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TMI Blog2017 (1) TMI 490X X X X Extracts X X X X X X X X Extracts X X X X ..... uary 2008 and exported as such vide ARE-1 dated 18th January 2008 and 23rd February 2008 respectively. The original authority held this availment to be contrary to CENVAT Credit Rules, 2004 and, while denying the credit of Rs. 11,72,913/-, ordered recovery thereof along with interest and imposed penalty of Rs. 6,00,000/- on the assessee. The first appellate authority set aside the order by placing reliance on the decision of the Hon'ble Supreme Court in BPL Display Devices Ltd v Commissioner of Central Excise [2004 (174) ELT 5 (SC)] which held that the expression 'for use by the manufacturer of the final product' is to be construed as 'intended for use by the manufacturer of the final product' if rule 3(5) of CENVAT Credit Rules is not be r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of the Tribunal in Mahindra & Mahindra v. Collector of Central Excise, Bombay-II [1994 (70) ELT 423 (Tribunal)] which holds '5. From the above, it is clear that if the inputs are removed, as such, for home consumption, what is contemplated is not mere reversal of credit originally taken. The Rule envisages clearance of such inputs on appropriate duty of excise, as if such inputs have been manufactured in that factory. This deeming concept enables the authorities to insist on the formalities required to be complied with, before permitting removal of inputs for home consumption. By this deeming concept, the receiver of the input is put on par with the manufacturer of these inputs. It is a benevolent scheme meant for giving input re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat it is a modified value added tax scheme. Hence, when the inputs which are received for the declared objective of utilisation in the final product by the receiver of input, are to be allowed diversion for home consumption, as such, it can be done only subject to specific provision laid down in Rule 57F(1)(ii). When the rule introduces the deeming concept of treating such inputs in respect of which credit has been taken on par with the goods manufactured in the recipient factory and the recipient of such inputs on par with the manufacturer of inputs, he has to comply with the requirement, if he seeks to remove the inputs without undergoing any process, on payment of duty as per the provisions of the Act and the Rules applicable to a manuf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is in relation to manufacturing activity; only thus, would the legislative intent of erecting a channel for elimination of cascading effects of tax be achieved; all else is a perversion of that intent. 8. The usual according of the privilege of credit of duty is limited to 'inputs' and 'capital goods' with their specific connotations in rule 2 of CENVAT Credit Rules, 2004 and that is apt considering that these are the two resources used for manufacture of 'output' goods. However, taking note of commercial reality, or compulsion which may be manifest in fabrication, assembly or manufacture of capital goods at the place of production, the Rules have carved out, through an Explanation, a niche for availment of credit used in goods for making ..... X X X X Extracts X X X X X X X X Extracts X X X X
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