Custom, Excise & Service Tax Tribunal
Super Packs vs Commissioner Of Central Excise on 30 August, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: E/2956/2012, E/25336/2013, E/25338/2013-SM [Arising out of Order-in-Appeal No. 301/2012 dated 08/10/2012 passed by the Commissioner of Central Excise, Bangalore - I] [Arising out of Order-in-Appeal No. 456/2012 dated 20/12/2012 passed by the Commissioner of Central Excise, Bangalore - I] [Arising out of Order-in-Appeal No. 17/2013 dated 18/01/2012 passed by the Commissioner of Central Excise, Bangalore - I] For approval and signature: HON'BLE SHRI S.S GARG, JUDICIAL MEMBER 1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes 3 Whether Their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes Super Packs Plot No. 39/7, 4th Main Road, Peenya Industrial Area Bangalore 560 058 Appellant(s) Versus Commissioner of Central Excise Bangalore II Commissionerate C.R. Building, Queens Road, Bangalore 560 001 Respondent(s)
Appearance:
Shri B.N. Gururaj, Advocate 22/2, 3rd Main Road, Chamarajpet Bangalore 560 018 For the Appellant Dr. K. Ezhilmathi, AR For the Respondent Date of Hearing: 29/08/2016 Date of Decision: 30/08/2016 CORAM:
HON'BLE SHRI S.S GARG, JUDICIAL MEMBER Final Order Nos. 20679 - 20681/ 2016 Per: S.S GARG The present three appeals are directed against the impugned orders dated 08.10.2012, 20.12.2012 and 18.01.2012 vide which the Commissioner has upheld the Orders-in-Original and rejected the appeals of the appellant. In all the three appeals, though the period of dispute is different but the issue involved is same, therefore all the three appeals are being disposed of by the common order. The period of dispute and the demand of duty/penalty are mentioned in the table below:
Sl. No. Appeal No. Period of Dispute Demand of Duty & Penalty (Rs.) 1 E/2956/2012 2005-06 to 2009-10 Rs. 22,50,467 Equal penalty 2 E/25336/2013 April 2010 to January 2011 Rs. 5,42,254/-
Equal penalty 3 E/25338/2013 02/2011 to 06/2011 Rs. 4,13,339/-
Equal penalty For the sake of convenience, facts of the case are taken from E/2956/2012. Briefly the facts of the present case are that the appellant is a partnership firm and is engaged in the manufacture of packing articles such as wooden boxes and plywood pallets falling under Central Excise Tariff sub-heading No. 4415 20 00 of the First schedule of Central Excise Tariff Act and are availing the benefit of cenvat credit on inputs, capital goods and input services. The appellants also get the goods manufactured through job workers M/s. Ficus Pax Pvt. Ltd. Bangalore and M/s. Sai Carton Manufacturing Company (P) Ltd., Mysore by sending cenvat credit taken inputs under delivery challans. While processing the inputs, the job workers have also used their own materials and returned the processed goods under cover of invoice issued under Rule 11 of Central Excise Rules 2002 to the appellant. Since the job workers have paid the excise duty on the processed goods, the appellant took cenvat credit of the same. But the departmental auditors who audited the appellants records on 26.05.2010 objected on the ground that the entire credit on the inputs should have been reversed under Rule 3(5) and the credits taken have resulted in double benefit to the appellant. Thereafter show-cause notices were issued which culminated into the recovery of cenvat credit irregularly taken on inputs and interest under Rule 14 of the Cenvat Credit Rules 2004 and imposed a penalty under Rule 15(2) of the Cenvat Credit Rules 2004 read with Section 11AC of the Central Excise Act, 1944. Thereafter appeals were filed before the Commissioner (Appeals) who vide the impugned orders has rejected the appeals of the appellant and hence the present appeals.
2. Heard both the parties and perused the records.
3. The learned counsel for the appellant submitted that the impugned orders are contrary to the facts and the law and have been passed in total disregard to the binding judicial precedents of the Honble Supreme Court and the Tribunals and are not sustainable in law. He further submitted that removal of inputs under Rule 4(5)(a) for processing and return cannot be construed as removal of inputs as such under Rule 3(5). He further submitted that the appellants goods fall under Rule 4(5)(a) of Cenvat Credit Rules 2004 which do not prescribe for maintaining any records except a simple account showing the dispatch and return of the goods from the job worker. He further submitted that there is a difference between Rule 3(5) and Rule 4(5)(a) of the Cenvat Credit Rules 2004. In the case of Rule 3(5) it is a one way entry such as sale or stock transfer to another unit with no animus to bring back the goods whereas in case of Rule 4(5)(a) it is essential to bring back the goods within 180 days or reverse the credit if the goods are not received back and in the present appeals there is no dispute about the receipt of goods by the appellant within the prescribed time and therefore Rule 4(5)(a) of the Cenvat Credit Rules 2004 are applicable and not Rule 3(5). In support of his submission, he relied upon the following case-laws:
a) International Auto Ltd. Vs. CCE, Bihar 2005 (183) E.L.T. 239 (S.C)
b) Southern Lubrication (P) Ltd. Vs. CCE, Bangalore 2012-TIOL-642-CESTAT-BANG.
4. On the other hand the learned AR reiterated the findings of the impugned order. Here it is pertinent to mention the bare provisions of Rule 3(5) and Rule 4(5)(a) of Cenvat Credit Rules 2004.
Rule 3(5) when inputs or capital goods, on which cenvat credit has been taken, are removed as such from the factory, or premises of the provider of output service, the manufacturer of the final products or provider of output service, as the case may be, shall pay an amount equal to the credit availed in respect of such inputs or capital goods and such removal shall be made under the cover of an invoice referred to in rule 9:
Provided that such payment shall not be required to be made where any inputs 5[or capital goods] are removed outside the premises of the provider of output service for providing the output service Rule 4(5)(a) The Cenvat credit shall be allowed even if any inputs or capital goods as such or after being partially processed are sent to a job worker for further processing, testing, repair, re-conditioning 2[or for the manufacture of intermediate goods necessary for the manufacture of final products] or any other purpose, and it is established from the records, challans or memos or any other document produced by the manufacturer or provider of output service taking the cenvat credit that the goods are received back in the factory within one hundred and eighty days of their being sent to a job worker and if the inputs or the capital goods are not received back within one hundred eighty days, the manufacturer or provider of output service shall pay an amount equivalent to the cenvat credit attributable to the inputs or capital goods by debiting the cenvat credit or otherwise, but the manufacturer or provider of output service can take the cenvat credit again when the inputs or capital goods are received back in his factory or in the premises of the provider of output service.
5. After considering the provisions of Rule 3(5) and 4(5)(a) of the Cenvat Credit Rules 2004 and the judgments of the Tribunal in the case of Southern Lubrication (P) Ltd. cited supra, I am of the considered opinion that appellants case is squarely covered by the said decision wherein it has been held that the removal of input or capital goods to a job worker for further processing, testing, repair, reconditioning or any other purpose is governed by Rule 4(5)(a) of the Cenvat Credit Rules, 2004. Therefore following the ratio of the above case, I am of the view that the impugned orders are not sustainable in law and are liable to be set aside and I set aside the impugned order in all the three appeals and allow the appeals with consequential relief, if any.
(Order pronounced in open court on 30.08.2016) (S.S GARG) JUDICIAL MEMBER iss