Custom, Excise & Service Tax Tribunal
Sentini Cermica Pvt.Ltd vs The Commissioner on 21 November, 2016
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL REGIONAL BENCH AT HYDERABAD Bench Single Member Bench Court I Appeal No. E/21006 to 21010/2014 (Arising out of Order-in-Appeal No.91-95/2013(G)CE, Dated 23-12-2013 passed by Commissioner(Appeals), C&CE, Guntur) For approval and signature: Honble Ms. Sulekha Beevi, C.S., Member (Judicial) 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 Lordship wish to see the fair copy of the Order? 4. Whether Order is to be circulated to the Departmental authorities? Sentini Cermica Pvt.Ltd., ..Appellant(s) Vs. The Commissioner C&CE, Guntur ..Respondent(s)
Appearance Shri Karan Talwar, Advicate for the Appellant.
Shri P.S.Reddy, AR for the Respondent.
Coram:
Honble Ms. Sulekha Beevi, C.S., Member (Judicial) Date of Hearing: 21/11/2016 Date of Decision: 21/11/2016 FINAL ORDER No.A/31397 31401/2016 [Order per: Sulekha Beevi, C.S.]
1. The brief facts are that, appellants are engaged in the manufacture of ceramic glazed tiles falling under Chapter 69 of Central Excise Tariff Act,1985 (CETA, 1985). They are registered with the Central Excise Department and are availing the facility of Cenvat credit of the duty paid on inputs. The appellants engaged M/s H & R Johnson(India) as job worker for the manufacture of ceramic glazed frit, which is a intermediate product falling under Chapter 32 of CETA, 1985. The appellant had supplied the raw material namely boric acid, zinc oxiode, borax, soda ash and calcined alumina etc. to the job workers. The appellant had availed the credit on such raw material supplied to the job worker under job worker challans. The job worker processed the raw material was and the appellant received the intermediate product namely ceramic glazed frit from the job worker on payment of excise duty, under invoices issued by the job worker. The department entertained a view that as the raw material supplied free, to the job worker, the job worker ought not to have paid excise duty in term of NotificationNo.214/86-CE. Show cause notices were issued alleging that the job worker is not required to pay duty on the frit supplied to the appellants and that the appellant ought not to have availed credit on the excise duty paid to the job workers. After due process of law, the original authority confirmed the demand along with interest and imposed penalty. The appellant carried the issue in appeal and vide orders impugned herein the Commissioner(Appeals) upheld the demand, interest and penalties. Hence these appeals
2. On behalf of the appellant, the Ld. Counsel Karan Talwar put forward arguments as follows:
i) That job worker of the appellant has not cleared goods under Notification No. 214/86-CE
ii) That clearance of goods under Notification No.214/86 is optional and job worker cannot be compelled to avail the exemption thereunder.
iii) That appellant cannot be denied credit even in case the job worker is not liable to pay duty.
3. The Ld.Counsel adverted to the invoices in appeal No. 21006/2014 and submitted that in some of the invoices the job worker had mentioned the Notification No. 214/86. That the job worker had in fact paid the duty and had not availed the exemption under the said notification. That the mention of Notification is some invoices was due to in advertant mistake. He also drew attention to the conditions in the notification and submitted that the appellant had not given any undertaking as provided in the Notification, stating that the job worker is availing the exemption in terms of Notification No. 214/86. That, there being no evidence to show that the job worker had availed exemption under 214/86, the department cannot force the availment of benefit of exemption upon the jobworker and deny the credit to the appellant. The Ld.Counsel submitted that the issue stands covered by the following judgments
1. CCE, Ahmedabad-I, Vs Rohan Dyes and intermediaries ltd. 2012(284)ELT-484(Guj)
2. Bright Steel Mac. Fabrics Vs CCE, Ahmedabad-1994(69)ELT-276(Tri)
3. Collector Vs Bengal Paper Mills Co.ltd. 1996(83)ELT A112.
4. Collector Vs Bright Steel Mac Fabrics-1997(94)ELT.A145(SC).
5. Kohinoor Printers Pvt.Ltd. Vs CCE, Pondicherry-2015(321)ELT-456(Tri.Chennai)
6. CCE, Puducherry Vs Kohinoor Printers Pvt. Ltd. 2015 (321)ELT.448(Mad)
7. Federal Mogul Goetze India Ltd. Vs Commr.of CE.Bangalore-2015 (318) ELT-340(Tri.Bang)
8. BHEL Vs CCE&ST, Meerut-I, 2014(300)ELT-442(Tri. Del)
9. Sundaram Auto Components Ltd. Vs CCE, Chenni-2011 (267)ELT-377(Tri.Chennai)
4. On behalf of the department, the Ld. AR, Shri.P.S.Reddy reiterated the finding in the impugned order. He submitted that the job worker ought not to have collected duty from the appellant and ought to have availed the exemption under Notification No. 214/876. Therefore, the credit availed by the appellant is irregular and they are bound to reverse the same.
5. I have heard both sides.
6. The details with regard to the period involved, the amount and date of show cause notice of the appeals is shown below, as tabulated by the appellant.
Appeal No. E/21006/2014 E/21007/2014 E/21008/2014 E/21009/2014 E/21010/2014 Order-in-Appeal No & Date 91-95/2013(G)CE, dated 23-12-2013 Date of SCN 07-06-2012 30-08-2012 30-10-2012 04-01-2013 28-03-2013 Period April, 2011 to June, 2011 August, 2011 to Sept.2011 October, 2011 to Nov, 2011 Dec., 2011 to Feb, 2012 March, 2012 to May, 2012 Order-in-Original No&Date 41/2012. Dt 27-09-2012 54/2012. Dt 12-11-2012 01/2013. Dt 30-01-2013 05/2013. Dt 28-02-2013 21/2013. Dt 31-0-7-2013 Amount involved in Rs.
4,63,036/-
3,50,028/-
4,66,591/-
4,57,783/-
4,70,244/-
Amount recovered Rs.36,53,716/- has been recovered from the bank account of the appellant though the credit under dispute is Rs.22,07,682/-
7. On perusal of records it is seen that in a few invoices Notification No .214/86 is seen noted by the job worker. It is the case of appellant that mentioning the notification number was due to mistake and as the invoices specifies the excise duty, the mention of notification number is not of much relevance. It is also not disputed that appellant has not filed an undertaking complying with the condition laid in the Notification No.214/86 so as to avail the exemption. The very same issue came up for consideration in the case of CCE, Ahmedabad-I Vs Rohan Dyes & Intermediates Ld. 2012(284) ELT -484(Guj). The Tribunal observed as under; We do not find any substance in the contention of Mr. Ravani that the job workers cannot prefer to pay excise duty in spite of having exemption notification bearing No. 214/86 exempting the job workers from paying duty in view of the mandatory provision of Section 5A(1A) of the Act. Similarly, we are also not impressed by the submission of Mr. Ravani that it was a case of sale and not the case of job work so as to attract the aforesaid principle laid down by the Supreme Court in the above case. On consideration of the entire materials on record, we thus hold that the Tribunal below rightly applied the decision of the Supreme Court in the case of International Auto Ltd. (supra) to the facts of the present case and allowed the appeal of the respondents.
In Bright Steel MAC Fabrics Vs CCE, Ahmedabad the Tribunal relied upon the judgment of Hoble High Court of Ahmedabad in SLP No.7222/91 dated 29-10-1991 and observed as follows:
Shri Dave pointing out to sub-rule (2)(a) & (b) argued that the reference to removal and return of goods without payment of duty was in cases where removal is done under bond for export. He also argued that these provisos did not apply to the present case, as the same was not removed under bond for export. He submitted that in any case the proviso to (a) & (b) of sub-rule (2) also specified that even waste need not be returned to factory if appropriate duty had been paid thereon. We also find force in this submission. We clearly notice that Rule 57F(2) does not envisage return of inputs after completion of processing resulting in a semi-finished goods or intermediate goods without payment of duty. Therefore, the job-workers in these cases, admittedly are independent manufacturers and they are utilising the benefit of SSI exemption under Notification No. 175/86-C.E., dated 1-3-1986 as amended. They are, therefore, entitled to enjoy the concessional benefit of the said notification. As rightly held by the Gujarat High Court in Special Civil Application No. 7222/91, they cannot be compelled to utilise the benefit under Notification No. 214/86 Similar view was taken in Kohinoor Printers(P)Ltd. Vs CCE, Pondichery, 2015(3210 ELT 456( Tri-Chennai) which was maintained by the Honble Madras High Court in the case reported in 2015(321) ELT 448(Mad).
Again, the discussion of the Tribunal in the case of Federal Mogul Goetze India Ld Vs CCE, Bangalore 2015(318) ELT-240(Tri-Bang) is as under and held the issue in favour of assessee.
10.2?The Notification 214/86, though has been issued under Section 5A of the Central Excise Act, the same is not an exemption notification per se. A job worker who undertakes the job work which is amounting to manufacture is, legally, the manufacturer. In respect of goods manufactured on job work basis cleared by the job worker, he is required to pay excise duty due at the time of clearance of job-worked goods to the raw material supplier. Notification 214/86 basically provides an option to the job worker not to pay the excise duty if the raw material supplier undertakes to pay the excise duty on the said products and undertakes to use them for further manufacture of excisable goods which are ultimately cleared on payment of duty. In other words, it does not exempt the duty on the job-worked items but it merely shifts the liability to a person other than the job worker and also shifts the date of payment of duty that is instead of reckoning from the date of clearance from the premises of the job worker, the same is to be reckoned from the date of clearance by the principal manufacturer (the person who supplied material to the job worker for the purpose of getting job work done). To consider this notification as an unconditional notification and to hold that the job worker-appellant should not have paid the duty may not be appropriate.
8. The job worker has paid duty in the instant case and the appellant has availed credit on the said duty. The issue whether job worker can pay excise duty without availing the exemption under Notification No.214/86 and whether the principal manufacturer can avail credit of the duty has been discussed and analysed in the judgments relied by the Ld. Counsel for the appellant and stated supra. Following the same, I find that the demand is unsustainable. The impugned orders are therefore set aside. The Appeals are allowed with consequential relief if any. (Dictated & Pronounced in open court) (SULEKHA BEEVI C.S.) MEMBER(JUDICIAL) dks.
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