Custom, Excise & Service Tax Tribunal
M/S. Exide Industries Ltd vs C.C.E & S.T. Delhi-Iii on 30 September, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI PRINCIPAL BENCH, COURT NO. II Appeal No. E/3188/2012-EX(DB) [Arising out of Order-in-Appeal No. 24-25/SA/CCE/2012 dated 13.07.2012 by the Commissioner of Customs, Central Excise & Service Tax (Appeals), Gurgaon]. For approval and signature: Honble Shri Ashok Jindal, Member (Judicial) Hon'ble Shri B. Ravichandran, Member (Technical) 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. Exide Industries Ltd. .Appellants Vs. C.C.E & S.T. Delhi-III .Respondent
Appearance:
Shri B.L. Narsimhan, Advocate for the Appellant Shri Govind Dixit, DR for the Respondent CORAM:
Hon'ble Shri Ashok Jindal, Member (Judicial) Hon'ble Shri B. Ravichandran, Member (Technical) Date of Hearing: 30.09.2015 FINAL ORDER NO. 53077/2015-EX(DB) Per Ashok Jindal:
The appellant Exide Industries Ltd. is in appeal against the impugned order denying Cenvat Credit on semi finished / unformed batteries.
2. The facts of the case are that the appellant are manufacturer of electric accumulators. The appellant procured semi finished and unformed batteries from their sister units and after receipt of these unformed / electrolytic accumulators they poured sulphuric acid in the batteries and charged upto specified gravity and cleared them as final product on payment of duty. The case of the Revenue is that the appellant is receiving batteries and selling them as batteries only. Therefore, the activity undertaken by the appellant does not amount to manufacture. Consequently, the appellant is not entitled to take Cenvat Credit on semi finished batteries received by them from sister units. Therefore, proceedings were initiated against the appellant to deny Cenvat Credit on their input. The matter was adjudicated. Demand was confirmed by denying Cenvat Credit along with interest and penalty was also imposed.
3. Shri B.L. Narsimhan, Advocate, Ld. Counsel for the appellant appeared and submits that the appellant has taken the activity in their factory of electrolic filling in the batteries received in semi finished conditions. Thereafter, they do jar formation process that is put two plate inserted into container with top lid closed and sealed and the complete batteries is sold by them on payment of duty. Therefore, the activity undertaken by the appellant is an activity amounts to manufacture as they have made their batteries marketable as per section note 6 of section 16 of the Central Excise Tariff Act 1985. Therefore, the appellant is entitled to take Cenvat Credit on these batteries received in semi finished condition. In alternate he submits that if there activity does not amount to manufacture, in that case also, the appellant has cleared these batteries on payment of duty which is higher than the Cenvat Credit availed by them. Therefore, as held by the Honble High Court of Bombay in the case of CCE Pune Vs. Ajinkya Enterprises-2013 (294) ELT 203 (Bom) the appellant has correctly availed Cenvat Credit as payment of duty on clearance of their finished product shall amounts to reversal of Cenvat Credit. Therefore, impugned order be set aside.
4. On the other hand, Ld. AR reiterated the findings of the impugned order and submits that as the activity of the appellant does not amount to manufacture as the character and classification of the impugned goods does not change by the activity undertaken by the appellant. Therefore, Cenvat Credit is rightly denied by the Adjudicating Authority.
5. Heard both the sides. Considered the submission.
6. In this case the short issue before us is:
a) Whether the activity undertaken by the appellant on amounts to manufacture or not. Consequently, the appellant is entitled to take Cenvat Credit or not and / or;
b) In case activity of the appellant does not amount to manufacture the appellant cleared their goods on payment of duty whether the same shall be treated as reversal of Cenvat Credit or not.
7. Following activity has been undertaken by the appellant semi finished / incomplete / unformed batteries as under:
a) Receipt of semi finished and unformed batteries.
b) Electrolytic filling
c) Jar formation process
d) Test to check whether there is any leakage or not, and thereafter sealing the same and sold on payment of duty.
8. We have seen the process undertaken by the appellant and also gone through the section note 6 of section 16 of the Central Excise Tariff Act 1985 which is reproduced here as under:
In respect of goods covered by this section, conversion of an article which is incomplete or unfinished but having the essential character of the complete or finished article (including blank that is an article, not ready for direct use, having the approximate shape or outline of the finished article or part, and which can only be used, other than in exceptional cases, for completion into a finished article or a part), into complete or finished article shall amount to manufacture.
9. Semi finished / incomplete batteries received by the appellant and by the process undertaken by the appellant have become complete batteries / marketable. Therefore, the activity undertaken by the appellant is squarely covered by the section note 6 of Section 16 of Tariff Act 1985. Therefore, we hold that activity undertaken by the appellant amounts to manufacture. Therefore, they have rightly taken the Cenvat Credit on semi finished / incomplete batteries received from their sister unit to do the process making them marketable in complete condition. The appellant has succeeded on the issue that whether their activity amounts to manufacture or not. We also hold that as per the decision of Honble High Court in the case of Ajinkya Enterprises (Supra) wherein it has been held that if activity does not amount to manufacture, the goods cleared on payment of duty shall amount to reversal of credit. In that situation also appellant is not required to reverse Cenvat Credit.
10. In these circumstances, the appellant has correctly taken the Cenvat Credit and we do not find any merit in the impugned order. Accordingly, same is set aside. Appeal is allowed with consequential relief if any.
(Operative part of the order pronounced in the open court)
(B. Ravichandran) (Ashok Jindal) Member (Technical) Member (Judicial)
Bhanu
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E/3188/2012-EX(DB)