Custom, Excise & Service Tax Tribunal
M/S Parry Enterprises India Ltd vs C.C.E. Bharuch on 12 January, 2018
In The Customs, Excise & Service Tax Appellate Tribunal West Zonal Bench At Ahmedabad Appeal No.E/12069/2016-SM [Arising out of OIA No. CCESA-VAD-APP-II-VK-254-2016-17 dated 19.09.2016 passed by the Commissioner of Central Excise, Customs and Service Tax, Vadodara]] M/s Parry Enterprises India Ltd. Appellant Vs C.C.E. Bharuch Respondent
Represented by:
For Appellant: Mr. Dhaval Shah (Advocate) For Respondent: Mr. S.K. Shukla (A.R.) CORAM:
HONBLE DR. D.M. MISRA, MEMBER (JUDICIAL) Date of Hearing/Decision:12.01.2018 Final Order No. A / 12050 /2018 Per: Dr. D.M. Misra Heard both the sides.
2. This appeal is filed against order in appeal No. CCESA-VAD-APP-III-VK-254-16-17 passed by the Commissioner (Appeals) Central Excise Customs and Service Tax, Vadodara.
3. Briefly stated the facts of the case are that due to incident of flood between 20.09.2013 to 22.09.2013 in their factory premises, work in progress goods and machineries inside the factory premises were damaged. After necessary inquiry by the Department, Show Cause Notice was issued to them for recovery of the Cenvat Credit of Rs. 2,81,908/- in respect of inputs contained in work-in-progress goods and on capital goods damaged in along with interest and penalty. On adjudication the demand was reduced to Rs. 1,13,436/- taking into that compensation amount received from Insurance Company. Aggrieved by the said order the appellant filed an appeal before the Ld. Commissioner (Appeals), who enhanced the demand to Rs. 2,81,908/- with interest and penalty. Hence the present appeal.
4. Ld. Advocate Sh. Dhaval Shah, for the appellant at the outset submits that Ld. Commissioner (Appeals) has travelled beyond the scope of the appeal, in enhancing the demand, hence, the Order is bad in law, accordingly liable to be set aside. He submits that receiving compensation from the Insurance Company on damages, in no manner relevant for availing Cenvat credit on inputs that were used in the manufacture of work-in-progress goods and their plant and machinery, which were though damaged but not removed from the factory. It is his contention that the credit cannot be denied on the inputs contained in the semi finished goods lost in fire, flood etc. as held by this Tribunal in the case of VFC industries (P) Ltd. vs CCE & ST Vadodara-II, 2017 (352) ELT 507(Tri-Ahmd.) following the ratio laid down by the Karnataka High Court in the case of Commissioner vs Tata Advanced Materials Ltd. 2011 (271) ELT 62 (Kar).
6. Ld. AR reiterated the findings of Ld. Commissioner (Appeals).
7. I find that the issue of admissibility of Cenvat credit on inputs used in work in progress goods damaged/ destroyed in fire, flood etc. is covered by the judgment in the case of VFC industries (supra) and Parth Packaging vs CCE Vapi order No. A/12830/2017 dated 05.10.2017. As far as demand relating to credit availed on capital goods, damaged during flood, the same is not removed from the factory premises; also, the insurance company compensated for damage of the said capital goods cannot be a valid ground for reversal of the credit in view of the principle laid down by the Honble Karnataka High Court in the case of Tata Advanced Materials Ltd. (supra). Their Lordships observed as:
6.?Therefore, it is clear that there is no provision in the rules which provides for a reversal of the credit by the Excise Authorities except where it has been irregularly taken in which event it stands cancelled or if utilised has to be paid for. This is not the case of the revenue. In the instant case, when the assessee purchased the capital goods and when he has paid the excise duty on them, in law, he is entitled to get the credit on the duty paid while clearing the finished products from his factory. Accordingly, he utilised the cenvat credit and cleared the finished products. It is about three years after such payment, the capital goods were destroyed in fire. As the assessee had insured the said capital goods, he put forth a claim for payment of the loss sustained by him, which includes the payment of excise duty. The Insurance Company in terms of the policy has compensated the assessee. Merely because the Insurance Company paid the assessee the value of goods including the excise duty paid, that would not render the availment of the cenvat credit wrong or irregular. At the same time, it does not confer any sight, on the Excise Department to demand reversal of credit or default to pay the said amount. The assessee has paid the premium and covered the risk of this capital goods and when the goods were destroyed in terms of the insurance policy, the Insurance Company has compensated the assessee. It is not a case of double payment as contended by the department. At any rate, the Excise Department has no say in the instant case as held by the Apex Court. In that view of the matter, the substantial questions of law framed in this appeal are answered in favour of the assessee and against the revenue. Accordingly, the appeal is dismissed.
In the result, the impugned order is set aside and the appeal is allowed with consequential relief, if any, as per law.
(Dictated and pronounced in the open court) (Dr. D.M. Misra) Member (Judicial) Neha 3 | Page E/12069/2016-SM