TMI Blog2014 (7) TMI 233X X X X Extracts X X X X X X X X Extracts X X X X ..... r in the impugned order is accepted, no capital goods Cenvat Credit can be allowed in respect of any item of capital goods enumerated in Rule 2(a) of the Cenvat Credit Rules, as all the items - various items of machinery covered under Chapter 84, 85 & 90 of the Tariff, pipes & tubes, tanks, pollution control equipments refractories etc. have to be installed in the factory before being put to use and after installation, the same would become fixed to earth plant. - prima facie case is in favor of assessee - Stay granted. - Appeal No.56733/2013-EX(DB) - Stay Order No. S/51219/2014-EX(DB) - Dated:- 2-4-2014 - G Raghuram and Rakesh Kumar, JJ. For the Appellant :Sh B L Narsimhan, Adv. For the Respondent: Sh Amresh Jain, (AR) JUDGEMENT Per: Rakesh Kumar: 1.1. The appellant are a Public Sector Undertaking, engaged in the manufacture and marketing of petroleum products. The dispute in this case is in respect of their refinery at Panipat where they manufacture various petroleum products falling under Chapter 27 and also goods covered by Chapter 39 of Central Excise Tariff, Act 1985. During period from July'07 to March'12 the appellant had taken Cenvat Cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utilized the Cenvat Credit of ₹ 58,13,624/- in respect of Cenvat Capital Goods to which they were not eligible, another Show Cause Notice dt. 02.11.12 was issued to them for recovery of the above amount of Cenvat Credit along with interest thereon and also for imposition of penalty. Both the Show Cause Notices were adjudicated by the Commissioner, Central Excise, Rohtak vide order-in-original No.23-24/CE/Commr./DM/RTK/2012, dated 31.12.12 by Commissioner Central Excise, Rohtak by which he confirmed the Cenvat Credit demand of ₹ 367,14,65,992/- and 58,13,624/- against the appellant along with interest thereon under section 11AB and besides this, imposed penalty of ₹ 367,72,79,616/- on the appellant company under Rule 15(2) of the Cenvat Credit Rules, 2002 read with Section 11AC of Central Excise Act., 1944. In this order the Commissioner has held that the capital goods in respect of which the Cenvat Credit, in question, has been taken by the appellant, had been brought by their contractors and used in execution the EPCC projects on turnkey basis which resulted in coming into existence of the plant, which was immovable in nature and could not be considered as excis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in terms of the EPCC contracts given to various contractors for various projects, the material received in the factory of the appellant are to be the property of the appellant and the contractor hold them in trust for the appellant company and in view of this, the finding of the Commissioner that at the time of receipt of goods in the factory, the same were property of the contractors is factually incorrect, that in any case the Cenvat Credit demand is time barred, as in the circumstances of the case and also in view of the fact that the appellant are Public Sector company run by the Govt. of India, it would be absurd to allege wilful suppression of the facts and fraud with intent to evade the payment of duty, that the impugned order is not sustainable at all, that the appellant company have strong prima facie case in their favour and hence the requirement of pre-deposit of Cenvat Credit demand, interest thereon and penalty may be waived for hearing of the appeal and the recovery thereof may be stayed till the disposal of the appeal. 4. Sh. Amresh Jain, learned DR, vehemently opposing the stay application, pleaded that notwithstanding the fact that the goods procured by the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... setting up the plant; and (b) the goods after being installed had become fixed to earth structure which is not excisable and hence the Cenvat Credit of Central Excise duty involved these goods would not be available to the appellant. 6. In term of the definition of 'capital goods' as given in Rule 2(a) of the Cenvat Credit Rules, 2004, the capital goods are those goods which are specified in this Rule and which (except for office equipment or appliance) are used in the factory of the manufacturer of the final products or for providing of output service. Thus any item which is covered by the list of the items mentioned in Rule 2(a) of the Cenvat Credit Rules, except for office equipment or office appliances, and is used in any manner in the factory of the manufacturer of the final products, would be covered by the definition of the capital goods and accordingly would be eligible for Cenvat Credit. There is absolutely no requirement that the capital goods at the time of receipt must be owned by manufacturer or that the same would cease to be capital goods, if they are installed in the factory and become fixed to earth. In fact, most of the capital goods the machine ..... X X X X Extracts X X X X X X X X Extracts X X X X
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