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TMI Blog2020 (2) TMI 1254X X X X Extracts X X X X X X X X Extracts X X X X ..... ture, are not absorbed into the final product let alone finding inclusion in intangible output service . It is not contemplated, either in Finance Act, 1994 or in general commercial usage, that capital goods should be in perpetual operation. The absence of such condition in CENVAT Credit Rules, 2004 reflects this common understanding that capital goods are dutiable on procurement and that, unlike the availment of credit of duties suffered on inputs, credit thereof is permitted at certain specified stages and, that too, only twice. Dis-connection of service is preceded by usage, even for a time, of the capital goods which suffice to continue the eligibility owing to existence as such even after service has been rendered. This is clear from the provisions of rule 3(5) of CENVAT Credit Rules, 2004 in accordance with which the manufacturer is required to reverse the credit in full when cleared as such and, under rule 3(5)(a), to reverse in proportion to remenant value after being put to use and at the appropriate rate of duty in the event of transformation as waste and scrap - it is only upon the transfer of possession to another manufacturer/provider of output service that credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and of ₹40,63,50,355/-, along with interest thereon, besides imposing penalties of like amount under rule 15 of CENVAT Credit Rules, 2004. 2. According to Learned Counsel for the appellant, the proceedings were superfluous insofar as the demand pertaining to written-off equipment is concerned; he contends the appellant had, on their own, reversed the CENVAT credit despite which this amount had been included in the notices, as well as in the impugned order, merely on account of factual reporting in an audit. It would, therefore, appear that ineligibility of credit on this count is not under challenge. It is also the contention of Learned Counsel that a necessary condition for eligibility to CENVAT credit is procurement for pass through to the premises of the customer with no provision having been made for usage as a continuing condition for eligibility. He drew attention to the erroneous application of rule 3(5) of the CENVAT Credit Rules, 2004 which is intended only when goods are removed as such and not to post-usage removal. It is further submitted that discontinuation of paid services does not forestall access to free channels as well as advertisements which conti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lause it is clear that the expression for use must mean intended for use . If the intention of the legislature was to limit the exemption only to such goods sold as were actually used by the undertaking in the generation and distribution of electrical energy, the phraseology used in the exemption clause would have been different as, for example, goods actually used or goods used . , has made it amply clear that the expression used is to be interpreted as intended for use and that CENVAT Credit Rules, 2004 did not envisage that discontinuation of use would disentitle them from the privileges of CENVAT credit availed. Relying upon the decision of the Hon ble High Court of Madras in Commissioner of Central Excise, Coimbatore v. Lakshmi Machine Works Ltd [2015 (321) ELT 577 (Mad)], it was argued that the reference to 4. The Tribunal, on a careful consideration of the case and upon hearing either side and carefully considering the decisions placed before it held in favour of the assessee. For better clarity, the relevant portion of the order, is quoted hereinbelow :- 5. I have carefully considered the records of the case and rival submissions. I find that the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... premises of the customers and never returned, he submits that the rendering of service that is not taxable does not suffice to entitle the appellant to CENVAT credit and that capital goods are entitled to credit only if used in providing output services for which reliance is placed on rule 6(4) of CENVAT Credit Rules, 2004 and the definition of exempted service in rule 2(e) of CENVAT Credit Rules, 2004. Discountenancing the scope of interpreting used as intended for use , it is argued that the circumstances in which the Hon ble Supreme Court was called upon to lay down the difference is not germane to the present proceedings and was made in an entirely different context. According to him, the decision of the Tribunal in Dish TV India Ltd v. Director General of Central Excise Intelligence [final order no. 50878/2019 dated 11th July 2019], being non-speaking, is not sufficient precedent. 5. Besides inviting our attention to the relevant statutory provisions, he attached special importance to the decision of the Hon'ble High Court of Gujarat in Commissioner of Central Excise, Surat I v. Neminath Fabrics Pvt Ltd [2010 (256) ELT 369 (Guj.)] which held that 20. Thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailment of credit. 7. We are not required to pursue the submissions of the appellant that the expression place of removal or use are relevant for determination of continued eligibility. The case of Revenue rests upon removal of equipment from the premises of the provider which, from a certain point in time, ceased to be used by them for rendering the output services and, therefore, justifying resort to rule 3(5) of CENVAT Credit Rules, 2004 for fastening consequent liability. The expressions employed in rule 3(5) of CENVAT Credit Rules, 2004 are removed and as such . The appellant is a provider of taxable services and the expression removal , as utilized in Central Excise Act, 1944, is germane only for determination of valuation with intent to subject manufactured goods to assessment which does not logically lend itself for applicability to a provider of output service. Moreover, the said expressions are neither qualified with grammatical variations and cognate expressions nor amenable for adoption within CENVAT Credit Rules, 2004. Instead, it would be appropriate for us to lay emphasis on the scheme of CENVAT Credit Rules, 2004 which was reframed to cover input servic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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