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Commissioner of Central Excise, Aurangabad Versus M/s Pepsico India Holdings Ltd.

2015 (10) TMI 846 - CESTAT MUMBAI

CENVAT Credit - Capital goods - initially used for exempted goods - later used for dutiable goods also - Held that:- Expression exclusively used “also includes intention to use” as provided under Rule 6(4) of the Cenvat Credit Rules. As the appellant had admittedly informed the Revenue at the time of commencement of production that it will utilize the said machinery installed for manufacture of both dutiable and non-dutiable products, it cannot be said that the said machinery is exclusively used .....

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uction of dutiable goods started admittedly in June, 05. Thus, I hold that the respondent assessee is entitled to CENVAT Credit on the capital goods in question - Decided against Revenue. - Appeal No. E/191/2009 - Final Order No. A/963/2015-WZB/SMB - Dated:- 29-4-2015 - Shri Anil Choudhary, Member (Judicial) For the Petitioner : Shri Ashutosh Nath, AC (AR) For the Respondent : Ms. Anjali Hirawat, Advocate ORDER Per: Shri Anil Choudhary The Revenue is in appeal against Order-in-Appeal No. JAK (26 .....

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ntral Excise Tariff Act, 1985. The assessee availed CENVAT Credit of duty paid on inputs and capital goods under Cenvat Credit Rules, 2002. During the period Nov. 2003 to May, 2004, the assessee have availed CENVAT Credit of duty paid on machinery which was used in the manufacture of exempted goods i.e. Mango Slice falling under Chapter Heading 2202.40, which was exempted under Notification No. 6/2002 dated 1.3.2002 from payment of duty. It appeared to the Revenue that as per provisions of Rule .....

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was confirmed under Rule 12 of Cenvat Credit Rules, 2002 read with Section 11A (1) of the Central Excise Act. Further, penalty of equal amount was also imposed under Rule 13 of Cenvat Credit Rules read with Section 11AC of the Act along with interest under Section 11AB. 2.1 Being aggrieved, the appellant preferred appeal before the Commissioner (Appeals), who vide is order dated 30.3.2007 remanded the case to the adjudicating authority directing to conduct necessary enquiry whether the said capi .....

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03 to May, 2004, but the said credit was utilized only from Nov, 2005 onwards i.e. only after commencement of manufacture of dutiable products like Lipton Ice Tea and Gatorade. Since the credit availed was utilized only after commencement of manufacture of dutiable goods, it cannot be said that the capital goods were used for the manufacture of exempted goods only and/or the credit was wrongly availed. The learned Commissioner (Appeals) held in favour of the assessee allowing the appeal holding .....

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Credit on the capital goods in question and have used for manufacture of both the exempted and capital goods. The Commissioner (Appeals) has recorded the following findings, which are reproduced for ready reference: - 7. I have carefully gone through the case file and documents available on records. From the records, I find that my predecessor had remanded back the case with the direction to verify whether the appellants had utilized the said capital goods towards manufacture of dutiable i.e. G .....

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ovember, 2003 to May, 204 during which no dutiable product was manufactured by the appellants. The case was sent for de novo adjudication with limited purpose of ascertaining the fact from ER-1 that the appellants are manufacturing dutiable and exempted products with the said capital goods. The clearance of both the type of goods is evidence from the ER-1 for the month of November, 2005 and December, 2005. Moreover the credit so availed in November 2003 to May 2004 was kept unutilized till Novem .....

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re of both dutiable and non-dutiable goods, in view of the case law 2004 (169) ELT 328, which was also relied upon in earlier Order-in-Appeal, the credit cannot be denied . 2.3 Being aggrieved, the Revenue is in appeal before this Tribunal. 3. The learned AR, Shri Ashutosh Nath for the appellant-Revenue states that learned Commissioner (Appeals) by relying on the ruling of this Tribunal in the case of Balaji Mills Ltd. - 2004 (169) ELT 328 (Tri-Chennai) has grossly erred inasmuch as, the facts i .....

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s case and stands distinguished in the subsequent order of the Tribunal in the case of KS Oils Ltd. - 2007 (216) ELT 267 (Tri-Del), wherein it has been held that in case of Balaji Mills ltd, the Modvat credit cannot be denied to the assessee when the capital goods are used both for manufacture of dutiable and exempted goods. In the instant case, the assessee utilized the capital goods exclusively for manufacture of exempted final products during the material period. Thus, it is not a case where .....

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t availability of Modvat credit on capital goods, to be looked into at the time of receipt of capital goods in factory premises of the appellant. Capital goods were used for manufacture of exempted products at the time of installation of the machinery and its subsequent use after one year or more in manufacture of final products chargeable to duty will not make assessee eligible for Modvat credit. The said ruling of the Tribunal was appealed by the assessee before the Apex Court, which was dismi .....

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ion before the Tribunal was eligibility of credit for capital goods will be determined whether from the date of receipt of capital goods or from the date of its utilization. Rule 6(4) of the Cenvat Credit Rules, 2002 not permitting CENVAT Credit on capital goods used exclusively in manufacture of exempted goods,it was held that credit eligibility to be determined with reference to their dutiability of the final product on the date of receipt of the capital goods. Accordingly, he prays for allowi .....

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be verified at a preliminary level with reference to ER-1 and other statutory records. The use of the capital goods in the manufacture of various products also needs to be verified. In case it is found that the appellants have used the capital goods for manufacture of both dutiable and non-dutiable goods, CENVAT Credit cannot be denied . It is further submitted that the Commissioner (Appeals) in the earlier round had clearly held that the credit would be admissible if it is found that the capita .....

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he findings recorded by the adjudicating authority. Therefore, the disability in Rule 6(4) is not applicable. 4.1 The learned Counsel further distinguishing the ruling in the case of Surya Roshni (supra), states, as the said decision deals with admissibility of CENVAT Credit of duty paid on capital goods installed which were used in the production of non-dutiable goods at the time of receipt of such capital goods. Subsequently the goods in question become dutiable and accordingly, Surya Roshni a .....

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up to manufacture and fill beverages - both taxable and non-taxable. At the relevant date the assessee had undertaken trial run and there after started commercial production of slice a mango fruit pulp based drink falling under Chapter 2202.40 w.e.f. 7.4.2004. It was further stated in the intimation that the assessee will be using the newly installed production line for manufacture of excisable product, which shall be intimated in due course. The learned Counsel further stated that the ruling o .....

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