TMI Blog2018 (11) TMI 302X X X X Extracts X X X X X X X X Extracts X X X X ..... restricts the allowance only to 50% of the credit for each year of use. Rule 3 of the CENVAT Credit Rules, 2002 requires the receipt of the capital goods in the factory for use in or in relation to manufacture of final products. The subject equipments / machines are undoubtedly used in or in relation to the manufacture of final products. Thus, the literal rule of interpretation when applied to the CENVAT Credit Rules, 2002 would entitle the Respondent to the benefit of CENVAT Credit on the duty paid equipment / machines (capital goods). On an identical issue arose before the Tribunal in JSW Ispat [], the machines/ equipments were used to set up/ assemble an oxygen plant i.e. immovable property in the factory of the assessee. This oxygen plant was issued to manufacture the excisable goods i.e. manufacture ingots falling under Chapter 72 of the Excise and Tariff Act, 1985. Nevertheless, the Tribunal allowed of CENVAT Credit of duty paid on machines / equipments used in setting up a plant, to be utilised on payments of duty on the final products viz: iron and steel ingots cleared by the assessee, therein - no distinction in facts and law, is pointed out by the Revenue, which would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the Act. The Respondent entered into two agreements with M/s. S.S. Engineers one for purchase of machinery and equipments required for a sugar plant and the other for setting up of a sugar plant out of the above purchased machinery and equipments at its site. As a result of the aforesaid two agreements M/s. S.S. Engineers supplied all equipments / machineries required for setting up the sugar plant at the factory of the Respondent. The above equipments/ machines are supplied by M/s.S. S. Engineers under cover of Central Excise (Cenvatable) invoices indicating the name and factory address of the Respondent. 5. In terms of the above agreements, M/s. S.S. Engineers erected/set up and commissioned a sugar plant at the Respondent's factory. This sugar plant was admittedly used to manufacture its final products. The Respondent, availed of the duty paid as CENVAT Credit on the equipment/ machines, used to set up the sugar plant and utilized it for payment of duty on its final product. The same was disclosed to the Appellant in the statutory returns filed by the Respondents regularly. 6. Thereafter, on 24th March, 2005, the Appellant issued a show cause notice to the Responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant is installed/set up would be entitled to avail of the MODVAT credit under Rules 57 Q of the MODVAT Rules it was pointed out that the definition of capital goods given under Rule 57Q of the Central Excise Rules, 1944 (MODVAT Rules) are similar to the definition of capital goods in Rule 2(b) (i) of the Central Credit Rules, 2002. 10. On the other hand the only contention in support of the order dated 2nd March, 2005 urged by the Appellant Revenue was that the machines / equipments have been used by M/s. S.S. Engineers to manufacture a sugar plant. Therefore, it is M/s. S.S. Engineers alone who would be entitled to take credit of duty paid on the inputs. Thus, the Appellant cannot take credit on the socalled capital goods. The decisions relied upon by the Respondent were distinguished on the ground that the same was rendered in the context of Rule 57Q of the MODVAT Rules and would have no application in interpreting of the CENVAT Credit Rules, 2002. 11. On consideration of the above submissions, the impugned order dated 30th October, 2006 allowed the Respondent's appeal. This by placing reliance upon the orders of its Coordinate Benches in case of Gujarat Ambuja Cem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Explanation-2 - Inputs include goods used in the manufacture of capital goods which are further used in the factory of the manufacturer; RULE 3. CENVAT Credit (1) A manufacturer or producer of final products shall be allowed to take credit (hereinafter referred to as the CENVAT credit) of- (i) . . . . . (ii) . . . . . (iii) .. .. . . . (iv) . . . . . (v) . . . . . (vi) . . . . . paid on any inputs or capital goods received in the factory on or after the first day of March, 2002, including the said duties paid on any inputs used in the manufacture of intermediate products, by a job-worker availing the benefit of exemption specified in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No.214/86- Central Excise, dated the 25th March, 1986, published vide number G.S.R. 547 (E) dated the 25th March, 1986 and received by the manufacturer for use in, or in relation to, the manufacture of final products, on or after the first day of March, 2002. 14. Mr. Kantharia, learned Counsel in support of the Appeal submits as under:- (a) No CENVAT Credit is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that sugar plant is not chargeable to tax, does not in terms of the law as existing at the relevant time, deprive the Respondent of the credit of duty paid on the capital goods received and used in their factory; and (c) Lastly, the issue whether the CENVAT Credit of the duty paid on machines/ equipments used in setting up a immovable property is available to the Respondent in whose factory the immovable property is set up to take CENVAT credit and utilize the same in payment of duty on final product has been accepted by the Revenue in law. This has been so held by the Tribunal in Commissioner of Central Excise v/s. JSW Ispat Steel Ltd. 2013 TIOL-1758-CESTAT-Mum. This decision of the Tribunal has been accepted by the Central Board of Indirect Taxes and Customs. In support, our attention was invited to a print out, downloaded from www.cbic.gov.in a site of the Central Board of Indirect Taxes and Customs wherein the above decision of the Tribunal in JSW Ispat Steel Ltd., (supra) on this very issue was accepted as being legal and proper. Thus, in fairness the issue is no longer res-integra and the appeal should be withdrawn by the Revenue. 16. The purpose/ o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods in the factory for use in or in relation to manufacture of final products. The subject equipments / machines are undoubtedly used in or in relation to the manufacture of final products. Thus, the literal rule of interpretation when applied to the CENVAT Credit Rules, 2002 would entitle the Respondent to the benefit of CENVAT Credit on the duty paid equipment / machines (capital goods). 19. The reliance by the Appellant on the decision of the S.S. Engineers (supra), Triveni Engineering Industries Ltd., (supra) would have no application to the facts which arise for our consideration. In both the above cases the Court was concerned with the issue whether duty is payable on an immovable property. In both the cases, the Court held that immovable property such as a sugar plant is not goods and, therefore, not excisable. In none of the above two cases, the issue arising for our consideration viz: whether duty paid on capital goods under the CENVAT Credit Rules, 2002, would not be available, if the same are used in the factory of the manufacture to set up the plant which, in turn, is used in the manufacture of final products. Thus, the reliance upon the above decisions does n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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