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2018 (11) TMI 302 - HC - Central ExciseMODVAT/CENVAT Credit - inputs/capital goods - machines/ equipments of a sugar plant - Scope of SCN - reliability on precedent decisions - Held that:- On plain reading of the Rule 2(b) and 3 of the Credit Rules, 2002, it is clear that the capital goods in the present facts had been received in the Respondent's factory and used in the factory. Thus, the duty paid on this capital goods is available to the Respondent, to be taken as CENVAT Credit as it is duly supported by appropriate cenventable invoices. It is not the case of the Revenue that the machines/ equipments are not relating to manufacture of final products. The only case of the Revenue is that these machines/ equipments loose their identity as they became a part of the set up plant and have to work along with other machines / equipments to manufacture final products. The submission of the subject equipment/ machines loosing its identity in the sugar plant is contrary to the show cause notice as it proceeds on the basis that it is capital goods, as it restricts the allowance only to 50% of the credit for each year of use. Rule 3 of the CENVAT Credit Rules, 2002 requires the receipt of the capital goods in the factory for use in or in relation to manufacture of final products. The subject equipments / machines are undoubtedly used in or in relation to the manufacture of final products. Thus, the literal rule of interpretation when applied to the CENVAT Credit Rules, 2002 would entitle the Respondent to the benefit of CENVAT Credit on the duty paid equipment / machines (capital goods). On an identical issue arose before the Tribunal in JSW Ispat [], the machines/ equipments were used to set up/ assemble an oxygen plant i.e. immovable property in the factory of the assessee. This oxygen plant was issued to manufacture the excisable goods i.e. manufacture ingots falling under Chapter 72 of the Excise and Tariff Act, 1985. Nevertheless, the Tribunal allowed of CENVAT Credit of duty paid on machines / equipments used in setting up a plant, to be utilised on payments of duty on the final products viz: iron and steel ingots cleared by the assessee, therein - no distinction in facts and law, is pointed out by the Revenue, which would justify the inapplicability of this case to the present facts. We are unable to understand why the Revenue is agitating this issue before us when in another case, decided by the Tribunal, raising an identical issue, the decision of the Tribunal has been accepted - Rule of law prevailing in this country is one of the key elements to determine ease of doing business. The Rule of law inter alia ensures absence of arbitraries in taking decisions, which would mean equal applicability of law to all concerned. Therefore, an issue as raised herein (being a pure question of law), would have all India implication not only before the Court but at various levels of adjudication under the Act. Therefore, where at the highest level i.e. at the level of the Central Board of Indirect Taxes and Customs, the Revenue has accepted a particular view on a pure question of law, then in all such cases, the Revenue should withdraw the show cause notices and / or pending proceedings. Appeal dismissed - decided against Revenue.
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