TMI Blog2014 (10) TMI 807X X X X Extracts X X X X X X X X Extracts X X X X ..... r evidence indicating that at the time of receipt, the appellant had plans to use the machinery, in question, for manufacture of dutiable as well as exempted final products [like the machinery, without any modification, being capable of manufacture of both the dutiable final products (aerated/carborated waters) as well as exempted final products (MAAZA) alongwith declaration/intimation of dual use], they would be eligible for Cenvat credit. If there is no such evidence, it would have to be presumed that at the time of receipt, they had plans to use the capital goods, in question, only for manufacture of the fruit pulp based soft drinks (exempted final product) and it is only subsequently they decided to switch over to manufacture of dutiable final product (aerated waters) and in that event, in accordance with the Tribunal s judgment in case of Surya Roshni Ltd. (2003 (5) TMI 95 - CEGAT, NEW DELHI) and Spenta International Ltd. (2007 (8) TMI 25 - CESTAT, MUMBAI), they would not be eligible for Cenvat credit. Accordingly, the impugned order is set aside and the matter is remanded to the Commissioner for denovo decision, keeping in view our above observations. - Appeal No. 432 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the above-mentioned plant from the financial year 2006-2007. The Department was of the view that the appellant would not be eligible for the Cenvat credit in respect of the machinery installed for manufacture of fruit pulp based soft drink which is fully exempt from duty, as, since the installation of this machinery till 2005-2006, this machinery was exclusively used for manufacture of exempted final product. On this basis a show cause notice dated 13th March 2006 was issued to the appellant for recovery allegedly wrongly availed capital goods Cenvat credit amounting to ₹ 1,64,08,716/- alongwith interest and also for imposition of penalty on them under the provisions of Rule 15 (2) of Cenvat Credit Rules, 2004 readwith Section 11AC of Central Excise Act, 1944. This show cause notice was adjudicated by the Commissioner vide order-in-original dated 15/11/06 by which the above-mentioned Cenvat credit demand was confirmed alongwith interest and penalty of equal amount was imposed on the appellant under Section 11AC. 1.2 The appellant filed an appeal before the Tribunal against the order dated 15/11/06. The Tribunal vide final order No. 231/2008-EX dated 01/05/08 dismisse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reason only, the capital goods Cenvat credit in respect of the machinery, in question, has been taken, while no capital goods Cenvat credit had been taken in respect of the machinery installed in another plant, which was to be used exclusively for manufacture of exempted goods, that the manufacture of aerated waters (dutiable final products) was started in October 2006 after minor adjustments and software changes, that no modification has been done in the machinery, that from the very beginning, the intention of the appellant was to use this machinery for manufacture of dutiable final product as well as exempted final product and, therefore capital goods Cenvat credit would be admissible and the prohibition of Rule 6 (4) of Cenvat Credit Rules, 2004 would not be applicable, that earlier judgment dated 01/05/08 of the Tribunal had been passed on the basis of wrong assumption that the machinery, in question, as such cannot be used for manufacture of aerated waters except after modification, which is a wrong assumption as is clear from the certificates of the manufacturer of machinery, that for availing capital goods Cenvat credit, when a manufacturer does not exclusively uses a mach ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vely for manufacture of exempted final product or the same were being used for manufacture of dutiable final products, that the judgment of the Tribunal in the case of CCE, Indore vs. Surya Roshni Ltd. (supra) has been affirmed by the Apex Court vide judgment reported in 2003 (158) E.L.T. A273 (S.C.) by which the appeal filed by the appellant was dismissed, that the Tribunals judgment in the case of CCE, Indore vs. Surya Roshni Ltd. (supra) has been further affirmed by Larger Bench judgment of the Tribunal in the case of Spenta International Ltd. vs. CCE, Thane reported in 2007 (216) E.L.T. 133 (Tri. - LB), wherein the Tribunal has held in clear terms that eligibility of the capital goods for Cenvat credit in respect of any capital goods received by an assessee is to be determined with reference to the dutiability of the final products on the date of the receipt of the capital goods and that in view of the above submissions, there is no infirmity in the impugned order. 5. We have considered the submissions from both the sides and perused the records. 6. The undisputed facts are that the capital goods, in question, had been received by the appellant in their Bareilly unit dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... financial year. From a perusal of this sub-Rule, it is clear that capital goods Cenvat credit would be admissible when the capital goods are used either only for dutiable final product or for dutiable as well as exempted final product. The capital goods Cenvat credit is also admissible when a manufacturer is availing full duty exemption based on the value or quantity of the goods cleared in a financial year, in which case, while initially the manufacturer will be availing full duty exemption (for some months or for several financial years at a stretch) but subsequently at some point of time when he crosses the threshold limit for exemption, his final product becomes dutiable and in such a case, even during the period of full exemption, the manufacture can take capital goods Cenvat credit which he can utilize when this final product becomes dutiable. A question arises as to when capital goods are used for manufacture of dutiable as well as exempted final product, whether for availing capital goods credit, the dutiable as well as exempted final product have to be manufactured simultaneously. In our view this is not necessary, and Cenvat credit would be admissible even if the capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (exempted goods) as well as for manufacture of aerated waters (dutiable goods) and for this reason only, they had availed capital goods Cenvat credit, while initially using the machinery only for manufacture for the exempted final product. This aspect has to be verified on the basis of records. If the appellant at the time of receipt of the capital goods during September 2004 to August 2005 period, had filed any declaration to the Department or had sent some letter to the Department intimating that they would be using this machinery for manufacture of dutiable final product (aerated waters) as well as exempted final product (the fruit pulp based soft drinks), or there is any other evidence indicating that at the time of receipt, the appellant had plans to use the machinery, in question, for manufacture of dutiable as well as exempted final products [like the machinery, without any modification, being capable of manufacture of both the dutiable final products (aerated/carborated waters) as well as exempted final products (MAAZA) alongwith declaration/intimation of dual use], they would be eligible for Cenvat credit. In this regard, as per the directions of Hon ble Allahabad High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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