Custom, Excise & Service Tax Tribunal
M/S. Mtr Foods (P) Ltd vs Commissioner Of Central Excise, ... on 4 February, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: E/25350/2013-DB [Arising out of Order-in-Original No. 29/2012 dated 31/10/2012 passed by Commissioner of Central Excise, BANGALORE-I ] For approval and signature: HON'BLE SMT. ARCHANA WADHWA, JUDICIAL MEMBER HON'BLE SHRI ASHOK K. ARYA, TECHNICAL MEMBER 1 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? M/s. MTR Foods (P) Ltd. Plot No.77 & 78, Bommasandra Industrial Area, Hosur Road, BANGALORE. KARNATAKA Appellant(s) Versus Commissioner of Central Excise, Customs and Service Tax BANGALORE-I POST BOX NO 5400, CR BUILDINGS, BANGALORE, - 560001 KARNATAKA Respondent(s)
Appearance:
Mr. M.S. SRINIVASA, & Mr. H. Y. Radju, Advocates 185, Brahmi, 2 g cross, 3 BANGALORE 560 072. Karnataka For the Appellant Mr. N. Jagadish, Superintendent (AR) For the Respondent Date of Hearing: 04/02/2016 Date of Decision: 04/02/2016 CORAM:
HON'BLE SMT. ARCHANA WADHWA, JUDICIAL MEMBER HON'BLE SHRI ASHOK K. ARYA, TECHNICAL MEMBER Final Order No. 20331 / 2016 Per : Ashok K. Arya 1 The appellants namely MTR Foods Pvt. Ltd. are engaged in the manufacture of food items which are said to be exempted under viz., Notification No. 01/2011- CE dated:-01.03.2011. According to this notification, the appellants are required to pay a lower rate of duty subject to the condition that they have not availed CENVAT credit on the inputs and input services used. The appellants also have packing division which is engaged in the manufacture of packing materials which are sold to independent buyers as well as used by the appellants in the manufacture of food products.
1.1 Central Excise department took the view that CENVAT credit availed on the materials used for manufacture of packing materials which were cleared on payment of duty, whether it is for captive use or for sale to independent buyers, would amount to utilization of CENVAT credit on inputs used in the manufacture of food products. Therefore, proceedings were initiated to deny the benefit of exemption of duty under the Notification No. 01/2011-CE dated 01/03/2011. As a result of the proceedings, the differential duty demand of Rs. 4,96,22,609/- with interest was confirmed for the period from March 2011 to February 2012; penalty of Rs. 10 lakhs was also imposed on the appellants.
1.2 The appellants were granted waiver of pre-deposit and Stay against recovery by this Tribunal vide Misc. Order No. 20808/2014 dated 24.03.2014.
2 The appellants and the respondents have been heard in detail and their submissions have carefully been examined.
3 We find that the appellants manufacture two categories of goods namely packing material (falling under chapter 39) and Instant Food Mixes, Ready to Eat Food Products etc., where the appellants claim benefit of Notification No. 01/2011-CE dated 01.03.2011 3.1 From the facts it is clear that the appellants are taking CENVAT credit on the inputs to the manufacture of first category of goods namely packing material (printed laminated /metalized film and pouches). But it is also clear that the appellants are not taking CENVAT credit for the duties paid by the appellants on the packing material (printed laminated/metalized film and pouches), which are used as inputs for the second category of goods namely Instant Food Mixes, Ready to Eat Food Product, etc. 3.2 It is also clear from facts on record that the appellants are claiming benefit of the Notification No. 01/2011 dated 01.03.2011 for their second category of goods namely Instant Food Mixes and not for first category of their manufacture namely packing material (printed laminated /metalised film and pouches) falling under chapter 39. When from the facts it is clear that the appellants are not claiming any CENVAT credit for the inputs used in the manufacture of second category of goods (Instant Food Mixes, ready to eat food product etc.) the appellants would be entitled to the benefit of Notification No. 01/2011-CE dated 01.03.2011. It is to be noted again that the appellants have not taken any CENVAT credit for any of inputs including the input of packing material (printed laminated /metalised film and pouches) in respect of manufacture of Instant Food Mixes, ready to eat food, etc. 3.3 The appellants also cited the decision of Chandrapur Magnet Wires Pvt. Ltd. vs. CCE, Nagpur reported in 1996 (81) E.L.T. 3 (S.C.), which makes the position clear that even when a manufacturer has taken CENVAT credit for certain inputs and they reverse the said credit, they would be entitled to the benefit of Notification. Honble Supreme Court held that if credit has been taken but the duty is debited subsequently, benefit of exemption under Notification containing condition regarding non-availment of Modvat credit cannot be denied.
3.4 This Tribunals decision in case of Century Fibre Plates Pvt. Ltd. vs. Commissioner of Central Excise, Hyderabad: 2014 (313) E.L.T. 278 (Tri.-Bang.) also makes this position clear that the appellants as the facts stand, are entitled to the benefit of Notification No. 01/2011-CE dated 01.03.2011. The appellants are certainly legally entitled to the claim the benefit of Notification No. 01/2011-CE dated 01.03.2011. Commissioner Central Excise, when deciding the SCN issued to the appellants has not rightly appreciated the facts on the ground. There has been misconstruction on the part of Commissioner deciding the SCN notice, when he wrongly linked the CENVAT credit taken on the inputs for manufacture of packing material (printed laminated /metalized film and pouches), which actually is a different product altogether and has no direct link with the product, instant food mixes, etc. It is to be noted that the appellants are paying full duty on the manufacture of other product namely packing material falling chapter 39. CENVAT credit taken in case of inputs, for the manufacture of packing material (Chapter 39) cant be wrongly linked with the manufacture of another category of goods namely Instant Food Mixes, Ready-to-eat food product, etc. 4 considering above discussions and the decisions quoted, the appeal is allowed with consequential benefit, if any.
(Operative portion of the Order was pronounced in open court on 04.2.02.2016.) ASHOK K. ARYA TECHNICAL MEMBER ARCHANA WADHWA JUDICIAL MEMBER rv 2