Custom, Excise & Service Tax Tribunal
M/S. Micro Inks Pvt. Limited vs Commissioner Of Central Excise & S.T., ... on 28 April, 2015
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Zonal Bench, Ahmedabad Appeal No. : E/133/2007 Application Nos. : E/Extn/13748/2004 and E/Others/15958/2014 (Arising out of OIA-KS/372-376/DAMAN/2006 dated 15.11.2006, passed by Commissioner (Appeals) Central Excise, Service Tax & Customs, Daman) M/s. Micro Inks Pvt. Limited : Appellant (s) VERSUS Commissioner of Central Excise & S.T., Daman : Respondent (s)
Represented by :
For Appellant (s) : Shri S. Suriyanarayanan, Advocate For Respondent (s) : Shri J. Nair, Authorised Representative For approval and signature :
Mr. P.K. Das, Hon'ble Member (Judicial) Mr. H.K. Thakur, Hon'ble Member (Technical) 1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2 Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? No 3 Whether their Lordships wish to see the fair copy of the Order?
Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes CORAM :
Mr. P.K. Das, Hon'ble Member (Judicial) Mr. H.K. Thakur, Hon'ble Member (Technical) Date of Hearing / Decision : 28.04.2015 ORDER No. A/10443 / 2015 Dated 28.04.2015 Per : Mr. P.K. Das;
The applicant filed the application for change of Cause Title, insofar as the applicants name M/s. Micro Inks Limited would be M/s. Micro Inks Private Limited. In support of their contention, the applicant enclosed a certificate of incorporation consequent to conversion of the Company from Public Limited Company to Private Limited Company, issued by Assistant Registrar of Companies, Registrar of Companies, Ahmedabad. In view of that, the registry is directed to amend the cause title, as the applicants name would be M/s. Micro Inks Private Limited instead of M/s. Micro Inks Limited in all further proceedings. Application for change of cause title is allowed. Now the appeal is taken up for hearing.
2. The relevant facts of the case, in brief, are that the appellant is engaged in the manufacture of Pigments, Varnish and Miscellaneous Chemicals falling under Chapter 32, 24, 38 and 39 of the Schedule of the Central Excise Tariff Act, 1985. They availed CENVAT/modvat credit on capital goods namely Fluid Coupling, Geared Coupling, Electric Motors, Gear Box as components/ spare parts of the machines. The appellant supplied the components to the job workers under Rule 57S of the erstwhile Central Excise Rules, 1944. After processing/ re-working by using the components supplied by the appellant, the job worker returned back the machines Reactor Vessel, Sigma Mixer Machine and Mixer Muller machine to the appellant.
3. A show cause notice dated 18.6.2003 was issued proposing to deny the modvat credit of Rs. 10,55,690/- alongwith interest and to impose penalty for the period 1999 to 2000. It has been alleged that the job workers cleared the goods under full exemption from payment of duty under Notification No. 8/99-CE dated 28.2.1999 and Notification No. 8/2000-CE dated 01.3.2000. Condition No. (iii) of Para 2 of Notification No. 8/2000-CE (supra) stipulates that the manufacturer availing the notification shall not avail cenvat credit. The adjudicating authority confirmed the demand of modvat credit and also imposed penalty of equal amount. Commissioner (Appeals) upheld the adjudication order.
4. Learned Advocate appearing on behalf of the appellant submits that there is no dispute that the appellant supplied the duty paid components to the job-workers, who after processing returned back the goods under Rule 57S of the erstwhile Central Excise Rules 1944. He submits that the Commissioner (Appeals) observed that the appellant fraudulently sent the materials under Rule 57S to camouflage non-inclusion of value of the said components. He submits that the proceedings were initiated against the job-workers to deny the benefit of Notification No. 214/86-CE dated 01.3.1986, on the ground that the job workers supplied a complete machine and the value of the goods supplied was not considered in the aggregate value of SSI exemption notification. It is submitted that this Tribunal in the case of M/s. Mech Form vs. CCE, Daman by Final Order No. A/870-871/WZB/AHD/2010 dated 23.6.2010, has allowed the appeal of the assessee. It is submitted that the said order of the Tribunal was upheld by the Hon'ble Supreme Court by Order dated 30.7.2012 in Civil Appeal Nos. 1059-1060 of 2011 in the case of Commissioner of Central Excise & Customs, Daman vs. M/s. Mech Form.
5. On the other hand, the learned Authorised Representative for the Revenue submits that the Tribunal, in the appellants own case, vide Final order No. A/2790/WZB/AHD/2007 dated 06.11.2007 remanded the matter to Commissioner (Appeals) with certain directions. He further submits that the appellant cleared the components under Rule 57S for repair and reconditioning but they received such a complete machines and therefore, they are liable to reverse the credit on the components supplied by them. The learned Authorised Representative strongly relied upon the decision of the Tribunal in the appellants own case, where the Tribunal remanded the matter.
6. We find that this issue has already been settled by the Tribunal in the case of Mech Form. The Commissioner (Appeals) observed that the appellant availed modvat credit by routing these components through the job workers and suppressing the value of Sigma machinery by not including the value of the capital goods in the assessable value of the Sigma machinery. In turn, the aggregate value of clearance under the SSI Exemption of the job workers should have been computed by including the value of these components.
7. We find that the issue is no more res-integra in view of the decision of the M/s. Mech Form (supra). In that case, the Tribunal held that the job worker is eligible for the benefit of Notification No. 214/86-CE. The relevant portion of the said decision in the case of M/s. Mech Form is reproduced below:-
2. The appellants premises were visited by the officers on 13.12.2000 and it was found that they were receiving the various capital goods like electric motors, gear boxes, fluid coupling and gear coupling free of cost from their customers by assembling/installation in Sigma machines manufactured by them. As such, the capital goods were being procured under the cover of Annexure II challans from their customers, who were availing Modvat credit on the same and were sending the same to the appellant under Rule 57S(7) of Central Excise Rules, 1944. A view was entertained that the value of these components received free of cost is required to be included in the assessable value of their final product. Inasmuch as the appellants under-valued the goods by not including the value of the components supplied free of cost, their aggregate value of clearances under SSI exemption notification is required to be computed by said value and the same would cross the exemption limit.
3. On the above basis, a show cause notice dt.25.06.03 was issued to the appellant for demanding duty and imposing penalty. The notice culminated into an order passed by the Assistant Commissioner, Central Excise, confirming demand of duty of Rs.2,13,902/- and imposing equivalent penalty under Rule 173Q(1) and imposing penalty of Rs.10,000/- each on other appellants. The said order of the Assistant Commissioner was confirmed by the Commissioner (Appeals) and hence the present appeal.
4. After hearing both sides, we find that admittedly various capital goods were received by the appellant under Annexure II challans and were being returned by them to the principal manufacturer by filing Part II of the Annexure II Challans with the Revenue. The lower authorities have observed that inasmuch as the process undertaken by them amounted to complete manufacture of the machines, the provisions of Rule 57S(7) were not available to them as the same permits the manufacturer to remove the capital goods for test, repairs and reconditioning of the said capital goods and return the same to his factory. The appellants contention of job work cannot be accepted as the machines were sold to the customers and the Annexure II challans were to camouflage non-inclusion of the value of the said components.
5. Learned advocate submits that even if the Revenues case of complete manufacture of goods is accepted, even then the benefit of Notification No.214/86-CE which allows use of capital goods manufactured on job work basis is to be extended to them. For the above proposition, he relies upon the decision in the case of Flux Engineering Ltd. Vs. CCE Noida -2004-(178)-ELT 853 (Tri-Del.), laying down that prior to amendment of Notification No.214/86-CE vide Notification No.68/95-CE, dt.16.3.95, the machinery, plant, equipment etc. were excluded . However, with the amendment, the exclusion clause relates only to packaging materials and plant, machinery which were excluded are no more covered in the exclusion clause. The Tribunal has also held that the benefit of Notification No.214/86-CE not only applied to the input but is also available to the capital goods.
8. In the present case, the appellant supplied components to job workers under Rule 57S(7) of the erstwhile Central Excise Rules, 1944. It is seen that the job workers, after processing (alignment etc.) supplied capital goods namely, Reactor Vessel, Sigma Mixer Machine and Mixer Muller. The Tribunal accepted that the job worker is eligible to the benefit of exemption Notification No. 214/86-CE. There is no dispute that these capital goods were used in the manufacture of the final product at the appellants factory and cleared on payment of duty.
9. In view of that, we do not find any reason to deny the modvat credit to the appellant. Accordingly, we set-aside the impugned order. Appeal filed by the appellant is allowed. Application filed for extension of stay order is dismissed as infructuous.
(Dictated and pronounced in the Court)
(H.K. Thakur) (P.K. Das)
Member (Technical) Member (Judicial)
..KL
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