- (1.) M/s Samsung Electronics India Information and Telecommunication Ltd. (hereinafter referred to as SEIITL) was a public limited company and was engaged in the manufacture of colour monitors and CTV chassis on job works. On 28.12.2002 a team of Central Excise Officers visited the premises of SEIITL and conducted a check and found that SEIITL was manufacturing CTV chassis for Samsung Electronics India Ltd. (hereinafter referred to as SEIL) on job work basis. For this purpose SEIITL had obtained 10 numbers of Auto Insertion Machines from SEIL valued at Rs. 2,75,483.00 involving duty amounting to Rs. 44,12,877.00. SEIITL had taken credit of 50% duty on these machines amounting to Rs. 22,06,438.00 vide entry no.52 dated 18.10.2001 and balance 50% amounting to Rs. 22,06,438.00 was taken vide entry no. 68 dated 01.05.2002. The statement of Manager Production of SEIITL was also recorded, who deposed that all the 10 numbers of Auto Insertion Machine received from SEIL were being used exclusively for the manufacture of CTV chassis for SEIL. On this basis, the checking team consequently found that SEIITL had taken Cenvat Credit amounting to Rs. 74,40,730.00 in respect of Auto Insertion Machine which was used exclusively for job work for the manufacture of CTV chassis. SEIITL was amalgamated with SEIL with effect from 01.04.2003 as per the order of the Delhi High Court dated 07.05.2003. According to the department, since Cenvat Credit had wrongly been utilised by SEIITL and there was suppression of facts and declaration with regard to duty, a notice dated 26.03.2004 was issued to SEIL for contravention of Cenvat Credit Rules, 2001 (hereinafter referred to as the Rules).
(2.) SEIL submitted its reply and thereafter the Commissioner Central Excise, Noida passed an order in original dated 28.12.2004 disallowing the Cenvat Credit amounting to Rs. 74,40,730.00 and also imposed penalty. Being aggrieved, SEIL preferred an appeal before the Customs, Excise and Service Tax Appellate Tribunal, New Delhi, who by an order dated 21.02.2006 allowed the appeal holding that the SEIL was eligible for availment of Cenvat Credit. The department, being aggrieved, has filed the present appeal under Section 35-G of the Central Excise Act, 1944, which was admitted on the following substantial questions of law: "1. Whether the CENVAT credit of capital goods taken by the respondents, which are exclusively used in the manufacture of exempted goods, is admissible? 2. Whether the penalties should not be imposed on SEIL as well as on Shri Puspak Verma, Manager (Accounts) and Shri Rahul Sood, Manager (Production) for contravening the provisions of Rule 57E (3), (4) and (5) of the Central Excise Rules, 1944 and Rule 7(1) of Cenvat Credit Rules, 2002?"
(3.) We have heard Sri Siddharth Shukla, the learned counsel for the appellant and Sri M.P. Devnath along with Sri Nishant Mishra, the learned counsel for the respondents.;