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TMI Blog2023 (7) TMI 764X X X X Extracts X X X X X X X X Extracts X X X X ..... ny view of the matter the show cause notices do not allege that the raw materials on which CENVAT credit had been taken had not been utilized for fabrication of capital goods . The Commissioner, therefore, could not have examined this issue - It is, therefore, not possible to sustain the finding recorded by the Commissioner that the items in question have not been used for fabrication of capital goods . Penalty - HELD THAT:- The imposition of penalty upon the Gautam Goel cannot also be sustained. Even otherwise, the learned counsel for the appellant is justified in asserting that there was no evidence on record to suggest that he was involved in the day to day affairs of the appellant, particularly with regard to availment of CENVAT Credit. Appeal allowed. - EXCISE APPEAL NO. 314-315 OF 2010 with EXCISE APPEAL NO. 323-324 OF 2010 - FINAL ORDER NO’s. 70002-70005/2023 - Dated:- 18-7-2023 - MR. DILIP GUPTA, PRESIDENT AND MR. P. ANJANI KUMAR, MEMBER (TECHNICAL) Shri Aalok Arora, Advocate for the appellant. Shri Santosh Kumar, Authorized Representative for the Respondent ORDER Excise Appeal No. 314 of 2010 has been filed by M/s Dhampur Sugar Mills Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the items mentioned in ANNEXURE-I to this notice neither fall under one of the specified chapter or heading mentioned in Rules 2 (a)(A) (i) of CENVAT Credit Rules, 2004, nor do they fall under any of the other clause of the said Rule. It therefore, appears that the said items do not conform to the definition of Capital Goods, therefore, no CENVAT Credit appears to be admissible to the party on the said items . Thus, the party have violated the provisions of Rule 2 and 3 of CENVAT Credit Rules, 2004 by wrongly taken and utilized the inadmissible Cenvat credit of Rs. 1,44,37,976/- (Cenvat duty Rs. 1,41,55,563/- + Education Cess Rs.2,82,413/-) on these items during the period from October'06 to March'07 in as much as they have availed the inadmissible Cenvat credit under Rule 3 of CENVAT Credit Rules, 2004 on the items which do not covered in purview of the definition of the Capital Goods as defined under Rule 2 (a) (A) of the CENVAT Credit Rules, 2004. 5. ***** 6. Further, Shri Gautam Goel, Managing Director of M/s Dhampur Sugar Mills Ltd., Dhampur, Distt.- Bijnor is looking after the works relating to Finance and Central Excise. His active involvement in the inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, components and accessories, irrespective of their classification, would be covered by the definition of capital goods . The appellant also placed reliance on the decisions of the Tribunal in its own matter that held that the appellant would be entitled to avail CENVAT credit on these items. 10. The Commissioner, however, by order dated 14.10.2009, did not accept the contentions advanced by the appellant and observed as follows:- I do not find any reason to place the goods on which the party has taken Cenvat credit, anywhere in the category (i) to (vii) mentioned as above. Therefore these goods do not qualify to as capital goods, in view of the above said definition, and hence the Cenvat Credit on these goods is not admissible as capital goods. The Honorable Supreme Court of India, in case of CCE Coimbatore Vs. Jawahar Mills Ltd (2001(132) E.L.T.3 (S.C.)] held that an item falls within the definition of capital goods would depend upon the use it is put to. Therefore, it is very vital to ascertain the use of the goods on which Cenvat credit taken i.e. whether the goods used in fabrication of capital goods or in repair maintenance of capital goods. I have gone through t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods used for fabrication of capital goods, and the record where so fabricated capital goods were entered and further issued for captive use or how much goods were used in the repair maintenance of capital goods and how much for fabrication of capital goods. Therefore, without any such correlation, the Cenvat credit can not be allowed to the party who merely took Cenvat credit on all the goods purchased by them and did not maintain any documentary evidence about specific use of the said goods, made them liable for penal action . The case laws referred by them are not squarely applicable in the facts circumstances of the case. I do not accept the plea of the party on demand of interest as the rule 14 of Cenvat credit rules 2004, read with Section 11 AB of Central Excise Act, 1944, had clear provisions in this regard, whether wrongly taken Cenvat credit utilized or not. The case laws referred by them are not applicable. I find that Sh. Gautam Goel who looks after the excise work also did not make necessary arrangement to up keep the records regarding the said goods on which the party took Cenvat credit. I do not find any proper reason in his explanation and hence he is liab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that the goods in question do not qualify as capital goods as they were not used in the factory for the manufacture of the final product. 13. The submissions advanced by the learned counsel for the appellant and the learned authorized representative appearing for the department have been considered. 14. To appreciate the contentions, it would be appropriate to first reproduce rule 2(a)(A) of the CENVAT Rules, as it existed at the relevant time. 15. Rule 2(a) defines capital goods as under - 2(a) Capital Goods means- (A) The following goods, namely (i) all goods falling under Chapter 82, Chapter 84, Chapter 85, Chapter 90, heading No. 68.02 and sub-heading No. 6801.10 of the First Schedule to the Central Excise Tariff Act, (ii) pollution control equipment; (iii) components, spares and accessories of the goods specified at (i) and (ii); (iv) moulds and dies, jigs and fixtures; (v) refractories and refractory materials; (vi) tubes and pipes and fittings thereof; and (vii) storage tank, used- (i) in the factory of the manufacturer of the final products, but does not include any equipment or appliance used in an office; or (ii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue slips which show the names of the items, quantity and place of use. 19. Explanation 2 to rule 2 (g) of the CENVAT Rules provides that input includes goods used in the manufacture of the capital goods which are further used in the factory of the manufacturer. Thus, if the items in question were used in the expansion of factory, CENVAT credit would be admissible on such items. The items were used in the fabrication of machine, machinery, accessory and support structure necessary to keep the heavy machinery/equipments like boiler, turbine, cane carrier, bagasse etc., to manufacture the final product. 20. In this connection, it would be useful to reproduce the letter dated 03.11.2009 submitted by the appellant to the Commissioner in response to the show cause notice, wherein a certificate from the Chartered Engineer regarding use of the items involved in the capital goods used in the manufacture of finished goods was produced. The said letter is reproduced below:- We had already submitted through our additional submission that the amount had not been taken or utilized by us for the payment of duty on finished goods. It is submitted that neither penalty nor interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.2008 sent by the appellant to the Superintendent of the Central Excise, Range Dhampur in connection with the letter dated 07.02.2008 and the same is reproduced below: The Superintendent, Central Excise, Range-Dhampur Dhampur Subject: CENVAT Credit taken on Capital goods during the period April 07 to September 07. Dear Sir, This is with reference to your letter C.No. 20-CE/Misc./DSM Sugar/DPR/04/99 dated 07.02.2008. The aforesaid items were used as Input to Capital Goods in the machinery namely Electrostatic Precipitator of 170 Ton Boiler, Body of 170 Ton Boiler, Pipe Lines of Cooling Tower of 170 Ton Boiler, E.O.T. Crane of 30 M.W. Turbine, I.D. Fan of 170 Ton Boiler, base Frame of Cooling Tower of 170 Ton Boiler and 30 M.W. Turbine, Oil System Section of 30 M.W. Turbine, Control Panel of 30 M.W. Turbine, D.N. Piant Tank, HCL Tank of R.O. Plant, F.D. Fan of 170 Ton Boiler, Body of CIGAR of Boiling House Section, Evaporator Body of Boiling House etc. and duly verified by the Chief Engineer are enclosed herewith as desired in your aforesaid letter. You can verify the uses by visiting our factory. You are, therefore, very kindly requested to allow the Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... achines, machinery, parts and accessories thereof fabricated and the use of items in question duly certified by Chartered Engineer to the Original Authority. We note that the appellant submitted before the Original Authority that Welding Electrodes used in fabrication of machines and that of support structure. On hearing both the sides and on perusal of the facts on record we note that the issue is no more res-integra and the same has been decided by this Tribunal in appellant's own case through Final Order No. 70814-70817/2018 dated 07/012/2017. For the purpose of ready reference, we reproduce the findings of said Final Order recorded in Para 7 as follows:- 7. Having considered the rival contentions, we find that the appellants had led evidence before the Courts below that the items in question like Welding Electrodes, MS electrodes, MS plate, Shape and Section etc have been utilised for fabrication of mostly Capital Goods. The appellants had filed Annexure-A to the reply to show cause, wherein they have explained item-wise usage and stated that the same has been used in fabrication of accessory to boiler, evaporator, clarifier and other machinery or its part in the factory ..... X X X X Extracts X X X X X X X X Extracts X X X X
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