- (1.) Heard Shri B.K.S. Raghuvanshi for the appellant and Shri Nishant Mishra for the respondent. This appeal has been filed under section 35G of the Central Excise Act 1944 (hereinafter referred to as the Act) from the order of the Customs, Excise and Service Tax Appellate Tribunal, New Delhi (hereinafter referred to as the Tribunal) dated April 25, 2005 by which the appeal of the respondent has been allowed and the addition made by the Assistant Commissioner, Central Excise, Division IV, Ghaziabad has been deleted. The appeal has been admitted on the following substantial question of law: Whether the Appellate Tribunal on the facts and circumstances of the case could decide the goods used as paint on the shop floor can be inputs under the Modvat Credit Rules, 2001/2002?
(2.) The facts giving rise to the present appeal are as follows: M/s. Samtel Color Ltd., Chhapraula, Ghaziabad (the respondent), was the manufacturer of "colour picture tubes" which is an excisable good falling under Heading 40.11 of the Central Excise Tariff Act, 1985. The respondent was availing of the facilities of Cenvat credit under the Cenvat Credit Rules, 2001. During scrutiny of the return for the month of July, 2001 to September, 2001, the Deputy Commissioner, Central Excise, Ghaziabad noticed that the respondent had availed of Cenvat credit on different inputs, viz., cement proder S powder, cement prodor K solution, prodor lac special, mastic HF, PVC roll film 2 MM, cement prodor nitroprima, proscreed HF powder, and paint, etc., involving an amount of Rs. 6,27,099. The Deputy Commissioner, Central Excise, Ghaziabad issued notice dated August 1, 2002 to the respondent that the aforesaid materials were not used for the manufacture of the final product, as such, the assessee was not entitled to the benefit under the Cenvat Credit Rules, 2001 on these materials. It is alleged that the assessee could not submit his reply within the time allowed in the notice as such the Assistant Commissioner, Central Excise, Division IV, Ghaziabad by order dated February 14, 2003 held that the aforesaid materials used by the assessee were the building materials and not required to be used in the manufacturing/processing, directly or indirectly for manufacture of finished goods and as such the Cenvat credit facility availed of on these materials, was inadmissible. On this finding, he disallowed the Cenvat credit on the amount of Rs. 6,27,099 and imposed penalty of Rs. 2 lakhs.
(3.) Feeling aggrieved, the respondent filed an appeal from the aforesaid order. The appeal was heard by the Commissioner (Appeals), Customs and Central Excise, Ghaziabad who by the order dated November 14, 2003 held that the reply submitted by the appellant was not sufficient. The disputed materials were the building materials which were required for construction/maintenance of the building and not for the manufacture of the final product, as such the Cenvat credit availed of on it was not admissible. On these findings, the appeal was dismissed.;