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TMI Blog2007 (11) TMI 211X X X X Extracts X X X X X X X X Extracts X X X X ..... n 11AC of the said Act read with Rule 15 of the said Rules. The Revenue's appeal is for enhancing the penalty to Rs. 6,97,31,863/- equal to the amount of duty demanded under Section 11A(2) read with Rule 14. 2. DCL are engaged in the manufacture of cement, for which they are registered with the department. They have also Service Tax Registration with the department. They avail themselves of Cenvat credit on capital goods, inputs and input services and utilize the same for payment of duty on their final product viz, cement. During the period from March, 2004 to March, 2005, they had set up a power plant of capacity of 29 MW in their factory premises and had also taken Cenvat credit of the duty paid on inputs and capital goods received in their factory in relation to the setting up of the power plant and also credit of the service tax paid on input service utilized for the erection and commissioning of the power plant. The credit so availed was utilized for payment of duty on cement, too. Scrutiny of records and investigations conducted by the department revealed that the said power plant was leased out by DCL to M/s. Keshav Power Pvt. Ltd. (KPPL, for short) under a Lease Deed da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he relevant provisions of the Transfer of Property Act, 1882. During the course of investigations, M/s. DCL paid (under protest) an amount of Rs. 6,84,82,078/- partly from Cenvat credit account and partly from PLA. On the basis of the results of investigations, the department issued a show-cause notice dated 5-4-2006 to M/s. DCL seeking to (a) recover an amount of Rs. 7,05,03,828/- (consisting of Cenvat credit of Rs. 6,94,14,477/- and Education Cess of Rs. 10,89,351/-) being the total amount of the alleged inadmissible credit availed by M/s. 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. The above demand was based on the allegation that M/s. DCL had, by leasing out the power plant with ancillary equipments to another company, 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 CCR, 2004, they were liable to pay an amount equal to the credit taken on such inputs and capital goods. It was also alleged that the credit taken on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actory and is silent about input services. There fore, the demand for reversal of credit on input services under the above provision is not justifiable. (g) The Commissioner erred in relying on the Tribunal's decision in Majestic Auto Ltd. v. CCE, Ghaziabad , 2004 (173) E.L.T. 145 (Tri.-Del.), which case is distinguishable on facts. (h) M/s. DCL had informed the department about their proposal to set up a captive power plant and had also submitted a revised ground plan incorporating the cement plant and the power plant. There was no suppression of any relevant fact by M/s. DCL, nor did they intend to evade payment of any amount to the Revenue under Rule 3(5). It was their bona fide belief that they were entitled to avail the credit in question, unaffected by their transactions with M/s. KPPL under the lease deed. For these reasons, the extended period of limitation was not invocable against them. The entire demand is liable to be set aside as barred by limitation. 4. Ld. Sr. Advocate has cited case law in support of some of the above contentions of the assessee. Relying on the Apex Court's judgment in Shyam Oil Cake Ltd. v. CCE, Jaipur , 2004 (174) E.L.T. 145 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontention that, unless there was physical removal of capital goods from factory, Modvat/Cenvat credit taken thereon cannot be asked to be reversed, ld. Sr. Advocate has cited the following decisions :- (1) Whirlpool of India Ltd. v. CC, New Delhi - 2003 (58) RLT 241 (CESTAT - Del.) (2) Metzeller Automotive Profiles India P. Ltd. v. CCE, Ghaziabad - 2004 (167) E.L.T. 208 (Tri.-Del.) (3) Associated Cement Companies Ltd. v. CCE, Belgaum - 2004 (173) E.L.T.210 (Tri.-Bang.) (4) Indorama Synthetics (I) Ltd. v. CCE, Nagpur - 2005 (190) E.L.T. 193 (Tri.-Mum.) In support of the assessee's contention that ownership is immaterial for availment of Cenvat credit on capital goods, ld. Counsel has cited the following decisions :- (1) HIS Automotives Ltd. v. CCE, Chennai , 2004 (163) E.L.T. 116 (Tri. -Chennai) (2) Modernova Plastyles P. Ltd. v. CCE, Mumbai , 2004 (60) RLT 448 (CESTAT-Mum.) (3) JBM Sungwoo Ltd. v. CCE, Chennai , 2005 (70) RLT 69 (CESTAT -Chennai) 5. Ld. Consultant for the Revenue has expressed the view that the present case has to be decided on its own facts and circumstances without reference to any of the cases cit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e with law cannot be disallowed subsequently on any ground whatsoever. In this connection, he has referred to Rule 14 of the CCR, 2004 and has submitted that, where any credit has been utilized wrongly, the same could be recovered along with interest. 6. We have given careful consideration to the submissions. The inputs and capital goods, on which Cenvat credit had been availed by the assessee on receipt of the goods in their factory, were used in the setting up of the power plant in question and the input services, on which Cenvat credit had been availed by the party, were utilized for the erection and commissioning of the power plant. It is not in dispute that the power plant was set up in a stretch of land which was part of the cement factory premises and its precincts covered by the approved ground plan of the factory and the same was set up for generating electricity for captive use for the manufacture of cement and ancillary purposes. In other words, it was set up as a captive power plant. The main issue arising in this case is whether, on account of the power plant having been leased out to an- other company (KPPL) w.e.f. 15-3-2005 for generation of electricity and suppl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), we made an attempt to decipher the meaning of the expression "as such" used in the above provision. As the same expression has been used in an identical context in sub- rule (5) of Rule 3 of the CCR, 2004, we have the advantage of making useful reference to the following excerpt from Final Order No. 814/07 ibid "6 Both sides have dwelt much on the expression 'as such' used in sub- rule (4) of Rule 3 of the CCR. According to learned Counsel, removal of capital goods as such means removal of unused capital goods, whereas, according to learned SDR, it would mean removal of capital goods, whether used or unused. It is significant that the expression 'as such' was not used under the erstwhile Rule 57S which dealt with the manner of utilization of capital goods and the credit of the duty paid thereon. Sub-rule (1) of Rule 57S imposed a liability on the manufacturer of final product to pay appropriate duty of excise on his capital goods when removed from the factory for home consumption as if such capital goods had been manufactured in the said factory. Sub-rule (2) of Rule 57S prescribed the extent to which such duty of excise was payable. This sub-rule reads as under :- "(2) In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rule(4), which says that such removal shall be made under the cover of an invoice referred to in Rule 7 . Rule 7 of CCR lists out of the documents on the basis of which Cenvat credit on inputs or capital goods can be taken by a manufacturer of final products. One of these documents is an invoice issued by a manufacturer for clearance of inputs or capital goods as such in terms of the provisions of the CER, 2002 . Rule 11 of the CER, 2002 mandates that no excisable goods shall be removed from a factory or a warehouse except under an invoice signed by the owner of the factory or his authorised agent. Obviously, the invoice, mentioned under Rule 7 (1) of the CCR, 2002, issued by a manufacturer for clearance of inputs or capital goods as such, is the one specified under Rule 11 of the CER, 2002 which stipulates that excisable goods shall be removed from a factory/warehouse only under an invoice signed by the owner of the factory or his authorised agent. Contextually, it may also be noted that, while Rule 7 of the CCR, 2002 employs the word 'clearance', Rule 11 of the CER, 2002 uses the word 'removal'. Elsewhere in the CER as well as in the parent statute also, 'clearance' and 'rem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a line of decisions, some cited by the assessee and others cited by the Revenue. Most of such decisions have been cited before us in the present case also. While ld. Counsel has cited a number of decisions to establish that physical removal of capital goods from factory is a peremptory condition for invoking Rule 3(5) of the CCR, 2004, ld. Consultant has argued to the contra by relying on the Tribunal's decision in Majestic Auto case (supra). As our final order in BILT Industrial Packaging Co . has dealt with these aspects also, we would like to reproduce the relevant paragraph of that order for the purpose of the present case :- "7. We note, that in the cases of Jamna Auto Industries (supra) and Whirlpool of India (supra), this Tribunal had occasion to consider a similar factual situation under the erstwhile Rule 57S of the CER, 1944. In both the cases, the assessees had sold their factories with capital goods therein after availing credit on such goods. The Tribunal held that the credit so availed was not recoverable in the absence of removal of capital goods from factory. In the case of Metzeller Automotive Profiles (supra), the question was whether, under sub-ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d examined, inter alia , the meaning of "place of removal" defined under Section 4(4)(b) of the Central Excise Act. After noting that the term "removal" had not been defined anywhere in the statute, the Apex Court observed as under :- "There can be no doubt that the word 'removal' contemplates shifting of a thing from one place to another. In other words, it contemplates physical movement of goods from one place to another." The word "removal" has not been defined under CCR, 2004 either. In the circumstances, the above observation of the Apex Court assumes significance and has to be followed as binding ruling. Accordingly, we are of the view that all the decisions cited by ld. Counsel in support of the assessee's contention that Rule 3(5) of the CCR, 2004 would not be invocable unless there was physical removal of capital goods/inputs are in accordance with the ruling of the Apex Court. 10. In the present case, it is also pertinent to note that the assessee's contention that the power plant continued to be their captive power plant even after its lease to KPPL has not been successfully rebutted. It is their definite case that the land on which the power plant is situate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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