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OFFICE OF THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS, NO.71, CLUB ROAD, BELGAUM. C No DRAFT SHOW CAUSE NOTICE Date:

M/s UltraTech Cement Ltd., (Unit: Rajashree Cement Works), Aditya Nagar, Malkhed are holders of Central Excise Registration No.AAACL6442LEM017 are engaged in the manufacture of Cement and Clinker falling under the Chapter 25 of Central Excise Tariff Act, 1985. They are availing Cenvat Credit of duty paid on inputs, capital goods and also availing the Cenvat credit of Service Tax paid on input services under Rule 3 of the Cenvat Credit Rules, 2004. 2. The assessee is receiving Welding Electrodes, Oxygen and Acetylene Gases, Lubricants and Hydrochloric Acid and using them for maintenance of the plant and machinery and availing CENVAT credit on these as inputs. Welding electrodes and Gases are used to weld the machinery as part initial installation as well as for maintenance and repair. Lubricants and Hydrochloric Acid are being used for maintenance of the machinery. The activity of repairing/maintenance of machinery does not come within the ambit of process of manufacture and therefore anything used for such repairs cannot be held to have been used in or in relation to the manufacture of final product. 3. The definition of inputs under CENVAT Credit Rules, 2004 restricts the goods used in or in relation to manufacture of final products within the factory of production. Goods used in any particular activity in the course of the process of converting raw materials into finished goods can only be held to have been used in or in relation to the manufacture of goods. The activity of repairs and maintenance of machinery is in no way connected even remotely with the process of manufacture of goods. They are neither partially nor integrally connected with the process of manufacture of final product. The welding electrodes, Gases, Lubricants and Hydrochloric Acid used by the assessee for repairs and maintenance of machinery cannot be treated to have been used in relation to the manufacture of final products as they are not used in co-extensively with the process of manufacture of cement/clinker and hence not integrally connected with the manufacture. Hence, the usage of Welding Electrodes, and Gases used for repairs and maintenance of machinery is out of the purview of inputs as per the statutory definition and the assessee is not entitled for CENVAT credit on such goods under CENVAT Credit Rules, 2004. 4. During the period from July 2011 to December 2011, the assessee have wrongly availed Cenvat credit Rs.32,09,356/- (BED Rs.29,57,654/-, Education Cess Rs.59,152/-, Secondary and Higher Education Cess Rs.29,577/- and AED of Rs.1,62,973/-) in respect of goods valued at Rs.2,30,63,513/- as detailed in Annexure to this Show Cause Notice as Inputs under Rule 3 of Cenvat Credit Rules, 2004. Thus, it appears that the assessee has violated the provisions of Rule 2 and Rule 3 of Cenvat Credit Rules, 2004. Hence, the total Cenvat Credit of Rs.32,09,356/- availed on Gases, Welding Electrodes, Lubricants and Hydrocloric Acid used as inputs is recoverable under Rule 14 of Cenvat Credit Rules 2004 read with

Section 11A(1) of Central Excise Act, 1944 along with interest as applicable. The goods are also liable for confiscation under Rule 15 (1) of Cenvat Credit Rules, 2004. Penalty is also imposable under Rule 15(1) of Cenvat Credit Rules 2004. 5. Therefore, the assessee is hereby required to show cause to the Additional Commissioner of Central Excise and Customs, No.71, Club Road, Belgaum-590001, as to why: i) CENVAT credit of Rs.32,09,356/- (BED Rs.29,57,654/-, Education Cess Rs.59,152/-, Secondary and Higher Education Cess Rs.29,577/- and AED of Rs.1,62,973/-) in respect of Gases, Welding Electrodes, Lubricants and Hydrocloric Acid, availed and utilised, during the period from July 2011 to December 2011 , (as detailed in Annexure enclosed to the Show Cause Notice) should not be disallowed/demanded and recovered from them in cash under Rule 14 of Cenvat Credit Rules, 2004 read with Section 11A(1) of Central Excise Act, 1944. Interest at applicable rate should not be charged, demanded and recovered under Rule 14 of Cenvat Credit Rules, 2004 read with Section 11AA of Central Excise Act 1944. Inputs valued at Rs.2,30,63,513/- in respect of which the assessee has taken and utilized Cenvat credit wrongly should not be held liable for confiscation under Rule 15 (1) of Cenvat Credit Rules, 2004 and Penalty should not be imposed on them for the said contravention under Rule 15(1) of Cenvat Credit Rules 2004.

ii)

iii)

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6. The assessee is further directed to produce at the time of showing cause all the evidences upon which they intend to rely in support of their defence and indicate whether they would like to be heard in person before the case is adjudicated. If no mention is made of this in his written explanation it would be presumed that they do not desire a personal hearing. 7. If no cause is shown against the action proposed to be taken within 30 (Thirty) days of receipt of this notice or if the assessee does not appear before the Adjudicating Authority when the case is posted for hearing, the case will be decided ex-parte. 8. Normally no extension of time will be granted either for filing the written reply or for postponement of personal hearing. If for any justifiable reasons, extension is sought for, the request shall reach this office at least one week before the scheduled date. 9. The Show Cause Notice is issued without prejudice to any other action which may be taken or any other or any further proceedings which may be initiated against the above said assessee under the provisions of Central Excise Act 1944 and the rules made thereunder or any other law for the time being in force in India. 10. The department reserves the right to add, amend, modify, delete and part or portion of this notice and any such addendum, amendment, modification, deletion if made shall be deemed to be part and partial of this notice.

11. Assessees letter dated 14.05.2012 is relied upon for issuance of the instant Show Cause Notice.

To M/s UltraTech Cement Ltd., BY R P A D (Unit : Rajashree Cement Works), Aditya Nagar, Malkhed.

ADDITIONAL COMMISSIONER CENTRAL EXCISE, BELGAUM

Copy to the: 1. Assistant Commissioner of Central Excise, Gulbarga Division, Gulbarga. 2. Superintendent, Central Excise, Range A, Gulbarga

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OFFICE OF THE DEPUTY COMMISSIONER OF CENTRAL EXCISE, CUSTOMS & SERVICE TAX, BEHIND TV STATION, KAPNOOR, GULBARGA-585 104 C.No.V/25/3/23/2012 Adjn To The Commissioner, Central Excise, BELGAUM. Sir, Sub: C.Ex.-Submission of periodical draft Show Cause Notice proposed to be issued on M/s UltraTech Cement Ltd., (Unit : Rajashree Cement Works), Aditya Nagar, Malkhed reg. -o0oPlease refer to SCN Sl.No.5/2012 dated 31.01.2012 issued from C.No.V/25/15/90/2011 in respect of M/s UltraTech Cement Ltd., (Unit : Rajashree Cement Works), Malkhed, by the Additional Commissioner, Central Excise, Belgaum demanding recovery/reversal of cenvat credit availed on Gases, Electrodes, Lubricants and Hydrocloric Acid amounting to Rs.13,27,571/- during the period from January 2011 to June 2011. In this regard, a periodical draft Show Cause Notice for the further period from July 2011 to December 2011 for wrong utilization of CENVAT Credit of Rs.32,09,356/- (BED Rs.29,57,654/-, Education Cess Rs.59,152/-, Secondary and Higher Education Cess Rs.29,577/- and AED of Rs.1,62,973/-) on Gases, Electrodes, Lubricants and Hydrocloric Acid is enclosed herewith. The last date for issuance of the Show Cause Notice is 08.08.2012 as the assessee filed the ER-1 for the month July 2011 on 09.08.2011. Yours faithfully, Date: 28.05.2012

(Adjudication Section)

(BHAV RAO D.MAINALLI) DEPUTY COMMISSIONER CENTRAL EXCISE, GULBARGA.

Encl : As above.

Central Excise Periodical Show Cause Notice in respect of M/s UltraTech Cement Ltd., (Unit : Rajashree Cement Works), Malkhed for irregular availment of cenvat credit on Gases, Electrodes, Lubricants and HCL Rs.32,09,356/-. (July 2011 to December 2011)

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