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TMI Blog2024 (6) TMI 581X X X X Extracts X X X X X X X X Extracts X X X X ..... e Rules of 2004 it would be open for the assessee to avail upto 50% of CENVAT credit in the financial year when the capital goods were procured. However, Rule 2 (a) of the Rules does not make it mandatory for the assessee to lodge a claim for Cenvat Credit only in the year of procurement of the machinery - in the facts and circumstances of the present case, there is no cogent basis for this Court to conclude that the assessee had illegally availed CENVAT credit for procurement of the capital goods pertaining to the years 2010-11 and 2011-12. Consequently, the order for recovery of the amount of CENVAT credit as affirmed by the learned Tribunal is held to be unsustainable in the eyes of law. The Commissioner (Appeals), Customs, Central Excise and Service Tax, Guwahati, was not correct in passing the order dated 25/11/2014 particularly in so far as allowing the demand for recovery of Rs. 15,95,332/- as CENVAT credit availed by the appellant on the capital goods is concerned. Appeal allowed. - HONOURABLE CHIEF JUSTICE MR. JUSTICE SUMAN SHYAM For the Petitioner : MR. D SARAF For the Respondent : Mr. S. C. Keyal, SC, Central Excise. JUDGMENT ORDER (CAV) (SUMAN SHYAM, J) Heard Mr. D. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t inspection that these facts come to light. As such, vide Show Cause notice dated 18.12.2012 the assesee was asked to show cause as to why the erroneous refund of excise duty amounting to Rs. 15,95,332/- sanctioned during the period from November 2007 to January, 2008 as well as the wrongful availment of CENVAT credit amounting to Rs. 22,93,920/- during the financial years 2010-11 and 2011-12 should not be recovered from the assessee. 5. Based on the proceedings initiated on the basis of the aforementioned show cause notice, the Additional Commissioner of Central Excise and Service Tax, Guwahati had passed Order-in-Original No. 39/Addl. Commr/BT/CE/ GHY/12-13 dated 29.05.2013 whereby, it was held that the amount demanded by the Revenue was not recoverable from the assessee under the law. Aggrieved by the order dated 29.05.2013, the Revenue went in appeal before the Commissioner (Appeals) Customs, Central Excise Service Tax (NER), Guwahati. By the order dated 25.11.2014, the Commissioner (Appeals) Customs, Central Excise Service Tax (NER) had interfered with the Order-in-Original dated 29.05.2013, thus allowing the appeal filed by the Revenue. The operative part of the order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e only because of non availment and consequently non-utilisation of Cenvat credit which was available to the appellant. 16. Hence Cenvat credit which were not availed and utilized on the last day of the month in which it was available but utilized in subsequent months and consequently paid higher amount in cash, the amount of the said non-availed credit is to be deducted from the amount to be paid as refund. 17. I find that the adjudicating authority has erred in not confirming the demand being the amount of credit not availed and utilized in the last day of the month in which credit was available. 18. In view of the above the appeal filed by the department is allowed. 6. Assailing the order dated 25.11.2014 the assessee i.e. the appellant herein had preferred Excise Appeal No. E/75264/15 before the Central Excise and Service Tax Appellate Tribunal (CESTAT), Kolkata, which was disposed of by the impugned judgment and order dated 02.05.2018. The operative part of the order dated 02.05.2018 is reproduced herein below for ready reference :- 6. The claim of the appellant that these facts were known to the jurisdictional authority does not impress; the refund claim did not contain any d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CC 606 Mr. Saraf has further argued that in order to avail CENVAT credit over capital goods, the only thing that the assessee would be required to satisfy is that the capital goods were utilized for manufacturing during the period of validity of the exemption notification. 10. By referring to another decision of the Supreme Court rendered in the case of KCP Ltd. vs. Commissioner of Central Excise, Chennai reported in 2014 (1) SCC 597 Mr. Saraf has argued that unless the capital goods are installed in the factory it would be wholly impermissible for his client to claim CENVAT credit on such capital goods for the year 2007-08. On such grounds the learned counsel for the appellant has prayed for setting aside the impugned judgment and order dated 02.05.2018, in so far as the same relates to upholding the demand of recovery of Rs. 15,95,332/- from the appellant, is concerned. 11. Responding to the above argument, Mr. S. C. Keyal, learned counsel for the respondent has submitted that the provisions of the Cenvat Credit Rules, 2004 more particularly, Rule 2 (a), makes it clear that the capital goods would have to be used in the factory for availing CENVAT credit. According to Mr. Keyal, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... job work basis, subject to the condition that the inputs are used in the manufacture of such final product by the job worker :] [ Provided further that the CENVAT credit in respect of inputs may be taken by the provider of output service when the inputs are delivered to such provider, subject to maintenance of documentary evidence of delivery and location of the inputs :] [ Provided also that the manufacturer or the provider of output service shall not take CENVAT credit after [one year] of the date of issue of any of the documents specified in sub-rule (1) of rule 9.] (2)(a) The CENVAT credit in respect of capital goods received in a factory or in the premises of the provider of output service [or outside the factory of the manufacturer of the final products for generation of electricity for captive use within the factory,] at any point of time in a given financial year shall be taken only for an amount not exceeding fifty per cent. of the duty paid on such capital goods in the same financial year : Provided that the CENVAT credit in respect of capital goods shall be allowed for the whole amount of the duty paid on such capital goods in the same financial year if such capital goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that CENVAT credit in respect of capital goods received in a factory or in the premises of the provider at any point of time in a given financial year shall be taken only for an amount not exceeding 50% of the duty paid on such capital goods in the same financial year. However, neither Rule 4 nor Clause 2B contained in the Notification dated 08.07.1999 creates any embargo in claiming CENVAT credit with regard to capital goods in any subsequent financial year, provided the same has been installed in the factory in such subsequent years. The only requirement under the Rules and the notification appears to be that there must be actual installation and use of the capital goods in the factory for availing CENVAT Credit. Our attention also could not be drawn to any provision of the Rules or the relevant notification which makes it mandatory for the assessee to install all capital goods in the year of procurement itself so as to avail CENVAT credit. 16. It is no doubt correct that as per Rule 2 (a) of the Rules of 2004 it would be open for the assessee to avail upto 50% of CENVAT credit in the financial year when the capital goods were procured. However, as noted above, Rule 2 (a) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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