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TMI Blog2023 (10) TMI 1111X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s.EID Parry (India) Limited ( hereinafter referred to EID Parry) was similar to the issue involved in the instant case and that the said appeal filed by the EID Parry had been held in favour of the EID Parry and the CENVAT Credit availed by them in respect of the machineries that they had used in the co-generation/captive power plant is held to be in order. 2. The review petitioner would submit that after the passing of this order, when the petitioner had appeared before the 1st respondent, the 1st respondent insisted upon the petitioner producing the User Test Certificate as the order in EID Parry had been passed on the basis of this User Test Certificate. The grievance of the review petitioner is that the issue of the production of the User Test Certificate was not brought to their notice on 28.06.2023 and further the question of producing the user certificate in their case does not arise. A perusal of the order dated 28.06.2023 would clearly indicate that the issue of the User Test Certificate was not brought to the notice of the petitioner as well as to the Court. What was represented was that the very same issue forming the subject matter of the Writ petitions was the subje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e show cause notices have been issued on the ground that as electricity is an exempted product applying the terms of rule 6(4) of the CENVAT Credit Rules 2004, the petitioner is not entitled to CENVAT Credit and the petitioner have been asked to show cause as to why: i) the CENVAT credit already availed on the capital goods used in the co-generation plant for the various periods should not be demanded from them under Rule 14 of the CENVAT Credit Rule 2004; ii) why interest at the appropriate rate should not be collected from them; and iii) why penalty should not be imposed on them under Rule 15 of the CENVAT Credit Rule. They were called upon to make their written submission along with the documents in support thereof. 6. It is necessary to briefly touch upon the facts which have preceeded the issue of the show cause notices subject matter of these writ petitions/review petitions. 7. The petitioner had earlier been served with show cause notices for the periods September 1995 - November 1995, May 1996 to December 1999 and September 1997 to February 1998 in respect of the CENVAT Credit availed by them stating that the electricity that had been generated from the co-generatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not claiming CENVAT credit on the inputs used for the generation of electricity in the captive power plant. Ultimately, the respondents had withdrawn the appeals filed by them against the petitioner herein before the Hon'ble Apex Court. By reason of the above, the issue raised in these earlier show cause notices, viz., that the electricity generated was not being fully utilized captively and therefore, the petitioners were not entitled to claim CENVAT credit was held against the respondent. 9. The petitioner would submit that thereafter the show cause notices which are impugned in the above writ petitions came to be issued. These show cause notices were premised on the basis that the capital goods were being utilized for generating electricity which by itself was an exempted commodity and therefore the petitioners were not entitled to CENVAT Credit. 10. The following tabulated statement would give the details of the show cause notices issued, its dates and the period covered under each of the notices and these are the show cause notices which are subject to challenge in these writ petitions. S.N. SCN No. Dated Period 1. C No/IV/09/10/2009 16.06.2009 Feb 2008 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regarding the demand for the user Certificate and the validity and relevance of the Show Cause Notices. 14. It is the case of Mr.Dilip Kumar learned Senior Standing counsel appearing for the respondents/revenue that the User Test Report is relevant for considering the issue on hand only to arrive at a conclusion as to whether the machineries/components are being actually used in the captive power plant, since CENVAT Credit is applicable only in respect of those machineries that are being used in the co-generation power plant for generating electricity. That apart, it is the contention of Mr.Dilip that the issue of a User Test Certificate has already been discussed and approved by the Hon'ble Supreme Court in the judgments reported in Commissioner of Central Excise V. Jawahar Mills Ltd., 2001 (132) ELT 3 and in Commissioner of Central Excise, Jaipur V. Rajasthan Spinning & Weaving Mills 2010 (255) ELT 481. 15. He would draw the attention of the Court to the judgment in Jawahar Mills Ltd, cited supra, wherein the Hon'ble Supreme Court had observed that "user will determine whether an item qualifies or not the requirement of clause 1A", namely, the explanation given to capital good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause. 18. Per contra, Mr. Joseph Kodianthara, learned Senior counsel appearing on behalf of Vikram Veerasamy would submit that the contention of the respondent that the show cause notices have been issued on account of the changed legal scenario on account of the above-referred judgments of the Hon'ble Supreme Court is without any basis, since the judgment in Jawahar Mills Ltd had been pronounced as early as in the year 2001, during the pendency of the earlier proceedings before the Hon'ble Supreme Court. As regards the judgment in the Rajasthan Spinning & Weaving Mills, the same has been passed only in the year 2010. Therefore, the contention of the petitioner that there is a changed legal scenario does not hold water. 19. He would submit that the earlier show cause notices had been issued on the ground that the electricity generated was not being utilized for the petitioner's own use but that it was being sold to the Electricity Board. The matter had been challenged by the revenue right up to the Hon'ble Supreme Court where ultimately, they had given up their claim. In the appeal that has been filed before the Hon'ble Supreme Court in C.A.Nos.2039 and 2940 of 2011, they had gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 04 which states that CENVAT Credit cannot be allowed on capital goods which are used exclusively in the manufacture of exempted goods other than the final products which are exempted from whole of duty of Excise duty leviable. Therefore, it is clearly seen that the respondents whose earlier show cause notices have reached finality are attempting to raise a new issue which was not pleaded earlier. Their demand for User Test Certificates based on the judgements of the Hon'ble Supreme Court in the Jawahar Mills Ltd and the Rajasthan Spinning & Weaving Mills is also not maintainable for the simple reason that at no point in time either in the earlier show cause notices or in the show cause notices now impugned has the respondents raised a doubt that all the components in respect of which CENVAT Credit has been availed are not being put to use in the co-generation plant. This stand has been taken up for the first time only when the petitioner had appeared before the 1st respondent after the order of this Court dated 28.06.2023. Further the show cause notice clearly states that the components are being used to generate electricity which is an exempted good; therefore is clear that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... User Test Certificate. In the case of Rajasthan Spinning & Weaving Mills the issue was whether the steel plates and M.S channels used for the fabrication of the chimney in a diesel generating shed would qualify to be termed as capital goods and thereby entitled to MODVAT Credit. Ultimately, the Hon'ble Supreme Court had held that the steel plates and M.S channels fall within the definition of capital goods and therefore the petitioner was entitled to avail MODVAT Credit. In the said case the Hon'ble Supreme Court had applied the ''User Test'' to come to the conclusion that the steel plates and M.S channels are used for the fabrication of the chimney and would therefore fall within the purview of Serial No.5 of table attached to Rule 57Q of the Central Excise Rules, 1944. These judgments have not set a precedent that a User Test Certificate is mandatory. On the contrary, in the case of Jawahar Mills Ltd, the Hon'ble Supreme Court had observed that the plea of User Test had not been raised earlier by the respondent/ revenue and therefore, they had become disentitled to raise the plea. In the case of Rajasthan Spinning & Weaving Mills, the User Test has been 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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