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2018 (3) TMI 604 - AT - Central ExciseCENVAT credit - common inputs used in the manufacture of both dutiable and exempted final products - Rule 6 (3) (b) of Cenvat Credit Rules 2002/2004 - main argument made by the appellant is that the traction motor and vacuum circuit motor were subjected to testing in the factory of the appellant; that the main items are part of the larger equipment cleared for the MRTS project; that the activity/ process carried out on these items amount to "manufacture" and hence for all these reasons, there has been no removal of cenvat credit availed goods as such. Held that: - The disputed items namely tractor motors and vacuum circuit breakers are, undoubtly, manufactured in the other factories of the appellants who cleared them on payment of duty to the appellant. Appellant in turn avails cenvat credit on these items - we are not able to identify any process or processes carried out by appellant which bring about lasting or permanent change in the characteristics or functionality of the impugned items. It is also not the claim of the appellant that once the process of testing and inspection is complete, the procured items would no longer be called "Traction Motor" and "Vacuum Circuit Breaker" and that they would be influenced by any other nomenclature. The adjudicating authority has correctly analysed various issues involved and has come to a reasoned conclusion that the processes carried out by the appellant will not amount to a manufacturing process. Extended period of limitation - Penalty - Held that: - It is not the case that appellant had sought any clarification from the department on whether the manner in which they intend to discharge duty liability on the impugned items was correct as per law. Appellant not only did not disclose the activities done by them on these inputs but at the same time declared the clearances of the items as "manufactured products" in the monthly returns which is tantamount to misdeclaration and suppression of facts - invocation of extended period of limitation for demand of duty liability is very much in order - penalty also upheld. Appeal dismissed - decided against appellant.
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