Custom, Excise & Service Tax Tribunal
M/S. Jalan Dyeing & Bleaching Mills vs Cce Mumbai on 3 May, 2011
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI
COURT NO. II
APPEAL NO. E/1000/09 Mum
(Arising out of Order-in-Appeal No. SB(38) 38/MI/2009 dated 26.6.2009 passed by the Commissioner of Central Excise (Appeals), Mumbai)
For approval and signature:
Honble Shri Ashok Jindal, Member (Judicial)
1. Whether Press Reporters may be allowed to see : No
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 : Yes
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
M/s. Jalan Dyeing & Bleaching Mills
:
Appellant
Versus
CCE Mumbai
Respondent
Appearance Ms. Nupur Agarwal, Advocate for Appellant Shri Ashwani Kumar Prabhakar, JDR for Respondents CORAM:
Shri. Ashok Jindal, Member (Judicial) Date of Hearing : 03.05.2011 Date of Decision : 03.05.2011 ORDER NO.
Per Ashok Jindal The appellant M/s. Jalan Dyeing & Bleaching Mills had filed an appeal against the impugned order confirming demand of duty along with interest and imposition of penalty on the appellant by the order-in-original on account of availing excess credit on inputs.
2. Facts of the case are that the appellant is the manufacturer of excisable goods i.e. grey fabrics during the financial year 2003-04, 2004-05 and 2005-06 and had availed CENVAT credit on inputs viz. grey fabrics. The allegation against the appellant is that they have received short quantity of grey fabrics as compared to the actual quantity mentioned on the Central Excise invoice for the said period. It is also stated that they have also recovered processing charges from their suppliers on the actual quantity of fabrics received and duty paid accordingly, but not on the entire quantity as per Central Excise invoices. Therefore, it was alleged that the appellant had availed CENVAT credit on the entire quantity mentioned on the Central Excise invoices and not on the actual quantity received in contravention of Rule 3 of CENVAT Credit Rules, 2002/2004. A show-cause notice has been issued which was adjudicated, demands were confirmed along with the interest and equal amount of penalty under Section 11AC read with Rules 13 & 15 of CENVAT Credit Rules, 2002/2004 has been imposed. Aggrieved by the said order, the appellant is in appeal before me.
3. In support of defence, the learned Advocate for the appellant submits that the shortage in the quantity was very negligible as for the year 2003-04 it was 0.37%, for the year 2004-05 it was 0.32% and for 2005-06 it was 0.13% which is within the tolerance limit as per Standards of Weights and Measures Act. The learned Advocate further submitted that these shortages were only on account of measurement of goods at the suppliers end (it was excess) and at the end of the appellant (it was found short). Credit has been taken rightly as per the Central Excise invoices. As the shortages are negligible and are within the permissible limits of tolerance, the credit is not deniable. To support this contention the learned Advocate relied on the Larger Bench decision in the case of CCE Chennai vs. Bhuwalka Steel Industries Ltd. 2010 (249) ELT 218 (Tri. LB).
4. On the other hand the learned DR submitted that it is an admitted fact that the grey fabrics received in the factory of the appellant was found short which has been recorded in their statutory records and as per Rule 3 of the CENVAT Credit Rules, 2004, credit is available only on the actual quantity of the inputs received. Therefore, excess credit taken by the appellant is required to be reversed. To support his contention he relied on the decision of Asea Brown Baveri Ltd. vs. Collector of Central Excise, Vadodara 1994 (74) ELT 897 (Tri.) and Bombay Dyeing & Manufacturing v. CCE 1999 (113 (ELT) 331(Tri.)
4. Heard both sides.
5. On careful examination of the submissions made by both the sides, I find in this case the allegation against the appellants are that the appellant has taken excess credit on inputs viz. grey fabrics i.e. as per Central Excise invoices issued by the supplier as compared to actual receipt of the grey fabrics. Therefore, the demands were raised. The appellant has relied on the decision fo the Larger Bench of this Tribunal in the Bhuwalka Steel ((supra)) wherein the Larger Bench in paragraph 12 has observed that different types of shortages cannot be dealt with accordingly to any one inflexible and fixed standard for the purpose of allowing credit under Rule 3(1) of the CENVAT Credit Rules, 2004. Decision to allow or not to allow credit in any particular case will depend on various factors. The Larger Bench has also discussed the circumstances under which the credit under Rule 3 is to be examined the same are as follows:-
(i) Whether the inputs/capital goods have been diverted en-route or the entire quantity with the packing intact has been received and put to the intended use at the recipient factory.
(ii) Whether the impugned goods are hygroscopic in nature or are amendable to transit loss by way of evaporation etc.
(iii) Whether the impugned goods comprise countable number of pieces or packages and whether all such packages and pieces have been received and accounted for at the receiving end.
(iv) Whether the difference in weight in any particular case is on account of weighment on different scales at the despatch and receiving ends and whether the same is within the tolerance limits with reference to the Standards of Weights and Measures Act, 1976.
(v) Whether the recipient assessee has claimed compensation for thee shortage of goods either from the supplier or from the transporter or the insurer of the cargo.
6. The Larger Bench has laid down the tests whether difference in weight in any particular case is on account of weighment on different scales at the despatch and receiving ends and whether the same is within the tolerance limits with reference to the Standards of Weights and Measures Act, 1976 the credit ccannot be denied, the said principle is squarely applicable to the facts of this case. I find that the measurement at the end of the supplier was found excess and at the end of appellant was found short which is well within the permissible limit of tolerance as per the Standards of Weights and Measures Act, 1976. There is no allegation against the appellant that the inputs have been diverted enroute or not received in the factory of the appellant as per Central Excise invoices. In the absence of any such allegation the tests laid down by the Larger Bench in the case of Bhuwalka Steel (supra) is squarely applicable to the facts of the case. The case law relied upon by the learned DR has also been considered by the Larger Bench. The decision of Asea Brown Baveri Ltd. (supra) is not relevant to the facts of this case as in that case the issue of imposition of penalty for breach, negligence or lapses despite absence of mala fide was for consideration . Therefore, I hold that the appellant has taken the CENVAT credit correctly as per Central Excise invoice. Therefore, the appellant is not required to reverse the credit. In result, the impugned order is set aside and the appeal is allowed with consequential relief.
(Dictated in Court) (Ashok Jindal) Member (Judicial) nsk 5