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2016 (6) TMI 228 - CESTAT CHENNAI

2016 (6) TMI 228 - CESTAT CHENNAI - TMI - Cenvat credit availed on capital goods - eligibility - procedure irregularity - Demand of interest and imposition of penalty - Section 11AC of Central Excise Act, 1944 - Held that:- merely levelling an allegation based on presumption without actual verification, will not help the case of the revenue to deny credit to the appellant - the Chartered Engineer's certificate produced by the appellant in their defence to prove that the impugned inputs have been .....

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ems fabricated during the relevant period , quantity of material issued for fabrication, quantity of scrap generated , documents evidencing installations etc. to show beyond the receipt, consumption and inventory of such goods (MS items) as mandatorily required under Rule 9(5) of the CCR , 2004.

Appellant has not taken care to give details of the items which are of general use for which the revenue should not suffer, and at the same time the appellant also should not suffer for not fu .....

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oner of Central Excise (Appeals-II), Chennai and hence they are taken up together for disposal. 2. The brief facts of the case are that appellants are manufacturers of TMT Bars, CTD Bars and M.S. Rounds, M.S. Ingots etc. falling under CETA'1985. They are availing cenvat credit on inputs and capital goods and input services and utilize the same for paying duty on their final products. Appellant has furnace to melt MS scrap etc. used in the manufacture of final product. For the purpose of sett .....

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s alleged that there has been wrong availment of cenvat credit on the impugned goods for the period October 2006 to May 2011 and a SCN was issued for (i) ineligible credit availed on inputs for ₹ 10,49,211/- and (ii) ineligible credit availed on capital goods for ₹ 3,11,335/-. After due process of law, the adjudicating authority vide OIO No.01/2013 dt. 31.1.2013 held the credit availed as ineligible and also imposed penalty under Section 11AC. On appeal, the learned Commissioner (App .....

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peal E/40258/2015 relates to wrong availment of cenvat credit for the period March 2012 to Dec 2012. A SCN was issued again on two counts (i) on ineligible credit availed for ₹ 1,98,118/- on inputs and on capital goods for ₹ 14,193/-. The adjudicating authority vide OIO No.15/2014 dt. 3.3.2014 held the credit availed as ineligible and also imposed penalty of ₹ 2000/- under Rule 25 of CCR 2004. On appeal, the Commissioner (Appeals) allowed the cenvat credit on inputs to the tune .....

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l goods credit denial] E/40295/ 2015 [by Revenue against inputs credit relief] 1/2013 dt. 31.1.13 47/11 dt. 4.10. 2011 Inputs: ₹ 10,49,211* Capital Goods: 3,11,335 [* Allowed by Com (A)] Duty: ₹ 13,60,546 Penalty: ₹ 3,11,335 (u/s 11AC) Oct 2006 to May 2011 2. E/40258/ 2015 [by assessee against capital goods credit denial] 15/2014 dt. 3.3.14 C.No.IV/09/15/2013 dt. 12.3. 2013 Inputs: ₹ 1,98,118/-* Capital Goods: ₹ 14,193 [* Allowed by Com (A)] Duty: ₹ 14,193/- P .....

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. - 2001 (132) ELT 3 (SC). The counsel vehemently argued that learned Commissioner (Appeals) has traversed beyond the scope of SCN by raising the issue of mandatory requirement under Rule 9 (5) of CCR 2004 whereas the SCN does not mention about Rule 9 (5) of CCR 2004. In this regard, he relied on the Supreme Court decision in the case of Caprihans India Ltd. Vs CCE 2015 (325) ELT 632 (SC). He further submits that the case law relied on by learned Commissioner (Appeals) in the case of Rutvi Steel .....

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t the Tribunal's LB decision in the case of Vandana Global Limited (supra), is no longer a good law in view of the judgment rendered by the Supreme Court in the case of Commissioner of Central Excise, Jaipur v. Rajasthan Spinning & Weaving Mills Limited, reported in 2010 (255) E.L.T. 481 (S.C.). The Tribunal's LB decision also stands disapproved by the Hon'ble Calcutta High Court in the case of Surya Alloy Industries Ltd. Vs UOI 2014 (305) ELT 47 (Cal.) after referring the decisi .....

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) ELT 503 (Kar.) 4.2 Ld. counsel also submitted copies of Notification No.16/2009-CE (NT) dt. 7.7.2009 and also filed copy of extract of CCR 2004 and drew my attention to Rule 2(k) and Explanation 2 thereto. 4.3 Ld. counsel also submits that the Chartered Engineer has thoroughly examined the nexus between the impugned goods used as inputs and final products and thereafter only issued the certificate. He relied on Tribunal's decision [para-4] in Shree Narmada Khand Udyog Sahakari Mandli Ltd. .....

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e themselves have admitted having used channels, beams, angles etc. to set up the furnace plant platform. He further submits that the same items which are shown as raw material are also claimed as capital goods. He drew my attention to page 51, 52 & 53 of the appeal paper book in Appeal E/40358/2015 and annexures regarding impugned goods which are part of the SCN and annexure on page 54 is regarding cenvat credit availed on capital goods. He further submits that appellant-assessee has availe .....

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0 lakhs, as mentioned in Sl.No.2 & 3 of the table of the impugned order, Revenue did not prefer any appeal before the Commissioner (Appeals). In support of his contention he produced a copy of Tribunal's decision in the case of CCE & ST Raipur Vs SKS Ispat and Power Ltd. 2015 (236) ELT 620 (Tri.-Del.), wherein Revenue's appeal was dismissed. However, he emphasized that since they were not able to convince the Bench, the Revenue's appeal was dismissed though the facts were dis .....

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, angles , bars etc. inside the furnace and that HR sheets , MS rounds and HR coils are used as liners and patches inside the furnace.(iii) that it has been contended by them that in due course of time the impugned inputs are consumed in the manufacture of final products, (iv) that they have also enclosed a Chartered Engineer s certificate in favour of their argument, (v) that neither in the show cause notice nor in the impugned order , the respondent has brought out any evidence to prove that t .....

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gation based on presumption without actual verification , will not help the case of the respondent to deny credit to the appellant, (ix) that on the other hand I am inclined to accept the Chartered Engineer s certificate produced by the appellant in their defence to prove that the impugned inputs have been used in the furnace and consumed in due course, (x) that consequently, I take the stand that credit on the impugned inputs is allowable in terms of Rule 2(k) of CCR , 2004 , since the consumab .....

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ap etc. To set up furnace, platform, channels, beams, angles, bars etc. are used. The liners, patchers and formers in due course of time get smelted .. (ii) that the adjudicating authority vide para 12 of the O-in-O , has clearly given his findings as the assessee s contention does not appear to be correct in as much as these items themselves are all finished goods and are not used in the manufacture of TMT , CTD bars . The Commissioner (Appeals) failed to consider this finding. (iii) that as pe .....

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r appeal, their contention is that of a procedural lapse, this cannot be a ground for denial of the credit as the finding in para 7 is very clear and convincing. In the absence of any malafide, the contention of the revenue cannot be accepted. The department appeal is dismissed as devoid of merits. 8. With regard to Appeal Nos.E/40258/2015 and E/40358/2015 being the assessee s appeal on denial of credit on the capital goods , the Commissioner (Appeals) has observed in para 8 as follows, With reg .....

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structures for Capital goods etc. I am of the view that the appellants could easily prove the User test prescribed by the Hon ble Supreme Court in the case of Jawahar Mills case [2001 (132) ELT 3 (SC)]. It can be seen that the appellant had not declared the fabrication of any capital goods /sub-assemblies of capital goods in the ER-1 filed during the relevant period. When the appellant was aware that such goods, on which credit was being taken, were items of general use , they were expected to m .....

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