M/S.Rico Auto Inds. Ltd vs Cce, Delhi

[Arising out of Order-in-Appeal No.26/ANS/GGN/2009 dated 27.01.2009 passed by the Commissioner of Central Excise (Appeals), Delhi-III].

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?

M/s.Rico Auto Inds. Ltd. Appellant

Vs.

CCE, Delhi  Respondent

Present for the Appellant : Shri R.C. Choudhary, Advocate

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

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

Date of Hearing/Decision: 14.07.2015

FINAL ORDER NO. 52246/2015

PER: S.K. MOHANTY

This appeal is directed against the impugned order dated 27th January, 2009 passed by the Commissioner of Central Excise (Appeals), Delhi-III, wherein cenvat credit taken by the appellant on the disputed goods have been denied on the ground that the said goods have not been used for manufacture of final products in the factory.

2. Ld. Advocate Shri R.C. Chowdhary, appearing for the appellant submits that the appellant took cenvat credit on Roof Ventilators, Evaporating Cooling Machine, Industrial Trolley Wheels and Bins for Casting Storage by treating the same as capital goods. The ld. Advocate further submits that the Roof Ventilator though falls under Chapter 73 of the Central Excise Tariff Act, 1985, but the same is a part of the Evaporating Machine falling under Chapter 84, installed in the factory. According to him, since all the disputed goods except Beams for Casting Storage are falling under Chapter 84 of Central Excise Tariff Act, 1985 the same should be considered as capital goods, as per the definition contained in Rule 2 (a) (A) of the Cenvat Credit Rules, 2004. With regard to the Bins for casting storage, the submission of the ld. Advocate are that the cenvat amount of Rs.64,346/- has already been reversed by the appellant before issue of the show cause notice and the present appeal is in context with the imposition of penalty confirmed by the authorities below under section 11AC of the Central Excise Act, 1944.

3. Per contra, Shri R.K. Mishra, ld. D.R appearing for the respondent reiterates the findings recorded in the impugned order.

4. I have heard the ld. Counsel for both sides and perused the records.

5. I find that classification of the disputed goods under Chapter 84 of the Tariff Act have not been disputed by the authorities below. The only ground assigned in the impugned order for denial of cenvat benefit to the appellant is that the disputed goods have not been used for manufacture of the final product in the factory. Rule 3 of the Cenvat Credit Rules, 2004 is the enabling provision, which entitles a manufacturer to take cenvat credit of excise duty paid on the inputs or capital goods received in the factory of the manufacturer of final product. The goods of chapter 84 are categorized as capital goods for the purpose of taking cenvat credit. On a conjoined reading of Rule 3 and definition of capital goods contained in rule 2 (a), reveals that irrespective of the purpose for which the capital goods have been installed, if the same confirms to the eligible chapters mentioned in the definition clause, the cenvat credit shall be available to the manufacturer. In the present case, since the classification of the disputed goods under Chapter 84 has not been objected to by the authorities below, the ground assigned for rejection of the cenvat credit is not sustainable under the law. With regard to imposition of penalty of Rs.64,346/- in the adjudication order and confirmed in the impugned order, I find that the cenvat credit attributable to the disputed goods i.e. Bins for Casting Storage has been reversed by the appellant before issuance of the show cause notice. Further, no specific findings have been recorded either in the adjudication or in the impugned order regarding the involvement of the appellant in any activity concerning fraud, collusion, misappropriation etc., with intent to evade payment of Central Excise duty. In absence of those ingredients, imposition of penalty under section 11AC of the Central Excise Act, 1944 is not justified.

6. In view of above, 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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