1. Heard Sri A.P. Mathur, learned counsel for the appellant and Sri Shailendra Jaiswal, Advocate holding brief of Sri Vinod Kant, learned counsel for the respondent. This appeal u/s 35G of the Central Excise Act, 1944 has been filed against the judgment and order passed by the Customs, Excise & Service Tax Appellate Tribunal dated 1-5-2008 in Excise Appeal No. E/432/2007 [2008 (232) E.L.T. 475 (Tri.-Del.)].
2. The appeal has already been admitted vide order dated 8-3-2010 [2010 (256) E.L.T. A158 (All.)].
3. The facts of the case has been noted by the Tribunal in its judgment and order dated 1-5-2008 which needs no repetition except few facts as noted hereinbelow:--
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nt has received capital goods during the period from September, 2004 to April, 2005 and have taken Cenvat credit of duty paid on the capital goods. The dispute relates only to one machine which was imported by the assessee which was used for manufacture of pulp based product, namely, 'Maaza' which is exempt from whole of the duty of excise. From October, 2006, the appellant also used the machine for dutiable goods.
A demand-cum-show cause notice dated 30-3-2006 was issued asking the appellant as to why demand should not be issued and recovery be made under the provisions of Rule 14 of the Cenvat Credit Rules, 2004 read with the proviso to Section 11A of the Central Excise Act, 1944 and interest be not demanded as well as penalty. Show cause notice also mentioned that as to why extended period of 'five years' as provided under proviso to Section 11(A)(1) of Central Excise Act, 1944 should not be invoked as they have suppressed the facts as mentioned above and availed credit on duty of capital goods exclusively used in the manufacture of exempted goods. The Commissioner Central Excise vide order dated 15-11-2006 confirmed the demand directing for payment of interest as well as imposition of penalty for which judgment was appealed before the Tribunal. The Tribunal by the judgment dated 1-5-2008 affirmed the order of the Commissioner against which this appeal has been filed.
4. Sri A.P. Mathur, learned counsel for the appellant in support of the appeal submitted that the machine which was installed in the factory was capable of both manufacture of dutiable goods as well as exempted goods, hence Cenvat credit was rightly availed. He submits that the Tribunal committed error in taking the view that the appellant could not have taken the benefit since the machine was capable of being used for dutiable products only after modification. He submits that although a certificate dated 4-1-2007 from the manufacture was filed before the authorities but he submits that to make things clear the appellant now obtained another certificate dated 25-9-2009 which has been annexed along with supplementary affidavit in this appeal which clearly provides that no such modification can be done in India since machines are manufactured in Germany and imported in India. He submits that Tribunal mistook minor adjustment as minor modification, whereas the minor adjustment in machine is not any modification in the machine. He further submits that it is admitted fact that from October, 2006 the appellant has used machine for manufacture of dutiable goods, hence in the financial year in which the benefit was taken, to which machine was used, both for dutiable goods and exempted goods, permitting the appellant rightfully claim the benefit of Cenvat credit. He submits that credit can be denied as per Rule 6, sub-rule (4) of Cenvat Credit Rules, 2004 only when machine is exhaustively used for manufacturing of exempted goods.
5. Sri Shailendra Jaiswal, learned counsel appearing for the respondent submits that the certificate dated 25-9-2009 has been placed before this Court in this appeal and when the matter was heard by the Tribunal it had no benefit of the certificate. He submits that if reliance is being placed on the said certificate, the matter be remitted to the Tribunal for reconsideration.
6. We have heard learned counsel for the parties and perused the record.
7. Rule 6 of sub-rule (4) of Cenvat Credit Rules, 2004 which is relevant in the present case which provides as follows:--
4. No Cenvat credit shall be allowed on capital goods which are used exclusively in the manufacture of exempted goods or in providing exempted services, other than the final products which are exempt from the whole of the duty of excise leviable thereon under any notification where exemption is granted based upon the value or quantity of clearance made in a financial year.
In the present case, from the facts which emerges from the record, it is clear that the machine which was installed in the factory was used both for manufacture of exempted goods as well as dutiable goods. Dutiable goods were manufactured since October, 2006 which fact has been noted in Paragraph No. 8 of the judgment of the Tribunal. The Tribunal had denied the benefit on the pretext that "the certificate of the manufacturer relied upon by the appellant also confirms that the plant is usable for manufacture of aerated waters only after modification". The certificate which was relied upon by the appellant before the authorities dated 4-1-2007 was to the following effect as under:--
This is to confirm that the Krones PET line installed and operating at Bareilly at the fruit juice Maaza plant and the Filler VP-L-PET is designed to handle carbonated/aerated soft drinks. This is achieved by software changes and minor adjustments. Krones has supplied several similar equipment and fillers which are operating at various sites across the world.
The manufacture had certified that machine is designed to handle carbonated/aerated soft drinks by software changes and minor adjustments. The certificate never said that the object can be achieved only after modification. The certificate did not use the word 'modification' which has crept in the order of the Tribunal. More so, before us now the appellant has filed certificate dated 25-9-2009 which indicates that no modification in the machine can be done in India since it is manufactured at Germany and imported in India.
8. As submitted by learned counsel for the respondent, ends of justice would be served in setting aside the order of Tribunal dated 1-5-2008 remitting the matter back before the Tribunal for consideration afresh.
9. Thus, the appeal is allowed by setting aside the judgment of the Tribunal dated 1-5-2008 and the matter is remitted back to the Tribunal to decide the appeal afresh in accordance with law taking into consideration the certificate dated 25-9-2009 which has been placed before us.
10. Learned counsel for the appellant has submitted that 25% of the total amount of duty amounting to Rs. 1,64,08,716/- directed by the Commissioner, Central Excise, Meerut while deciding stay-cum-waiver application is lying deposited with the department. In view of the above, when the appeal is revived before the Tribunal, no further recovery be initiated. The appeal be decided expeditiously.