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TMI Blog2018 (4) TMI 466X X X X Extracts X X X X X X X X Extracts X X X X ..... lusively in the research & development department of the operations of the appellant. According to the lower authorities, CENVAT credit can be availed only in relation to manufacture of goods and the output of the said department is not manufacture. In addition to the demand of duty, along with interest thereof, penalty of like amount has also been imposed under rule 15(1) of CENVAT Credit Rules, 2004. 2. Learned Counsel for appellant drew attention to the definition of manufacture in section 2 of Central Excise Act, 1944 '2 Definitions.- xxxx (f) 'manufacture' includes any process, - i) incidental or ancillary to the completion of a manufactured product; ii) which is specified in relation to any goods in the Section or Chapte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value of which is included in the value of the final product and goods used for providing free warranty for final products; or (iii) all goods used for generation of electricity or steam or pumping of water for captive use; or (iv) all goods used for providing any [output service, or; (v) all capital goods which have a value upto ten thousand rupees per piece. but excludes - (A) light diesel oil, high speed diesel oil or motor spirit, commonly known as petrol; (B) any goods used for - (a) construction or execution of works contract of a building or a civil structure or a part thereof; or (b) laying of foundation or making of structures for support of capital goods, except for the provision of service portion in the executio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that the appellant does not produce excisable goods; neither is there any allegation that research & development is not intended for the betterment of excisable goods manufactured by the appellant. However, a definition, by itself, would not suffice to enable availment of credit. The entitlement to CENVAT credit flows from rule 3 of CENVAT Credit Rules, 2004 in accord with which such inputs as that used in the production of output is eligible for credit. The issue therefore crystallizes on this pivot: whether the ancillary functions that support the manufacturing facility do contribute to output for the purposes of availment of credit. 6. It is here that the definition of manufacture in Central Excise Act, 1944, referred to by Learned Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to CENVAT credit to the extent of the excess electricity cleared at the contractual rates in favour of joint ventures, vendors etc., which is sold at a price.' thus clarifying that inputs in any activity that contributes to the final product would be in compliance with the definition input in CENVAT Credit Rules, 2004. 8. The Tribunal in V Ramakrishna Rao v. Commissioner of Central Excise, Hyderabad [2006 (205) ELT 703 (Tri-Bang)] held thus '6. We have gone through the records of the case carefully. The Show Cause Notice issued to the appellants is not only based on the balance sheets but also on the raw material ledger for R & D issue register and the indent slips used for R & D. Therefore, the appellant cannot take advantage of the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case, the penalty on Shri V. Rama Krishna Rao is set aside. The appeals are disposed of in the above terms.' implying that denial of credit is a consequence of establishing that the research and development facility was not integral to the manufacturing process. Such an allegation has not motivated the demand in the present instance. It was in a similar vein that the Tribunal handed down its decision to disallow the credit claimed by the assessee in Bajaj Auto Ltd v. Commissioner of Central Excise, Pune [2004 (176) ELT 162 (Tri-Mumbai)]; in the impugned order, and in the notice there is no finding that research and development has nought to do with the product that emerges in the factory. 9. Considering the wide latitude offered for ava ..... X X X X Extracts X X X X X X X X Extracts X X X X
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