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TMI Blog2023 (7) TMI 427X X X X Extracts X X X X X X X X Extracts X X X X ..... d for removal of particles and Sulphur Dioxide mist from tail gas. The Respondent entered into contract with Thermax Ltd. (in short referred to as 'the contractor') for supply of materials for building of TGT Plant, including complete electrical and instrumentation and all other materials as well as spares at the factory site. The Respondent also entered into separate contracts with the Contractor for preparing engineering, technical performance specification for imported equipments and placed work order for erection, commissioning and installation of TGT Plant at the site inside the factory premises of the Respondent. Accordingly, the Contractor placed orders with various suppliers for parts/components required for installation of the TGT Plant which were directly consigned to the Respondent's factory premises. The parts/components of capital goods were received at the factory premises under duty paying invoices issued in the name of Respondent. Upon complete commissioning and inspection of functional TGT Plant, the same was handed over by the Contractor to the Respondent. 4. A Show Cause Notice dated 8.11.2007("impugned SCN") was issued to the Respondent, proposing to deny and r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quent to the dismissal of Department's Civil Appeal, the impugned show cause notice was retrieved from Call-book for adjudication. 6. The Additional Commissioner vide Order-in-Original dated 27.7.2020 confirmed the denial of Cenvat Credit amounting to Rs. 58,16,363/- along with interest and imposed penalty equal to the confirmation of credit demand. 7. On appeal by the Respondent, the Commissioner (Appeals) vide the impugned order dated 16.12.2020 set aside the entire demand in favour of the Respondent. The relevant portion of the order is reproduced below: 1. the machineries, components, spares and accessories used in installation of TGT Plant is directly used in the process of manufacture of dutiable final product i.e. lead, zinc etc. The TGT Plant assembled at site, is not the final product of the Respondent, but the capital goods had been used for manufacture of dutiable final products. Therefore, the credit availed on such parts/spares/accessories of TGT Plant by the Respondent, qualify as capital goods and is admissible. 2. Identical issue raised in Aditya Cement has been settled in favour of assessee vide CESTAT's Final Order dated 6.3.2002 which was upheld by Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f final product to take credit of excise duty on "paid on any input or capital goods received in the factory of production of final product". In the present case, there is no dispute that the components/parts of TGT plant was received at the factory premises, under duty paid invoices, issued in the name of the respondent. The department has not disputed that the said plant had been manufactured out of such parts/spares/components and this plant was used in the manufacture of the dutiable, final product of zinc and lead. He relied on the following judgements to buttress his case:- i) Gujarat Ambuja Cement- 2001(130) ELT 129 (Tri-Del) ii) CCE, Mumbai -II v NRC Ltd - 2001(135)ELT 1012(Tri Mum) iii) Aditya Cement Ltd vs CCE Jaipur iv) Vasavadatta Cement vs CCE, Belgaum- 2002(148)ELT 1046 (Tri- Bang) 11. The learned counsel stated that the ownership of goods is irrelevant to decide the admissibility of credit. He added that the factum of receipt of capital goods in the factory of the respondent has not been disputed in the appeal. Further, the identity of the goods qualifying as capital goods has also not been disputed by the department. The property in the goods rests with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This Rule states that 'the Assistant Commissioner may, on sufficient cause being shown to him, allow the manufacturer to take credit of the specified duties on capital goods paid by a contractor or job-worker who undertakes the job of initial setting up, renovation, modernisation or expansion of the plant on behalf of the manufacturer of final products, subject to such procedure and conditions as may be specified by the Commissioner or the Central Board of Excise and Customs'. The DG sets in question are power plants. WDIL was engaged for initial setting up of this captive power plant in the factory of GACL. Parts, components and accessories of DG sets are capital goods in terms of the definition given in Rule 57-Q (covered by Sl. No. 5 of the Table to the Rule). Even if the DG sets which have been manufactured out of these parts and components and accessories, have not discharged duty liability, there is no bar to availment of Modvat credit duty paid on such parts, components, accessories. A comparison of the provisions of Rules 57-D(2) and 57-R(2) will clarify the above position. Rule 57-D(2) states that credit of specified duty shall be denied in case inputs are used in the man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it on account of the excise paid on the components, spares and accessories of the goods exempt. A DGPP is a capital good. If duty is paid on the components used in its manufacture, we see no reason why the manufacturer cannot claim Modvat credit for such duty." 12.2 In a similar decision in the case of Commissioner of Central Excise, Mumbai-III vs NRC Ltd. [2001(135)ELT 1012(Tri-Mum)] the Tribunal held as follows: "4. The grounds in the appeal run as follows. The assembly of the diesel generating sets from its components amounts to manufacture. The generating set so manufactured is exempted from duty. Therefore, by application of Rule 57R(1), credit cannot be taken of the duty paid on capital goods used exclusively in the manufacture of an exempted final product. The provisions of Rule 57T(7) (which the Tribunal in Gujarat Ambuja Cememt Ltd. v. CCE relied upon) will not apply because the fabricator of the generating set had not undertaken any initial setting up or modification, renovation or expansion of the plant. 5. It is no doubt true that the immediate result of assembly or putting together of the alternator and the diesel engine resulted in the emergence of a diesel gener ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n out component in any of the machinery in its factory, it could be argued that the component it is not directly used in the manufacture of the final product. The component can also be said to be used to manufacture a machine in which it will be fitted as a replacement, that machine already exists even in the absence of the component. Therefore, none of the components would ever be continued to be used in the manufacture of any commodity and therefore could not be capital goods. The absurdity of this conclusion destroys the merits in the submission. 7. The second ground is also equally without merit. No doubt, the manufacturer of the generating set was M/s. Wartsila NDS (India) Ltd. or M/s. Modi Mirrless Blackstone Ltd. However, the credit that is sought to be taken is not the credit of the duty payable, if any, on the generating set. The credit is sought to be taken on the components of the generating set. Here again, the manufacturer is some one other than the person who has taken the credit. Now if the condition is that it is only the person who paid should take the credit, it will mean that credit will only be available on capital goods, if they are solely utilised in the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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