Custom, Excise & Service Tax Tribunal
K V Suresh Babu vs Cce Chennai-Ii on 25 June, 2024
CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL, CHENNAI
COURT HALL - I
Excise Appeal No.42219 of 2015
(Arising out of Order in Original No. 2/2015 dated 29.7.2015
passed by the Commissioner of Central Excise, Chennai)
M/s. S.S. Industries Appellant
No. 177, SIDCO Womens' Industrial Estate
Vellanur Villages, Satyamurthy Nagar
Thirumullaivoyal, Chennai - 600 062.
Vs.
Commissioner of GST & CE Respondent
Chennai North Commissionerate 26/1, Mahatma Gandhi Road Nungambakkam, Chennai - 600 034.
AND Excise Appeal No.42232 of 2015 (Arising out of Order in Original No. 2/2015 dated 29.7.2015 passed by the Commissioner of Central Excise, Chennai) Shri K.V. Suresh Babu Appellant Manager, M/s. S.S. Industries No. 177, SIDCO Womens' Industrial Estate Vellanur Villages, Satyamurthy Nagar Thirumullaivoyal, Chennai - 600 062.
Vs. Commissioner of GST & CE Respondent Chennai North Commissionerate 26/1, Mahatma Gandhi Road Nungambakkam, Chennai - 600 034.
APPEARANCE:
Ms. P. Mallows Priscilla, Advocate for the Appellant Shri M. Ambe, Authorized Representative for the Respondent CORAM Hon'ble Shri P. Dinesha, Member (Judicial) Hon'ble Shri M. Ajit Kumar, Member (Technical) Final Order Nos. 40739 - 40740/2024 Date of Hearing : 19.06.2024 Date of Decision: 25.06.2024 2 E/42219 & 42232/2015 Per P. Dinesha, Brief facts of the case as set out in the impugned Order in Original are that the assessee was embossing the logo of M/s. Hyundai on caseskin which was obtained by cutting the coil, which appeared to be not a process amounting to 'manufacture' as per the decision of Hon'ble Supreme Court in the case of Faridabad Iron and Steel Traders Association reported in 2005 (181) ELT A68 (SC). It was the further case of the Revenue that the taxpayer was only embossing the logo of M/s. Hyundai as per the drawings of its customers; no new distinct and different article had emerged from the above process and hence, the process undertook by the taxpayer could not be treated as manufacture. Further, it also appeared to the Revenue that the taxpayer was availing ineligible credit on such goods which were not inputs for making Caseskin and utilising the same to discharge central excise duty on both excisable and non-excisable products.
2. The above, accordingly, appeared to the Revenue that the taxpayer had contravened Rule 3 of CENVAT Credit Rules, which prompted the Revenue to issue the Show Cause Notice No. 81/2014 dated 26.9.2014, proposing inter alia to demand an amount of ₹1,25,42,187/- being the CENVAT credit wrongly availed for the period December 2010 to 12.0 8.2014, 3 E/42219 & 42232/2015 under Section 11A(5) of Central Excise Act, 1944 read with Rule 14 of CENVAT Credit Rules.
3. It appears that the taxpayer filed a detailed reply justifying its action, but however, the original authority having considered the same in adjudication confirmed the demands proposed in the Show Cause Notice. It is against this order and demand that the present appeal has been filed before us.
4. Heard Ms.P. Mellow Priscilla, learned Advocate for the appellant and Shri M. Ambe, Authorized Representative for the Revenue, we have perused the documents placed on record, along with the order of the original authority; we have also carefully considered the judicial pronouncements relied upon during the course of arguments before us. The only issue that crops up for our consideration is, "whether the activity undertook by the taxpayer - appellant did amount to the process of manufacturing and therefore, the CENVAT credit was correctly availed on the inputs?
5. At the outset, Advocate would submit that the appellant had availed and utilised CENVAT credit for payment of excise duty on Caseskins; when the department had collected duty on the finished products, the credit so availed on the inputs could not be denied alleging or disputing the manufacturing activity of the appellant.
4
E/42219 & 42232/2015
6. She has relied on the following decisions:
a) Judgment of the Hon'ble High Court of Bombay in the case of CCE Vs. Ajinkya Enterprises - 2013 (294) ELT 203 (Bom.)
b) Judgment of the Hon'ble High Court of Gujarat in the case of CCE Vs. Creative Enterprises - 2009 (235) ELT 785 (Guj.)
c) Judgment of the Hon'ble High Court of Karnataka in the case of CCE Vs. Vishal Precision Steel Tubes
- 2017 (349) ELT 686 (Kar.) to buttress that when the duty is paid by an assessee and the same is accepted by the Revenue, the department is not justified in denying the CENVAT credit ON the ground that the process undertaken by the assessee did not amount to manufacture.
7. Without prejudice to the above, she would also contend that the assessee had furnished all the details required, in their ER - 1 return and hence, the revenue was not was not justified in invoking the extended period of limitation by alleging suppression. Per contra, ld. joint commissioner supported the findings of the original authority
8. We find that the ratio in all the above decisions of Hon'ble High Courts is that when the final product is stated as dutiable and duty is accordingly paid and collected by the revenue by treating the activity as manufacturing activity, the CENVAT credit is always available and hence, there is no question of denial or reversal of the same in the case on hand. Moreover, it is not disputed by the revenue that the appellant had paid duty, but they only are denying the CENVAT 5 E/42219 & 42232/2015 credit, which is not permissible in view of the ratio laid down by the above High courts.
9. In view of the above, we are of the view that the denial as made in the impounded order is contrary to the settled position of law, which therefore requires to be set aside. Resultantly, we set aside the same and allow the appeal with the consequential benefits, if any, as per law. Ordered accordingly.
10. Insofar as the second appeal is concerned, the same is against the levy of penalty under Rule 15A of the CENVAT Credit Rules, 2004.
11. We note that the above penalty is fastened based only on his own statement, without there being any independent evidence in support. That apart, we have set aside the impugned order and finding therein against the main appellant and our findings in the earlier paragraphs would squarely apply to this appellant.
12. In view of the above, we set aside the impugned order insofar as this appellant is concerned also and allow the appeal.
13. In the result, both the appeals are allowed.
(Order pronounced in open court on 25.06.2024) (M. AJIT KUMAR) (P. DINESHA) Member (Technical) Member (Judicial) Rex