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2016 (11) TMI 1332 - CESTAT HYDERABAD

2016 (11) TMI 1332 - CESTAT HYDERABAD - TMI - Denial of CENVAT credit - irregularly credit taken on inputs and capital goods - Rule 7 of CENVAT Credit rules 2002 - Held that: - The eligibility of various inputs and capital goods for the purpose of availment of CENVAT Credit has become more broader over the years pursuant to various judgments of Tribunals and other higher courts including the Hon’ble Apex Court. On going through the impugned orders it is seen that the adjudicating authority has g .....

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lant. Sh. Karan Talwar & G. Prahlad, Advocates for the Respondent. [Order per: Madhu Mohan Damodhar] M/s Rashtriya Ispat Nigam Limited (herein after referred as the assessee), Visakhapatnam, are engaged in the manufacture of Iron and Steel products of Ch. No. 72 and are availing the facility of credit of duty paid on the capital goods and inputs under the CENVAT Credit Rules 2002. On scrutiny of the returns filed under Rule 7 of the CENVAT Credit Rules, for the period from 4/2002 to 3/2003, .....

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ly declared, and they were described by their brand name or company name like Nalco; d) availed credit on Welding Electrodes used in the repairs and maintenance of the machinery and also in civil maintenance/construction; e) taken CENVAT Credit on High Tensile Steel scrap (7212.30) for use in packing on the strength of invoices issued by M/s. ITW Signode, Rudraram, Medak. The invoices show RINL (Visakhapatnam) as the consignee in the form RINL, Visakhapatnam , A/C ITW Signode India Ltd, Visakhap .....

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od from 04/2002 to 03/2003 for a total amount of ₹ 5,62,69,602/- under Rule 12, and interest u/s 11AB. 3. On adjudication vide Order-in-Original dated 28-04-2004, the adjudicating authority inter alia held: a) the credit shall not be admissible on the items used in the auxiliary shops; b) he has seen the copies of the IMCN issued and found that these are in the form of challans, which contained complete details as regards the description of the goods and the payment details etc. Such docum .....

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not admissible; c) in respect of credit on rounds and rebars, the Commissioner held that the credit is held admissible on such rounds so long as these are used in the manufacture of drilling rods used for t aping the tap hole in the blast furnace. d) in respect of Items mentioned as Misc. Inputs, the Commissioner held that there is no allegation that these inputs have been diverted or otherwise not used in the manufacturing factory. In the circumstances of the case, he did not order recovery of .....

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d there is no infirmity in availing the credit on the basis of invoices issued by ITW, Medak in the name of ITW, Visakhapatnam; f) entire credit on Welding Electrodes denied on the ground that these were used in repair or auxiliary shops as no duty is paid on used items repaired/remade in the workshop or in the auxiliary shops; g) Credit held admissible on Aluminium Wire Rods on the ground that they are used in the manufacturing process subject to the condition that the assessee furnished a prop .....

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able under Section 11A (1); iv) Ordered that interest in accordance with the provisions of Section 11AB shall be paid on the amounts disallowed/payable as above; v) Imposed a cumulative penalty of ₹ 2,00,000/- under Rule 13 of the CENVAT Credit Rules and Rule 25/27 of the Central Excise Rules for all the show cause notice. Aggrieved department has filed appeal no. E/812/2005. 4. With regard to Appeal E/960/05, certain discrepancies were noticed during scrutiny of the CENVAT returns filed u .....

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xiliary shops as the auxiliary shops are shown to be used as a workshop for manufacture/repair of spares/frames etc for the capital goods in the factory and the spares are not leviable to duty and are used in the factory. b) Credit on items like Oxygen gas, argon gas, acetylene gas and MS plate used in the auxiliary shops or for maintenance purposes is not admissible. c) Credit is admissible on seals whether they are inputs or capital goods as they are used in the packing of the finished goods a .....

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is no allegation that these inputs have been diverted or otherwise not used in the manufacturing factory no recovery of the credit is to be ordered. f) Credit is to be denied on welding Electrodes as they were used in the repairs and maintenance/ construction g) Credit on various capital goods items like street light fittings, batteries etc is not admissible as these are not used in or relation to the manufacture of the final products. Accordingly, the Commissioner vide the said O-I-O has ordere .....

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nalty of ₹ 10,00,000/- under Rule 13 of Cenvat Credit rules, 2002 and Rule 25/27 of CER, 2002, along with interest in accordance with the provisions of Section 11AB, in respect of all the 3 Show-Cause Notices. Aggrieved, the department has preferred appeal no. E/960/2005. 5. The grounds raised by department are as follows: I) In the Show Cause Notices dated 30.04.04 and 25.05.04, credit was sought to be denied on the inputs silicon Carbide Grains on various grounds including the ones that .....

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28.04.04 but it is seen that there is no such discussion in that order. II) Credit on all items of Annexure C of the show Cause Notices dated 30.04.04 and 25.05.04 was also sought to be denied on the ground that they are referred to with brand names, their usage being not known etc. The commissioner, in his order, has stated the following: (a) There is no allegation that the inputs have been diverted/not used in the manufacturing factory. (b) In the circumstances he does not order for recovery o .....

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received into the factory of the assessee as verified from the Goods Acceptance/Rejection Notes (GARN) maintained by the assessee. Rule 3 and Rule 4 of the Cenvat credit Rules 2002 very clearly imply that credit can be availed only in respect of inputs/capital goods received into the factory of the manufacture. The Commissioner however, in his order has merely held that, the assessee is entitled for credit on steel straps since these are used in the packing. The Commissioner has given no finding .....

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in the Order-in-Original No.71/03-04. V) The Show Cause Notice dated 30.04.04 proposed denial of the balance 50% credit on the capital gods on which the first 50% credit was taken during the year 2003-04 and which was proposed to be denied in earlier Show Cause Notices. Out of the total amount the Commissioner has allowed credit of an amount of ₹ 35,04,297/- but has not discussed the same in the order. Even in the Order-in-Original no.71/03-04, there was no discussion on this matter. VI) .....

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e in respect of appeal no. 812/2005. 6. On behalf of Revenue/ Appellant the Ld. AR Sh. P.S. Reddy reiterated the grounds of appeal. 7. On behalf of respondent Sh. Karan Talwar adverted our attention to the fact that against the order impugned herein, the respondent/assessee had approached the CESTAT vide appeal no. E/68/2005 in respect of ₹ 2,57,99,188/- which was disallowed by the adjudicating authority; the Tribunal vide Final Orde No. 396/2007 dated 26.03.2007 had allowed credit of the .....

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tal goods on which credit was allowed by Commissioner were actually used in relation to manufacturing activity and that even for balance disallowed amount relief has been provided by Tribunal s Order No. 396/2007 dated 26.03.2007; that the matter is no longer resintegra and squarely covered by a number of case laws, eg; Madras Cements Ltd., V CCE [2005(192) ELT 902 (Tri- Chennai)], which was affirmed by Hon ble Supreme Court at [2010 (254) ELT 3 (S.C)]. 9. In respect of department appeal E/812/2 .....

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reference to credit on basis of internal material consumption notes (IMCN), the said credit is actually taken on internal delivery challan wherein all details required in invoice are available. iv) with reference to credit on inputs used in Auxiliary shops eg; coal tar pitch, O2 gas, Argon gas etc it is well settled that credit is available on inputs used in intermediate exempt product which are captively consumed on manufacture of dutiable final products. Further in their own case RINL Vs CCE .....

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