Custom, Excise & Service Tax Tribunal
M/S.Shree Rajasthan Texchem Ltd vs Cce, Jaipur on 18 December, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066.
BENCH-DB
COURT-II
Excise Appeal No.E/1887 & 1888/2006-EX/DB in
[Arising out of Order-in-Appeal No.270-271 (HKS)/CE/JPR-II/2206 dated 31/03/2006 /19.04.2006 passed by the Commissioner (Appeals), Customs and Central Excise, Jaipur]
For approval and signature:
HONBLE MR. RAKESH KUMAR, MEMBER (TECHNICAL)
HONBLE MR. S.K. MOHANTY, 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 Lordships wish to see the fair copy
of the Order?
4. Whether Order is to be circulated to the Departmental
authorities?
__________________________________________________
M/s.Shree Rajasthan Texchem Ltd. Appellant
Vs.
CCE, Jaipur Respondent
Present for the Appellant : Shri.B.L.Narasimahn, Advocate
Present for the Respondent: Shri.Pramod Kumar, DR
Coram:HONBLE MR. RAKESH KUMAR, MEMBER (TECHNICAL)
HONBLE MR.S.K. MOHANTY, MEMBER (JUDICIAL)
Date of Hearing/Decision: 18/12/2014
FINAL ORDER NO. 54980-54981/2014
PER: RAKESH KUMAR
The appellant are manufacturers of blended spun yarn and their raw-material are polyester staple fibre and viscose staple fibre. In addition to clearances to domestic buyers the appellant also have exports. For production of blended spun yarn for export, they have procured certain quantity of polyester staple fibre and viscose staple fibre free of duty under Rule 19 (2) of the Central Excise Rules 2002 read with Notification No. 43/2001-CE NT dated 21st June, 2001 for use in the manufacture of the yarn for export. The appellant due to some reasons, could not use full quantity procured duty free for the intended purpose that is for manufacture of the spun yarn for export and certain quantity of the spun yarn manufactured out of the duty free PSF & VSF was cleared to domestic buyers on payment of duty. The appellant in respect of PSF & BSF procured duty free which had been used for manufacture of spun yarn cleared to domestic buyers on payment of duty, paid central excise duty amounting to Rs.19,88,054/- but through the cenvat credit and besides this, they also paid interest on this duty. Interest amount has paid in cash. The appellant also took cenvat credit of the excise duty of Rs.19,88,054/- paid on the above mentioned PSF & VSF. The department was of the view that the appellant were required to pay the duty on the PSF and VSF which had been procured duty free under Rule 19 (2) in cash and secondly, they were not eligible for cenvat credit of this duty. It is on this basis that the Addl. Commissioner vide Order-in-Original dated 08.12.2005 confirmed the duty demand of Rs.19,88,054/- against the appellant alongwith interest and also disallowed the cenvat credit of the same amount and confirmed its demand alongwith interest. By this order, the Additional Commissioner also imposed penalty of Rs.20.00 Lakhs on the appellant Company under Rule 5 of the Cenvat Credit Rules, 2004 and imposed penalty of Rs.5.00 Lakhs on Shri Vikas Ladia under Rule 26 of the Central Excise Rules.
2. On appeal being filed to Commissioner against this order, the same were dismissed in toto vide order dated 19.04.2006 against which these two appeals have been filed.
3. Heard both sides.
4. Shri B.L. Narasimhan, Advocate, the ld. Counsel for the appellant, pleaded that there are two points of dispute in these cases. The first point in dispute is about duty on PSF & VSF procured duty free under Rule 19 (2) of the Central Excise Rules, 2002 which could not be used for manufacture of the spun yarn for export and point of dispute is as to whether duty on this PSF & VSF could be paid through cenvat credit, That this issue stands decided in the appellants favour by the Tribunal judgment in the case of Ginger Clothing Pvt. Ltd. Vs. CCE, Thane reported in 2014 (299) ELT 469 (Tri.-Mumbai) wherein the Tribunal in similar circumstances held that the duty on the material procured free of duty for export production under Rule 19(2) of Central Excise Rules, 2002 could be paid through cenvat credit, that as regards the second point of dispute as to whether cenvat credit of duty paid on the PSF and VSF is admissible, this issue also stands decided in the appellants favour by the Tribunal judgment in the case of Shree Karpagambal Mills Ltd. Vs. CCE, Tirunelveli reported in 2007 (216) ELT 718 (Tri.Chennai) and that in view of the above submissions the impugned order is not sustainable.
5. Shri Promod Kuamr,D.R. defended the impugned order by reiterating the findings of the Commissioner (Appeals) and emphasized that the amount payable on the goods procured duty free under rule 19 (2) of the Central Excise Rules, 2002 for use in the manufacture of goods for export is not the same as duty, and in this regard he drew our attention to the findings of the Commissioner (Appeals) in para 14 of the impugned order. He pleaded that since the amount payable is not duty, the same was required to be paid in cash and not by utilizing the cenvat credit and for the same reason its cenvat credit would not be admissible.
6. We have considered the submissions from both the sides and perused the records. The undisputed facts are that the appellant manufacture blended spun yarn for sale to domestic buyers as far as for export and that during the period of dispute, they had purchased PSF & VSF free duty under Rule 19 (2) of the Central Excise Rules, 2002 for use in the manufacture of spun yarn for export. There is no dispute that the entire quantity of the spun yarn manufactured out of the duty free PSF & VSF was not exported and certain quantity was cleared to domestic buyers on payment of duty. The quantity of the PSF & VSF procured duty free under Rule 19 (2) of Central Excise Rules, 2002, which was used in the manufacture of spun yarn cleared to domestic buyers on payment of excise duty was not eligible for duty exemption and on this point there is no dispute. The only point of dispute is as to whether the excise duty on this quantity of PSF & VSF could be paid through cenvat credit and whether cenvat credit of the duty so paid would be admissible.
7. We find that on the first point as to whether the duty on above mentioned quantity of PSF & VSF procured duty free which could not be used for manufacture of the finished goods exported out of India, could be paid through Cenvat Credit is not stands decided by the Tribunal judgment in the case of Ginger Clothing Pvt. Ltd. Vs. CCE, Thane reported in 2014 (299) ELT 469 (Tri.-Mumbai) in favour of the appellant and similarly the second issue as to whether cenvat credit of the duty paid on the above mentioned PSF & VSF would be admissible also stands decided on appellants favour by the Tribunal judgement in the case of Karpagambal Mills Ltd. Vs. CCE, Tirunelveli reported in 2007 (216) ELT 718 (Tri.Chennai). In view of this, the impugned order is not sustainable. The same is set aside. The appeals are allowed.
[Dictated & Pronounced in the open Court].
(S.K.MOHANTY) (RAKESH KUMAR) MEMBER (JUDICIAL) MEMBER (TECHNICAL) Anita ?? ?? ?? ?? 0 2