Custom, Excise & Service Tax Tribunal
M/S Adani Gas P. Ltd vs Commissioner, C.Ex. & S.Tax on 30 January, 2017
In The Customs, Excise & Service Tax Appellate Tribunal West Zonal Bench At Ahmedabad Appeal No.E/754/2008; E/1788-1790/2010 [Arising out of OIO-12-COMMR-2008, dt.31.03.2008, and OIO-27-28/COMMR/HKJ/AHD-II/2010, dt.27.08.2010, passed by Commissioner, C.Ex. & S.Tax, Ahmedabad-II ] 1. M/s Adani Gas P. Ltd, 2. Shri Dharmesh A. Parekh Appellants Vs Commissioner, C.Ex. & S.Tax, Ahmedabad Respondent
Represented by:
For Appellants:Shri Deven Parikh, Senior Advocate, Shri Hardik Modh, Advocate For Respondent: Shri J. Nagori, A.R. CORAM:
HONBLE DR. D.M. MISRA, MEMBER (JUDICIAL) HONBLE MR.ASHOK K. ARYA, MEMBER (TECHNICAL) Date of Hearing:23.01.2017 Date of Decision:30/01/2017 Order No. Per: Dr. D.M. Misra These appeals are filed against the respective Orders-in-Original passed by Commissioner, C.Ex. & S.Tax, Ahmedabad-II. Since issues involved in these appeals are common, hence taken up together for disposal. However, for better understanding, the facts involved in each of these appeals are separately stated.
1.1 Appeal No.E/754/2008:
In brief, the facts of the case are that the Appellants are inter alia engaged in the activity of procuring natural gas from Gujarat State Petroleum Corporation Ltd. and manufacturing Compressed Natural Gas (CNG), classifiable under Chapter Sub-heading No.27112900 of Central Excise Tariff Act, 1985, at their factory premises at Memco, Naroda, Ahmedabad. The Appellants Memco factory premise was visited by the Central Excise officers on 23.08.2007. On scrutiny of records relating to availment of CENVAT Credit, it was allegedly noticed that besides availing CENVAT Credit on various capital goods, inputs, at their CNG station at Memco, the Appellant had also availed CENVAT Credit on capital goods, and inputs at their various distribution points, described as their daughter stations. After completion of necessary investigation, it was alleged that the capital goods and inputs viz. Compressors, Dispensers, Ball Valves, Spares, Cables, CNG Storage Cascades installed at their different CNG outlets i.e. daughter stations/distribution centers were not eligible to CENVAT Credit amounting to Rs.3,15,78,544/- availed during the period Jan.2007 to June 2007. The Appellants had paid back the said CENVAT Credit in cash against GAR7 challan on 24.09.2007 and 28.11.2007 under protest. Subsequently, a Show Cause Notice was issued to them on 24.12.2007 and adjudicated by the learned Commissioner on 31.03.2008, who confirmed recovery of CENVAT Credit and imposition of penalty under Rule 15(2) of CENVAT Credit Rules, 2004 read with Section 11AC of Central Excise Act, 1944.
1.2 Appeal No.E/1788-1790/2008:
In these Appeals also, the officers of the Central Excise Department visited the two other locations of the Appellant viz. Maninagar and Jamalpur on 17.09.2007. During the course of investigation, it was noticed by the officers that besides availing CENVAT Credit on various capital goods, inputs and input services at these locations, the Appellant had also availed CENVAT Credit of capital goods, input and input services in relation to various distribution points/daughter stations, wherefrom the CNG had been distributed by the Appellant to the consumers. On recording the statements and carrying out further investigation, it revealed that the Appellant had availed CENVAT Credit on capital goods/inputs w.e.f. January 2007 and also on input services. (Service Tax paid for transportation of goods through pipeline and also on input viz. Cascades (Stationary/Mobile.) Consequently, a Show Cause Notice was issued on 22.05.2008 for recovery of CENVAT Credit of Rs.59,23,395/- on capital goods, Rs.53,39,566/- on inputs, Rs.77,03,649/- on input services, totaling to Rs.1,89,66,610/- availed at both Jamalpur and Maninagar stations. The said Show Cause Notice was adjudicated by the Commissioner of Central Excise confirming the demand and imposition of equivalent penalty under Rule 15(2) of CENVAT Credit Rules, 2004 and personal penalty on other noticee. Aggrieved by the said order, the Appellants preferred an appeal before the Tribunal, which resulted in remanding the case to the Adjudicating authority for deciding the case afresh after the decision of the Chief Commissioner on the pending application seeking centralized registration of all the distribution units by the Appellant.
1.3 In the meantime, another Show Cause Notice was issued to their Memco Unit on 04.05.2009, on the basis of Audit objection, alleging wrong availment of CENVAT Credit of Rs.45,24,039/- on various input services during the period August 2006 to May2007.
2. In the remand proceeding, both the aforesaid Show Cause Notices have been decided, resulting into confirmation of demands of Rs.1,89,66,610/- and Rs.45,24,039/- and penalty of equivalent amounts under Rule 15(2) of CENVAT Credit Rules, 2004 read with Rule 25 of Central Excise Rules,2002, also directing confiscation of capital goods and inputs with an option to redeem the same on payment of fine of Rs.1.00 crore. Besides, Rs.20.00 lakhs penalty was also imposed on them under Rule 25 and personal penalty of Rs.5.00 laks on Shri Dharmesh A. Parekh, second Appellant under Rule 26 of the Central Excise Rules, 2002. Hence, the present appeals.
3. The learned senior advocate Shri Deven Parikh for the Appellant explaining the activities undertaken by the appellant submitted that the Appellant received natural gas at their City Gate Station (CGS) at Virat Nagar, Ahmedabad through transmission pipelines network of M/s GSPL. The natural gas received is distributed on continuous basis for sale as Piped Natural gas (PNG) to industrial, commercial and domestic consumers. The natural gas received is also distributed to CNG stations for conversion into compressed natural gas to be filled into the vehicles. The natural gas received from CGS is compressed with the help of compressors at 240 to 250 Bars kg/cm sq. The said compressed CNG later sold/dispensed through dispenser at the CNG stations/outlets. The dispensers at the CNG stations/outlets are directly connected through tubing of the compressors/cascades. Simultaneously, the compressed CNG in online/mother CNG station is filled into mobile cascades at a pressure of 240-250 bars/kg cm.sq and transported to daughter stations/outlets for retail sale.
3.1 It is his contention that that even though the Appellant has applied for centralized registration on 11.10.2005, but due to the pendency of such application, they received separate Central Excise registration for their premises at Memco, Jamalpur and Maninagar. Further, he has submitted that during the period in question, the appellant had their business operation of distribution of CNG through 14 online stations, 6 daughter stations and 6 daughter booster stations situated at various locations in Ahmedabad. He has further submitted that the Appellant had paid CENVAT Credit on input, capital goods and input services in relation to the aforesaid places. The inputs/capital goods involved in the process at various locations are viz. compressors, dispensers, stationary cascades and mobile cascades. Besides inputs and capital goods, they have also availed CENVAT Credit on various input services viz. Man Power Service, GTA Professional Service, Construction Service, Erection, Commissioning & Installation Service, Repair & Maintenance Service, Architecture Service, Security Service etc received by them.
3.2 Assailing the impugned order where under CENVAT Credit has been denied to them on the inputs, capital goods and input services availed at various daughter stations, the learned Advocate submitted that even though such daughter stations were situated away from the place where compression of natural gas take place, however, since the compressed natural gas were dispensed at these daughter stations, therefore, the place of removal of such CNG be considered to be shifted to the daughter stations and accordingly, the CENVAT Credit on inputs/capital goods which were though not received at the registered premises, but used in or in relation to the manufacture and clearance of final product upto the place of removal, be eligible to CENVAT Credit.
3.3 Elaborating his arguments, he has submitted that although the process of compression is a mere change in the physical form of natural gas and does not amount to manufacture within the common meaning of the word manufacture, but by way of a legal fiction and artificial definition inserted in Chapter Note 5 of Chapters 26 & 27 of Central Excise Tariff Act, compression of natural gas is deemed to be a process of manufacture. It is his contention that compression means reducing the volume of the gas by compressing the quantity under pressure. The moment the pressure is removed, the natural gas returns to its expanded form and increase in volume. Thus, CNG must constantly be kept under pressure i.e. compressed, for it to be commercially marketable. Wherever, there is no online transportation facility of the gas and the same has to be transported by road from mother station to daughter station, it is important to ensure sufficient level of pressure to keep the natural gas compressed. The moment the pressure is reduced, in which case below 100 bars, the gas cannot be dispensed into the vehicles and thereby becomes non-marketable at the daughter stations. To ensure that the pressure at daughter stations is maintained, at most of the daughter stations, boosters have been installed. Since all vehicle owners cannot come to mother stations, for injecting CNG into their vehicles, hence the place of removal of CNG also to be considered as daughter station from where the same is sold/injected to the vehicle owners/users. He has vehemently argued that the activity of compression continues and integrated one, and the natural gas must remain compressed under pressure at all times for it to be marketable from the place of removal.
3.4 The learned Advocate Shri Deven Parikh further submitted that the definition of compressed natural gas prescribed under Section 2(l) of Petroleum Natural Gas Regulatory Board, 2006, reveals that if the pressure of CNG falls below 200 bars, it does not remain compressed natural gas. Recompressed booster stations are not connected with steel pipeline network. It has compressor for making CNG out of natural gas as well. By the very nature of the product, the pressure in cascade reduces, therefore, the gases cannot be sold as CNG as per the said statutory definition. It is his contention that the reason for gas becoming natural gas again is quite irrelevant. The fact remains that the cascade will no longer contain the CNG once the pressure falls below 200 bars. The compressors are used at these stations without remaking CNG from natural gas. It is his contention that this activity of remaking amounts to manufacture in view of Chapter Note (v) of Chapter 27 of Central Excise Tariff Act, 1985. The only difference being that this is the second stage of compression. In both the cases, it is natural gas which is converted into CNG by undertaking the process of compression which amounts to manufacture. In support of the contention that remaking of the goods amounts to manufacturing activity, undertaking of returned manufactured goods, the learned Advocate refers to the following decisions:- (i) CCE Vs Bhushan Steel & Strips Ltd. 2014 (304) ELT 327 (All);(ii) Maruti Udyog Ltd CCE 2016 (332) ELT 879 (T); (iii) Hotline CPT Ltd Vs CCE 2015 (318) ELT 141 (T); CCE Vs Tudor (I) Ltd. 2006 (197) ELT 53 (T-LB).
3.5 Further, accepting the legal position that the place of removal has not been specified either in the definition of capital goods or input. However, as the definition qualify the expression unless the context otherwise require which means that the definition is not applicable if the context does not require. It is his argument that in the context of CNG, it is peculiar in nature both in the manner in which the same is manufactured and marketed and the definition of capital goods as given in Rule 2(a) and inputs in Rule 2(k) of CENVAT Credit Rules,2004 would not be applicable in strict sense because the scope of factory in both the definitions would not apply to those goods where manufacturing activity continues until the same is sold from the place of removal. The definition of factory would take into its scope any manufacturing process connected with the production of excisable goods and it does not limit or confined to four corners of one premise. Hence, both the mother station and the daughter station would qualify to come within the scope of the the word factory. It is his submission that the appellant would be entitled to CENVAT Credit of all the capital goods, inputs and input services used in the manufacture of final product i.e. CNG upto the place of removal as such place of removal having regard to the peculiar nature of goods, and the context in which the same has been sold, would be the extended factory i.e. daughter stations. Further, he has submitted that as place of removal is the place where CNG is dispensed into the vehicles, mother stations, online stations, daughter stations, and daughter booster stations, and Central Excise duty has been paid on the value on which the CNG sold to customers; the place where CNG dispensed into vehicles ought to be the place of removal. Therefore, inputs, capital goods and input services used at the place of removal is eligible to CENVAT Credit in view of the judgment in the case of CCE Nagpur Vs Ispat Industries Ltd 2015 (324) ELT 670 (SC), Sports & Leisure Apparel Ltd Vs CCE Noida 2016-TIOL-887-CESTAT-ALL.
3.6 It is further submitted that Commissioner has denied CENVAT Credit on dispensers on the ground that the same were used outside the factory for manufacture and had no role to play in the manufacture of CNG. Countering the said observation, he has submitted that the dispenser is a measuring instrument used in conjunction with storage cascasdes for effecting delivery of CNG by a specified volume. The dispensers continuously measures, memorize, and display the volume and the pressure of CNG passing through the measuring transducers.
3.7 Use of dispensers is inevitable for dispensing CNG into the customers vehicles and without dispensers, the process of clearance of CNG cannot be considered as complete; hence the same has to be considered as an integral part of clearance of CNG. The dispensers have been used at CNG stations including on line stations and the same are integral part for clearance of CNG upto the place of removal. Further, assailing the denial of credit on mobile cascades and stationary cascades on the same ground, the learned Advocate has submitted that these are also for clearance of CNG prior to place of removal. Mobile cascades being the packing material in which the CNG is stored, as certain retailed outlet does not have the facility of compression of natural gas, therefore, mobile cascades are required for supply of compressed CNG to such outlets. He has vehemently argued that mobile cascades are in the nature of packing material in which CNG is filled, stored and transmitted from mother station to daughter station from where the CNG is ultimately injected into the vehicles of customers. It is his contention that merely because the mobile cascades are partly used outside the factory it does not mean that the same are not eligible to CENVAT Credit. In support, he has referred to the following judgments (i) Vikram Cement Vs CCE 2006 (194) ELt 3 (SC); (ii) Jaypee Rewa Cement Vs CCE M.P. 2001 (133) ELT 3 (SC); (iii) Greenply Industries Ltd Vs CCE Kolkata-VII 2014 (314) ELT 356 (Tri-Kolkata); (iv) Triveni Engg. & Inds. Ltd Vs CCE 2014 (303) ELT 129 (Tri-Del); (v) CCE Vs Industrial Oxygen Co. Ltd 2004 (175) ELT 907 (Tri-Bang.); (vi) Hira Power & Steel Ltd Vs CCE, Raipur 2008 (229) ELT 408 (Tri-Del); and (vii) Steel Authority of India Ltd Vs CCE Bhubaneshwar-II 2007 (219) ELT 960 (Tri-Del.) Advancing the alternative argument, he has submitted that even if it is assumed that mobile cascades are used for storing of CNG, then also CENVAT Credit is available in view of the following decisions:- (i) Goyal Mg Gases Pvt. Ltd. Vs CCE Ghaziabad 2005 (192) ELT 715 (Tri-Del); (ii) CCE Vs West Coast Industrial Gases Ltd 2003 (155) ELT 11 (SC); (iii) STS Chemical Ltd Vs CCE Mumbai-II 2001 (132) ELT 704 (Tri-Mumbai).
3.8 On the same analogy, CENVAT Credit on stationary cascades is also eligible as they were used for clearance of CNG prior to the place of removal. It is his contention that the stationary cascades are used for storing the CNG and then connected the same to the dispensers through pipeline for further distribution to their customers.
3.9 Distinguishing the decision of this Tribunal in the case of Mahanagar Gas Ltd Vs CCE Mumbai II 2015-TIOL-497-CESTAT-MUM, the learned Advocate submitted that in the said judgment, the CENVAT Credit on cascades was denied on the premise that the same were used for transporting CNG to daughter booster stations, where the CNG was filled by using compressors into the vehicles. The cascades are used for transporting the CNG which has already come into existence as a manufactured product and is a marketable commodity. The Tribunal has no occasion to deal with situation about eligibility of CENVAT Credit from the perspective of clearance of CNG prior to place of removal. In the present case, the place of removal is the mother stations, on line stations, daughter stations and daughter booster stations, from where the CNG is dispensed into the vehicle. Also, distinguishing the decision of Tribunal in the case of Brahmani River Pellete Ltd Vs CCE 2015 (40) STR 471 (Tri-Kolkata), the learned Advocate submitted that in the said case, the goods were not directly used by bringing them from mine to the Pellet plant and there were number of processes involved after the goods were transferred. Considering the said fact, it was held that transfer of raw materials through pipeline from factory located at Barbil from another factory located at Jaipur located 221 kms away from Barbil, cannot be construed that the plant installed at Barbil factory is captive plant for Jaipur factory and entitled to CENVAT Credit. In contrast, in the present case, the input, capital goods and input services were used for clearance of CNG from the mother stations, on line stations, daughter stations and daughter booster stations from where CNG is dispensed into the vehicles. The place of removal in the instant case is mother stations, on line stations, daughter stations and daughter booster stations from where the CNG is sold to the customers.
3.10 Further, the learned Advocate submitted that they have applied for centralized registration on 11.10.2005 to the Chief Commissioner of Central Excise, which was pending approval and correspondences were made through their letters, 10.07.06, 04.12.2006, 06.12.2006, and 05.02.2007 subsequently. After issuance of Circular dt. 16.10.2008, the Commissioner of Central Excise through letter dt. 11.11.2008, directed the Appellant to make a fresh application in terms of the said circular pursuant to which the Appellant approached for centralized registration on 05.2.2009, which was granted on 24.04.2009. It is his contention that therefore, the benefit of CENVAT Credit is available from the date of application and not from the date approval of registration and the delay caused in grant of such registration cannot act as prejudice to the Appellants benefit. In support, he has referred to the following judgments:- (i) State of U.P. Vs Haji Ismail Noor Mohammed & Co.- 1998 (3) SCC 398; (ii) Vimal Enterprises Vs Union of India 2006 (195) ELT 267; (iii) CCE Vs M.P.V. & Engg. Industries 2003 (153) ELT 485 (SC); (iv) York Print & Pack Vs Collr of C.Ex., Calcutta-I 2002 (147) ELT 1092 (Tri-Kol.); (v) CCE Vs Zoloto Malleables 2002 (284) ELT 523 (Tri-Del.); (vi) Arora Soap & Detergents Vs CCE Meerut 1999 (111) ELT 140 (Tri-Del.) 3.11 Further, he has submitted that obtaining centralized registration cannot be a condition precedent for availment of CENVAT Credit. In support, he has referred to the following judgments:- (i) Beico Inds. Pvt. Ltd. 2014 (36) STR 551 (Tri-Ahmd); (ii) Portal India Wireless Solutions Pvt. Ltd. 2012 (27) STR 134 (Kar.); (iii) Imagination Technologiesm P. Ltd 2011 (23) STR 661 (Tri-Mum); C.Metric Solution Pvt. Ltd. 2012 (286) ELT 58 (Tri-Ahmd) 3.12 It is his argument that since they have made correspondences with the Department for centralized registration prior to issuance of Notification No.43/2008-CE(NT), dt.06.10.2008, therefore, the said notification be considered as retrospective in application being clarificatory in nature. Further, assailing the finding of the learned Adjudicating authority for denial of CENVAT Credit on the ground that the Appellant did not produce Cenvatable invoice, the learned Advocate submitted that the Appellant through letter dt.27.2.2007, submitted copies of invoices on the basis of which CENVAT Credit had been availed. In respect of input services, the Department through a letter in November 2006, asked for supply of documents, under which CENVAT Credit on input service was availed. The Appellant since received the said letter in the month of June 2007, responded the same on 13.07.2007 submitting necessary documents in respect of input services. These letters/communication clearly indicate that the Appellant had submitted copies of invoices on which CENVAT Credit had been availed by them. Therefore, the finding of the Adjudicating authority is factually incorrect.
3.13 Further, countering the argument that the Respondent were of the view that the CENVAT Credit cannot be extended on input service invoices, as the Appellant had not been registered as an input service distributor and without receiving invoices, bills and challan in respect of their places of removal, hence, such services had not been used by them. The learned Advocate submitted that the Appellants had used input services in or in relation to the manufacture of CNG and clearance of CNG prior to place of removal, therefore, the CENVAT Credit on such input services are available to them. The learned Advocate further submitted that the demand is partly barred by limitation as the Appellant informed all the fact to the Department by filing Application for centralized registration on 11.10.2005 in relation to all CNG stations with the Commissioner of Central Excise, setting out the facts in detail and thereafter correspondences with the Department continued; and the Central Excise officers sought information and clarifications from the appellant in allowing centralized registration to them from time to time. The Appellant had categorically informed the Department on such availing and utilization of CENVAT Credit. Thus, the entire facts were within the knowledge of Department, hence larger period of limitation cannot be invoked against them. In support, he has referred to the following judgments:- (i) Commissioner Vs Meghmani Dyes & Intermedites Ltd 2013 (288) ELT 514 (Guj.); (ii) CCE Bangalore Vs Pragathi Concrete Products (P) Ltd 2015 (322) ELT 819 (SC); (iii) Metal Tubes Vs CCE New Delhi 2000 (126) ELT 1260 (Tri); (iv) CCE Bangalore-II Vs ITC Ltd 2010 (257) ELT 514 (Kar.) [approved in Commissioner Vs ITC Ltd 2013 (295) ELT A 64 (SC)] (v) Steel Authority of India Ltd Vs Collr.of CEx. 1993 (67) ELT 868 (Tri) [maintained in Collr. Vs Steel Authority of India Ltd 1996 (83) ELT A 106 (SC)] 3.14 Further, he has submitted that there was no intention to evade payment of duty and accordingly penalty is not imposable on them. In support, he has referred to the following judgments:- (i) CCE Vs HMM Ltd 1995 (76) ELT 497 (SC); (ii) Godrej Soaps Vs CCE Mumbai 2004 (174) ELT 25 (Tri-LB); and CCE Aurangabad Vs Balkrishna Industries 2006 (201) ELT 325 (SC) 3.15 Further, challenging the personal penalty on the employee of the Appellant, the learned Advocate submitted that he is mere an employee and not the decision maker and thus he should not be held responsible for any omissions and commissions, as he has no malafide intention and working on the instructions of the appellant. In support, he has referred to the following judgments:- (i) Rammaica (India) Ltd Vs CCE 2006 (198) ELT 379 (T); (ii)Associated Plastics & Rayons Vs CCE Vapi 2007 (210) ELT 524 (Tri); (iii) O.P. Agarwal Vs CCE Kandla 2005 (185) ELT 387 (Tri).
4.1 Per contra, the learned Authorised Representative for the Revenue submitted that the Appellant had wrongly availed CENVAT Credit on various inputs, capital goods and input services which were disallowed to them by the Adjudicating authority. He has submitted that the Appellant had wrongly availed credit on Mobile Cascades, treating them as input claiming the same as packing material. It is his argument that the mobile cascades have been used for transporting and storage of CNG and therefore, cannot be treated as packing material. Besides, the said mobile cascades do not fall under the definition of capital goods as prescribed under Rule 2(a) of CCR,2004. Similarly, the dispensers are not eligible to CENVAT Credit, which were used at the daughter stations, since it has no nexus with the manufacturing activity carried out at mother stations. Therefore, the capital goods used at daughter stations are not eligible to credit. Besides, they have failed to produce the necessary invoices for scrutiny on which credit was availed. Also, the CENVAT Credit on stationary cascades which are used for storage purpose, cannot be treated as packing material and since do not satisfy the definition of capital goods prescribed under Rule 2(a) of CENVAT Credit Rules, 2004, hence not eligible to CENVAT Credit. In support of the Adjudicating authoritys order for denial of CENVAT Credit on various input services, the learned Authorised Representative submitted that these services were not used in the registered premises and they have not been registered also as input service distributor. Therefore, CENVAT Credit cannot be available to them on the input services received prior to registration as input service distributor under relevant rules.
4.2 On limitation, the learned Authorised Representative submitted that they were aware of the fact that the proper officer for Central Excise registration is always the Assistant/Deputy Commissioner, but the appellant had made an application to the Chief Commissioner purposefully to take undue advantage. Besides, the Appellant failed to produce complete information to the Department, therefore, they cannot claim innocence and the extended period of limitation is rightly applied against them. It is his contention that the benefit of the circular issued by the Board in 2008 is only prospective in nature and even though Centralised Registration has been allowed, but it is clarified that no CENVAT Credit would be admissible. He has submitted that the purpose of seeking Centralized Registration was not for availing CENVAT credit but compliance of various procedural formalities in discharging the duty at one place i.e. mother stations, instead of all daughter stations separately.
5. Heard both sides and perused the records. The undisputed facts are that the Appellant are engaged in the manufacture of compressed Natural Gas (CNG) at three locations viz. Memco, Maninagar and Jamalpur, designated as mother stations, which are sold/distributed through different locations known as daughter stations/daughter booster stations. The dispute centers around eligibility to CENVAT Credit on capital goods, inputs and input services at the registered premises (mother stations), when the capital goods, inputs and input services are utilized in distribution/sale of CNG at the daughter stations/daughter booster stations.
6. It is also not in dispute that the natural gas when compressed at a particular pressure results into compressed natural gas; a process which is prescribed as manufacture under Chapters 27 of Central Excise Tariff Act, 1985.
7. The principal argument of the Appellant is that even after compression of the natural gas at their mother stations, for the purpose of distribution of the same, the CNG was transported to various daughter stations wherefrom the same are injected into the vehicles. It is vehemently argued that if the pressure of CNG falls below 100 Bars, then the CNG cannot be injected into the vehicles through dispensers installed at various daughter stations, but to be recompressed to increase the pressure. Precisely, it is their contention that the manufacture of CNG even though completed at the place of mother stations, but at daughter stations also compression is required when the pressure falls below 100 bars, therefore, the process of manufacture continues till the daughter stations. Consequently, the capital goods, inputs and input services at the daughter stations be considered a satisfying the definition of input, capital goods and input services and admissible to cenvat credit.
8. The contention of the Revenue, on the other hand, is that since the manufacture of CNG at mother stations are complete, as the resultant is a marketable commodity, the activity of distribution/sale from daughter stations, cannot be considered as manufacture of CNG, hence not eligible to credit under CENVAT Credit Rules, 2004 in view of the decision of this Tribunal in Mahanagar Gas Ltd. Vs. CCE,Mumbai-II 2016 TIOL-497-CESTAT-MUM.
9. Before analyzing the argument, it is necessary to refer to the definition of capital goods, inputs and input services contained in CENVAT Credit Rules, 2004. These definitions at the relevant time read as under:-
Definitions.?Rule 2. 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] 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; and
(vii) storage tank used -
(1) in the factory of the manufacturer of the final products, but does not include any equipment or appliance used in an office; or (2) for providing output service;
[(B)? motor vehicle designed in the name of provider of output service for providing taxable service as specified in sub-clauses (f), (n), (o), (zr), (zzp), (zzt) and (zzw) of clause (105) of Section 65 of the Final Act;
[(k) input means -
(i) all goods, except light diesel oil, high speed diesel oil and motor spirit, commonly known as petrol, used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not and includes lubricating oils, greases, cutting oils, coolants, accessories of the final products cleared along with the final product, goods used as paint, or as packing material, or as fuel, or for generation of electricity or steam used in or in relation to manufacture of final products or for any other purpose, within the factory of production;
(ii) all goods, except light diesel oil, high speed diesel oil, motor spirit, commonly known as petrol and motor vehicles, used for providing any output service;
Explanation 1 The light diesel oil, high speed diesel oil or motor spirit, commonly known as petrol, shall not be treated as an input for any purpose whatsoever.
Explanation 2 Input includes goods used in the manufacture of capital goods which are further used in the factory of the manufacturer [but shall not include cement, angles, channels, Centrally Twisted Deform Bar (CTD) or Thermo Mechanically Treated bar (TMT) and other items used for construction of factory shed, building or laying of foundation or making of structures for support of capital goods];
10. Needless to emphasize the purpose of extending credit of the duty paid on capital goods, inputs and input services is to avoid the cascading effect of double taxation on the finished goods. But, the extent of credit admissible, is regulated and prescribed under CENVAT Credit Rules, 2004. A quick glance at the above definitions reveals that to be eligible as inputs, it is necessary that the raw materials must have been used in or in relation to manufacture of finished product in the factory; and as capital goods the goods falling under specific chapter or specifically mentioned in the definition of capital goods, be used in the factory for use in manufacture of final product and not in the office. This Tribunal in the case of Mahanagar Gas Ltd Vs CCE, Mumbai-III 2016-TIOL-497-CESTAT-MUM, confronted with similar situation, where under the Appellant therein was holding Central Excise registration for manufacture of compressed natural gas (CNG). Also, the Appellant had availed CENVAT Credit on capital goods viz. compressor, cascades, dispensers, spares in terms of relevant CENVAT Credit Rules. They had also availed CENVAT Credit of duty paid on cascades which were used for transportation of CNG to their daughter booster stations eventually for sale of CNG. The CENVAT Credit was denied by the Department on the ground that daughter booster stations could not be considered as manufacturing premises or factory. After referring to the case laws and Boards circulars on the subject, this Tribunal has concluded as follows:-
5.2 We find on perusal of records that the contentions raised by the learned Counsel for the appellants are devoid of merits for more than one reason:-
(i) Firstly, it is undisputed that the compression of natural gas takes place at Mother Station where the appellants have installed various machines where the compression of natural gas is considered as an activity of manufacturing. Hence, CENVAT Credit availed on such capital goods at mother station is quite rightly undisputed. Subsequent to compression, the CNG which comes into existence is filled in the cascades into bottle/cylinder which is used for transporting the CNG to DBS, wherein the same are filled by using compressors into the vehicles. In our considered view these cascades are only transporting the CNG which has already come into existence as a manufactured product and is a marketable commodity. The argument of the learned Counsel that the CNG needs recompression into DNS in order to fill the product into vehicle is without any merits inasmuch CNG is already a marketable commodity, and the activity of recompression is neither incidental nor ancillary for manufacture of CNG at DBS as the recompression is of CNG.
(ii) Secondly, reliance was placed on the Chapter Note 5 to the Chapter 27. The said Chapter Note will not be of any help to the appellant's case as the said Chapter Note talks about the compression of natural gas for the purpose of marketing the CNG would amount to manufacture, in the case in hand, the compression of natural gas takes place at mother station. At DBS the recompression of CNG does not bring into existence any new product which is distinct.
5.3 The reliance placed by the learned Counsel on the case of Vikram Cement and Birla Pericalse (supra) will also be of no help as in that cases the issue was regarding the use of capital goods and dumper used for the purpose of transportation of inputs and not for the transportation of already finished goods. The reliance placed by the learned Counsel on the case of Deepak Fertilizer (supra) is also not on strong footing, inasmuch as, in that case the issue was regarding credit of Service Tax paid on input services utilized in relation to installation of Ammonia Storage tanks, which are used for storing ammonia, which is consumed in the factory premises of the appellant therein for manufacturing of fertilizer. The facts of case in hand are totally different than the facts recorded in that case. Hence, the ratios of all three case laws as cited by the learned Counsel are not helpful to him.
11. On behalf of the Appellants sincere attempts have been made in submitting that in the said judgment, this Tribunal has not considered the issue that since the place of removal of CNG is at the daughter stations/daughter booster stations and applicable excise duty was paid on the basis of selling price of CNG from such daughter stations/daughter booster stations, therefore, the CENVAT Credit on mobile cascades, equipments installed at daughter booster stations is eligible to CENVAT Credit. Besides, it is also vehemently argued that even though the compression of natural gas took place at mother stations, however, if the pressure falls below 100 bars, while dispensing the CNG at the daughter stations, the CNG cannot be injected to the vehicles of the customers, hence, to maintain the pressure, compressors are required at daughter booster stations. Thirdly, the learned Advocate submitted that applying the principles of interpretation to the expression unless the context otherwise requires appearing in Rule 2 of CCR,2004, the criteria of use of input/capital goods cannot be restricted to the declared factory premises, where the activity of compression of natural gas takes place, but also extended to the daughter booster stations from where the CNG is dispensed.
12. With regard to the argument that for the purpose of allowing CENVAT Credit on inputs and capital goods, it is to be seen where the goods are ultimately sold by reading the definition of place of removal prescribed at Section 4 of Central Excise Act, 1944, in our opinion, does not rest on a sound basis, in absence of any such reference in the respective meaning of input and capital goods assigned under Rule 2 of Cenvat Credit Rules,2004. However, it is necessary to refer to the meaning of place of removal prescribed at Section 4 of Central Excise Act, 1944 which reads under:-
(c) place of removal means
(i) a factory or any other place or premises of production or manufacture of the excisable goods;
(ii) a warehouse or any other place or premises wherein the?excisable goods have been permitted to be deposited without payment of duty;
(iii) a depot, premises of a consignment agent or any other?[place or premises from where the excisable goods are to be sold after their clearance from the factory;] from where such goods are removed;
13. The Hon'ble Supreme Court in Maruti Suzuki Ltd Vs CCE New Delhi-III 2009 (240) ELT 641 (SC), while emphasizing the criteria of use, observed that the item which is used as packing material and its value included in the assessable value of the final product, would not by itself entitle the manufacturer to take credit. In our view, the place of removal is significant in the context of determination of assessable value and levy of duty on finished goods and its meaning cannot be read into the definition of input or capital goods contained in Rule 2(a) and Rule 2(k) of CENVAT Credit Rules 2004 as the said expression does not find a place in the said definitions. Therefore, the argument advanced by the learned Advocate that all inputs/capital goods that are used till the sale of the manufactured goods, would be eligible to CENVAT Credit, in our opinion, would be re-writing the definition of input and capital goods, which is not the intention of legislature and also not in consonance with the principle of statutory interpretation.
14. The second plank of argument of the learned Advocate that the daughter booster stations be considered within the scope of factory, in view of the expression unless the context otherwise requires contained in Rule 2 of CENVAT Credit Rules 2004, dealing with definitions various expressions used under Cenvat Credit Rules,2004. It is their contention that meaning of the words defined therein should be understood in the factual scenario of sale/distribution of CNG at daughter booster stations. It is their argument that considering the peculiar nature of the finished goods viz. CNG, the meaning of factory should be understood so as to extend it from the place of mother station to the daughter stations. In support of their above argument they placed reliance on the judgment of Honble Supreme Court in Aban Loyd Chiles Offshore Lt. Vs. UOI 2008 (227) ELT 24(SC).We do not find merit in the said contention of the appellant. The facts and circumstances in Aban Loyds case are different in as much as in the said case the Appellants therein were engaged in drilling operations for exploration of offshore oil, gas and other related activities under contracts awarded by the Oil and Natural Gas Commission. The drilling operations were carried on at oil rigs/vessels, which were situated outside the territorial waters of India and until around November, 1993, the Appellants, and all other similarly situated companies which were engaged in oil and gas exploration and exploitation were permitted to trans ship stores to the oil rigs without levy of any customs duty regardless of the fact whether oil rigs were operating within a designated area or non-designated area. From ?November, 1993 onwards, the Revenue Authorities refused to permit companies engaged in onward offshore operations, to trans ship stores to the oil rigs, without payment of customs duty. The Honourable Supreme Court was confronted with the issue whether oil rigs engaged in operations in the exclusive economic zone/ continental shelf of India, falling outside the territorial waters of India, are foreign going vessels as defined by Section 2(21) of the Customs Act, 1962, and are entitled to consume imported stores thereon without payment of customs duty in terms of Section 87 of the Customs Act, 1962. Answering the said question their Lordships observed as:
77.?The Counsel for the Appellants may be right in contending that the limits of the territorial waters has not been extended. The limits of territorial waters as defined in Section 3 of the Maritime Zones Act, 1976 has not been extended but under Sections 6 and 7 thereof, sovereign rights can be exercised by the coastal States on a area which is recognized as the maritime limit of the coastal State which is being exercised. Section 2(21) of the Customs Act cannot be read in isolation. The entire scheme of the Customs Act and other Acts such as Maritime Zones Act, 1976 which are in pari materia have to be read together. Reading of Sections 6 and 7 of the Maritime Zones Act, 1976 makes it clear Indias jurisdiction over the Maritime Zones Act, 1976 extends to the continental shelf and exclusive economic zone. Consequently, if mineral oil is extracted or produced in the exclusive economic zone or continental shelf and is brought to the main land, it will not be treated as import and, therefore, no customs duty would be leviable. Likewise, goods supplied to a place in the exclusive economic zone or continental shelf will not be treated as export under the Customs Act and no export benefit can be availed on such supply. Any mineral oil produced in the exclusive economic zone or continental shelf will be chargeable to Central Excise Duty, as goods produced in India. Implication of Notification No. S.O. 189 (E) dated 7-2-2002 and its consequences have been clarified in Circular No. 17 /2002-Customs, dated 13-3-2002 [2002 (141) E.L.T. T10] in following terms :
3.?The implication of the said notification is that mineral oils extracted or produced in the EEZ and Continental Shelf of India if brought to the mainland shall not be treated as import and therefore, no customs duty shall be leviable on such mineral oils. Likewise, the goods supplied from the mainland to a place in EEZ or Continental Shelf of India in connection with any activity related to mineral oil extraction or production shall not be treated as export under the Customs Act, 1962 and consequently, no export benefits can be availed of on such supplies. Another implication of the said notification is that bringing of any goods from any other country to any place in EEZ or Continental Shelf of India in connection with any activity related to extraction or production of mineral oils shall be treated as import under the Customs Act, 1962 and would be charged to duty accordingly. Further, mineral oils produced in the EEZ or Continental Shelf of India would be deemed to be produced in India and subject to levy of central excise duties under the Central Excise Act, 1944.
78.?Similarly, in Circular No. 22/2002 dated 23-4-2002 [2002(142) E.L.T. T20], the said notification i.e. S.O. 189(E) has been clarified in para 3 as under :-
3.?The implication of the said notification is that mineral oils extracted or produced in the EEZ and Continental Shelf of India if brought to the mainland shall not be treated as import and therefore, no customs duty shall be leviable on such mineral oils. Likewise, the goods supplied from the mainland to a place in EEZ or Continental Shelf of India in connection with any activity related to mineral oil extraction or production shall not be treated as export under the Customs Act, 1962 and consequently, no export benefits can be availed of on such supplies. Another implication of the said notification is that bringing of any goods from any other country to any place in EEZ or Continental Shelf of India in connection with any activity related to extraction or production of mineral oils shall be treated as import under the Customs Act, 1962 and would be charged to duty accordingly.
79.?It may not be correct to contend that the oil rigs installed by the Appellants answer the description foreign going vessel. A vessel may be a foreign going vessel but if the oil rig is situated in the area to which the Customs Act applies or extends, the aid of Section 2(21) of the Customs Act cannot be taken to get the benefit under Sections 86 and 87 of the same Act, The principle underlying under Sections 86 and 87 is that the stores are consumed on board by a foreign going vessel. If the so-called foreign going vessel is located within a territory over which the coastal State has complete control and has sovereign right to extend its fiscal laws to such an area with or without modifications and the stores were consumed in the area to which the Customs Act has been extended, reference or reliance to the vessel being a foreign going vessel shall be of no consequence and the customs duty would be leviable as the goods are consumed within the territory to which the Customs Act has been extended as per the Maritime Zones Act, 1976 and the International Convention - UNCLOS, 1982.
80.?We do not find any ambiguity in this situation. The interpretation given by the High Court in Pride Foramers case (supra) would not result in any absurd situation as contended by the Counsel for the Appellant. The Appellants wants the Court to read Section 2 (21) of the Customs Act in isolation, which would not be the correct approach. The Customs Act has to be read along with the provisions of the Maritime Zones Act, 1976.
15. Therefore, the ratio laid down in the aforesaid case is not applicable to the facts and circumstances of the present case. The interpretation of the expression unless the context otherwise requires has been explained in the book Principles of Statutory Interpretation by Justice G.P.Singh(seventh edition) referring to the decision of Supreme court in Vanguard Fire and General Insurance Company Ltd., Madras Vs. Fraser & Ross AIR 1960 SC 971 in the following words:
it is well settled that all statutory definitions or abbreviations must be read subject to the qualification variously expressed in the definition clauses which created them and it may be that even where the definition is exhaustive in as much as the word defined is said to mean a certain thing, it is possible for the word to have a somewhat different meaning in different sections of the Act depending upon the subject or context. That is why all definitions in statutes generally begin with the qualifying words , similar to the wards used in the present case, namely unless there is anything repugnant in the subject or context.
16. In the present case the appellant could not bring out any particular rule of Cenvat Credit Rule,2004 in which the defined expressions input and capital goods be read differently in the context of the said Rule. Besides, the meaning of input and capital goods cannot be changed and read differently depending on the nature of raw material/finished goods, which will lead to absurdity and chaos in the administration of the CENVAT credit scheme. It is the principle of statutory interpretation that the result of an interpretation which leads to absurdity be avoided. The principal criteria for eligibility to CENVAT Credit on inputs rests on its use in or in relation to manufacture of final products in the factory and for capital goods its use in the factory of production.
17. The other argument of the learned Advocate is that once the compression of natural gas is completed at mother stations, at a pressure of more than 200 bars, the same pressure may not continue till it was injected into the vehicles of the customers at daughter booster stations. Hence, the pressure is required to be maintained at the daughter Booster stations. In other words, it is his contention that the process of manufacture continues till the compressed CNG is injected into the vehicles. At the first blush, the argument may look attractive, but a deeper analysis of the same would lead to a negative result. Firstly, it is not the argument of the Appellant that invariably in all cases, the pressure of CNG falls below 100 bars, in transferring the same in mobile cascades from mother stations to daughter boosters stations, but in few cases, it might fall below 100 bars, and necessitates recompression. On the basis of said hypothetical situation, it cannot be assumed and construed that the process of manufacture continues till the compressed CNG is injected into the vehicles. Therefore, we agree with the conclusion arrived at by this Tribunal in Mahanagar Gas Ltd case(supra) that re-compression at daughter booster stations cannot in any manner, be interpreted as resulted into manufacture of CNG as the compressed CNG at mother stations attained marketability.
18. In the said case the Tribunal has also discussed the applicability of ruling of Hon'ble Supreme Court in Jaypee Rewa Cements case while arriving at the conclusion, hence, we do find the necessity to discuss it again. Further, the claim of the Appellant that the mobile cascaded be considered as packing materials is also devoid of substance. The learned Advocate has also submitted that they have applied for centralized registration way back in 2005, which was to them allowed to them pursuant to issuance of Notification No.43/2008CE(NT) dt. 06.10.2008 It is his contention that the said notification is retrospective in nature and accordingly, the Appellants are eligible to avail CENVAT Credit of inputs/capital goods at their daughter stations. On going through the said notification and the Circular no. 875/13/2008-CX dt. 16.10.2008 issued in this regard we find that though centralized registration was allowed, but it is specifically mentioned that provisions governing eligibility to claim the CENVAT Credit would be applicable as earlier. Therefore, we do not see any relevance to apply the aspect of availability of centralized registration to the eligibility of CENVAT Credit on the inputs and capital goods at their daughter stations.
19. Therefore, we are of the view that the Appellants are not eligible to CENVAT Credit of duty paid on dispensers, mobile cascades, stationary cascades, compressors, spare parts etc. installed & used at their daughter booster stations/ daughter stations, at their registered factory premises at Memco, Jamalpur and Maninagar.
20. Now coming to the dispute of input service tax credit, at para 27.3 of the impugned Order, the Ld. Adjudicating authority has disallowed it observing that the administrative/Registered office of the Appellant was not registered as input service distributor and no invoice, bills, challans were issued in the name of the three registered Units. The issue of eligibility of CENVAT Credit on input service where the Input service distributor is not registered has been settled by the Gujrat High Court in the case of CCE Vs. Dashion Ltd. 2016 (41) STR 884(Guj.). Their Lordships observed as:
7.?The second objection of the Revenue as noted was with respect of non-registration of the unit as input service distributor. It is true that the Government had framed Rules of 2005 for registration of input service distributors, who would have to make application to the jurisdictional Superintendent of Central Excise in terms of Rule 3 thereof. Sub-rule (2) of Rule 3 further required any provider of taxable service whose aggregate value of taxable service exceeds certain limit to make an application for registration within the time prescribed. However, there is nothing in the said Rules of 2005 or in the Rules of 2004 which would automatically and without any additional reasons disentitle an input service distributor from availing Cenvat credit unless and until such registration was applied and granted. It was in this background that the Tribunal viewed the requirement as curable. Particularly when it was found that full records were maintained and the irregularity, if at all, was procedural and when it was further found that the records were available for the Revenue to verify the correctness, the Tribunal, in our opinion, rightly did not disentitle the assessee from the entire Cenvat credit availed for payment of duty. Question No. 1 therefore shall have to be answered in favour of the respondent and against the assessee.
21. Though from the above decision, it is clear that to avail input service credit, the registration of head office/registered office is not mandatory, however, it is necessary to ascertain the documents on which these units had availed credit as there have been claims and counter claims. In the Departments contention, all relevant documents on which input service CENVAT credit availed, had not been placed before the adjudicating authority, whereas, the claim of the appellant is that the relevant input service invoices were submitted before the authorities in September 2007. Hence, in our opinion, to verify the claim, it is necessary to remit the case for verification of the documents.
22. On the issue of limitation, we find that in appeal number E/754/2008, the demand notice was issued on 24.11.2007 for the period January 2007 to June 2007, hence, the demand is within normal period of limitation, accordingly, the issue of limitation is irrelevant. In relation to appeal number E/1788-1790/2008, two show cause notices have been adjudicated. The first demand notice was issued on 22.5.2008 for the period 2006-07 & 2007-08(up to Sep.2007). The appellant has claimed that they had availed credit from February 2007 only after due intimation to the department. If the said claim is correct, then only a portion of the demand would be under extended period limitation. The second demand notice was issued to the to the appellant on 04th May 2009 demanding inadmissible credit on input services for the period from August 2006 to May 2007, thus, the entire demand rests on extended period of limitation.
23. It is submitted on behalf of the appellant that on 11.10. 2005 they had applied for centralised registration of all the premises i.e. mother stations as well the daughter stations. They informed all the facts to the Department in the said letter and also subsequently during the course of correspondences with the Department on the business of compression and distribution of CNG from the mother and daughter stations respectively. Further, it is submitted that on 27.02.2007, they made their intention clear by addressing a letter to the department to avail Cenvat credit on capital goods and thereafter availed the credit. With regard to the second demand notice, it is submitted that in response to the communication received from the Range Superintendent dt. 30.08.2007 they had informed the details of credit availed on input services at all their registered premises along with necessary input invoices through letter dt. 07.09.2007. Therefore, based on audit objection, the demand issued for recovery of cenvat credit on input services availed for the for the period from May 2006 to May 2007, is barred by limitation. Precisely, it is their contention that no facts had been suppressed from the Department nor mis-stated or mis-decalred, hence, extended period of limitation cannot been invoked.
24. We find from the records that correspondences between the Department and the appellant had been continuing on the issue of centralised registration since Oct. 2005. Therefore, there is merit in the contention of the appellant that necessary information had been furnished from time to time about their business of compression of natural gas and distribution/sale of CNG from daughter stations through their various letters enclosed with the Appeal paper book. Besides, the Appellant had informed the department about their intention to avail CENVAT credit on 27.02.2007.Thus, extended period of limitation cannot be applicable in the facts of the first show cause notice.
25. The second demand notice which was issued in May 2009 is clearly barred by limitation inasmuch as during the course of furnishing statement Shri Ketan Vyas, Assistant Manager, categorically stated that all information had been submitted to the range Supt on 07.9.2007. We find that even though the same has been mentioned at paragraph 4.1 of the show cause notice, no contrary evidence indicating non receipt of the relevant invoices had been brought on record by the revenue. On going through the said letter dt.07.09.2007(page 479 of Appeal paper book) we find that the Appellant had furnished detailed statement of CENVAT credit availed along with copies of invoices. Hence, no facts was suppressed from the department in availing the credit. Therefore, in our view, the demand is barred by limitation.
26. It cannot be denied that the issue of eligibility of CENVAT credit on capital goods inputs and input services availed at various daughter stations, from where the CNG was ultimately cleared/sold during the course of pendency of application for centralised registration, rests on interpretation of the relevant provisions of law and all facts had been disclosed to the department. Hence, imposition of equivalent penalty on the appellant under rule 15(2) of Cenvat Credit Rules,2004 read with section 11AC of Central Excise Act,1944 is unsustainable in law. We receive support from the judgement of the judgement of Honourable Gujrat High Court in Dashion Ltd.s case(supra). Their Lordships observed as:
8.?Coming to the question of penalty, right from the show cause notice stage till the final disposal of the show cause notice proceedings, we find little evidence to support the allegations of wilful misstatement, suppression, fraud or collusion on the part of the assessee. In fact, perusal of the show cause notice would show that the entire basis of the Revenue was wrongfully availment of the credit. Mere wrongfully availment without element of mens rea and that too for the purpose of evading payment of duty would not be sufficient to impose penalty. The adjudicating authority, without any basis or evidence, merely mechanically recorded that the assessee had, by reason of wilful misstatement, suppression of fact or in contravention of the provisions of the Rules, evaded payment of central excise duty. He was not even sure whether this was a case of wilful misstatement or suppression of fact or contravention of provisions of the Rules.
27. In view of the above decision of Hon'ble Gujarat High Court, penalty under Section 11AC of Central Excise Act, 1944 read with Rule 15(2) of CENVAT Credit Rules 2004 is not attracted. Also, for the same reason, since the Appellant had availed CENVAT Credit after furnishing the due information to the Department, therefore, confiscation of capital goods/inputs at daughter stations also unsustainable. Also, personal penalty imposed on the Authorized signatory Shri Dharmesh A. Parekh is accordingly not sustainable and be set aside.
Our above findings are summarized as below:-
1. CENVAT Credit of Rs.3,15,78,544/- in relation to Appeal No.E/754/2008 is not admissible. Consequently, appropriate interest in terms of Rule 14 of CENVAT Credit Rules, read with Section 11AB of of Central Excise Act, 1944 is applicable. Penalty is unsustainable, accordingly set aside.
2. The demand of Rs.59,23,395/- on capital goods and Rs.53,39,566/- on inputs to be re-worked out for the normal period of limitation. The eligibility of CENVAT Credit on input services i.e. Rs.77,03,649/- be examined by taking into consideration the input service invoices furnished and in the light of the aforesaid observation. The equivalent penalty and confiscation of goods are set aside. The demand of Rs.45,24,039/- on input services is set aside on the ground of limitation. The personal penalty of Shri Dharmesh Parekh is also set aside.
In the result, the respective Orders impugned are modified to the above extent, and all the appeals are disposed off, accordingly on the above terms.
(Pronounced on 30/01/2017)
(Ashok.K.Arya) (D.M. Misra)
Member (Technical) Member (Judicial)
cbb
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