TMI Blog2018 (7) TMI 165X X X X Extracts X X X X X X X X Extracts X X X X ..... llowed. The definition of “Factory” has been given in Central Excise Act and this clearly does not cover the gas well where the compressor has been installed - It is true that the goods are finally required for the manufacture and so are many other raw materials sourced from various places without which the manufacture cannot take place. All these places from where raw materials are sourced, cannot be treated as part of the factory of the manufacturer. There is nothing on record to show that the well is part of the registered premises of the factory of the manufacturer - CENVAT credit not admissible - demand upheld. Penalty - Held that:- Appellant has enough reason to suspect that they were entitled to the credit and hence any malafid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers which are then driven to the factory and the gas is used to manufacture the final products. When it was pointed out by the department that they are ineligible to avail CENVAT credit on the compressor, the appellant reversed the same in Feb. 2014 and again took credit of the same amount in March 2014 and intimated the department. Thereafter, in April 2014 and they took credit of the balance 50% of CENVAT credit also. Show Cause Notice was issued to the appellant alleging irregular availment of CENVAT credit as the compressor was moved out of the factory and asking them to reverse the credit in terms of Rule 3(5) of CENVAT Credit Rules, 2004. The Show cause notice also proposed imposition of penalty and recovery of interest. 3. After f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CE, Hyderabad-III [2016(340) E.L.T. 724 (Tri.-Hyd.)] wherein the CENVAT credit of capital goods was allowed on boilers and water plant system installed in neighbouring unit. (d) Vikram Cement vs. CCE, Indore [2006(194) E.L.T. 3(S.C) wherein Hon ble Supreme Court has allowed credit on inputs viz; explosives used for blasting mines to produce limestone for use in the manufacture of cement by the assessee. (e) CCE, Madurai vs. India Cements Ltd. [2002(150)E.L.T. 341 (Tri.- Chennai). (f) Synthetic Packers Pvt. Ltd. vs. CCE (Appeals-I), Bangalore [2009(240)E.L.T. (Tri.-Bang.)] (g) Jaypee Bela Plant vs. CCE, Bhopal [2005(180)E.L.T 31 (Tri.-Del.)] (h) CCE Salem vs. Bharath Sanchar Nigam Ltd. [2017(7)G.S.T.L. 129 (Mad.)] 5. Ld. DR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following case laws: (i) Rajhans Metals Pvt. Ltd. vs CCE Rajkot [2007-TIOL-1491- CESTAT-AHM)] (ii) Atul Auto Limited vs. CCE, Rajkot [2009(237)E.L.T 102 (Tri.- Ahmd)] (iii) Rajshanti Metals Pvt. Ltd. vs. CCE, Rajkot [2015(39)S.T.R. 875 (Tri.-Ahmd.)] (iv) Leamak Healthcare Pvt. Ltd. vs. CCE, Ahmedabad [2017(49) S.T.R. 605 (Tri.-Ahmd.)] 7. There are a number of cases where the CENVAT credit has been disallowed to the appellants when the capital goods were used in places such as wind mills which are located far from the factory of the manufacturer, although the electricity so generated is ultimately provided to the factory for use in manufacture of final products. He argues that the ratio of these cases applies to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... materials are sourced, cannot be treated as part of the factory of the manufacturer. There is nothing on record to show that the well is part of the registered premises of the factory of the manufacturer. I, therefore, find that the demand is sustainable and CENVAT credit is inadmissible. It needs to be reversed along with interest. However, in view of the cases cited by the appellant, I find that he has enough reason to suspect that they were entitled to the credit and hence I cannot attribute any malafide intent and therefore, I set aside the penalty imposed on them. The appeal is allowed partly to the extent of setting aside the penalties imposed in the Order-in-Original. 9. The appeal is allowed to the extent of setting aside the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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