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TMI Blog2015 (7) TMI 267X X X X Extracts X X X X X X X X Extracts X X X X ..... o compliance of other requirements, the credit availed in respect of inputs on capital goods shall be paid. This situation has not arisen in the present case, as no invoice has been issued for removal of the goods from the factory premises and, therefore, the said rule is not applicable to the case of the assessee. - no reason to interfere with the well considered findings of the Tribunal on the questions of law as raised - Decided against Revenue. - C.M.A. NOS. 3420 & 3421 OF 2008 - - - Dated:- 4-6-2015 - R. Sudhakar And K. B. K. Vasuki,JJ. For the Appellant : Mr. T. Chandrasekaran For the Respondents : Mr. S. Muthu Venkataraman for M/s. G.RM. Palaniappan for R-2 JUDGMENT (Delivered By R. Sudhakar, J.) The present appeals have been preferred by the Revenue, aggrieved against the order passed by the Tribunal which, while dismissed the appeal filed by the Revenue, allowed the appeal filed by the assessee. Vide order dated 12.11.08, this Court, while admitting these appeals, framed the following substantial questions of law for consideration:- C.M.A. No.3420/2008 1. Whether the inputs and capital goods used in a power plant and on which Cenvat credit o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant from the possession and use of the assessee to another company? 2. The brief facts, as could be culled out from the order of the Tribunal, are as hereunder :- The respondent/assessee is engaged in the manufacture of cement, for which they are registered with the department. The assessee is also registered with the department and assessed to service tax. The assessee availed cenvat credit on capital goods, inputs and input services and utilised the same for payment of duty on the final product, viz., cement. During the period between March, 2004 and March, 2005, a power plant was set up by the assessee within their factory premises for which they took cenvat credit on the duty paid on inputs and capital goods received in their factory in relation to the setting up of the power plant. The credit availed by the assessee was utilised for payment of duty on cement. The department conducted investigation and on scrutiny of the records, found that the said power plant was leased out by the assessee Dalmia Cements Ltd., (for short 'DCL') to M/s.Keshav Power Pvt. Ltd. (for short 'KPPL') under a lease deed dated 24.3.05 with retrospective effect from 15.3.2005. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from cenvat credit account and partly from PLA. 3. Further to the investigations, the department issued a show cause notice dated 5.4.06 to DCL seeking to recover the following :- (a) an amount of ₹ 7,05,03,828/- (consisting of Cenvat Credit of ₹ 6,94,14,477/- and Education Cess of Cr.10,89,351/-), being the total amount of alleged inadmissible credit availed by DCL on capital goods, inputs and input services during the period from March, 2004 to March, 2006; (b) appropriate the payments already made towards such demand; (c) levy interest on the above amount; and (d) impose penalty. 4. The above demand was made on the allegation that DCL, by leasing out the power plant with ancillary equipments to KPPL, removed from their factory the capital goods and inputs used for setting up the power plant and, consequently, in terms of Rule 3 (5) of the Cenvat Credit Rules, 2004, (for short 'CCR, 2004') they were liable to pay an amount equal to the credit taken on such capital inputs and capital goods. It was also alleged that the credit taken on input services used in the setting up of the power plant, which was subsequently transferred to KPPL, was also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, neither the Department nor the Courts can deem such provision to the detriment of the assessee. e) Ownership is immaterial for availment of Cenvat Credit, as has been propounded in a series of cases. f) Rule 3 (5) of the CCR, 2004, speaks only about removal of inputs and capital goods as such from factory and is silent about input services. The demand for reversal of credit on input services under the above provision is, therefore, not justifiable. g) The Commissioner erred in relying on the Tribunal's decision in Majestic Auto Ltd. - Vs - CCE, Ghaziabad (2004 (173) ELT 145 (Tri. Del.)), which case is distinguishable on facts. h) The department had been informed by DCL about its proposal to set up a captive power plant and revised ground plan was also submitted incorporating the cement plant and power plant. There was no suppression of any relevant fact by DCL nor there was any intention to evade payment of any amount as provided under Rule 3 (5). DCL contended that it was their bona fide belief that they were entitled to avail the credit, irrespective of their transactions with KPPL under the lease deed and, therefore, the extended period of limitation cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or premises of the provider of output service, the manufacturer of the final products or provider of output service, as the case may be, shall pay an amount equal to the credit availed in respect of such inputs or capital goods and such removal shall be made under the cover of an invoice referred to in rule 9: Provided that such payment shall not be required to be made where any inputs are removed outside the premises of the provider of output service for providing the output service: Provided further that such payment shall not be required to be made when any capital goods are removed outside the premises of the provider of output service for providing the output service and the capital goods are brought back to the premises within 180 days, or such extended period not exceeding 180 days as may be permitted by the jurisdictional Deputy Commissioner of Central Excise, or Assistant Commissioner of Central Excise, as the case may be, of their removal. Rule 9 of CCR, 2004 9. Documents and accounts.- (1) The CENVAT credit shall be taken by the manufacturer or the provider of output service or input service distributor, as the case may be, on the basis of any of the followin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, bill or challan issued by an input service distributor under rule 4A of the Service Tax Rules, 1994. Rule 11 of CCR, 2002 Rule 11. Goods to be removed on invoice.- (1) No excisable goods shall be removed from a factory or a warehouse except under an invoice signed by the owner of the factory of his authorised agent and in the case of cigarettes, each such invoice shall also be countersigned by the Inspector of Central Excise or the Superintendent of Central Excise before the cigarettes are removed from the factory. Provided that a manufacturer of yarns or fabrics falling under Chapter 50, 51, 52, 53, 54, 55, 58 or 60 or readymade garments falling under Chapter 61 or 62 of First Schedule to the Tariff Act may remove the said goods under a proforma invoice signed by him or his authorised agent. The provisions of sub-rules (2) to (5) shall apply to the proforma invoice except that the said invoice shall not contain the details of the duty payable. The manufacturer shall, within five working days from the issuance of the proforma invoice prepare the invoice in terms of this rule after making adjustments in respect of the goods rejected and returned by the buyer. The proform ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invoice issued by him that no credit of the additional duty levied under sub-section (5) of section 3 of the Customs Tariff Act, 1975 shall be admissible. Provided further that in case of the second stage dealer receiving imported goods under an invoice bearing an indication that the credit of additional duty of customs levied on the said goods under sub-section (5) of section 3 of the Customs Tariff Act, 1975 (51 of 1975) shall not be admissible, the said dealer shall on the resale of such imported goods, indicate on the invoice issued by him that no credit of the additional duty levied under sub-section (5) of section 3 of the Customs Tariff Act, 1975 shall be admissible. Explanation. - For the purposes of this rule, first stage dealer and second stage dealer shall have the meaning assigned to them in CENVAT Credit Rules, 2002. 11. Keeping the above rule position in mind, this Court proceeded to analyse the case of the assessee as revealed by the records. 12. While the adjudicating Commissioner relied upon the decision in Majestic Auto case (supra), the Tribunal, however, distinguished that decision placing reliance on the decision of the Supreme Court in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were used by the appellant. Once it was admitted that the capital goods, on which Modvat Credit was taken by the appellant remained installed in the same premises, which was leased out and continued to be engaged in the manufacture of I.C. Engine, which was further used in the manufacture of two wheelers and that a separate registration certificate was obtained by HBSA Pvt. Ltd., there was no removal of goods. The capital goods remained installed in the same premises and thus even if the premises were transferred on lease, the capital goods even if they were deemed to be installed in the premises of HBSA Pvt. Ltd., Rule 57-S, would not be attracted. 16. On a plain reading of Rule 3 (5) of the Cenvat Credit Rules, 2004, we find that Rule 3 (5) only speaks about the removal of goods under cover of invoice referred to in Rule 9 on inputs or capital goods on which cenvat credit has been taken and if such goods are removed as such from the factory or premises of the provider of output service, the manufacturer of the final products or provider of output service, shall be liable to pay an amount equal to the credit availed in respect of such inputs or capital goods. 17. In this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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