Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, ... vs Toshali Cements Pvt Ltd on 19 February, 2018
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
SOUTH REGIONAL BENCH AT HYDERABAD
BENCH - DB
COURT - I
Appeal(s) Involved:
E/1340/2011-DB
(Arising out of Order-in-Appeal No. 19/2011 dated 11/04/2011 passed by Commissioner of Central Excise Customs & Service Tax(Appeals), Visakhapatnam)
Commissioner of Central Excise, Service Tax and Customs VISAKHAPATNAM-II
Appellant(s)
Versus
Toshali Cements Pvt Ltd
Respondent(s)
Appearance:
Mr. K. Siva Krishna, A.R. for the Appellant.
Mr. B.V. Kumar, Advfor the Respondent.
CORAM:
HON'BLE Mr. M.V.RAVINDRAN, MEMBER (JUDICIAL)
HON'BLE Mr. C. J. MATHEW, MEMBER (TECHNICAL)
Date of Hearing: 19/02/2018
Date of Decision: 19/02/2018
Final Order No. A/ 30246 / 2018
[Order per: M.V.RAVINDRAN]
This appeal is directed against Order-in-Appeal No. 19/2011 dated 11/04/2011 and is filed by the Revenue.
2. Heard both sides and perused the records.
3. On perusal of records, it transpires that the issue is regarding refund of the CENVAT credit availed on inputs like blast furnace slag and furnace oil. The respondent herein procures blast furnace slag and furnace oil on which duty is paid; grinds the same and resultant product; ground granulated blast furnace slag is exported as well as cleared for home consumption.
4. Whenever the goods are cleared for home consumption, the appellant reverses the proportionate CENVAT credit availed on the goods cleared on which no duty liability is discharged, but in respect of goods which are exported, they filed refund claim under Rule 5 of the CENVAT Credit Rules 2004. The adjudicating authority rejected the said refund claim on the ground that the goods which have been cleared for export are not manufactured goods as held by the Tribunal in case of Andhra Cements Vs CCE Visakhapatnam [2005(188)ELT 179(Tri-Bang) and hence they could not have availed CENVAT credit on the inputs used for such ground granulated blast furnace slag. Aggrieved by such an order, an appeal was preferred before the 1st Appellate Authority. The 1st Appellate Authority in the impugned order has set aside the order-in-original on the reasoning as mentioned herein below:
I have gone through the facts of the case, the records, the impugned order and the submissions made by the appellant along with supporting case laws. I find that the issue to be settled here is whether the appellant is entitled for the refund of the credit on the inputs taken. There is no dispute regarding the input being granulated slag obtained form a blast furnace during the manufacture of iron and steel. The same is subject to duty under CSH 2618.0000 of the CETA as contended by the appellant and the credit of the same has been taken by the appellant as input credit. The appellant subjects the input slag to a process of grinding and produces Grand Granulated Blast Furnace Slag which is nothing but a refined form of the Blast Furnace Slag/GBS. This process has been held as not amounting to manufacture by the Honble CESTAT and credit denied by the Department on this basis. Consequently the Order-in-Original held that as the credit itself was not available as decided by the Commissioner in another case, the accumulation of the credit and its refund would not arise. The Ground Granulated Blast Furnace Slag has been held by the Department as non excisable on account of the decision of the Apex Court. The appellant contends this. The argument of the Department is that there is no conversion to different name, character and use in the said process and that the basic ingredients of Rule 5 of manufacture and final products were not present in the instant case. I find that the argument of the appellant is that a wider scope is present for the expression of manufacture when the goods are exported and in terms of the EXIM Policy. The same arises out of the view expressed by the Honble CESTAT in various decisions in this regard. I also find that the Board has stated in circular dated 13.10.1999 that in case of exports, the wider connotation for the expression manufacture has to be applied. In an earlier order issued by me in Order-in-Appeal No. 23/2010 (V-II) CE in appeal No. 11/2010 (V-II) CE, on a similar issue for a different period, the appeal of the appellant was allowed and it was opined that the appellant was eligible for refund. The findings of the Adjudicating Authority in that case were too similar as in this case and therefore I find that the Order-in-Appeal referred above would be applicable in this case also. Without repeating the findings of my earlier order and following the same, I hold that the appeal filed is required to be allowed and the Order-in-Original set aside.
5. Revenue is aggrieved by such finding recorded by the first Appellate Authority. It is the case of the Revenue that since the goods ground granulated blast furnace slag is not an item on which excise duty is discharged, CENVAT credit could not have been availed on blast furnace slag and furnace oil.
6. We find that the issue is no more res-integra and the 1st Appellate Authority has come to a correct conclusion as reproduced by us hereinabove. Similar issue came up before the Honble High Court of Bombay in the case of Repro India Ltd Vs UOI [2009(235)ELT 614 (Bom] wherein their Lordships went into detail as to whether the refund can be allowed in respect of CENVAT credit availed on inputs which are used for goods which are exempted or non-dutiable and in paragraph No. 7 held as under:
7. We may also consider the provisions of Rule 6 of the Cenvat Credit Rules, 2004. The relevant portion of Rule 6(6)(v) reads as under :-
The provisions of sub-rules (1), (2), (3) and (4) shall not?(6) be applicable in case the excisable goods removed without payment of duty are either -
(i).......
(ii) .....
(iii) .....
(iv) .....
cleared for export under bond in terms of provisions of the?(v) Central Excise Rules, 2002.
The petitioners had manufactured both dutiable and exempted final product (packaged software and printed books respectively). The petitioner has taken credit on input used in the manufacture of dutiable as well as exempted final products. If the exempted products are exported outside India the provisions of Rule 6(6)(v) of the Cenvat Credit Rules are applicable. Therefore, the bar provided under Rule 6(1) and the liability created under Rule 6(3)(b) of the Cenvat Credit Rules, 2004 are not attracted. By denying to the petitioner from exporting the printed books under bond what the respondents want to do is in fact to levy 10% on the sale price of the printed books in terms of Rule 6(3)(b) of the Cenvat Credit Rules, 2004. In our opinion this is wholly impermissible.
The provisions as now contained in Rule 6 of the Credit Rules, 2004 were contained in Rules 57C and 57CC of the Central Excise Rules, 1944 as they stood prior to 1st April, 2000. From 1st April, 2000 till 30th June, 2001 similar provisions were contained in Rule 57AD of the Central Excise Rules, 1944. In the context of these Rules circular dated 8th November, 2001 of the Ministry of Finance was issued. It dealt with the question whether 8% has to be paid on the sale price of exempted goods. Under Rule 6(3)(v) of Cenvat Credit Rules, 2004, to 8% has been increased to 10%. The relevant portion of the Circular dated 8th November, 2001 reads as under :-
Further, it is now clearly and specifically mentioned in Rule 57AD(4) that the provisions relating to non-availability of Modvat credit and reversal @ 8% is not applicable in case the exempted goods are cleared for export under bond in terms of the provisions of Rule 13 .
In the new rule 57AD, it has been explicitly provided what was implicity in erstwhile rules 57C and 57CC. Further, the present rule 57AD(4) clearly goes on to show that the exempted goods are eligible to be exported under bond. To interpret otherwise will render the new rule 57AD(4) redundant.
In view of the foregoing in this case the provisions of sub-rule 57C(1) are satisfied as stipulated under Rule 57C(2) as well as Rule 57CC(6)1 and there was no need to comply with the provisions of rule 57CC1). Therefore, it is clear that an amount of 8% of the price of the goods exported is not required to be paid irrespective of whether the exported goods are exempted or otherwise.
It would thus appear that the direction of the respondent No. 2 to the petitioners to pay 10% even though printed books were exported is not legally sustainable. It is only in the event the petitioners does not export the printed goods and do not maintain the account as contemplated by rule 6(2) the petitioner would be required to pay 10% on the sale price of the printed books not so exported.
Even though Rule 6(1) of the Cenvat Credit Rules, 2004 provides that no Cenvat credit will be available in respect of the inputs used in the manufacture of exempted products, Rule 6(6)(v) of the Cenvat Credit Rules creates an exemption inter alia in respect of the excisable goods removed without payment of duty for export under bond in terms of Central Excise Rules, 2002. Considering the language of Rule 6(6)(v) of the Cenvat Credit Rules, 2004 the petitioners are entitled to avail Cenvat credit in respect of the inputs used in the manufacture of the final products being exported irrespective of the fact that the final products are otherwise exempt.
It may be seen from the above reproduced paragraph of their Lordships that the issue is now squarely covered in favour of the respondent and the 1st Appellate Authority was correct in coming to such a conclusion that the respondent is eligible for the refund of the amount. We do not find any reason to interfere in such a reasoned order passed by the 1st Appellate Authority. The appeal is devoid of merits, accordingly stands rejected.
.
(Order pronounced and dictated in open court) C. J. MATHEW MEMBER (TECHNICAL) M.V.RAVINDRAN MEMBER (JUDICIAL) Neela Reddy 5