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2019 (11) TMI 485 - AT - Central ExciseCENVAT Credit - credit of capital goods on TG-2 denied - Rule 6(4) of CCR 2004 - HELD THAT:- Rule 6(4) of CCR 2004 prohibits availment of Cenvat credit on capital goods used exclusively for manufacture of exempted goods. In other words, if they are used for both manufacture of dutiable products and exempted products, the Cenvat credit on capital goods can be availed - In the present case, TG-2 has been installed in an island mode exclusively for supply of power to the grid as per the PPA. In fact, the clauses in the PPA indicate that there will be two TG sets and TG-2 has to run in an island mode and is meant only for supply of power to the grid. There is nothing on record to show that PPA entered into has been modified and the clause requiring TG-2 to be in an island (isolated) mode has been modified to enable it to be interconnected with the sugar plant for use in the manufacture of sugar. Considering the contradictory pieces of evidence both made available by the appellant, it is found that the PPA is more authentic document. Even if the appellant has connected TG-2 with their sugar plant, for a short time in violation of the agreement, that does not make it capital good used in manufacture of sugar. There is also no evidence to substantiate that during the short interval when such connection is made, whether any excisable products have been manufactured. Extended period of limitation - Penalties - HELD THAT:- In this case, when the appellant has consciously entered into an agreement with APTRANSCO indicating that TG-2 set is to be isolated from the plant and to be used exclusively for generation of electricity to be whole out to the grid, they should not have taken the Cenvat credit on capital goods under Rule 6(4). They have taken ineligible Cenvat credit with an intent to illegally avail Cenvat credit and to that extent evade payment of duty - the extended period of limitation has been correctly invoked and also the penalties have been correctly imposed upon the appellant. Appeal dismissed - decided against appellant.
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