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TMI Blog2018 (7) TMI 1931X X X X Extracts X X X X X X X X Extracts X X X X ..... to set up and install a 350 TPD capacity Coal Based Sponge Iron Plant entered into a contract with TISCO Growth Shop ("TGS") in 2002. The contract was effective from July 1, 2002. (ii) Under the said contract TGS undertook the responsibility of providing assistance in engineering designs, site work, fabrication and erection and other connected activities right from the beginning to the commissioning stage and trial running of the factory. (iii) Subsequently, NIPL placed the following two orders on TGS for getting certain items produced on conversion basis for manufacture of DR Plant equipments, Drive system, Waste Gas handling system, etc. for further use and fabrication along with other items needed for the setting up of the Sponge Iron Plant. (i) NIPL/PROJECT/02/A/02-03 dated 29.10.2002; (a) Manufacture and supply of DR Plant items as listed below based on the manufacturing drawings. Support station assembly with base frames for Kiln. (a) Kiln shell with tyres. (b) Support station assembly with base frames for cooler (c) Cooler shell with tyres (ii) NIPL/PROJECT/02/B/02-03 dated 04.11.2002. (a) Manufacture supply of Drive system waste gas handling syste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les, 2000. The show cause notice proposed recovery of central excise duty of Rs. 1,67,09,674/- from TGS under the First Proviso to Section 11A of the Central Excise Act read with Rule 25 of the Central Excise Rules. (ix) The Show Cause Notice further proposed denial of Cenvat credit availed by NIPL on the inputs sent to TGS for the manufacture of Kiln and Cooler. (x) The Show Cause Notice also proposed imposition of penalty on Shri R.K. Agarwal, Managing Director of NIPL under Rules 13 and 15 of the Cenvat Credit Rules and Rule 26 of the Central Excise Rules for devising the modus operandi, as alleged by the Department. (xi) The Commissioner, vide the impugned order, dropped the demands and penalties proposed in the Show Cause Notice. Hence, the present appeals before the Tribunal. 2. It has been contended on behalf of the Revenue that: (i) Inputs, on which the credit has been availed and which went into manufacture of capital goods, have been used in the manufacture of dutiable finished goods cleared from the factory. The adjudicating authority has erred in holding that the finished goods in the instant case is sponge iron, whereas the finished goods are 'Kiln' and ' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the show cause notice, the said goods which would have finished dimensions of 4.2 meter x 72 meter and 3.6 meter x 42 meter respectively were impracticable to be manufactured at TGS's factory and it would have been impossible to transport the same in one piece to the NIPL site. Hence, they were removed segment wise from TGS's factory to NIPL site where they were assembled into final shapes of kiln and cooler for which, inter alia, 'structural fabrication' was carried out at the NIPL site. Such structural fabrication at site, as held by the Larger Bench of this Tribunal in Mahindra & Mahindra Vs. Commissioner of Central Excise [2005 (190) ELT 301 (T-LB) amounts to manufacture of excisable goods. ii) In cases where several processes are required to be carried out at the premises of the raw material supplier, the benefit under Notification No. 214/86-CE and Rule 4(5) of the Cenvat Credit Rules is available as held in: (a) Sunco Rubber Ltd. Vs. CCE [2004 (176) ELT 223 (T)] affirmed by the Madras High Court in CCE Vs. Sunco Rubber Ltd. [2008 (228) ELT 27 (Mad)] (b) Eveready Industries Ltd. Vs. CCE [2005 (186) ELT 570 (T)] (iii) In any event it is settled law that job worker is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. We also find that there is a specific finding of the Commissioner in the impugned order that the kiln and cooler did not attain the shape of a final product at the factory of TGS. It has been submitted that it was not possible to manufacture the said goods at one place and that the final product was obtained only at the premises of NIPL. It has also been submitted that by applying the ratio of the decision of the Hon'ble Madras High Court in the case of CCE Vs. Surco Rubber Ltd. [2008 (228) ELT 22 (Mad)], TGS cannot be held to be liable to pay duty on the said kiln and cooler, the same not having attained the shape of fully manufactured goods at its premises. 7. We find that it is not in dispute that the kiln and cooler in question are capital goods, used in the manufacture of final product, namely, sponge iron. The raw material on which NIPL has availed Cenvat credit are inputs, used in the manufacture of the abovementioned capital goods. From the Show Cause Notice it is apparent that the kiln and cooler were capital goods to be used in the NIPL factory for the manufacture of the final product. Even otherwise, as per Rule 2(k) of the CCR, inputs include goods used in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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