1. The appeal is against order dated 24/01/2013 of Commissioner of Central Excise, Bhopal. The appellants are engaged in the manufacture of cement and clinker liable to Central Excise duty. They were also availing credit of duty paid on inputs and capital goods in terms of Cenvat Credit Rules, 2004. The appellants entered into with agreement with M/s. Machmet India Ltd. for manufacture and supply of conveyor components and further agreement with M/s. Satna Cement Works for structural work of conveyor foundation. The dispute in the present case relates to the eligibility of the appellant to take credit of duty paid on various Iron Steel items procured by them and supplied to M/s. Machmet for further use in the manufacture/fabrication of conveyor parts. These Iron and Steel items are mainly angles, channels, plates etc. falling under Chapter 72 or 73. The Revenue entertained a view that the appellants have availed Cenvat credit wrongly and accordingly proceedings were initiated by issue of show cause notice dated 28/04/2011. The case was adjudicated and the Original Authority disallowed the Cenvat credit of Rs. 6,96,29,549/- and imposed equal amount of penalty under Rule 15 of Cenvat Credit Rules read with Section 11AC of the Central Excise Act, 1944.
2. The learned Counsel for the appellant contested the original order both on limitation and on merit. On limitation, he submitted that they have indicated the credit in their regular return and further given detailed reply about the credit and usage of inputs on 13/09/2007 in reply to a letter of Superintendent of Central Excise Audit. The present show cause notice was issued on 28/04/2011 covering the period of April 2006 to June 2009. It is his contention that the whole demand is hit by time bar. He contested specifically the findings recorded by the Original Authority to the effect that they have not provided the details regarding exact use of items on which credit has been availed.
3. On merit, it is submitted that the show cause notice mainly focused on the ineligibility of credit to the appellant on the ground that the Iron and Steel items do not fall within the definition of capital goods and the civil fabrication and construction work are in creation of immovable property and as such no credit can be availed on such Iron and Steel items. Whereas, the Original Authority examined the issue regarding the status of M/s. Machmet. It was held, the inputs are eligible to credit only at the hands of manufacturer (M/s. Machmet), not at the hands of the appellant. He further examined the availability of Notification No. 65/95-CE and concluded that the same is available only to a manufacturer and not to the appellant. Regarding other items like LV classifier parts, welding machines, dumper with fan etc., the appellant submitted that they are eligible for credit as these are directly used by them in connection with either fabrication of capital goods or repair of the same.
4. The learned AR reiterated the findings of the Original Authority and submitted that the appellants paid duty only on the Iron and Steel items which are not covered under the category of capital goods and these Iron and Steel items are actually used by their main contractor M/s. Machmet. As such, he submitted that the Original Authority is correct and in denying the credit.
5. We have heard both the sides and perused the appeal records. Though various items and components are involved in dispute, substantial portion of credit is with reference to Iron and Steel items procured by the appellant and supplied to their contractor M/s. Machmet India who were engaged in manufacture of components of conveyor belt. Later, the conveyor belts are erected in the required places in the appellant's premises by erecting foundation by another contractor. On perusal of the show cause notice as well as the impugned order, we note that the Original Authority has considered the issue on factors, which were not alleged or proposed in the show cause notice. As already noted, the proposals in the show cause notice are mainly on the ground that the Iron and Steel items are not capital goods and the resultant product is immovable property, ineligible to credit. Whereas the Original Authority focused on the status of the contractor (M/s. Machmet) and further examined the eligibility of Notification No. 65/95-CE. On perusal of the impugned order it is not clear as to whether M/s. Machmet carried out the operations within the premises of the appellant. The learned Counsel specifically submitted that whichever items were manufactured and fabricated by M/s. Machmet from their own facilities outside the premises of the appellant, on which duty has been paid, there is no dispute in the present proceedings on the said matter. The dispute relates to only the goods fabricated by the contractor within the premises of the appellants. In this connection, we note that the applicability of Notification No. 65/95-CE has been examined by the Original Authority. The said notification gives exemption to excisable goods manufactured in a workshop within the factory. We note that the exemption is with reference to location of manufacture. There is no reference as to the identity of the manufacturer. As noted already, the impugned order did not examine the issues as proposed in the show cause notice, and proceeded to arrive at conclusions at different facts and reasonings. As such, we find it fit and proper to set aside the same and remand the matter back to the Original Authority for a fresh decision.
6. In this connection, we note the submissions made by the appellant with specific reference to the letter dated 05/03/2008 of Superintendent of Central Excise and their reply dated 08/04/2008. We note the submissions made by the appellants are to be examined with reference to the proposals made in the show cause notice. Here, we may note that credit availability on similar type of items has been subject matter of various decisions by this Tribunal as well as High Courts and the Hon'ble Supreme Court. The appellants made specific reference to the following decisions:-
(i) Ultratech Cement Ltd. vs. CCE & ST, Jaipur - I reported in 2017 - TIOL - 91 (CESTAT - DEL);
(ii) Ultratech Cement Ltd. vs. CCE, Jaipur - II reported in 2017 - TIOL - 07 (CESTAT - DEL.);
(iii) Manglam Cement Ltd. vs. CCE, Jaipur reported in 2017 - TIOL - 141 (CESTAT - DEL.);
(iv) Singhal Enterprises Pvt. Ltd. vs. CCE, Raipur reported in : 2016 (341) E.L.T. 372 (Tri.);
(v) Mundra Ports & Special Economic Zone Ltd. vs. CCE reported in : 2015 (39) S.T.R. 726 (Guj.);
(vi) Birla Corporation Ltd. vs. CCE, Raipur reported in : 2007 (212) E.L.T. 162 (S.C.);
(vii) Birla Corporation Ltd. vs. CCE reported in : 2005 (186) E.L.T. 266 (S.C.);
(viii) Vikram Cement Ltd. vs. CCE, Indore reported in : 2006 (194) E.L.T. 3 (S.C.);
(ix) Vikram Cement vs. CCE, Indore reported in : 2006 (197) E.L.T. 145 (S.C.);
(x) Aditya Cement vs. Union of India reported in 2008 (221) E.L.T. 362 (Raj.);
(xi) Continental Foundation Jt. Venture vs. CCE, Chandigarh - I reported in : 2007 (216) E.L.T. 177 (S.C.);
(xii) Pushpam Pharmaceuticals Company vs. CCE, Bombay reported in : 1995 (78) E.L.T. 401 (S.C.);
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h Cement vs. CCE, Raipur reported in : 2016 (332) E.L.T. 356 (Tri.); and (xiv) CCE, Chennai vs. Essar Engineering & Contractors Ltd. reported in 2009 - TIOL - 140 (CESTAT - MAD.). 7. As the matter is being remanded for a fresh decision, the Original Authority may consider the facts of the present case and applicability of these case laws to the said facts. 8. WE also note that the appellant made a strong objection regarding limitation. The question of limitation also is kept open for a fresh decision. 9. In view of the above discussion and analysis, the impugned order is set aside. The matter is remanded back to the Original Authority for a fresh decision. The appellant shall be given adequate opportunity to present their side of the case. The appeal is allowed by way of