Custom, Excise & Service Tax Tribunal
M/S Bayer India Ltd vs Ludhiana on 21 January, 2015
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066 CIRCUIT BENCH AT CHANDIGARH Appeal No.E/2012/2006-EX(DB) [Arising out of OIA No.149/CE/Chd/2006, dt.28.02.2006, passed by Commissioner of Central Excise & Customs (Appeals), Chandigarh] M/s Bayer India Ltd. Appellant Vs Commissioner, Central Excise & Service Tax, Ludhiana Respondent
Represented by:
For Appellant: Ms.Swati Gupta, Shri R.K.Hasija Advocates.
For Respondent: Shri Yashpal Sharma, Authorised Representative For approval and signature:
Mr. P.K. Das, Honble Member (Judicial) Mr. P.S. Pruthi, Honble Member (Technical)
1. Whether Press Reporters may be allowed to see the No Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy of Seen the order?
4. Whether order is to be circulated to the Departmental Yes authorities?
CORAM:
MR. P.K. DAS, HONBLE MEMBER (JUDICIAL) MR. P.S. PRUTHI, HONBLE MEMBER (TECHNICAL) Date of Hearing/Decision:21.01.2015 Final Order No. Per: P.K. Das
1. The relevant facts of the case, in brief, are that the appellants were engaged in the manufacture of Pesticides/Insecticides classifiable under sub-heading 380510 of the Schedule to the Central Excise Tariff Act, 1985. A Show Cause Notice dt.23.09.2001 was issued, proposing the demand of Central Excise duty of Rs.45,14,933.00 along with interest and penalty on the ground that during the period from 01.09.2000 to 31.03.2001, the appellant cleared their inputs namely Metribuzin Tech.(Sancor Tech.) to M/s Bayer India Ltd on payment of Central Excise duty equivalent to CENVAT Credit availed by them. The Adjudicating Authority confirmed the demand of Rs.38,92,184.00 alongwith interest and also imposed a penalty of Rs.10 lakhs on the appellant. Commissioner (Appeals) reduced the penalty from Rs.10 lakhs to Rs.5 lakhs.
2. Ld.Advocate on behalf of the appellant, submits that the appellant cleared the inputs as such and reversed the credit availed on the inputs. He submits that this issue is squarely covered by the various decisions of the Tribunal. He drew the attention to the various provisions of CENVAT Credit Rules. He further submits that this issue is covered by the decisions of the Tribunal as under:-
i) Orient Paper Mills Vs CCE Ludhiana 2008 (232) ELT 88 (Tri-Del.)
ii) Tata Motors Ltd Vs CCE Jamshedpur 2010 (256) ELT 95 (Tri-Kolkata)
iii) Eicher Tractors Vs CCE Jaipur 2005 (189) ELT 131 (Tri-LB)
3. On the other hand, the ld.Authorised Representative for the Revenue reiterates the findings of the Commissioner (Appeals). He drew the attention of the Bench to the Rule 57AB (1)(b) of the Central Excise Rules, 2002. It is submitted that as per Explanation inserted during the relevant period, the appellant is liable to pay the appropriate duty of Excise as if the such inputs have been manufactured and removed from the factory.
4. Afte hearing both the sides and on perusal of the records, we find the explanation to Rule 57AB of Central Excise Rules 1944 provides when inputs or capital goods are removed from the factory, the manufacturer of the final product would pay the appropriate duty of excise leviable thereon as if such inputs or capital goods have been manufactured in the same factory, and such removal shall be made under the cover of an invoice prescribed under Rule 52A of the said Rules. According to the Revenue, the appellant is required to pay the duty on the value said goods as if such inputs are manufactured in the factory. We find that this provision was changed from time to time. The Larger Bench of the Tribunal in the case of Eicher Tractors (supra) while dealing with the Rule 3(5) of CENVAT Credit Rules on the issue in respect of valuation of inputs on which CENVAT Credit has been availed and removed as such held in favour of the assessee. Rule 3(5) of CENVAT Credit Rules 2004 provides that when inputs or capital goods on which CENVAT Credit has been taken are removed as such from the factory, the manufacturer of the final product shall pay an amount equal to the credit availed in respect of such inputs.
5. We find that the Tribunal in the case of Tata Motors Ltd (supra), after considering the explanation of Rule 57AB (b) of the said CENVAT Credit Rules, 2004, held that the reversal of the credit availed at the time of receipt of inputs is sufficient at the time of clearance as such from the factory of production. The relevant portion of the said Rule is reproduced below:
10.?In respect of the demand of Rs. 1,11,35,767.00/-, the Revenue is relying upon the Rule 57AB (b) of Central Excise Rules which provides as under :
The CENVAT credit may be utilized for payment of any duty of excise on any final product manufactured by the manufacturer or for payment of duty on inputs or capital good themselves if such inputs are removed as such or after being partially processed, or such capital goods are removed as such.
Explanation :- When inputs or capital goods are removed from the factory, the manufacturer of the final products shall pay the appropriate duty of excise leviable thereon as if such inputs or capital goods have been manufactured in the said factory, and such removal shall be made under the cover of an invoice prescribed under Rule 52A.
Prior to this Rule 57F, Central Excise Rules also provides that in case the inputs regarding which credit of duty has been availed by the manufacturer are removed from the factory as such inputs are to be treated as manufactured in the said factory. However, there was a proviso which provides that where such inputs are removed from the factory on payment of such duty of excise which will not be less than the amount of credit. The provisions of Rule 57F of Central Excise Rules were interpreted by the Larger Bench of the Tribunal in the case of CCE v. American Auto Services reported in 1996 (81) E.L.T. 71 (Tribunal) and the Tribunal held that in such a situation reversal of credit is sufficient when inputs are cleared as such. This view was again affirmed by the Larger Bench in the case of CCE v. ABB (supra). The appeal by the Revenue against this decision was dismissed as not pressed. The same is reported in 2001 (131) E.L.T. A149 (S.C.).
11.?We find that as the Provisions of Rule 57F of Central Excise Rules were interpreted by the Larger Bench of the Tribunal in the case of CCE v. American Auto Services [1996 (81) E.L.T. 71 (Tribunal)] and CCE v. ABB (supra) and the Tribunal held that reversal of credit is sufficient when the inputs are cleared as such. We find the rule which is under consideration in the present appeal i.e. Rule 57AB(b) of the Central Excise is similar to Rule 57F of Rules and difference is to proviso to Rule 57F which is not in Rule 57AB(b). The proviso was only to the extent that where the inputs are removed from factory for home consumption on payment of excise duty, such duty will not be less than the amount credit. In the Rule 57AB (b) which is under consideration, even this condition is not there. Therefore we find that the ratio of the decisions of the Tribunal in the case of CCE v. American Auto Services and CCE v. ABB (supra) are applicable on the facts of the present case hence the reversal of credit availed at the time of receipt of inputs is sufficient at the time of clearance of inputs as such from the factory of production hence the demand is not sustainable and set aside and appeal in this regard is allowed.
6. We find that the present case is squarely covered by the decision of the Tribunal in the case of Tata Motors Ltd (supra). In view of that, the impugned order passed by the lower authorities is not sustainable. Accordingly, the impugned order is set aside. The appeal filed by the appellant is allowed.
(Dictated & Pronounced in Court) (P.S. Pruthi) (P.K. Das) Member (Technical) Member (Judicial) cbb 5