TMI Blog2023 (10) TMI 1111X X X X Extracts X X X X X X X X Extracts X X X X ..... neration plant is being used for generating electricity which is an exempted commodity and therefore the petitioners are not entitled to CENVAT Credit. This conclusion has been arrived at by applying the provisions of Rule 6(4) of the CENVAT Credit Rules 2004 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. The issue of producing a User Test Certificate not having been demanded in the impugned Show Cause Notices and the order dated 28.06.2023 having been passed on the joint submissions of the counsel where once again there was no reference to the User Test Certificate, the Review petitions have to be allowed and since the question of CENVAT Credit having reached finality, and the impugned Show Cause Notices are issued on a new ground with reference to the subsequent periods of the writ petitions have to be allowed - the writ petitions/revie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passing the impugned order and the orders were passed by this Court directing the writ petitioner to appear before the 1st respondent on 12.07.2023. While passing the order, this Court had directed the 1st respondent to follow the order dated 31.03.2023 passed in the matter of EID Parry and allow the CENVAT Credit in respect of the machineries that the petitioners used in their co-generation/captive power plant. The Court had also directed that orders had to be passed within a period of two weeks from the date of appearance of the petitioner before the 1st respondent. The question of producing the User Test Certificate had not been brought to the notice of the Court. Therefore, the review now filed by the petitioner has to necessarily be allowed. 4. Both parties had earlier argued the writ petition at length and after hearing both sides when the parties had orally submitted that in a similar case, the first respondent had set aside the show cause notice this Court had passed the order dated 28.06.2023. Mr.Dilip learned Standing counsel appearing on behalf of the Revenue had justified the necessity for the production of the User Test Certificate by stating that no prejudice would b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the period May 1996 to December 1999 were challenged unsuccessfully before this Court in CMA Nos.2146 and 2147 of 2008. The Division Bench of this Court by their order dated 24.07.2008 was pleased to observe that the respondents had not challenged the final order nos.75 and 1494 of 2005 which were also the orders passed in respect of similar show cause notices relating to the co-generation power plant of the petitioner. That apart, the Bench had also observed that cases of other assessees were also considered favorably by the Tribunal and ultimately, the appeals were dismissed. 8. Challenging the said order, the respondent had filed a Special Leave Petition before the Hon ble Supreme Court which was later admitted and converted into Civil Appeals Nos.2039 and 2040 of 2011. The respondents had conceded that they had not challenged the orders passed in final order no.75/2005 (which was the show cause notices for the period September 1997 to February 1998). They had contended that though had not challenged the orders in view of the fact that the 2nd proviso to Rule 57 R2 had been omitted on 31.08.1996 even prior to the demand being raised. They had also contended that the decision aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 015 11. The petitioner had challenged the show cause notices on the ground that by reason of the orders passed in the earlier show cause notices, this issue had attained finality and the respondents cannot revive the same once again. The petitioner has also challenged the impugned notices on the ground of delay by stating that after the issue of the show cause notices spread over the period June 2009 to March 2015 no action to date has been taken to date and therefore relying upon the provisions of Section 11 A(11) the time limit for adjudicating on the show cause notices had long expired and on this ground also the show cause notices deserve to be quashed. 12. When these writ petitions had come up for admission the learned standing counsel for the respondents had taken time to come back with instructions and the matter had come up on several dates when both parties had made their submissions ultimately on 28.06.2023, the learned standing counsel for the respondents had come forward with the submission that the matter involved in the case of EID Parry is the very same issue involved in the present case where the Commissioner had held in favour of EID Parry. Therefore ultimately by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that if the petitioner is confident about their eligibility for the CENVAT Credit, the submission of the User Test Certificate of a Chartered Engineer could be produced by them and their refusal gives rise to doubt about the usage of the disputed capital machineries/inputs in establishing the co-generation power plant. It is his argument that the petitioner is entitled to CENVAT Credit only in respect of machineries/inputs that are actually put into use in the co-generation power plant. Once the petitioner is able to prove that the components are an integral plant of the co-generation power plant then the respondents would have no hesitation in allowing the CENVAT credit. He would submit that the electricity generated by itself is an exempted product and therefore the petitioner cannot seek CENVAT credit. 17. It is his contention that the demand for a User Test Certificate is not in variance with the directions of this Court on 28.06.2023. He would further submit that the impugned show cause notices have been issued only on account of the change in legal scenario which has taken place on account of the judgments in the Rajasthan Spinning Weaving Mills and the Jawahar Mills Ltd . He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed by this Court on 28.06.2023. He would further contend that the show cause notices by themselves are time-barred. Under Section 11A(11) of the Central Excise Rules, the adjudication should take place within a period of 3 years or latest within a period of 5 years of the issue of the show cause notice. In the case on hand to date no adjudication has taken place. It is also his contention that the judgments in the Jawahar Mills Ltd and the Rajasthan Spinning Weaving Mills would have no relevance to the case on hand, as there was no doubt raised at any point of time by the respondents that the components in respect of which CENVAT Credit was sought for was not actually used in the co-generation plant. 21. Heard the counsels on either side. 22. The records would show that earlier show cause notices had been issued by the respondents denying CENVAT Credit to the petitioner on the ground that the electricity that was generated was not being used captively but was being sold outside to the Tamil Nadu Electricity Board and therefore they are not entitled to a CENVAT Credit. This issue has attaining finality with the orders passed against the 1st respondent right up to the Hon ble Suprem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital goods in terms of rules 57 Q of the Central Excise Rules 1944. The controversy in that case was as to whether these items would come within the ambit of capital goods as set out in Rule 57-Q. The learned Judges had observed that the definition of capital goods is wide and capital goods could be machines, machinery, plants, equipment and apparatus tools or appliances which are used for producing or processing any goods or for bringing about any change in any substances for manufacturing of the final products qualifying for availing a MODVAT Credit. In the said case, the Hon ble Supreme Court had observed that at no point in time before the authorities had the revenue raised a case that the items do not satisfy the requirements of capital goods within the meaning of the Rule 57-Q, on the ground of User Test and it was only before the Hon'ble Supreme Court that the same has been urged. Therefore, the learned Judges had refused to remand the matter for fresh decision. The learned Judges had simply given its concurrence to an argument advanced by the learned Additional Solicitor General that the user of a particular component would determine whether or not it qualifies the requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld not be recovered since the electricity that has been generated was not being Captively used and was sold out. In the show cause notices which are the subject matter of instant writ petitions, they have been asked to show cause as to why the CENVAT Credit given to them should not be denied since the electricity that was being generated is an exempted product. 28. The show cause notices as already submitted have been issued between the years 2009 to 2015 and nearly 7 to 12 years have lapsed in the issue of the 12 show cause notices. In fact, the respondents have not moved a little finger till the writ petition was filed by the writ petitioner to adjudicate on these Show Cause Notices. Sub Section 11 of Section 11A of the Central Excise Act would read as follows:- (11) The Central Excise Officer shall determine the amount of duty of excise under Sub-section(10) - (a) Within six months from the date of notice where it is possible to do so, in respect of cases falling under sub-section (1); (b) within [two years] from the date of notice, where it is possible to do so, in respect of cases failing under sub-section (4). 29. Therefore, in respect of the show cause notices subject matter ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
