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TMI Blog2016 (7) TMI 797X X X X Extracts X X X X X X X X Extracts X X X X ..... at some of the boilers have been erected at the Special Economic Zone at Jamnagar while others have been exported from India. Considering the decision of the Tribunal in re Flat Products Equipments (I) Ltd (supra) the demand of credit cannot survive. Credit allowed - Decided against the revenue. - APPEAL NOS: E/1094 & 1191/2012 & CROSS-OBJECTION NO: E/CO-127/2012 - Final Order Nos. A/87400-87402/2016-WZB/EB - Dated:- 29-4-2016 - SHRI M V RAVINDRAN, MEMBER (JUDICIAL) AND SHRI C J MATHEW, MEMBER (TECHNICAL) Shri Gajendra Jain with Shri Rajesh Osthwal, Advocate for the assessee/appellant Shri V.K. Agarwal, Addl. Commissioner (AR) for the respondent ORDER PER: C J MATHEW: Appeal has been filed by M/s Thermax Limited against order-in-original no. 16/CEX/2012 dated 23rd April 2012 of Commissioner of Central Excise, Pune - I which disallowed CENVAT credit of ` 5,90,83,654/-, demanded interest thereon and imposed penalties under rule 15(2) of the CENVAT Credit Rules, 2004 read with section 11AC of Central Excise Act, 1944. 2. Revenue, too, filed appeal no. E/1191/2012 challenging the impugned order to the limited extent of it having allowed appellant-assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gone into the supply of export product, viz., boiler, are inputs and, therefore, within the ambit of eligibility for availment under CENVAT Credit Rules. According to the appellant, the boiler consists of steam drum, water drum, water wall panel, headers, risers, down comers, convection, bank tubes. integral piping, econonomiser coils, saturated supply pipes, super heater coils, super heater interconnecting pipe and that, for the final assembly, auxiliary parts and accessories viz., valves, pressure gauges, electric motors, air pre-heaters, electrostatic precipitators, burners, control panels, air modulators, blowers/industrial fans, turbines, de-aerator tank, silencer, et al are to be attached. It is also contended that the HSN Explanatory Notes of heading 8402 clearly bring out the functionality of a boiler only with conjoining of these items. It was also stated that the appellant-assessee, when supplying the boilers to domestic consumers, also fulfills the contract on similar lines except that the bought-out items are taken directly to the site of the customers. However, in the case of foreign customers and special economic zone customers compliance with the statutory requireme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dit Rules, 2004 that defines inputs and to rule 2(h) defining final product as excisable goods manufactured or produced from input, or using input service it was contended that applicability of rule 3 of CENVAT Credit Rules, 2004 fails in the case of the appellant. Reliance was placed upon the judgment of the Honble Supreme Court in KCP Ltd v. Commissioner of Central Excise [2013 (195) ELT 353 (SC)] which held that the item under export not having been manufactured in the factory of assessee, the condition for availing MODVAT credit does not arise. Similar judgments were also relied upon by the learned Authorised Representative. It was also pointed out to us that the Honble Supreme Court in Thermax Babcock Wilcox Ltd v. Commissioner of Central Excise, Pune cited by the appellant-assessee has no precedential value as that had been disposed off by noting that consideration of eligibility for CENVAT credit would have been merely an academic exercise in the absence of duty demand being invoked in the show cause notice. 8. The dispute relates to availing of CENVAT credit on bought-out items claimed to have been used in the erection of boilers at the site of the purchasers fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one or at the site of the purchasers abroad. In these circumstances there cannot be any conclusion other than that the manufacture of boiler in its final form is rendered at the factory of manufacturer and the clearance of boiler is, for all practical purposes, effected from the said factory gate. Since the boiler is the final product of the manufacturer, every component within it and every input that goes into the component manufactured in the factory would an input in so far as CENVAT Credit Rules, 2004 is concerned. It is certainly not a tenable claim that Revenue can distinguish between an input of an input and an input itself when there is no dispute that the components manufactured from inputs and the components that are inputs have gone into the final products; nor can Revenue presume to enter the commercial arena and dictate the manufacturing policy of an industry. In the context of the decision of the Tribunal in the appellants own case cited supra which we respectfully follow, we find that the bought-out items are also inputs for the purpose of taking credit in accordance with the definition in rule 2(k)(i) as it stood then. 10. The impugned order has elaborately ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it Rules, 2004. This judgment also does not support the case of the department. In the instant case there is no dispute about the fact that the cost of the bought out parts have been included in the value of the machinery which has been ultimately exported and forms very much part of the machinery. Further, whatever credit has been taken, the duty liability has been discharged on a value inclusive of such bought out parts and on that ground also the demand for reversal of the CENVAT credit does not sustain. It should also be observed herein that the transaction in the instant case is that of exports and it is the avowed policy of the government to promote export by relieving the burden of taxes on the products exported and also on the products consumed in the manufacture of the goods exported. Therefore, the rules whether they be CENVAT Credit Rules or Central Excise Rules have to be read harmoniously to give effect to this objective. Thus in the instant case apart from the fact that the appellant is rightly entitled to the CENVAT credit on the goods exported, even from a policy perspective, such credit is permissible. 11. Considering the decision of the Tribunal supra, the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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