UNION OF INDIA Vs. HINDUSTAN ZINC LTD

JUDGEMENT

(1.) THIS Central Excise Appeal is directed against the order passed by the Customs, Excise & Service Tax Appellate Tribunal, New Delhi in Appeal No. E/4417/04-NB/sm, by which, the Tribunal has allowed the appeal filed by the respondent No. 1 with consequential relief. The respondent No. 1 is engaged in manufacture of Zinc ingots. During scrutiny of the records of the respondent-assessee No. 1, it was found that the respondent- assessee No. 1 had wrongly taken Cenvat Credit of Rs. 99]050/- during the period between 1-4-2002 to 28-2-2003 on "cement" treating it as input. A show cause notice was issued to the respondent-assessee as to why the said Cenvat Credit should not be disallowed. The respondent-assessee No. 1 was also asked to show cause as to why interest and penalty should not be recovered from him. The respondent-assessee No. 1 replied the said show cause notice on various grounds.

(2.) THE Assistant Commissioner, Central Excise Division, Udaipur vide his order dated 30th August, 2003 confirmed the demand of Rs. 99]050/- and also ordered for recovery of interest under Section 11ab of the Act, 1944. A penalty of Rs. 25]000/- was also imposed on the respondent-assessee under Rule 13 of the Cenvat Credit Rules, 2002.

(3.) CONSIDERING the aforesaid aspect of the matter, in our view, the Tribunal has erred in allowing the appeal filed by the respondent-assessee. In our view, the Tribunal has committed substantial error of law in allowing the appeal of the respondent-assessee by holding that the assessee is entitled for getting benefit of Cenvat Credit on cement. In our view, the foundation cannot be described as capital goods as per Rule 2 (b) of the Cenvat Credit Rules, 2002, and it cannot be said that the same is used in connection with manufacturing of goods, which are further used for the manufacture of the ultimate product.