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2016 (7) TMI 126 - MADRAS HIGH COURT

2016 (7) TMI 126 - MADRAS HIGH COURT - 2016 (338) E.L.T. 359 (Mad.) - Cenvat credit on inputs / capital goods used in installing the Captive Power Plant and Captive Power Plant is a Turnkey project which was not excisable - violation of Rule 2(a)(A)(i) and (iii) of the cenvat credit rules - Held that:- The Tribunal has not considered the matter while allowing the appeal with reference to in allowing credit for the entire co-generation plant, without examining the eligibility of the individual it .....

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espondent : Mr. S. Muthuvenkataraman JUDGMENT ( Judgment of the Court was delivered by D. Krishnakumar, J ) This Civil Miscellaneous Appeal arises against the Final Order No.219/2009 dated 13.2.2009 on the file of the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Chennai. 2. Mr.A.P.Srinivas, learned Senior Standing Counsel for the appellant would submit that the respondent M/s. EID Parry are manufacturers of sugar and molasses falling under Chapter 17 of the First Schedu .....

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respondents have availed Cenvat credit of the duty paid on the Machineries, Components and other accessories to the tune of ₹ 7,07,18,265/- (Cenvat Credit ₹ 6,93,34,723/- and Education Cess ₹ 13,83,542/-) used in installing the Captive Power Plant and Captive Power Plant is a Turnkey project. The Turnkey projects are not excisable goods and they are not goods conforming to the description of any machinery which falls in the Chapters mentioned in Rule 2(a)(A)(i) of Cenvat Credit .....

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Power Plant which are not falling under any of the Chapter Headings specified in Rule 2(a)(A)(i) and (iii) of the Rules. 3. The Assessee submitted his reply dated 30.10.2006 and 21.8.2007 to the Assessing Authority stating that the various component machineries which are brought into the factory are by themselves capital goods as they individually fall under the chapter heading specified in the definition of capital goods and that the subject goods are used within the factory of production and t .....

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captive power plant is not used exclusively in the manufacture of electricity but only within the factory in the manufacture of sugar and molasses barring the fact that some quantity of electricity is given to TNEB Grid. Personal hearing was given to the respondent. 4. The Commissioner of Central Excise considered the objections of the respondent and passed by the following order by Order No.22/2007 dated 25.9.2007:- Order (i) I confirm the demand of ₹ 7,11,18,829 (Seven Crore Elevan Lakh .....

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to be recovered under Section 11AB of Central Excise Act, 1944 read with Rule 14 of Cenvat Credit Rules, 2004. (iii) I impose a penalty of ₹ 7,11,18,829 (Seven Crore Elevan Lakh Eighteen Thousand Eight Hundred and Twenty Nine only) on the assessee under Rule 15 of Cenvat Credit Rules, 2004 for wrongly taking the credit of duty paid on the goods which are used for installing the Captive Power Plant. 5. Aggrieved by the aforesaid order, the assessee had preferred the Appeal before the Custom .....

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or consideration:- (i) Whether the Tribunal was right in allowing credit for the entire co-generation plant without examining the eligibility or otherwise of the individual items? (ii) Whether the Tribunal was right in permitting credit on items such as angles, beams, channels, ladder trays, joists supporting structures, steel structures which are neither inputs nor capital goods as per the definition especially in the light of the decision rendered by the Principal Bench of CESTAT, New Delhi re .....

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