Custom, Excise & Service Tax Tribunal
Cce, Jaipur-I vs M/S Swastic Conductors on 11 February, 2013
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
COURT NO. III
Appeal No. E/2090/2005
[Arising out of Order-In-Appeal No. 71(MPM)/CE/JPR-I/2005 dated 28.03.2005 issued by CCE, Jaipur-I]
For approval and signature:
Honble Ms. Archana Wadhwa, Judicial Member
Hon'ble Mr. Sahab Singh, Technical Member
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Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3
Whether Their Lordships wish to see the fair copy of the Order?
4
Whether Order is to be circulated to the Departmental authorities?
CCE, Jaipur-I Appellant
Vs.
M/s Swastic Conductors Respondents
Coram: Honble Ms. Archana Wadhwa, Judicial Member Hon'ble Mr. Sahab Singh, Technical Member Appearance:
Mr. M.S. Negi, DR for the Appellant Mr. Jiten Sighal for the Respondent Date of Hearing: 11.02.2013 FINAL ORDER NO . 55590/2013_ Per Ms. Archana Wadhwa Being aggrieved with the order passed by Commissioner (Appeals), revenue has filed the present appeal. We have heard Shri M.S. Negi, learned DR appearing for the revenue, and Shri Jiten Singhal appearing for the respondent.
2. Brief facts of the appeal are that the Appellants are engaged in the manufacture of Aluminum Conductors including ACSR conductors falling under Chapter 76 of the Schedule to the Central Excise Tariff Act, 1985. During the period from 25.07.2003 to 30.04.2004 under proper invoices the appellant had availed CENVAT credit on Steel wires to the tune of Rs. 8,86,393/- which is used as input for manufacture of ACSR conductors. As per the decision of Hon'ble Supreme Court in the case of (i) M/s Vishwaman Industries, (ii) M/s Hind Enterprises, and (iii) M/s Technoweld Industries, the drawing of wire from wire rods does not amount to manufacture and the same was also clarified vide the Boards Circular No. 720/36/2003-CX, dated 29.05.2003 that the process of drawing of wires from wire rods does not amount to manufacture under section 2(f) of Central Excise Act, 1944. As such the Steel wires manufactured from wire rods are not excisable and do not attract Central Excise duty and as such the CENVAT credit availed thereon as inputs is not admissible to the appellant as per rule 3 of Cenvat Credit Rules, 2002. A show cause notice was issued to the appellant on 27.7.2004 which was decided vide the impugned order. The adjudicating authority disallowed the CENVAT credit of Rs. 8, 86,393/- under rule 12 of Cenvat Credit Rules, 2002 read with Section 11 A of Central Excise Act, 1944, ordered for recovery of interest under rule 12 of Cenvat Credit Rules, 2002 read with section 11AB of Central Excise Act, 1944 and imposed penalty of Rs. 1,00,000/- on the appellant under rule 13 of Cenvat Credit Rules, 2002 for violation of rule 3 of the CENVAT Credit Rules, 2002.
3. The said order was challenged by the respondent before the Commissioner (Appeals), who allowed the appeal by observing as under:-
I have carefully gone through the case records, submission made in appeal memorandum and during the course of personal hearing. I find that the adjudicating authority has disallowed CENVAT credit to the appellant on the grounds that they had purchased steel wires, whereas the wire drawn from wire rods process does not amount to manufacture in view of decision of Hon'ble Supreme Court in the case of Technoweld Industries V/s CCE, Jaipur reported in 2003(155) ELT 209 (SC) and C.B.E.C.s Circular No, 720/36/2003-CX, dated 29.05.2003, therefore, the supplier of inputs was not required to pay duty on the impugned goods. The adjudicating authority has observed that the appellant has contravened the provisions of rule 3 of Cenvat Credit Rules, 2002, which allow a manufacturer of final products to avail credit of the duty of excise specified in the First Schedule to the Tariff Act and is leviable under Central Excise Act, 1944 whereas the appellant had taken credit of duty which was not leviable on the impugned goods in view of abovesaid order of Hon'ble Supreme Court. I further find that the appellant has correctly received Steel wires and there is no dispute about their being inputs for the manufacture of ACSR Conductors in the appellants factory. The manufacturing activity being conducted at the appellants factory and the excisability of the ACSR Conductors is also not in dispute. It is also not on the record that cases have been booked against the suppliers of the impugned goods. The issue decided in the abovesaid case by the Supreme Court related to the excisability of such wires drawn from wire rods, which has no direct applicability in the appellants case, until and unless the Central Excise authorities having jurisdiction over the supplier of impugned goods dispute the dutiability of wire, the duty paid by them cannot be questioned at the end of recipient of the impugned goods. There is no dispute about payment of duty on the steel wires received by the appellant. The appellants have taken the credit correctly of the amount of duty paid on the steel wires used in the manufacture of ACSR conductors, which are cleared on payment of duty from the factory of the appellant. This availment of CENVAT credit is in accordance with the provisions of rule 3 of Cenvat Credit Rules, 2002 and therefore, the imposition of penalty is also not justified. Hence the ratio of decision of abovesaid case law of Hon'ble Supreme Court is not applicable in the appellants case. So far as the excisability of the steel wires is concerned, the authorities having jurisdiction over the appellant cannot question it. The appellants case is squarely covered by the ratio of the various decisions.
4. The revenue in the memo of appeal have again reiterated the same very ground that drawing of wire from wire rod does not amount to manufacture and as such, the respondent should not have paid duty and should not have taken credit. However, we note that the various decisions relied upon by the Commissioner (Appeals) have settled the legal issue laying down that by utilizing the Modvat Credit for payment of duty on the final product, when no duty was required to be paid, an assessee can said to have reversed the credit. As such, further reversal is not called far.
5. We further note that sub Rule (3) of Rule 16 of Central Excise Rules 2002, has been inserted by the Taxation Law (amendment) Act, 2006 effective from 13.7.2006,which reads as under:-
Provided that for the proposes of this rule, assessee shall include wire drawing units, which has cleared the goods on payment of an amount equal to the duty at the rate applicable to drawn wire on the date of removal and on the value determined under relevant provisions of the Act and the rules made there under.
Provided further that the amount paid under the first proviso shall be allowed as CENVAT credit as if it was duty paid by the assessee who removes the goods
6. In terms of the above amendment which is retrospective for the period from 29.05.2003 to 08.07.2004, the input credit taken at the stage of wire rod stands regularized. Inasmuch as we note period involved in the present appeal is 29.05.2003 to 08.07.2004, we find that the said retrospective amendment covers the legal issue. Accordingly, the appeal file by the revenue is rejected.
(Pronounced in the open Court on) (Archana Wadhwa) Member (Judicial) (Sahab Singh) Member (Technical) Jyoti* ??
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