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2016 (11) TMI 1220 - CESTAT HYDERABAD

2016 (11) TMI 1220 - CESTAT HYDERABAD - TMI - CENVAT credit - whether appellant is eligible for CENVAT Credit availed on Capital goods when at the time of availing credit appellant was manufacturing only exempted product? - Held that: - at the time of availing credit, the appellant was manufacturing only exempted product, I have to agree that the contentions put forward by department holds merit. At the time of taking credit on capital goods i.e. December 2005 the appellant was manufacturing exe .....

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used to manufacture exempted goods at the relevant time of taking credit. The crucial aspect to be considered is the use of the capital goods on the date on which credit is taken. Therefore the credit availed on capital goods in the month of December 2005 is not admissible. - Credit not allowed - appeal dismissed - decided against assessee. - Appeal No. E/843/2008 & E/216/2009 - FINAL ORDER No.A/30994 to 30995/2016 - Dated:- 26-10-2016 - Ms. Sulekha Beevi, C.S., Member (Judicial) Ms. A.S.K. .....

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lants are the manufacturers of the Final products Maize Starch falling under chapter sub-heading No. 1108.12.00, Yellow Dextrine falling under Chapter sub-heading No. 3505 10 90 and Thin Boiled Starch falling under Chapter sub-heading No. 3505 10 90. b) Appellants started Manufacturing activity in the month of November 2005 and took Central Excise registration in the Month of November 2005 itself. During the first stage of manufacture appellants manufactured the final product Maize Starch which .....

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.15,86,777+Rs.31745 Cess) February 2006 ₹ 1,05,485/- March 2006 1,62,672/- Total Credit availed ₹ 18,86,679/- d) Out of the final product Maize Starch, appellants utilized some quantity of Maize Starch and manufactured the other two final products of Yellow Dextrine and Thin Boiled Starch. The appellants started clearing the final products of Yellow Dextrine and Thin Boiled Starch in the Month of February 2006 on payment of duty. e) Appellant utilized the said first 50% credit availe .....

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led Starch). That from this it is noticed that the capital goods are intended to be used by the manufacturer for exempted goods only and the availment of Credit was in contravention of sub-rule (4) of Rule 6 of CENVAT Credit Rules, 2004. g) Appellant availed second 50% CENVAT Credit on the capital goods in the subsequent Financial Year and the Second Show Cause Notice was issued to the appellant on the same ground and the total credit disallowed in the said notice was ₹ 15,02,742/-. h) The .....

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) ELT A 273 (SC)] which laid down the principle that the availability of MODVAT Credit is to be looked into at the time of receipt of the capital goods. If the goods are exclusively used in the manufacture of the exempted products, MODVAT Credit will not be available to the manufacturer. Subsequently, if the exempted product becomes dutiable on account of withdrawal of exemption notification or the manufacturer puts the capital goods to other use would not revive the question of MODVAT Credit wh .....

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a appearing for appellant submitted that Rule 6 (4) of CENVAT Credit Rules, 2004 specifies that credit is not eligible on the capital goods which are used exclusively in the manufacture of exempted goods. The appellant availed credit in the month of December 2005 where as the appellant cleared the dutiable final products in the month of February 2006 (2 months gap). Again, appellant utilized their final exempted product viz; Maize Starch for the manufacture of dutiable product of Yellow Dextrine .....

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e 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 therein become dutiable. In the present case, the facts are entirely different in as much as the appellant manufactures the dutiable products from the exempted product and accordingly the issue is to be decided that when the capital goods which are used in manufact .....

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Excis., Meerut reported in [2014 (310) ELT 398 (Tri-Del)] c) Commissioner of Central Excise, Bangalore Vs M/s Kailash Auto Builders Ltd., reported in [2012 (280) ELT 49 (kar)] d) M/s Rana Sugar Ltd., Vs Commissioner of Central Excise, Ludhiyana reported in [2012 (11) TMI 299 (CESTAT, Delhi]) e) Commissioner of Central Excise, Vadodara-II Vs Gujarat Propack reported in [2009 (234) ELT 409 (Guj)] 4. The Ld. Counsel has also put forward arguments referring to Rule 9 of Central Excise Rules: i) It i .....

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e chargeable to NIL rate of duty are exempted from the operation of Rule 9 of Central Excise Rules. In this context she submitted before that if the appellant having intention to only manufacture the exempted goods viz Maize Starch, they would not have at all registered with the Central Excise department in the month of November 2005 for the reason that they are not at all required to take registration in terms of the above notification No. 36/2001 (CE) (NT) Dated 26.06.2001. 5. Further the appe .....

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clause of said MOA in which the main objects of the company on its incorporation is specified as below: Point 3: To establish own, aquire or lease and to carry on the business as manufacturers, processors, traders of agro based products and other allied products such as Starch Glucose, Fructose, and Sorbital, Germ, Gluten, Aldehyudes, Acids, Ketones, Esters etc., 6. In addition the Ld. Counsel urged that the terms maize starch, yellow dextrin, and Thin boiling starch are generally used terms in .....

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is also very clear that the company has been incorporated for the purpose of manufacture of so many products and not to manufacture only Maize Starch. Further she submitted that this Maize starch is the raw material for manufacture of Dutiable products of both Yellow Dextrin and Thin Boiling starch and that was the same stated in reply to the Show Cause Notices and that Revenue has not disputed this fact. 7. The Ld. AR Sh. P.S. Reddy reiterated the findings in the impugned order. He submitted t .....

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ds which are used exclusively in the manufacture of Exempted goods or in providing exempted services other than the final products which are exempt from the whole of the duty of excise leviable thereon under any notification where exemption is granged based upon the value or quantity of clearances made in a financial year. 9. On taking into consideration the fact that, at the time of availing credit, the appellant was manufacturing only exempted product, I have to agree that the contentions put .....

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