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TMI Blog2013 (11) TMI 1389X X X X Extracts X X X X X X X X Extracts X X X X ..... roducts Ltd., which was further leased to the appellant. The Revenue was of the view that the appellant is not eligible for capital goods credit on the machinery/equipment which have gone in the fabrication of the plant since the plant is an immovable structure and not excisable and since no duty has been paid on the plant, the credit is not admissible. Accordingly, a show-cause notice was issued to the appellant vide notice dated 2.7.2010 proposing to deny CENVAT Credit amounting to Rs.4,85,00,029/- availed during the period June, 2005 to March, 2010 and to recover the same under the provisions of Rule 14 of the Cenvat Credit Rules, 2004 read with Section 11A of the Central Excise Act, 1944 along with interest thereon under Section 11AB of the said Act and also proposing to impose penalty under Section 11AC ibid. The notice was adjudicated and the impugned order was passed denying the CENVAT Credit on the capital goods used in the setting up of the Oxygen Air Plant and the same was sought to be recovered. Interest was also demanded on the credit wrongly availed and equivalent amount of penalty was imposed under Section 11AC. Aggrieved of the same, the appellant is before us. 3. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red by the contractor and invoices issued in the name of manufacturer, the manufacturer would be eligible for credit of the excise duty paid on components and parts. Again in the case of KCP Ltd. Vs. CCE, Guntur - 2009 (237) ELT 500 (Tri-Bang), this Tribunal held that steel plates, sheets etc. used in the manufacture/fabrication of 'clinker silos' which are storage tanks for final products in cement factory and such silos being capital goods, inputs used therein is eligible for capital goods credit, irrespective of whether the capital goods are dutiable or not. So long as inputs are used in capital goods within the factory of production, input credit has to be given in terms of Explanation 2 to Rule 2(k) of the Cenvat Credit Rules, 2004. Reliance is also placed on the decision of the Hon'ble High Court of Karnataka in the case of ICL Sugar Ltd. - 2011 (271) ELT 360 (Kar.), wherein it was held that raw materials used such as plates/bottom plates/roof plates in the manufacture of tank would be eligible for capital goods credit even though the storage tank fabricated out of these items is an immovable property. Therefore, it is submitted that the various equipments, parts, components ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital goods or not is to be determined in the light of the decision of Hon'ble Supreme Court. In the instant case, the plant as such is an immovable property and no excise duty has been discharged on the plant. The parts/components, machinery, equipments etc. used in the fabrication or assembly of the plant cannot be considered as capital goods for the purpose of availing of CENVAT Credit. Reliance is place on the decision of this Tribunal in the case of M/s Bharati Airtel Ltd., where a question arose whether capital goods credit can be taken on various items used in the assembly/erection of mobile towers and such mobile towers were used for rendering telecommunication services. This Tribunal held that since the mobile towers as such is an immovable property, items which have gone into the erection of mobile towers are not eligible for CENVAT Credit as parts or components of capital goods. In the present case, since the plant which into existence is immovable and various parts have been used in the erection of an immovable property, the appellant would not be eligible for benefit of CENVAT Credit. Accordingly, it is prayed that impugned order is sustainable in law and the appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. For example, in a sugar factory there may be a Boiler plant for generation of steam, a crusher installed for crushing of the sugar cane, a distillation plant for undertaking the various chemical processes involved in the manufacture of sugar. The boiler, crusher and distillation equipment, all have to be assembled together to form a sugar plant. Merely because all have been assembled together to form a sugar plant, can it be said that the capital goods credit cannot be allowed on Boiler, Crusher or a distillation equipment. Such a view according to us results in an absurd situation. In none of the manufacturing plants, all the machineries can be used as such and directly, the various machineries and equipments have to function in conjunction and in unison with each other and for this purpose, they are assembled into a plant. Merely because all the individual equipment, machinery or components are assembled together, it will be preposterous to suggest that the capital goods credit cannot be allowed on this individual machinery/equipment or appliances. The purpose of allowing capital goods credit is to relieve the burden of cascading effect of taxes. If that purpose is to be achi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apital goods and, therefore, it was held that they will not be eligible for the CENVAT Credit of excise duty paid under the category of capital goods. In the said decision, there was no finding by the Larger Bench stating that capital goods credit is not admissible in respect of machinery, equipments and appliances used within the factory of production which were used in the assembly of the manufacturing plant. Therefore, the facts of the said case are completely different and distinguishable from the facts of the present case and, therefore, the ratio of the said decision is not applicable to the present case and, therefore, the ratio of the said decision is not applicable to the present case. Similarly, in the case of Bharati Airtel Ltd. (supra), the question before the Tribunal was whether the erection of a tower consisting of various Iron & Steel items and cement can be considered as capital goods and this Tribunal held that tower per se is not capital goods as it does not undertake any process either in relation to manufacture of goods or in the rendering of any services and, therefore, it was held that iron and steel products and cement which have gone into the erection of an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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