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TMI Blog2024 (4) TMI 626X X X X Extracts X X X X X X X X Extracts X X X X ..... d the characteristics of immovable property. Hence, the same cannot be treated as manufacture, and has to be viewed as fabrication and erection of a system entirely fixed to the earth. The Paint shop thus cannot be considered as excisable goods. The appellant is not eligible for credit under the category of capital goods. Show Cause Notice dated 18.02.2014 was issued to the appellant for the period 31.03.2009 to 31.03.2012 invoking the extended period and proposing to deny the credit availed on capital goods. The Show Cause Notice proposed to recover the wrongly availed credit along with interest and also for imposing penalties. After due process of law, the original authority vide order impugned herein confirmed the demand, interest, and penalties. Aggrieved by such order, the appellant has preferred this appeal. 2. The Ld. Consultant Shri. R. Rajaram appeared and argued for the appellant. It is submitted that the appellant setup a Paint shop within the factory for painting the cars manufactured by them. The painting of cars is an integral activity of manufacture of finished goods. They procured various machinery, parts and components for setting up of the Paint shop and availed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods credit on the structural used in paint complex. Further, in the case of M/s. Honda Motorcycle & Scooter India Pvt. Ltd., Vs. CCE, Delhi III 2015 (5) TMI 285 CESTAT New Delhi has considered similar issue and held that as there is no dispute that the items fall under Chapter 85 which are covered by the definition of capital goods, the CENVAT credit cannot be denied. In the said case the Tribunal relied on the decision in the case of M/s Omax Auto Ltd., Vs. CCE Delhi III 2013 (8) TMI 301 CESTAT New Delhi, wherein the Tribunal distinguished the decision of Apex court in the case of Commissioner of Central Excise, Mumbai Vs. Josts Engineering Co Ltd., 2002 (146) ELT (29) TMI 107 Supreme Court (supra). 4. The Ld. Counsel put forward arguments on the ground of limitation. It is submitted that the entire demand has been made by invoking the extended period of limitation. However, in para 10 of the Show Cause Notice there is no specific allegation that the appellant has suppressed facts with intend to evade payment of duty. It is merely stated that the availment of credit would not have come to knowledge of department if the verification was not done by the department during the plant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the nature of spare, components of machinery which are already used in a factory. Therefore, the credit is not eligible under the category of capital goods. To avail CENVAT credit on inputs, the final product manufactured should be dutiable and not exempted. Here, the final product manufactured, using the impugned inputs, is the paint shop. Only if the paint shop is a dutiable machinery, and further if used in the manufacture of final products the input credit would be eligible. The paint shop is not a machinery but an immovable property. Hence, the credit has been correctly denied by adjudicating authority. 8. The arguments put forward by the appellant on the ground of limitation was countered by the Ld. AR by submitting that the wrongful availment of credit would not have come to the knowledge of the department, if the department had not verified the accounts of the appellant. There is suppression of facts and the extended period is invokable. The Ld. AR prayed that the appeal may be dismissed. 9. Heard both sides. 10. The issue to be considered is whether the appellant is eligible for credit on impugned items under the category of capital goods. The annexure to the SCN gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ensuring vibration free movement)'. 10.2 It can be seen that this circular clarifies about goods manufactured at site to be dutiable etc. In the present case, the appellant does not urge that 'paint shop' as such is a capital good and is excisable. They have not taken credit on paint shop. They have availed credit on various items which have been used to setup paint shop for facilitating the activity of carrying out painting of finished products. The items mostly fall under Chapter 83,84,85,90. Few items fall under Chapter 73 & 76 which were used for structural supports for erection of these machines. The entire set up is called the paint shop. 11. In the case of M/s. Hyundai Motors India Ltd., Vs. CCE & ST LTU Chennai and vica-versa 2015 (12) RMI - 940 - CESTAT Chennai (supra) the Tribunal considered the issue of availment of cenvat credit on items used for setting up paint shop and held that credit is eligible. In the case of M/s. Omax Auto Ltd., Vs. CCE, Delhi - III 2013 (8) TMI 301 -(CESTAT New Delhi) it was held that structures used in paint complex which is an integral part of the manufacture of motor vehicles used in the fabrication of paint complex is eligible for credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the assembly and erection of paint shop. It is not in dispute that these materials were actually utilized in the assembly and erection of paint shop only and not utilized elsewhere as components or spares of machinery that were used by NMPIL in the manufacture of their final products. So the impugned materials were used as inputes in the assembly and erection of paint shop and not utilized as capital goods i.e. spare/components of the machinery already in use in the factory as claimed by the assesseee while taking credit. From the legal provisions quoted above, it is clear that , to take cenvat credit on inputs, the final products manufactured should be dutiable and not exempt. Here the inputs were used in the assembly of paint shop. The paint shop is to be dutiable machinery and further it should be used in the manufacture of final products of NMPIL. In order to avail input credit on the materials that were used in the manufacture of the machinery, whereas, the paint shop is found to be not a machinery but an immovable property which is not excisable. 13. It can be seen that the original authority has relied upon the decision in the case Commissioner of Central Excise, Mumbai V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mand has been raised on the basis of figures as reflected in the books of accounts maintained by the appellant. There is no positive act of suppression established by the department against the appellant. In the case of Pushpam Pharmaceuticals Vs CCE, Bombay 1995 (78) ELT 401 SC (supra) the Hon'ble Supreme Court while considering the issue of invocation of extended period observed that when facts are known to both sides there is no ground to invoke the extended period. 3 Law about excisability of exempted goods was settled by this Court in Wallace Flour Mills Co. Ltd. v. Collector of Central Excise, Bombay, Division III - 1989 (44) E.L.T. 598 (SC) = (1989) 4 SCC 592. Till then conflicting decisions were rendered by different High Courts and Tribunal and it was not settled whether the turnovers of assessable and exempted goods were liable to be clubbed for determining liability. Therefore, two questions arise whether the appellant was bound in the state of uncertainty in law to include the turnover of the two items and if it failed to do so then it amounted to suppression of fact and second whether it was the duty of appellant to keep the Department informed about the turnover of ..... 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