Custom, Excise & Service Tax Tribunal
M/S G.G. Automotive Gears Limited vs Cce & St, Indore on 30 June, 2014
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No.2, R. K. Puram, New Delhi, Court No. 1 Date of hearing/decision: 30.06.2014 For Approval and Signature: Honble Mr. Justice G. Raghuram, President Honble Mr. R. K. Singh, Member (Technical) 1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 26 of the CESTAT (Procedure) Rules, 1982? 2 Whether it should be released under Rule 26 of 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? Excise Appeal No. 58360 of 2013 and Excise Stay No. 59017/2013 (Arising out of order in original No. 09/Commr/IND/CEX/2013 dated 28.03.2013 passed by the Commissioner of Central Excise, Customs & Service Tax, Indore). M/s G.G. Automotive Gears Limited Appellant Vs. CCE & ST, Indore Respondent
Appearance:
Shri Amit Jain, Advocate for the appellant Shri Yashpal Sharma, DR for the Respondent Coram: Honble Mr. Justice G. Raghuram, President Honble Mr. R. K. Singh, Member (Technical) Final Order No. 52741/ 2014 Per: R. K. Singh:
This order is being issued in respect of the stay application No.59017/2013 and Excise Appeal No. 58360/ 2013-Ex (DB) filed by M/s G.G. Automotive Gears Limited (hereinafter referred to as the Appellants) against Order-in-original No.09/COMMR/ IND/CEX/2013 dated 28.03.2013 in terms of which a demand of Rs.74,68,635/- was confirmed against the Appellants alongwith equal mandatory penalty.
2. The facts of the case briefly stated are as under:
The appellants were engaged in doing the job work for M/s Diesel Loco Modernization Works, Patiala which involved the following:
(i) Case Hardening & Tempering of Piston Pins.
(ii) Case Hardening & Tempering of Cam Rollers.
(iii) Machining of Pinions.
(iv) Case Carburizing and Hardening of Bull Gears.
(v) Complete Heat Treatment Process inclusive of stress relieving & tempering process, machining, finish grinding of Bull Gear.
They were availing of the benefit of exemption Notification No. 214/86-CX dated 25.03.1986. The demand has been confirmed on the ground that the suppliers of raw material M/s Diesel Loco Modernisation Works have not given an undertaking to the Assistant Commissioner of Central Excise having jurisdiction over the factory of the job worker as required in terms of the said notification, inter alia, among other things, to the effect that they (the suppliers) undertake the responsibility of discharging the liabilities in respect of Central Excise duty leviable.
2. Learned Advocate for the Appellants stated that the job work was done for the Public Sector Undertaking/ Government factory and there is no allegation that the goods were not duly accounted for. Further, they have stated that the adjudicating authority himself has conceded that except for machining of pinions which could possibly amount to manufacture, none of the other activities, namely; case hardening & tempering of piston pins, case hardening & tempering of cam rollers, case carburizing and hardening of bull gears, complete heat treatment process inclusive of stress relieving & tempering process, machining, finish grinding of bull gear, amount to manufacture. However, even after conceding this fact, the adjudicating authority without assigning any reason confirmed the entire demand. It can be nobodys case that excise duty is chargeable even when no manufacture has taken place. The Appellants referred to several judgments to this effect. As regards the availability of Notification No. 214/86-CE in the absence of the undertaking to be given by the supplier, they referred to the judgment of India Fabricators vs. CCE, Trichy- 2005 (191) ELT 339 (Tri. Chenn) wherein it is stated that the question of denying the benefit of the Notification to the appellants who is a job worker for the contravention, if any, committed by the supplier of the raw material does not arise and consequently the benefit of Notification No. 214/86-CE cannot be denied to the appellant. Similarly, in the case of CCE, Ahmedabad-II vs. Bharat Foundry 2009 (246) ELT 561 (Tri. Ahmd.) in the context of an exemption Notification No.84/94-CE with similar requirement it was held that in view of the substantial compliance on the part of the job worker and the facts of proper accounting of goods by the principal manufacturer, non filing of undertaking by the principal manufacturer would by itself not make the job worker ineligible for the exemption. In the case of Moon Chemicals vs. CCE, Thiruvananthapuram - 2007 (215) ELT 434 (Tri. Chennai) the Tribunal has come to a similar conclusion.
3. Although the case was listed for disposal of the stay application, Learned DR conceded that the issue is covered by various judicial pronouncements and therefore ld. DR had no objection if the appeal itself was taken up for final disposal and we do so accordingly.
4. We have gone through the submissions of both the parties. It is an admitted fact that out of the five processes carried out by the Appellants, four processes are outside the purview of manufacture. In other words, none of these four processes amount to manufacture and therefore the question of charging duty on the goods which only suffered these processes does not arise. This fact is so obvious that quoting any judgment on this aspect will be totally redundant and unnecessary. Regarding the process of machining of pinions, while such machining may result in the manufacture depending on the manner and extent thereof, neither the show cause notice nor the adjudication order provides any basis to infer that it actually amounted to manufacture. Even if this process is presumed to be amounting to manufacture, the demand in respect of such goods would only be to the extent of Rs.13,12,559/- as against Rs. 74,68,635/- confirmed by the impugned order-in-original. However, the substantive issue in this case is whether the benefit of Notification No. 214/86-CE can be availed of by the Appellants in the absence of the undertaking by the supplier referred to above. As may be seen from the various judicial pronouncements referred to earlier, it is settled law that the benefit of the said exemption cannot be denied merely because the supplier of the raw material had not submitted an undertaking as per the said Notification particularly when there has been proper accountal of the goods. As may be seen from the show cause notice as well as from the Order-in-original, there is no allegation of any deficiency in the accountal of the goods and the supplier in this case is a Public Sector Undertaking / Government company.
5. Thus, in the wake of the consistent view taken in various judicial pronouncements, the impugned demand is not sustainable and is therefore dropped. The appeal is allowed and the stay application is disposed of as infructuous.
[Operative portion already pronounced in open court] (Justice G. Raghuram) President (R. K. Singh) Member (Technical) Pant