Ajay Kumar Mittal, J. - (1.) This appeal has been preferred by the revenue under Sec. 35G of the Central Excise Act, 1944 (in short "the Act") against the order dated 15.1.2015 (Annexure A -3) passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi (hereinafter referred to as "the Tribunal") claiming the following substantial questions of law: - (i) Whether the respondent can avail CENVAT credit in respect of Capital Goods used exclusively for the purpose of Research and Development of New Model, localization of CKD parts, localization of inner parts of suppliers, quality and warranty analysis and counter measure and components and vehicle level testing, as the machines/equipments/apparatus/capital goods in question are not used for the manufacture of goods but are solely used for the purpose of Research and Development? (ii) Whether a place separate from manufacture/manufacturing process located in the unit where only R&D is carried out for the New Model, localization of CKD parts, localization of inner parts of suppliers, quality and warranty analysis and counter measure and components and vehicle level testing, can be termed as factory under CEA 1944? (iii) Whether a place located in the unit (registered premises) where no goods are manufactured nor any manufacturing process is carried out for the manufacture of goods can be termed as factory in terms of CEA 1944? (iv) Whether the CENVAT credit of Rs. 9,97,38,882.00 availed by the respondent is liable to be recovered from them under Rule 14 of the CCR -2004 read with proviso to Sec. 11A(1) of the Central Excise Act, 1944 by invoking the extended period? (v) Whether the respondent has rendered themselves liable to penalty under Rule 15(2) of the CENVAT Credit Rules, 2004 read with Sec. 11AC of the Central Excise Act, 1944 and Rule 25 of the Central Excise Rules, 2002? (vi) Whether interest leviable at the appropriate rate is also recoverable from them on the inadmissible CENVAT credit of Rs. 9,97,38,882/ - under Rule 14 of the CENVAT Credit Rules, 2004 read with Sec. 11AA of the Central Excise Act, 1944?
(2.) The facts, in short, necessary for adjudication of the instant appeal as narrated therein may be noticed. The assessee is engaged in the manufacture and clearance of motor vehicles and parts thereof. During the course of internal audit conducted by the officers of the Audit Branch of Central Excise Commissionerate, Delhi -III from 20th to 23rd, 26th, 27th and 29th November, 2012, on test check of records for the year 2011 -12, it was found that they had availed CENVAT credit qua machines/equipment/apparatus installed in Engineering Research Design and Development building and lab located separately from the production area used exclusively for R&D for new models development, localization of CKD parts, localization of inner parts of suppliers quality and warranty analysis and countermeasures and component and vehicles testing purpose amounting to Rs. 10,38,87,794/ - for the period from November 2007 to October, 2012. The CENVAT Credit so availed appeared to be inadmissible as the machines/equipment/apparatus in question were not used for the manufacture of goods but were solely used for the purpose of research and development. Accordingly, a show cause notice dated 20.3.2013 (Annexure A -1) was issued to the assessee for recovery of Rs. 9,97,38,882/ - along with interest and penalty for wrongly availing and utilizing Cenvat Credit. The Adjudicating Authority vide order dated 17.12.2013 (Annexure A -2) confirmed the said demand along with interest and also imposed penalty of equal amount, i.e., Rs. 9,97,38,882/ -. Feeling aggrieved, the assessee filed an appeal before the Tribunal who vide order dated 15.1.2015 (Annexure A -3) allowed the appeal and set aside the order, Annexure A -2. Hence, the present appeal.
(3.) We have heard learned counsel for the parties.;