9911796707
TMI Blog2024 (6) TMI 581X X X X Extracts X X X X X X X X Extracts X X X X ..... partment vide Registration No. AABCP6683NXM001 and Service Tax Registration No.AABCP6683NXM001 having its manufacturing unit at Saukuchi, Lokhra Road, Guwahati, Assam. The manufacturing unit of the appellant commenced its commercial production on 26.03.2004. Under the Notification No. 32/99-CE dated 08.07.1999 issued by the Central Government, the appellant was entitled to exemption on the credit of CENVAT including exemption on capital expenditure. As per the projection made in this appeal, the appellant had procured capital goods from M/S INOX Air Products Ltd. for use in the factory during the year 2007-08. However, the plants and machineries so procured during the year 2007-08 were not installed/put to use in the factory until the year 2011. The assessee had availed CENVAT credit amounting to a sum of Rs. 22,93,920/- during the financial year 2010-11 and 2011-12 on capital goods received during the months of November, 2007, December, 2007 and January, 2008. According to the Revenue, CENVAT credit amounting to Rs. 22,93,920/- against capital goods was available to the assessee only during the financial years 2007-08 and 2008-09 in terms of Rule 4 (2) of the Cenvat Credit Rules. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll be subject to the condition that the manufacturer first utilizes whole of the Cenvat Credit available to him in the last date of the month under consideration for payment of duty on goods cleared during such month and pays only the balance amount in cash." 13. I find that para 2B of the said notification is a substantive condition and the appellant has violated the said condition rendering them non-entitlement of the benefit of the said notification. I also find that CBEC vide letter F.No. 101/04/2003-CX.3 dated 04/06/2009 has clarified that when the manufacturer has not availed credit and consequently paid higher amount in cash, the amount of the said non-availed credit is to be deducted from the amount to be paid as refund, instead of rejecting the entire refund claim. 14. I find that the capital goods were received by the respondent assessee in the year 2007-08 and 2008-09 and these were stated to have been installed/used in the factory in the year 2010-11 and the appellant was availing area based exemption in terms of notification No. 32/99-CE dated 8/7//99. The Board's Circular referred above clarified the manner in which the credit is to be availed/utilized while ava ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d preferred C. Ex. Appeal No. 2/2020 before this Court. However, the said appeal was subsequently closed on account of the fact that the sum of Rs. 22,93,920/- involved in the appeal was below the pecuniary limit of Rs. 1,00,00,000/- (Rupees One Crore) fixed by the Ministry of Finance for the High Court to entertain an appeal of this nature. As such, only the appeal preferred by the assessee against the impugned order dated 02.05.2018 survived for consideration by this Court. 8. Assailing the impugned order dated 02.05.2018, in so far as the same upholds the demand for recovery of a sum of Rs. 15,95,332/- being the CENVAT credit availed by the appellant on the capital goods procured in the years 2007-08 and 2008-09 is concerned, Mr. Saraf has argued that even though the capital goods were procured in the years 2007-08 and 2008-09 but the machineries so procured were not installed/put to use in the factory until the year 2011. Therefore, the CENVAT credit was claimed by the appellant only in the year 2011 upon installation of the machineries. Contending that there is no provision either in the CENVAT Credit Rules, 2004 or the Central Excise Notification dated 08.07.1999 laying down ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... substantiate their respective arguments. Rule 2 (a) of the Cenvat Credit Rules, 2004 defines "capital goods" which reads as follows :- "RULE 2. Definitions. - In these rules, unless the context otherwise requires, - (a) "capital goods" means :- (A) the following goods, namely :- (i) all goods falling under Chapter 82, Chapter 84, Chapter 85, Chapter 90, [heading 6805, grinding wheels and the like, and parts thereof falling under [heading 6804 and wagons of sub-heading 860692]] of the First Schedule to the Excise Tariff Act; (ii) pollution control equipment; (iii) components, spares and accessories of the goods specified at (i) and (ii); (iv) moulds and dies, jigs and fixtures; (v) refractories and refractory materials; (vi) tubes and pipes and fittings thereof; [* * * ] (vii) storage tank, [and] [(viii) motor vehicles other than those falling under tariff headings 8702, 8703, 8704, 8711 and their chassis [but including dumpers and tippers],] used-" 14. Rule 4 of the Rules of 2004 deals with the conditions for allowing CENVAT credit. Rule 4 is extracted herein below for ready reference :- "RULE 4. Conditions for allowing CENVAT credit. - (1) The CE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on such capital goods in the same financial year : [Provided also that the CENVAT credit in respect of capital goods may be taken by the provider of output service when the capital goods are delivered to such provider, subject to maintenance of documentary evidence of delivery and location of the capital goods.] [Explanation. - For the removal of doubts, it is hereby clarified that an assessee shall be "eligible" if his aggregate value of clearances of all excisable goods for home consumption in the preceding financial year, computed in the manner specified in the said notification, did not exceed rupees four hundred lakhs.] (b) The balance of CENVAT credit may be taken in any financial year subsequent to the financial year in which the capital goods were received in the factory of the manufacturer, or in the premises of the provider of output service, if the capital goods, other than components, spares and accessories, refractories and refractory materials, moulds and dies and goods falling under [heading 6805, grinding wheels and the like, and parts thereof falling under heading 6804] of the First Schedule to the Excise Tariff Act, are in the possession of the manufactur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur view, would not stand extinguished merely because the Cenvat Credit claim was not lodged nor availed during the financial years when the capital goods were procured. As such, we are of the considered opinion that in the facts and circumstances of the present case, there is no cogent basis for this Court to conclude that the assessee had illegally availed CENVAT credit for procurement of the capital goods pertaining to the years 2010-11 and 2011-12. Consequently, the order for recovery of the amount of CENVAT credit as affirmed by the learned Tribunal is held to be unsustainable in the eyes of law. 17. For the reasons stated herein above, we are of the unhesitant opinion that the Commissioner (Appeals), Customs, Central Excise and Service Tax, Guwahati, was not correct in passing the order dated 25/11/2014 particularly in so far as allowing the demand for recovery of Rs. 15,95,332/- as CENVAT credit availed by the appellant on the capital goods is concerned. Consequently, the judgment and order dated 02/05/2018 passed by the CESTAT to the extent of allowing the above recovery, is also held to be unsustainable in law. As such, the impugned judgment and order dated 02/05/2018 is h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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