Custom, Excise & Service Tax Tribunal
Venus Wire Industries Pvt. Ltd vs Commissioner Of Central Excise, Raigad on 15 November, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No. I APPEAL No. E/2559/05-Mum (Arising out of Order-in-Original No. 82(37/RT)COMMR/04-05 dated 31.3.2005 passed by Commissioner of Central Excise & Customs (Appeals), Raigad) For approval and signature: Honble Mr. M.V. Ravindran, Member (Judicial) and Honble Mr. Devender Singh, Member (Technical) ======================================================
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 : Seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
====================================================== Venus Wire Industries Pvt. Ltd. Appellant Vs. Commissioner of Central Excise, Raigad Respondent Appearance: Shri Gajendra Jain, Advocate, for appellant Shri V.K. Shastri, Assistant Commissioner (AR), for respondent CORAM: Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. Devender Singh, Member (Technical) Date of Hearing: 2.8.2016 Date of Decision: 15.11.2016 ORDER NO Per: M.V. Ravindran
This appeal is directed against order-in-original No. 82(37/RT)COMMR/04-05 dated 31.3.2005.
2. The relevant facts that arise for our consideration are that the appellant herein is holder of central excise registration number and availed cenvat credit on hot rolled stainless steel wire rods used to prepare pickled and annealed stainless steel wire rods. The appellant had exported the pickled and annealed stainless steel wire rods under rebate. The lower authorities were of the view that pickling and annealing does not amount to manufacture within the meaning of Section 2(f) of the Central Excise Act, 1944. Hence availment of cenvat credit of the duty paid on inputs was incorrect. Coming to such a conclusion, a show cause notice was issued for the demand of the ineligible cenvat credit availed and also for the refund of the rebates already sanctioned. The adjudicating authority, after following the due process of law, confirmed the demands raised in the show cause notice along with interest and also imposed penalty.
3. The learned counsel takes us through the entire order-in-original and also the case records. It is his submission that undisputedly the appellant is undertaking the process of pickling and annealing of stainless steel wire rods and exporting the same under rebate. It is his submission that the provisions of Rule 6(1) of the Cenvat Credit Rules may not apply and the provisions of Rule 3(4) of the Cenvat Credit Rules, 2002 will apply and clearance of inputs as such on payment of duty equal to credit availed is permitted. He would submit that earlier inputs as such would be cleared under bond and on payment of duty for export. It is his submission that if it is the case of the Revenue that annealing and pickling does not amount to manufacture, it would amount to clearance of inputs as such and hence any duty paid on the goods exported is eligible to be claimed as rebate from the Government is the proposition of law which has been settled by the Tribunal in the case of Finolex Cables Ltd. vs. CCE, Goa reported in 2007 (210) ELT 76 and upheld by the Honble High Court of Bombay as reported at 2015 (320) ELT 256 (Bom.). He would also rely upon the Tribunals decisions in the case of Glass & Ceramics Ltd. vs. CCE, Mumbai-I reported in 2014 (305) ELT 133 and Lamicoat International Pvt. Ltd. vs. CCE, Noida reported in 2015 (324) ELT 411, for the proposition that once the inputs are exported, the appellant is eligible to avail cenvat credit and duty paid needs to be refunded.
4. The learned departmental representative, on the other hand, submits that two conditions need to be satisfied for availing modvat/cenvat credit the manufacturer must have paid duty on inputs which have been used in the process of manufacturing of final products, and excise duty must have been levied on the final product. He would submit that in the case in hand there is no dispute as to the fact that cenvat credit has been paid on the inputs, but there is no manufacturing process which would entail the appellant to avail the cenvat credit. He would submit that the ratio of the judgment of the Apex Court in the case of KCP Ltd. vs. CCE, Chennai reported in 2013 (295) ELT 353 (SC) would apply.
5. We have considered the submissions made by both sides and perused the records.
6. The undisputed facts are the appellant has procured the stainless steel wire rods on payment of duty and availed cenvat credit. It is also undisputed that the said stainless steel wire rods underwent an activity of pickling and annealing which the appellant considered as a process which would amount to manufacture, and exported the goods under bond on payment of duty claiming the rebate of cenvat availed.
7. We find that the impugned order is incorrect and not in consonance with the law for more than one reason.
8. Firstly, it is undisputed that annealed and pickled stainless steel wire rods were exported on payment of duty under rebate. The exports under rebate are always under the physical control or the approval of the jurisdictional range officers, and the range officers should have objected to such clearances sought to be done by the appellant.
9. Secondly, it is the avowed principle of the Government of India that when the goods are for export, no taxes/duties need to be included in the value. This avowed principle of the Government of India will go for a toss if the appellant herein is not granted the benefit of cenvat credit on the inputs which he has procured on payment of duty and after undertaking the process of pickling and annealing, exported the goods. The policy of the Government of India to encourage the exports will be relegated to the backbenches if the view expressed by the adjudicating authority is upheld.
10. Thirdly, we find that in the case of Finolex Cables Ltd. (supra), this Tribunal has categorically held that the assessee cannot be prevented from availing benefits available to the merchant exporter for the exports merely because he happens to be a manufacturer. In that case, the petitioner/appellant therein was a manufacturer and had exported the excess of procured raw material to overseas buyers under bond or under claim of rebate which was sought to be denied by the jurisdictional authorities. The findings of the Tribunal are in paragraph 10, which we reproduce below:-?
10. If the manufacturer of continuous cast copper wire rods 8 MM were to export without payment of duty under bond he was eligible to export and he was also eligible to retain and use the duty on the inputs which have gone into manufacture of the said product. If he had chosen to export on payment of duty he would be eligible for rebate on duty. Similarly, if a third party, say, a buyer or trader chooses to buy the said goods i.e. continuous cast copper wire rods 8 MM, he would be eligible to export either under bond or under claim for rebate of duty. In this case merely because the appellant happens to be manufacturer, he is not prevented from availing the benefit available to the merchant exporter. We find that the Revenue was aggrieved by such an order and carried the matter to the Honble High Court of Bombay. Their Lordships upheld the views expressed by the Tribunal by recording as under:-
3.?It is nobodys case that part of the raw material was not exported or that the export rebate was claimed on the goods for a quantity other than that was actually exported. It was sought to be contended that claim of Cenvat credit at the first instance itself was fraudulent as the respondents were aware that they were not going to use the goods for manufacture and the real intention of the respondent was to claim Cenvat credit on the exported goods. The facts indicate that a part of the goods was in fact utilised for manufacture. It is possible to envisage situations where the goods procured for the use as input may become surplus for variety of reasons, but it cannot be automatically said that procurement of excess raw material would, by itself, render the claim of Cenvat credit as fraudulent.
11. Identical views were expressed by the Tribunal in the recent case of Glass & Ceramics Ltd. (supra) and Lamicoat International Pvt. Ltd. (supra).
12. Since the issue involved in this case is now squarely covered by the ratio of the various decisions, we find no merits in the impugned order passed by the adjudicating authority. Accordingly, the impugned order is set aside and the appeal is allowed with consequential relief, if any.
(Pronounced in Court on 15.11.2016) (Devender Singh) Member (Technical) (M.V. Ravindran) Member (Judicial) tvu 1 7 E/2559/05