CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL CHENNAI REGIONAL BENCH – COURT No. III Excise Appeal No. 40022 of 2016 (Arising out of Order-in-Original No. 04/2015 dated 10.09.2015 passed by Commissioner of Central Excise, No. 690, 3^rd Floor, Periyar Building, Anna Salai, Nandanam, Chennai – 600 035)

Commissioner of GST and Central Excise ...Appellant Chennai North Commissionerate, No. 26/1, Mahatma Gandhi Road, Nungambakkam, Chennai – 600 034.

Versus M/s. Herrenknecht India Pvt. Ltd. ...Respondent No. 11, Alingivakkam Village, Ponneri Taluk, Thiruvallur District, Chennai – 600 067.

APPEARANCE:

For the Appellant : Mr. Sanjay Kakkar, Authorised Representative For the Respondent : Mr. Viswanathan N., Advocate CORAM:

HON’BLE MR. P. DINESHA, MEMBER (JUDICIAL)

HON’BLE MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL)

FINAL ORDER No. 40012 / 2025 DATE OF HEARING : 27.10.2025 DATE OF DECISION : 08.01.2026 Per Mr. VASA SESHAGIRI RAO The Principal Commissioner of Central Excise, Chennai (hereinafter referred to as the Appellant) has filed this appeal to assail the Order in Original No. 04/2015 dated 10.09.2015 passed by the Commissioner of Central Excise (Chennai – Audit II).

2. M/s. Herrenknecht India Pvt. Limited (hereinafter referred to as Respondent) is a 100% subsidiary of M/s. Herrenknecht AG, Germany. They are engaged in manufacture and export of Tunnel Boring Machine (TBM) and its parts, drilling system, cutter tools, etc., falling under Central Excise Tariff Heading 84314990. They avail CENVAT Credit on inputs and input services used in the manufacture of their finished products and utilize the same for payment of duty on their finished goods.

3. The Respondent imported two “used tunnel boring machines ex-446” under bill of entry No. 467617 dated 27.03.2010 from HERRENKNECHT Asia Headquarters, Singapore and cleared the same on payment of applicable Customs duties. The two imported TBMs, after repair and refurbishment, were supplied to ITD-ITD CEM JV for use in Kolkata Metro project after payment of applicable Central Excise duties by availing input credit on the said machines. Besides, the Respondent also utilized certain cenvat availed goods for carrying out the repair and refurbishment process. Similarly, they used certain input services for repair and refurbishment of the used TBMs and availed CENVAT credit on the same. The total value of goods and services used for repair and refurbishment process of the two imported TBMs used for execution of Kolkata Metro project and the CENVAT credit availed thereon is as detailed in the table below:

4. The Department entertained the view that the process of repair and refurbishment undertaken by the Respondent on the imported used TBMs does not amount to manufacture as (i) there is no functional difference between the imported machine and the subsequently cleared refurbished machine; and (ii) no new product with distinct character and use emerged out of the said process. Accordingly, Show Cause Notice No. 73/2014 dated 10.09.2014 was issued to the Respondent by the Commissioner of Central Excise-II, Chennai invoking extended time limit as laid down in Section 11A of Central Excise Act, 1994, applicable for recovery of CENVAT credit irregularly taken or utilized wrongly and alleging that that (i) the availment of input credit by the Respondent on inputs used for carrying out the process of repair and refurbishment on the imported used TBMs is in contravention of Rule 3 of CENVAT Credit Rules, 2004 read with Rule 6 of the said Rules; and (ii) the Respondent suppressed the facts that they have imported the used TBMs on which they have availed Input Cenvat Credit; and that such machines after being subjected to repair and refurbishment process are to be cleared for use in Kolkata Metro Project after payment of applicable Excise duty by availing Input credit on the said machines.

5. In the Show Cause Notice No. 73/2014 dated 10.09.2014, it was proposed to (i) deny Cenvat credit of Rs.2,68,86,626/- (Rup