, and the impugned Show Cause Notices are issued on a new ground with reference to the subsequent periods of the writ petitions have to be allowed - the writ petitions/review petitions are allowed and the show cause notices subject matter of the writ petitions are quashed. The writ petitions are allowed.
Issues Involved:
1. Validity of the Review Applications. 2. Requirement and relevance of the User Test Certificate. 3. Challenge to the Show Cause Notices. 4. Delay in adjudication of Show Cause Notices. Summary: 1. Validity of the Review Applications: The Review Applications were filed to review the common order dated 28.06.2023, based on the oral representation that the issue was similar to the case of M/s. EID Parry (India) Limited, where CENVAT Credit was allowed. The petitioner argued that the requirement of the User Test Certificate was not communicated during the initial proceedings, and thus the review was necessary. 2. Requirement and Relevance of the User Test Certificate: The petitioner contended that the User Test Certificate was not mentioned in the original order and was only brought up later. The respondents justified the need for the certificate to verify the actual use of machinery in the captive power plant, citing the judgments of the Supreme Court in Commissioner of Central Excise v. Jawahar Mills Ltd. and Commissioner of Central Excise, Jaipur v. Rajasthan Spinning & Weaving Mills. 3. Challenge to the Show Cause Notices: The petitioner challenged 12 Show Cause Notices issued between 2009 and 2015, arguing that the issue had attained finality with previous orders, and the respondents could not revive it. The petitioner also cited Section 11A(11) of the Central Excise Rules, arguing that the time limit for adjudication had expired. 4. Delay in Adjudication of Show Cause Notices: The court noted that the show cause notices were issued between 2009 and 2015, and no action had been taken to adjudicate them. The court held that the respondents' demand for the User Test Certificate was not maintainable as it was not raised in the original or impugned show cause notices. The court also found that the judgments cited by the respondents did not mandate the production of a User Test Certificate. Conclusion: The court allowed the review petitions, quashed the show cause notices, and held that the issue of CENVAT Credit had reached finality. The court also noted that the petitioners were not pressing their argument regarding input credit as they had already made the payments.
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