2008 (11) TMI 272 - AAR - Central Excise

CENVAT Credit - Capital goods - Whether in the facts and circumstances of the case the applicant is entitled to avail Cenvat credit of excise duty on its utilization of cement and steel in building foundation for plant and machinery, in building storage yard for raw material, in building factory buildings stair cases, platforms and supporting structures for plant and machinery - Advance ruling - Proposed activity - Held that - the activity of manufacture of cement in respect of which the question of law regarding availability of credit of central excise duty on the so called inputs/capital goods has been sought, appeared to be for an activity which is already being undertaken by the applicant in its existing factory. The applicant confirmed the above to the Authority, when the matter was heard on 22-7-2008. The department also confirmed that the applicant is registered with the Central Excise Department for manufacture of cement and that the new plant is to be located within the same factory. In the above situation, creation of additional capacity for manufacture of cement by expanding the plant cannot be considered to be a proposed activity qualifying for pronouncement of a ruling. Production of the same goods, namely cement, in the expanded plant is only a repetition or continuation of the past activity - application is rejected under Section 23D(2) - Decided against appellants.

Summary

Issues:
1. Eligibility for availing Cenvat credit on the utilization of cement and steel in building foundation and civil works.
2. Classification of steel used for civil work as 'Capital Goods' under Cenvat Credit Rules.

Analysis:
1. The applicant, a subsidiary of a French company, sought an advance ruling on availing Cenvat credit for using steel and cement in expanding its cement manufacturing capacity. The applicant argued that these materials are inputs/capital goods under Cenvat Credit Rules, 2004. The questions raised were whether the applicant can claim Cenvat credit for using steel and cement in various construction activities related to plant expansion. The department contended that construction activities do not constitute production or manufacture eligible for an advance ruling. It argued that the use of steel and cement as indicated by the applicant does not qualify them as capital goods or inputs as per the Cenvat Credit Rules.

2. The definition of Advance Ruling under Section 23A(b) of the Central Excise Act, 1944 involves the determination by the Authority of a question of law or fact regarding the liability to pay duty in relation to a proposed activity of production or manufacture of goods. It was highlighted that the activity for which a ruling is sought must be a "proposed" activity, not an ongoing one. The Authority noted that the applicant's expansion of the cement manufacturing plant within the existing factory did not constitute a proposed activity as the applicant was already engaged in manufacturing cement. The department confirmed the applicant's registration for cement manufacturing and the location of the new plant within the same factory. Hence, the expansion was seen as a continuation of the existing activity, not a new proposed activity. Consequently, the application was rejected under Section 23D(2) of the Central Excise Act, 1944 without delving into the merits of the case.