CCE Vs. INDIA CEMENTS LTD. AND ANR.

JUDGEMENT

(1.) BOTH these appeals have been filed by the Revenue against the OIO No. 12/97 -CE dated 25.11.1997. In the impugned order, the Commissioner of Central Excise dropped the proceedings initiated by the Department against both the assessees. The Show Cause Notice dated 4.6.1996 alleged that M/s. India Cements Ltd. (ICL in short) holding Registration No. 1/92 (Cement) were the manufactures of cement falling under Chapter Heading No. 2502.29. Consequent on introduction of modvat credit on capital goods, they started filing declarations as required under Rule 57T of CE Rules. The Superintendent, while assessing RT 12s for the months of 1/95 to 8/95, issued Show Cause Notices alleging that certain goods are not capital goods and do not conform to the meaning of capital goods as given in Rule 57Q. Later, on 9.10.1995, during the course of verification of such capital goods put to use in the factory, the Superintendent came across an erection of a Mega Generating Set in the factory of ICL. On enquiry, it was revealed that M/s. Wartsila Diesel India Ltd. (WDIL in short) has contracted to erect and commission 6MW Generating Set. Therefore, on due inspection of the contract, a fresh Show Cause Notice was issued on 4.6.1996 alleging that the assessee viz. ICL are not entitled to avail the modvat credit in respect of the generating sets supplied by M/s. WDIL. The Commissioner, after due examination of the matter, upheld the assessee's contention that they were eligible to avail the modvat credit in respect of such capital goods installed in the assessee viz. ICL's factory. He also upheld the contention that the demands were barred by time as all the details had been declared in the RT -12s and the credit had been taken simultaneously and given to the assessee. Therefore, he held that the demands issued by the Show Cause Notice was beyond the period of limitation and that there was no factors of fraud, suppression, etc. in the matter. He also noticed that the Show Cause Notice was vitiated and should have been issued by the Commissioner. However, it has been issued by the Superintendent and, therefore, it was also not valid in law. He has also accepted the pleas of all other aspects of the matter including dropping the demands proposed against WDIL under Section 11D(1) read with Sections 12B , 36A, 9(1)(b) and 11A of CE Act, as he clearly found that no such duty had been collected by WDIL. He also noticed that WDIL had supplied under specific orders and in terms of contract. The Diesel Generating Sets falling under Heading 85.02 are exempt from payment of duty if assembled at site of installation from duty paid engine and generator by virtue of Notification No. 56/95 dated 16.3.2005. The Commissioner also found from the records supplied by WDIL that the invoices evidenced payment of duty which was collected in the matter by WDIL and as they had not retained the duty with them, therefore, the question of attracting Section 11D does not arise. He also held that he had no territorial jurisdiction over WDIL to decide the matter and hence held that no duty and penalty is leviable and payable by WDIL. He held that ICL are eligible for modvat credit in respect of the goods supplied to them. The Revenue is aggrieved with this order.

(2.) WE have heard learned SDR and the earned Counsel in the matter.

(3.) THE earned Counsel pointed out that the department initiated proceedings against Chemplast Sanmar Ltd. and Anr. on the same allegation with regard to the setting up of DG sets and on the same grounds. The matter was decided by the Chennai Bench by Final Order No. 813 -816/2003 dated 7.10.2003 reported in, 2004 (114) ECR 107 (Tri. -Chennai). The order of the Commissioner was set aside by allowing the appeals. The Tribunal held that Chemplast Sanmar Ltd. had not suppressed any facts with an intention to evade duty since they had filed all the declarations. The Tribunal upheld the contention on the availment of modvat credit in respect of the same goods as involved in the present appeal. The disallowance of modvat credit and imposition of penalty was set aside. The proceedings against M/s. WDIL was also set aside. The earned Counsel submits that this judgment squarely applies to the facts of the present case, as the allegations are identical. He also relied on the judgment rendered in the case of Vasavadatta Cement v. CCE, Belgaum, 2002 (105) ECR 415 (Tribunal) on the same facts and the Tribunal held that the assessee therein is entitled to take credit of DG Sets and parts thereof and applied the ratio of its earlier judgment rendered in the case of Gujarat Ambuja Cement Ltd. v. CCE, 2000 (93) ECR 226 (T).