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TMI Blog2016 (4) TMI 1191X X X X Extracts X X X X X X X X Extracts X X X X ..... - Once the assessee files returns, it is for the proper officer to subject the returns to scrutiny and call for clarifications in case of any doubt - On bare perusal of definition of inputs, it can be seen that “input” include goods which are used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not. On such score, the contention of the revenue is totally untenable. I do not agree with the contention of Revenue that credit is not admissible as the prefabricated parts are embedded to earth, I am unable to accept the argument of the learned counsel that clean room is an equipment. It may be correct that such a room is indispensible to the process of manufacture, as the appellants are engaged in manufacturing bulk drugs - But no way can a clean room be considered a capital good or component, accessory, or part of capital goods - However as the issue is an interpretational one and as the appellant had revered the credit for the normal period on pointing out by department, even before issuance of show cause notice I hold that no penalty can be imposed for the irregular credit availed on prefabricated bui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esent appeal. 2. On behalf of the appellant, the learned counsel Shri M. Rajendran submitted his arguments both on merits and on the ground of limitation. The Commissioner (Appeals) allowed credit availed on steel tubes and pipes taking the view that these fall under the category of capital goods. Credit was disallowed on MS items and prefabricated modular walls and panels. He submitted that the subject MS items were used for support of pipes connecting the Reactors which are kept at different levels and the Heavy duty Palletized Racking system. Steel plates, (MS plates) were used for repair of corroded portions of Reactors. That repair and maintenance of worn and damaged parts are highly essential to carry on the manufacturing activity. The pre-fabricated modular walls and panels were used for making a 'clean room' in the factory. The appellant is manufacturing complicated molecular structures. The clean room is used as a contamination free-asceptic enclosure where the packing of product is done. The appellant has to abide by statutory conditions and norms of having the product manufactured and packed without being contaminated as the final products being drugs are meant for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r capital goods, the credit availed on MS items or prefabricated walls and panels is not admissible. After such amendment, credit on steel items used for building and laying foundation is not admissible. The appellant failed to disclose the details of items of credit availed in the returns and that therefore the appellant is guilty of suppression. The demand raised invoking the extended period is correct and proper. 6. I have heard the rival submissions. I will first take up the issue of limitation. The period involved is 4/2006 to 6/2010. The show cause notice is dated 25-4-2011. Major portion of the disputed period is beyond the normal period of one year. The department alleges that the appellant suppressed facts and that therefore extended period is invokable. On perusal of the show-cause notice, it is seen that the notice relies upon the ER-1 return and the letter issued by appellant informing the details of credit. There is no evidence for any positive act of suppression or wilful misstatement committed on the part of the appellant. The appellants have disclosed details of the credit availed as required under law. There is no requirement/provision in the ER-1 returns to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue failed to establish suppression of facts. The Tribunal in the said case observed as under :- 10. The Supreme Court in the case of Continental Foundation Jt. v. Commr. of C.Ex., Chandigarh-1 reported in 2007 (216) E.L.T. 177 (S.C.) held that the expression 'suppression' has been used in the proviso to Section 11A of the Act accompanied by very strong word as "fraud" or "collusion" and therefore, has to be construed strictly. Mere omission to give correct information is not a suppression of facts unless it was deliberate to stop the payment of duty. The incorrect statement cannot be equated with willful misstatement. Similarly, the Hon'ble Supreme Court in the case of Commissioner of C.Ex., Bangalore v. Karnataka Agro chemicals - 2008 (227) E.L.T. 12 (S.C.) held that it is well settled that mere non-declaration is not sufficient to invoke the larger period. Some positive act of suppression is required for invoking larger period of limitation under Section 11A. The Hon'ble Supreme Court in the case of Jai Prakash Industries Limited v. Commissioner of C.Ex., Chandigarh - 2002 (146) E.L.T. 481 (S.C.) held that in the case of divergent views of the various High Courts there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant suppressed facts. One other allegation is that the alternate plea of the appellant that if subject items do not fall under the category of capital goods, they would fall under the definition of inputs, would tantamount to willful mis-statement of facts. That the subject items were not used in actual manufacture of finished products, but were used by appellants for other purposes. That this was revealed after verification of details and therefore is wilful misstatement. The appellants have declared the description and the tariff classification of the items on which credit was availed in the monthly returns. On bare perusal of definition of inputs, it can be seen that "input" include goods which are used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not. On such score, the contention of the revenue is totally untenable. 10. The learned counsel for appellant has relied on the judgment laid by Apex Court in Uniworth Textiles Ltd. v. CCE, Raipur [2013 STPL (Web) 69 SC = 2013 (288) E.L.T. 161 (S.C.)]. He argued that the Apex Court relying on the judgment in Pushpam Pharmaceuticals Co. v. CCE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pipelines carry in-process material between the various processing machinery and have to be kept at specified levels for proper flow of the in-process material to each processing stage, and steel columns fabricated to position the pipelines are integral part of the whole system of processing machinery. Further MS items were used for fabricating or repairing reactors and Heavy Duty Palletized Racking System. The Tribunal in the case of Aarti Industries Ltd. v. CCE, Thane [2016-TIOL-678-CESTAT-Mum], allowed credit on MS items used for manufacture of capital goods. In CCE, Tiruchirappalli v. India Cements Ltd., [2014 (305) E.L.T. 558 (Mad.)], the Hon'ble Court following the ratio laid in CCE, Jaipur v. Rajasthan Spinning & Weaving Mills [2010 (255) E.L.T. 481 (S.C.)] held that credit is admissible on MS items used for fabrication of structurals used for support. Following the judgment laid in India Cements case I hold that appellants are eligible for credit availed on MS items during the normal period of one year for which the demand is raised. Therefore, the demand raised on MS items is set aside. 12. The appellant has availed credit of duty paid on prefabricated walls and pan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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