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TMI Blog2017 (5) TMI 514X X X X Extracts X X X X X X X X Extracts X X X X ..... al goods such as explosives, lubricants, detonators, components etc. provided to contractors for mine development work / ore productions. 4. During the period in dispute i.e. April 2008-May 2010 after availing Cenvat Credit on the inputs, capital goods, respondent outsourced the mining activity to various mining contractors for which purpose they supplied inputs and capital goods, such as explosives, lubricants, detonators, pipes, rods and other goods on which Cenvat Credit was availed. After carrying out the investigation, Revenue issued two show cause notices dated 06.11.2009 and 22.09.2010 directing the respondent to show cause as to why the demands cannot be raised on them for the improper availment of Cenvat Credit on the goods which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... identical in as much, the contractor were given physical possession of these explosives, detonators, lubricants, pipes, rods, etc.; contractors were not hired labours of the assessee but were independent legal persons in as much as they are having seperate registration with various departmental authorities and having separate books of accounts, necessary machinery and expertise to perform work in the accounts of the respondent and the items which are given by the respondent were essential requirements for providing the services as contracted. It is his further submission that items being essential requirement for given development, these items are covered under provisions of rule 2(k)(ii) of Cenvat Credit Rules 2004 as inputs for availment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the factory of the respondent i.e. the mining area. 7. After considering the submissions made by both the sides and perusal of the records, we find that the issue boils down to only two conclusion whether the explosives, lubricants, detonators, pipes and rods on which Cenvat Credit was availed and supplied to various outsource companies who undertake the mining activities is correct or the respondent is required to discharge the Cenvat Credit on such goods. 8. We find that the adjudicating authority after recording the entire issue of how the contracts have been signed by the respondent with their clients for mining activity and also provision of rule 3(5) of the Cenvat Credit Rules recorded the following findings: "5.8 I further fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SCN, no evidence has been given that the cost of these items was deducted to arrive at the amount to be paid to the service provider. Hence, I reject the allegation that amount to be paid to the contractor for providing the services was arrived at after deducting the cost of explosives, detonators, pipes and tubes, etc. Since the assessee, after the decision of the Hon'ble High Court of Rajasthan, has changed the terms and conditions of the contract whereby inputs and capital goods required for rendering the services are supplied free of cost to the service provider. 5.10 I have seen the copies of agreement relating to the period under dispute i.e. from April 2008 to May 2010 which revealed that during the impugned period the material, e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld that no amount is required to be paid under Rule (4) on capital goods as there has been no removal and dropped the demand of central excise duty." 11. We also place reliance on the decision of the Tribunal in the case of Steel Authority of India Ltd. (Supra) wherein the Tribunal has held as under: "Heard both the sides and examined appeal records carefully. The short point for decision is whether or not the appellants are eligible for concessions available for the goods manufactured / purchased by them when transferred to the power plant owned by another entity inside their factory premises. The Revenue held the view that this will amount to removal outside the factory and as such the liability arose. We find that the factory premis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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