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TMI Blog2015 (10) TMI 2568X X X X Extracts X X X X X X X X Extracts X X X X ..... goods on the date, on which, the goods to be manufactured were dutiable, despite the same goods becoming exempted goods on the next day, but to deprive the benefit to a person, who manufactures dutiable goods on the basis of the capital goods received in a particular financial year, would not be a proper interpretation to the Rules - Decided in favor of the assessee. - Civil Miscellaneous Appeal No.2092 of 2007 - - - Dated:- 8-10-2015 - V.RAMASUBRAMANIAN AND T. MATHIVANAN JJ. For the Appellant: Mr. C. Saravanan For the Respondent: Mr. A.P. Srinivas, SSC JUDGMENT (Delivered by V. Ramasubramanian, J.) This appeal is filed by the assessee under Section 35-G of the Central Excise Act, 1944, challenging the order in original passed by the Commissioner of Central Excise and the order passed by the CESTAT confirming the same, denying the appellant of the benefit of CENVAT credit on capital goods imported by the appellant during the financial year 2002-03. 2. Heard Mr. C. Saravanan, learned counsel for the appellant and Mr. A.P. Srinivas, learned Senior Panel Counsel for the respondents 2 and 3. 3. The appellant imported capital goods, during the period from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipt the appellant was also engaged in the manufacture of final product attracting nil duty ignoring the fact that the appellant was also engaged in the manufacture of dutiable final product which were exempted from duty in term of value based exemption notification No.8/2002-CE dated 1.3.2002? (2) Whether in the facts and circumstances of the case denial of CENVAT credit on capital goods can be justified especially in view of the fact that the edible oil was subjected to duty in the same financial year in which the subject capital goods were received? and (3) Whether the denial of credit based on case laws settled in the context of Rule 57Q of erstwhile Central Excise Rules, 1944 was correct or not in the facts and circumstances of the case? 9. For answering the questions of law, it may be necessary to have a look at two provisions in the CENVAT Credit Rules and two definitions. Rule 4(1) of the CENVAT Credit Rules entitles a manufacturer to take credit in respect of the inputs, immediately upon the receipt of the inputs in the factory. Sub-rule (2) of Rule 4 of the Cenvat Credit Rules, 2002, speaks about Cenvat credit in respect of capital goods. Rule 4(2) reads as follo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to claim CENVAT Credit stipulated in the first part of Rule 6(4) is negatived or offset by what follows. It says that a claim for exemption from the whole of the duty of excise leviable under any notification where exemption is granted based upon the value or quantity of clearances made in a financial year, are not covered by the first part of Rule 6(4). In other words, the import of Rule 6(4) is that if there are final products which are exempt under any notification, where the notification for exemption is based upon value or quantity of clearances made in a financial year, the CENVAT Credit will be allowed even on such goods, irrespective of the first part of Rule 6(4). 13. Therefore, the next question that we have to address ourselves is as to what are meant by capital goods and what are meant by final products. These two expressions are used in Rule 6(4). 14. Rule 2(b) of the Cenvat Credit Rules, 2002, defines the expression capital goods as follows: Rule 2. Definitions .-In these rules, unless the context otherwise requires,- (a) .... (b) capital goods means,- (i) all goods falling under Chapter 82, Chapter 84, Chapter 85, Chapter 90, heading No. 68. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance, it is seen that the decision in Surya Roshni arose out of Rule 57Q (2) of the Central Excise Rules, 1944. As per the said Rule, the manufacturer of the final product was entitled to credit of duty paid on goods. This credit as per Rule 57R(1) can be availed as and when the capital goods were received by the manufacturer. The focus was on the date of receipt by the manufacturer. But, Rule 4(2)(a) of the 2002 Rules makes a clear departure. Therefore, the reliance placed upon Surya Roshni appears to be incorrect. 20. It appears that the decision of the Tribunal in Surya Roshni, was taken on appeal to the Supreme Court by the assessee. Though the Supreme Court dismissed the Special Leave Petition, the Supreme Court did not affirm the decision of the Tribunal on merits. The Supreme Court dismissed the appeal as not maintainable. As a consequence, Surya Roshni has again bounced back to the Madhya Pradesh High Court, which is now seized of the matter. We have seen the order passed by a Division Bench of the Madhya Pradesh High Court on 21.9.2012, which makes it clear that the very decision in Surya Roshni relied upon by the Tribunal has not attained finality. This is apart from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even taking note of the fact that the decision in Surya Roshini is still at large before the Madhya Pradesh High Court. In any case, the interpretation to be given to Rule 6, was not even considered by the larger Bench in Spenta International. Hence, it has no application. 25. Yet another decision relied upon by Mr. A.P. Srinivas, learned Standing Counsel is the one in Commissioner of Central Excise v. Samsung India Electronics Ltd. [2014 (309) ELT 593]. In that case, the Allahabad High Court was concerned with a question whether the CENVAT Credit of capital goods taken by the respondents, which are exclusively used in the manufacture of exempted goods, was admissible or not. As seen from the facts out of which the said case arose, there were actually two companies in question. One was Samsung Electronics India Information and Telecommunication Ltd. It was engaged in the manufacture of colour monitors and CTV Chassis on job works. This company later amalgamated with Samsung Electronics India Ltd. The former was undertaking job work for the latter. Therefore, the question that arises for consideration in this appeal did not even arise for consideration in the case before the All ..... 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