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TMI Blog2019 (5) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... ds, which are further used for the manufacturing activity, would be eligible for Credit. The Department does not have a case that the items are not used as part of the cement plant. Instead, the Credit has been disallowed observing that these items take the nature of immovable property after being fixed to earth - the disallowance of Credit on the impugned items under the category of inputs is unjustified and requires to be set aside. CENVAT Credit - input services - HELD THAT:- The assertion of the Ld. Consultant for the appellant that there is no specific mention in the Show Cause Notice as to what are the categories of services under dispute, is not without merit. In fact, there is nothing in the Show Cause Notice which gives details of the services which are not eligible for Credit - Without availing the services of Erection, Commissioning and Installation, the machineries and equipment cannot be installed and put to commence manufacturing activity. We therefore find that the disallowance of Credit under the category of input service to the tune of ₹ 6,64,95,149/- is without any legal reasons and requires to be set aside. Time limitation - HELD THAT:- It is s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory of capital goods, as after assembly and erection, they are fixed to earth and become cement plant, which is immovable property and non-excisable. 2.2 The appellants had also availed Credit on various input services used for erection and commissioning of machinery. The Department was of the view that such services are not eligible for Credit. 2.3 Show Cause Notice was issued proposing to disallow the Credit and recover the same along with interest and also for imposing penalties. After due process of law, the Original Authority confirmed the demand of ₹ 25,55,70,351/- towards ineligible CENVAT Credit along with interest and imposed equal penalty. Hence, this appeal. 3.1.1 On behalf of the appellant, Ld. Consultant Shri. R. Parthasarathy appeared and argued the matter. He submitted that in order to enhance the production of clinker as well as cement, the appellant had constructed a new project called Line-II Project (cement plant) and such construction was undertaken between November 2009 and April 2011. Before commencement of the Line-II Project, the appellants had submitted a letter dated 04.11.2009 to the jurisdictional aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of excise; (d) Credit for various input services was also denied on the ground that they were related to and restricted to the erection and installation of the plant and were not related to operational activities of the plant and as such, it has to be construed that these services were availed by the appellants for the manufacture of non-excisable goods. 3.1.5 Reliance placed by the Department on Board Circular No. 58/1/2002-CX dated 15.01.2002 is highly misplaced and erroneous. The said Circular is relevant only for the purpose of levy of duty on turn-key projects like steel plants and cement plants. It does not relate to availment of CENVAT Credit. The view of the Department that after assembling the machinery, they become attached to earth and thus, are in an immovable condition and would be non-excisable goods, for which reason Credit is not eligible, is incorrect and against the law. 3.1.6 The Department has relied upon the decision in the case of M/s. Vandana Global Ltd. Vs. Commissioner of C.Ex., Raipur - 2010 (253) E.L.T. 440 (Tri. LB) to hold that after installation and assembly, the impugned items would be fixed to ear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Erection, Commissioning and Installation Services. These services have nexus with the manufacturing activity and would also fall within the definition of input service . 3.2.2 Further, during the relevant period (prior to 01.04.2011), the Credit in respect of service tax paid for setting up of factory is eligible for Credit. Therefore, all the services which were used by the appellant for setting up of cement plant (Line-II) are eligible for Credit. 3.3 He put forward arguments on the ground of limitation also. It is submitted by him that though the audit as well as investigations were conducted in 2011, the Show Cause Notice has been issued much later only on 27.11.2014, invoking the extended period alleging suppression of facts with intention to evade payment of duty. The appellant had disclosed the entire Credit availed in their ER-1 returns. Further, prior to starting the construction of the project, the appellant had written letter dated 04.11.2009 to the jurisdictional authorities informing them of their intention to avail Credit on various items under the category of inputs . In spite of this, the Department has alleged suppression of facts, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 149/- Total ₹ 25,56,54,811/- 6.2 Although it is alleged in the Show Cause Notice that the goods did not fall within the definition of inputs , the reason for which the Credit has been disallowed is that after assembly and installation of such items, they become immovable property and therefore, are not eligible for Credit. From the Show Cause Notice as well as the impugned Order, it is seen that various items were used for setting up of the cement plant. Many of these items are components or small parts which go into assembly, installation or commissioning of machines and equipment. As per Explanation-2 of the definition of inputs, as it stood during the relevant period, input includes the goods used in the manufacture of capital goods which are further used in the factory of the manufacturer. Thus, all those items which are brought into the factory and used for the manufacture of capital goods, which are further used for the manufacturing activity, would be eligible for Credit. 6.3 The Department does not have a case that the items are not used as part of the ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore find that the disallowance of Credit under the category of input service to the tune of ₹ 6,64,95,149/- is without any legal reasons and requires to be set aside, which we hereby do. 8. The Ld. Consultant for the appellant has also argued on the ground of limitation. It is seen that for the period from November 2009 to March 2011, audit and later, investigation was also conducted. In spite of such investigations, the Show Cause Notice was issued only on 27.11.2014. The appellants have disclosed the entire Credit availed by them in their ER-1 returns as well as their statutory records. It is also seen that they have intimated the Department as early as 04.11.2009 with regard to their intention to avail the Credit. All this would show that the appellants cannot be saddled with the allegation of suppression of facts with intention to evade payment of duty. We therefore find that there are no ingredients for invoking the extended period of limitation. The Show Cause Notice is time-barred and unsustainable on this ground also. The appellant succeeds both on merits as well as on limitation. 9. In view of the foregoing discussions, the imp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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