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2018 (9) TMI 20 - AT - Central ExciseCENVAT credit - Capital Goods - whether under these circumstances the assessee is entitled to the benefit of capital goods CENVAT credit on the disputed Line 3 of the plant? - Held that:- A plain reading of the Rule 6(4) of CENVAT Credit Rules, 2004 shows that no credit is admissible on capital goods used exclusively in manufacture of exempted goods or in providing exempted services. There is no requirement of the capital goods to be used any specified extent in manufacture of dutiable goods. The Rule, as it is framed, entitles an assessee to claim credit on capital goods even if the machinery is used to manufacture a single unit of dutiable goods. This appears unfair but equity has no place in matters of taxation and we have to follow the law as it is drafted. Whether the entitlement of capital goods should be decided based on how they are used at the time of receipt of capital goods? - Held that:- In this case, the plant was capable of manufacturing both exempted and dutiable products and the appellants declared their intention to manufacture both using Line 3. They, however, never used machinery for the first time of two years to manufacture dutiable goods at all. Thereafter, the appellants used machinery to manufacture of dutiable goods for 19 days. Thus, it cannot be said that the goods are used exclusively for manufacture of exempted products - the assessee is entitled to the benefit of CENVAT credit on capital goods on the Line 3 of their plant as it was declared to be meant for manufacture of both dutiable and exempted products and used for manufacture of dutiable products although for a mere 19 days. Demand set aside - appeal allowed - decided in favor of appellant.
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