M/S.Piccadily Agro Industries vs Cce, Panchkula

[Arising out of Order-in-Appeal No.117/ANS/PUK/2009 dated 30.04.2009 passed by the Commissioner (Appeals), Gurgaon]

For approval and signature:

HONBLE MR. S.K. MOHANTY, MEMBER (JUDICIAL)

1. Whether Press reporters may be allowed to see the

order for publication as per Rule 27 of the CESTAT

(Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the

CESTAT (Procedure) Rules, 1982 for publication in

any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy

of the Order?

4. Whether Order is to be circulated to the Departmental

authorities?

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M/s.Piccadily Agro Industries Appellant

Vs.

CCE, Panchkula  Respondent

Present for the Appellant : Shri Sudeep Singh, Advocate

Present for the Respondent: Shri R.K.Mishra, DR

Coram: HONBLE MR. S.K. MOHANTY, MEMBER (JUDICIAL)

Date of Hearing/Decision: 02.06.2015

Final ORDER NO. 54109/2015

PER: S.K. MOHANTY

The appellant is a manufacturer of sugar and molasses. During the period January to March, 2007 the appellant had installed the Ethanol plant within its factory premises. The capital goods used in the said Ethanol plant was taken as cenvat credit by the appellant. Taking of Cenvat Credit was disputed by the Central Excise Department on the ground that the machinery used in the manufacture of goods other than the final products i.e. sugar and molasses, will not be admissible for cenvat benefit to the appellant. The show cause notice issued in this regard was culminated in the adjudication order dated 27.11.2008, wherein cenvat credit of Rs.22,09,920/- was denied and equal amount of penalty was imposed on the appellant. The appeal filed against the said adjudication order was dismissed vide the impugned order. Hence, the present appeal is before this Tribunal.

2. Heard the ld. Counsel for both sides and perused the records.

3. The short question involved in this appeal is as to whether cenvat credit can be taken by the appellant for the capital goods relates to some other plant, which was not operational at the material time and that the Cenvat Credit attributable to the capital goods of such other plant (Ethanol Plant) can be used for removal of sugar and molasses from the factory of the appellant.

4. The ld. Advocate appearing for the appellant submits that the capital goods on which the cenvat credit has been taken are confirming to the definition of capital goods and the said goods having been used in the factory of the manufacturer of the final product, the cenvat credit is admissible. He further submits that Rule 3 of Cenvat Credit Rules, 2004, entitles the manufacturer to take cenvat credit, provided the central excise duty paid on the capital goods, received in the factory of manufacture of final product is eligible for cenvat credit. According to him, there is no stipulation that the plant which is not operational, cenvat credit attributable to such plant cannot be taken by the appellant. He further submits that sub rule (4) of Rule 3 permits urilization of cenvat credit for payment of duty of excise on any final product. Thus, according to him, since the Ethanol plant is located within the factory premises where sugar, molasses and Ethanol are the final products, cenvat credit attributable to the Ethanol plant should also be eligible for utilization or clearance of sugar and molasses from the factory.

5. Per contra, the ld. DR appearing for the Revenue - respondent reiterated the findings recorded in the impugned order and further submits that the Ethanol plant was not in operational during the disputed period. The appellant was not eligible to take cenvat credit of Central Excise Duty paid on the capital goods installed in the said plant.

6. I have heard the ld. Counsels and perused the records.

7. It is not in dispute that the plant facilities, such as sugar molasses and Ethanol are situated within the same factory premises of the appellant and the factory as a whole has been registered under the Central Excise statute. Since the above final products are subjected to levy of central excise duty, the inputs and capital goods used/utilized for manufacture of the final product will be eligible for cenvat credit. Rule 3 of the Cenvat Credit Rules only specifies that the duty paid capital goods received in the factory of manufacture of final product will be eligible for availment of cenvat credit. There is no restriction contained in the said Rule that the capital goods used in the factory under construction situated within the common factory shall not be eligible for cenvat credit. Further, sub-rule (4) of Rule 3 of Cenvat Credit Rules permits the manufacturer to utilize cenvat credit on payment of duty of excise on any final product manufactured by him.

8. Further, Rule 4 of the said Rules, prescribes the conditions for allowing the cenvat credit. Sub-rule 2 (a) of Rule 4 provides that the cenvat credit in respect of capital goods received in a factory at any point of time in any financial year shall be taken only for an amount not exceeding 50% of duty paid on such capital goods in same financial year. On a close reading of Rule 3 and Rule 4 of the said rules, it transpires that no restrictions have been imposed that where the plant in a factory is not operational, the cenvat credit taken on the capital goods installed in the said plant will not be eligible for cenvat credit and the credit so taken shall not be eligible for utilization towards the other excisable goods manufactured and cleared from the said factory.

9. Since no restrictions have been imposed in the cenvat credit rules for not taking the cenvat credit on the capital goods installed in the factory, where final goods have been manufactured by the appellant, I am of the considered view that denial of cenvat credit is not justified. Thus, the impugned order is set aside and the appeal is allowed in favour of the appellant.

(Dictated and pronounced in the open Court)

(S.K. MOHANTY)

MEMBER (JUDICIAL)

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