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2023 (5) TMI 236 - AT - Central ExciseEligibility to avail credit of duties of central excise - components and parts cleared to the appellant for erection and commissioning of ‘capital goods’ in the refinery of the appellant at Ambalamugal, Kochi - HELD THAT:- The decision of the Hon’ble Supreme Court, in CCE, INDORE VERSUS VIRDI BROTHERS & ORS. [2006 (12) TMI 3 - SUPREME COURT] and continuing the stand in several others in disputes on excisability of equipment, assembled on-site for embedding in the earth, under Central Excise Act, 1944, has held such, being immoveable property, to be excluded from the ambit of ‘goods’ intended by section 3 of Central Excise Act, 1944 and, therefore, not amounting to manufacture. The circular cited in the orders of the lower authorities, and referred to by Learned Authorized Representative, also issued under section 37B of Central Excise Act, 1944 identifies facets of manufacture of goods that crystallize duty liability under Central Excise Act, 1944; it does not address anything beyond uniformity of approach, in the light of judicial exclusion of activity as manufacture, to dutiability of on-site erection and certainly not to the scheme of CENVAT credit in such situations. The context of the cited decision and the circulars is, thus, limited to dutiability of such assembled equipment. There is no allegation that the goods procured for the erection of the oxygen plant and the boiler at the refinery of the appellant have not been subjected to duties of central excise or that they were not utilized in the erection of ‘capital goods’ to be used for manufacture of excisable goods. Intuitively, eligibility for taking credit of duty liability discharged on these goods received in the factory is not to be denied. The error that lower authorities have fallen into is in entertaining the conviction that ‘capital goods’ has a connotation which, upon ‘embedding in the earth’, is excluded from the ambit of Central Excise Act, 1944. Indeed, the statute, concerned with taxability on ‘manufacture’ of ‘goods’, does not acknowledge ‘capital goods’ at all and it is common knowledge that ‘capital’, as appellation, has more to do with accounting treatment than manufacture - As duty discharged on ‘capital goods’, in the manner defined for the purposes of CENVAT Credit Rules, 2004, is entitled to be availed as credit, and as it is not ‘capital goods’ in the form conceptualized by the lower authorities that is required to have discharged duty liability to be eligible but the parts thereof deployed for such assembly and installation, there is no valid ground for recovery of such credit. The notice has not made any other proposition for ineligibility to avail such credit - the impugned order does not sustain - Appeal allowed.
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