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TMI Blog2015 (10) TMI 1571X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court, that the show cause notice is the foundation of the demand under the Central Excise Act and that the order-in-original and the subsequent orders passed by the appellate authorities under the statute would be confined to the show cause notice, the question of examining the validity of the impugned order on grounds which were not subject matter of the show cause notice would not arise. - In the absence of any infirmity in the findings recorded by the Commissioner or the Tribunal, there is no warrant for interference. The questions proposed by the appellant which were not subject matter of the show cause notice, do not arise out of the impugned order passed by the Tribunal - Decided against Revenue. - TAX APPEAL NO. 363 of 2015 - - - Dated:- 11-9-2015 - MS. HARSHA DEVANI AND MR. A.G.URAIZEE, JJ For the Petitioner : Ms Sejal K Mandavia, Advocate For the Respondent : Mr JC Patel with Ms Shilpa Balani with Mr Dilip Kanojiya ORDER PER : MS. HARSHA DEVANI 1. In this appeal under section 35G of the Central Excise Act, 1944 (hereinafter referred to as the Act ), the appellant has called in question the order dated 17.12.2014 passed by the Cus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PSL Ltd., Gandhidham for SPMs with Sea Base Pipelines Project during financial years 2006-07 and 2007-08. However, the said project was completed only in May, 2008 by the respondent. As per rule 4(2) of the rules, the CENVAT credit in respect of the capital goods received in a factory or in the premises of the provider of output service at any point of time in given financial year, shall be taken only for an amount not exceeding 50% of the duty paid on such capital goods in the same financial year. As regards the balance 50% of the CENVAT credit thereon, the same has to be taken in any financial year subsequent to the financial year in which such capital goods were received in the factory of the manufacturer subject to such capital goods (if not excluded) being in his possession, as provided under rule 4(2)(b) of the rules. It appeared that the availment and utilization of the above CENVAT credit by the respondent was even before the actual installation of the capital goods was irregular and caused unintended benefit to the respondent, which was required to be recovered from it along with interest under rule 14 of the rules read with sections 73 and 75 of the Finance Act, 1994. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance upon a clause (ixa) inserted in sub-rule (1) of rule 3 of the rules, with retrospective effect from 18.04.2006, thereby allowing credit of service tax paid under section 66A of the Finance Act, 1994 and held that the respondent was eligible to take CENVAT credit of the service tax paid under section 66A of the Finance Act, 1994. 4. On the second aspect of taking CENVAT credit on capital goods prior to its installation, the Commissioner found that the respondent could avail 50% CENVAT credit of duty paid on capital goods in the same financial year in which the capital goods were received and the balance 50% in the subsequent financial year under the provisions of rule 3(1) read with rule 4(2)(a) of the rules. The Commissioner further observed that rule 3(1) of the Cenvat Credit Rules, 2004 allows availment of the CENVAT credit of any input or capital goods received in the factory of manufacture of final product or premises of the provider of output service on or after the 10th day of September, 2004. Rule 4(2)(a) of the Cenvat Credit Rules, 2004 provides that Cenvat Credit in respect of capital goods received in a factory or in the premises of the provider of output service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner has failed to take note of the fact that the credit of tax paid on imported services (viz. tax paid under section 66A) can be allowed/taken if they are in the nature of input services . Therefore, the Commissioner has erred in relying upon the Board s letters to assert that the credit of service tax paid on the imported services can be allowed, without ascertaining the basic premise of the said letters, as to whether the services of Consulting Engineers and Banking and other Financial Services used by the respondent would qualify as Input Service in its case. It was submitted that the Commissioner has not at all examined the proposition as to the eligibility of the above services used by the respondent, as input service , which he ought to have done before allowing the credit. 6.1 On the second issue, it was submitted that the Commissioner had permitted CENVAT credit on capital goods, by solely relying on the Board s letters dated 03.04.2000 and 28.06.2006, for the proposition that the condition of installation of capital goods prior to availing CENVAT credit is no longer required, without ascertaining as to whether the goods in respect of which CENVAT credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in the matter of levy and recovery of duty, penalty and interest. In the facts of the said case the court observed that if there is no invocation of rule 7 of the Valuation Rules 1975 in the show cause notice, it would not be open to the Commissioner to invoke the said rule. Reference was also made to the decision of the Supreme Court in the case of Commissioner of Central Excise v. Gas Authority of India Ltd., 2008 (232) ELT 7 (SC), for the proposition that the show cause notice is the foundation of the demand under Central Excise Act and if the show cause notice in that case itself proceeded on the basis that the product in question was a by-product and not a final product, then, in that event, the court need not answer the larger question of law framed. The court was in agreement with the view expressed by the Tribunal that nowhere in the show cause notice it had been alleged by the Department that Lean Gas was a final product. The court observed that ultimately, an assessee is required to reply to the show cause notice and if the allegation proceeds on the basis that Lean Gas is a by-product, then there is no question of the assessee disputing that statement made in the show ..... X X X X Extracts X X X X X X X X Extracts X X X X
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