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2007 (8) TMI 558

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..... on 4-8-2005 to the extent it upholds the orders-in-original denying the Cenvat credit in respect of welding electrodes, asbestos joints packing etc., C.D. Coils (aluminium), compressor springs and tensions, sleeves, M.S. fabricated bends, blades and electrical parts, rock wool blended etc. 2. Several show cause notices were issued to the appellant proposing recovery of credit in respect of various items, which, according to the Revenue, were not covered under the definition of capital goods in terms of Rule 2(b) of the Cenvat Credit Rules, 2001/2002. The appellant was manufacturing sugar and molasses and had availed Cenvat credit in respect of these items. 3. In Excise Appeal No. 3421 of 2005, the Cenvat credit amounts of Rs. 463/- an .....

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..... ) E.L.T. 553 (Tri.-LB), when there was difference of opinion on the issue of admissibility of the credit. The learned authorized representative, on the other hand, contended that, all the noticees were issued under Rule 13(1) in which no mens rea was required and therefore, even for innocent wrongful availment of Modvat credit, penalty was imposable. 5. The issue, whether welding electrodes used in the maintenance and repairs of plant and machinery, can be said to have been used for the manufacture of excisable goods and whether these were eligible for Cenvat credit, stands concluded in favour of the Revenue by the decision of the Larger Bench of the Tribunal in the case of Jaypee Rewa Plant (supra) and the decision in Triveni Engineering .....

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..... the case, since during the relevant period, there were decisions taking divergent views, it was not a fit case for imposing penalty. Penalty was, therefore, set-aside in that case. Following this decision, in Excise Appeal Nos. 3115 and 3121 of 2005 decided on 2-8-2007, the Single Member Bench set-aside the penalty without going into the question of applicability of minimum penalty prescribed by Rule 13. 7. It is possible to take a view that, the benefit of conflicting views, for not imposing penalty, can be extended only in cases where mens rea is required involving intention to evade duty. In cases where such mesn rea is required, an assessee can take a defence that he was only following the view of the Tribunal which was in his favour .....

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..... sheets, which were items used to seal the leakage and flow of liquids during the process of manufacture from one equipment to another, were components and/or accessories of plant and machinery installed in the factory and the said item qualifies for Modvat credit as capital goods. In the present case, the asbestos gaskets are said to be used in boilers, sulphur furnace, quads, pans and pumps. Therefore, they can be considered as parts of the machinery. Hence, even after the omission of the word plant in the subsequent rules, the Cenvat credit would be admissible in respect of such asbestos gaskets without which the machinery cannot function. In CCE, Meerut-II v. Kisan Sahkari Chini Mills Ltd., reported in 2007 (78) RLT 820 (CESTAT-Del.) .....

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..... ify for being considered as capital goods. There was, therefore, no warrant for denying Cenvat credit in respect of the components in the nature of CR coils, MS fabricated bends/blades and electrical parts which were used in the factory of the manufacturers because these were components of the goods falling in sub-clause (i) being the machineries falling in Chapters 84 and 85, as stated by both the sides. CR coils are used for cladding insulation on pipes on various sugar manufacturing machinery. Electrical parts (rock wool) are also used for cladding insulation on sugar manufacturing machinery and pipes. These are, therefore, components or parts of machinery without which the machinery cannot function. As clarified by circular No. 276/110/ .....

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..... ich were used in the process of manufacture of the final product. Pipe fittings and flanges, which were used to carry sugar cane to various fields for processing of sugar, were held to be in the nature of material handling equipment eligible for modvat as capital goods in SIEL Sugar v. CCE, Meerut, reported in 1998 (99) E.L.T. 54. 10. For the foregoing reasons, denial of Cenvat credit in respect of welding electrodes is upheld, while setting-aside the penalty imposed in respect thereof. Denial of Cenvat credit in respect of asbestos jointing gasket sheets, CR coils, MS fabricated bends/blades and electrical parts (rock wool) and imposition of penalty in respect thereof cannot be sustained. The impugned orders are sustained only in respect .....

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