COMMISSIONER OF CENTRAL EXCISE Vs. BAJAJ AUTO LTD.

JUDGEMENT

(1.) This appeal is filed by the Revenue against the impugned order wherein it was held that the Revenue's claim of denial of 50% of Cenvat Credit is not maintainable.

(2.) The brief facts of the case are that the respondents are manufacturer of the motor vehicle parts and availing Cenvat Credit by using inputs and capital goods. The Assistant Commissioner of Central Excise, Pune held that the respondents had no malafide intention to avail the Cenvat Credit as the same was not utilized immediately or afterwards for payment of duty as they had sufficient balance at the end of each month and interest is not recoverable in terms and dropped the proceedings initiated in the show -cause notice dated 02.05.2005. It was alleged against the respondents that the respondents have contravened the provisions of Rule 4(2)(b) of the Cenvat Credit Rules, 2001 as amended inasmuch as they have taken the balance credit of 50% of the Cenvat Credit on the capital goods in the financial year subsequent to the financial year in which the capital goods were received in the factory of the manufacturer, where the capital goods were not in possession and use of the manufacture of final product. On scrutiny of Income Tax Audit Report, it was observed that in respect of 2 machines, the respondents have availed 50% Cenvat credit amounting to Rs. 8,96,753/ - in April, 2001 before they were put to use in May, 2001. Therefore, the respondents had wrongly availed the said Cenvat credit and show -cause notice was issued. The same was dropped by the original adjudicating authority. On appeal before the Commissioner (Appeals) by the Revenue, the order of the adjudicating authority was confirmed. Aggrieved from the same, the Revenue is before me.

(3.) Considering the reliance placed and the impugned order wherein the Commissioner (Appeals) arrived at his finding in the light of the judgment in the case of Ispat Industries Ltd. v. CCE, Raigad : 2006 (199) ELT 509 (Tri -Mum) wherein it was held that goods are in possession of appellants and are for their use, hence, denial of 50% credit availed in the year 2002 -03 on the ground that capital goods were at the stage of erection and were not yet put to use, not sustainable, and held that the ratio of the judgment is squarely applicable in the present case. Further finding that the respondents were having sufficient balance in their Cenvat Credit account and the amount availed might not have been utilized till the capital goods were put to use.