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2017 (5) TMI 1339 - AT - Central ExciseCENVAT credit - material development plant - material expansion plant - Department took the view that the said plant was embedded to the earth and hence immovable property - Held that - The Section 37B order dated 15-01-2002 issued by the Board is very exhaustive going into 9 paras and clarifies various parameters and situations when and where the plant / machinery etc. would be considered immovable or otherwise - the present dispute will requires to be remanded back to the original adjudicating authority for denovo consideration to apply the tests laid down in the Board s Section 37B. Penalty - Held that - since the matter per se was under confusion, a fact recognized even by the Board in para 4 of the aforesaid section 37B order, the adjudicating authority should also adjudicate afresh the matter of imposability of penalty. Appeal allowed by way of remand.
Issues:
1. Eligibility of CENVAT credit on capital goods used for the construction of paper making machinery. 2. Determination of whether the machinery is immovable property. 3. Interpretation of Board's Order No. 58/1/2002-CX regarding excisability of plant and machinery. 4. Consideration of judgment of the Hon'ble Supreme Court in a similar case. 5. Appeal against the Commissioner's order upholding the demand of differential duty and penalty. Issue 1: Eligibility of CENVAT credit The appellants took CENVAT credit for capital goods used in constructing paper making machinery. The department argued that the machinery was immovable property, thus not eligible for credit. The Commissioner upheld the department's view, leading to a demand for differential duty and penalty. The appellants contested this decision. Issue 2: Machinery as immovable property The Senior Advocate referred to a Supreme Court judgment and a Board's Order clarifying that machinery capable of being sold or shifted without dismantling is moveable and excisable. The Advocate highlighted that a similar case was decided in favor of the appellants by the Commissioner (Appeals). The machinery's attachment to a foundation was deemed insufficient for permanent beneficial enjoyment, indicating it was not immovable property. Issue 3: Interpretation of Board's Order The Board's Order provided criteria for determining immovability of plant and machinery. The Tribunal noted that the Supreme Court had approved this Order in a previous case. The Order emphasized that attachment for permanent beneficial enjoyment is crucial in classifying property as immovable. The machinery in question did not meet these criteria, as it was not permanently fixed and could be moved after completion of its purpose. Issue 4: Supreme Court Judgment The Tribunal considered the Supreme Court's interpretation of immovable property, focusing on attachment to the earth for permanent beneficial enjoyment. The machinery's attachment to a foundation for stability did not meet the criteria for immovability, as it was not intended for permanent placement. The judgment emphasized the importance of the mode and object of annexation in determining immovability. Issue 5: Appeal against Commissioner's order After hearing both sides, the Tribunal decided to remand the case to the adjudicating authority for reconsideration. The appellants were to be given an opportunity to present their case and any additional evidence. The Tribunal also directed the authority to reassess the imposability of the penalty due to the confusion surrounding the matter. In conclusion, the Tribunal remanded the appeal for denovo consideration, applying the tests laid down in the Board's Order and providing the appellants with a fair opportunity to defend their case. The penalty imposition was also to be re-evaluated by the adjudicating authority.
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