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TMI Blog2007 (2) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... 49,010/- was disallowed and a penalty of equal amount imposed, besides ordering interest to be paid in terms of Section 11AB of the Central Excise Act, 1944. 2. According to the Revenue, during April 2003 to December 2003, the assessee had taken and utilized Cenvat credit of Rs. 1,49,010/- on welding electrodes falling under Heading 8311, plain plates, HR sheets, channels, angles falling under Chapter 72 and synthetic enamel (paints) falling under Chapter 32 of the schedule to the Central Excise Tariff Act, 1985, as capital goods. Since these were not covered under the definition of "capital goods" given in Rule 2(b) of the Cenvat Credit Rules, 2002, the appellant had violated the provisions of the rules by taking such credit. Show caus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Cenvat Credit Rules, 2002, in respect of these items. 5. As regards the welding electrodes, since the matter was covered by the ratio of the decision of the Larger Bench in Jaypee Rewa Plant v. CCE Raipur, reported in 2003 (159) E.L.T. 553 (CEGAT-LB), which was followed in J.K. Cement Works v. CCE, Jaipur, reported in 2007 (6) S.T.R. 60 (T) = 2007 (78) R.L.T. 581 (CESTAT-Del.), the claim in respect of welding electrodes was not pursued. It is evident that in view of the decision of Jaypee Rewa Plant (LB), welding electrodes, which were used for maintenance and repairs, were not eligible for cenvat credit. So far as the claim regarding paints is concerned, admittedly, it was made on the footing that goods were covered within the def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted as parts, accessories, or components of any ma chine. 7. As per the definition of "capital goods" under Rule 2(b)(iii) of the Cenvat Credit Rules, 2002, the components, spares and accessories of the goods specified at clauses (1) and (ii) of clause (b) would also be capital goods. The words "components, spares and accessories" do not leave any scope for inclusion of the items of general nature such as, plain plates, channels, HR sheets and angles being treated as capital goods unless it is specifically shown that the goods are adapted for being used as components, spares or accessories of any of the other goods covered by sub-clauses (i) and (ii) of clause (b) of Rule 2. Reliance placed on behalf of the appellant on the ratio of Sim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CCE, Noida v. DSM Ltd. (supra), when such items are used for fabrication of steel structures, shed etc. and they could not be treat as parts/accessories/components of any machine, for the purpose of Modvat credit, and where there is no evidence that the items were used as components of boilers, the order disallowing modvat credit would be justified. 8.1 Even in the present case, the authorities below have held that it was not shown by any corroborative material/evidence that the items, which were of generic nature, were used as components, spares or accessories of the eligible capital goods. The Commissioner (Appeals) has, therefore, rightly held that in the absence of any such evidence, they can only be considered to have been used for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gation of, only "wrongly" taking the inadmissible credit, imposition of the minimum prescribed penalty of Rs. 10,000/- will meet the ends of justice, having regard to the facts and circumstances of the present case. 9. Therefore, while confirming the impugned order denying the modvat credit and directing recovery thereof and recovery of interest; the penalty amount is reduced to Rs. 10,000/- (rupees ten thousand only). The appeal is, accordingly, partly allowed. Excise Appeal No. 2459 of 2005: 10. In this appeal the appellant has challenged the order of the Commissioner (Appeals) dated 29-4-2005 upholding the order of the Assistant Commissioner made on 30-9-2004 denying Cenvat credit of Rs. 1,35,666.33, imposing penalty of the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority had not imposed penalty initially and that after the Commissioner (Appeals) had rendered the decision on 23-11-2003, it came to be imposed by the Assistant Commissioner at the behest of the executive Commissioner is wholly misconceived It transpires from the record that by order-in-appeal No. 302-CE/MRT-I/2003 dated 20-11- 2003, which was made in appeal filed against the earlier order of the adjudicating authority (Deputy Commissioner) dated 3-4-2003 the Commissioner (Appeals) had, in terms, held as under: "As discussed above, violation of Rule 173Q is clearly established and therefore, the respondent are liable to penalty. The original adjudicating may take appropriate action (sick) after following the principles of natural justic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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