The Ahmedabad Bench of the Customs, Excise & Service Tax Appellate Tribunal(CESTAT) held that the demand of Cenvat Credit on capital goods invoking an extended period was not valid in the absence of suppression of fact.
Chiripal Industries Limited, the respondent engaged in the manufacturing of polyester filament yarn classifiable under Chapter heading 5402 of the Central Excise Tariff Act, 1985 and is registered with the Central Excise Department having registration. During the audit and further inquiry by the Preventive Section, it was revealed that the respondent had procured capital goods for the installation of a power plant under an EPCG license in the year 2008.
The respondent had availed cenvat credit of Rs. 1,19,82,513/- in the year 2012-13 on the power plant under the category of capital goods (Power Plant) which according to the department was incorrect as per the provision of Rule 2(a)(A) of Cenvat Credit Rules, 2004.
The power plant was installed outside the factory for the generation of electricity for captive use which was not permissible as capital goods. The department also contended that the rules were amended on 01.04.2011 after which the duty paid on such capital goods used in the captive power plant installed outside the factory was made eligible for cenvat credit whereas the respondent had availed cenvat credit only after the amendment was done. A show cause notice was issued demanding the credit credit on capital goods invoking the extended period. The adjudicating authority dropped the proceedings against all the notices.
Shri R. K. Agarwal, Superintendent (AR) appeared on behalf of the Revenue and reiterated the grounds of appeal. He further submitted that the respondent had received the capital goods admittedly, during the period from July 2008 to September 2010 even though the credit was taken during the period June 2012 to December 2012 with the provision of Cenvat Credit Rules prevailing at the time of receipt of capital goods shall apply.
As per the relevant provision during the period July 2008 to September 2010, the credit on capital goods installed outside the factory for the generation of electricity was not allowed. The same was allowed by amendment in Cenvat Credit Rules 2004 vide Notification No. 3/2011-CE(NT) dated 01.04.2011 whereby in Rule 2 in clause (a) in sub Clause (A) after item (1) an Item (1A) was inserted whereby the capital goods installed outside the factory of the manufacture of the final product for generation of electricity for captive use within the factory was allowed which is effective from 01.03.2011, therefore, this provision will not apply in the present case to the appellant as the capital goods were received and installed much before this above amendment made in Cenvat Credit Rules.
Shri P. P. Jadeja, Consultant, appeared on behalf of the respondent and reiterated the findings of the impugned order. It was submitted that the fact about the installation of capital goods in the factory premises of Nandan Exim Limited and availment of cenvat credit thereon by the Respondent was very much disclosed by the Respondent and was in the knowledge of the department.
As per the certificate issued by the Deputy Commissioner, it can be seen that in the certificate it is certified that the capital goods against the EPCG license were installed by the Respondent in the factory of M/s Nandan Exim Limited.
A two-member bench of Ramesh Nair (Judicial Member) and Raju (Technical member) observed that the demand was wrongly made under the extended period in the show cause notice. Further held that “Since the demand even on limitation alone is not sustainable, the Revenue’s appeal has no legs to stand. Accordingly, we uphold the impugned order and dismiss the Revenue’s appeal.”
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