Custom, Excise & Service Tax Tribunal
Universal Air Products Pvt. Ltd vs Commissioner Of Central Excise And ... on 24 January, 2017
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: E/28350 to 28353/2013-SM [Arising out of (i) Order-in-Appeal No. 556 & 557/2013 dated 25.10.2013 & (ii) Order-in-Appeal No.456 & 457/2013 dated 3.9.2013 passed by Commissioner of Central Excise (Appeals-I), Bangalore.] Universal Air Products Pvt. Ltd Plot No.22A, 3rd Stage, Peenya Industrial Area, BANGALORE - 560058 KARNATAKA Appellant(s) Versus Commissioner of Central Excise and Customs - BANGALORE -II PB 5400, CR Building, Queens Road BANGALORE, - 560001 KARNATAKA Respondent(s)
Appearance:
Mr. Narayana.M.A. Advocate For the Appellant Mr. Pakshi Rajan, AR For the Respondent Date of Hearing: 17/01/2017 Date of Decision: 24/01/2017 CORAM:
HON'BLE SHRI S.S GARG, JUDICIAL MEMBER Final Order No. 20123 - 20126_/ 2017 Per : S.S GARG The appellants have filed four appeals against the two impugned orders passed in Order-in-Appeal No.556 & 557 dated 25.10.2013 and Order-in-Appeal No.456 & 457/2013 dated 3.9.2012, vide which the Commissioner (A) has rejected the appeals of the appellant and upheld the four Orders-in-Original. Since the issue in all the four appeals is common and therefore, all the four appeals are being disposed of by this common order.
2. Briefly the facts of the case are that the appellant is engaged in the manufacture of liquid oxygen, liquid nitrogen, medical oxygen IP and carbon-dioxide falling under Chapter 28 of First Schedule to Central Excise Tariff Act (CETA), 1985 and they are availing credit of duty paid on inputs and capital goods under the provisions of CENVAT Credit Rules (CCR), 2004. The company had been procuring goods viz., vertical cryogenic storage tanks, portable cryogenic vessels and their components falling under SH No.84198910 and 84818090 of the First Schedule to CETA, 1985. The Department observed that the appellant had availed irregular CENVAT credit of Rs.4,37,699/- and Rs.3,27,719/- for the period April 2011 to July 2011 and August 2011 to October 2011 respectively and an amount of Rs.2,69,243/- and Rs.4,11,895/- for the month of September 2010 and October 2010 to March 2011 respectively, as capital goods credit. Thereafter a show-cause notices were issued proposing to recover irregular CENVAT credit availed by the appellant on the ground that the company is using the said goods exclusively as portable tank/packing material only for the movement of companys products from the factory to the customers premises and the said goods are not used in or in relation to the manufacture of final products. The appellant filed reply to the show-cause notices claiming that the said goods are in fact used as packing material and hence company was eligible for the credit of duty paid on the said goods. Thereafter the Assistant Commissioner passed orders-in-original denying the credit and ordered for recovery of the same along with interest and also imposed penalty. Being aggrieved by the said orders, the appellant filed four appeals before the Commissioner (A) and the Commissioner (A) vide two impugned orders dated 25.10.2013 and 3.9.2013 dismissed all the four appeals and hence, the present appeals.
3. Heard both the parties and perused the record.
4. Learned counsel for the appellant submitted that the impugned order is not sustainable in law as the same is against the facts and law. He further submitted that the company has used the storage tanks for rendering a taxable service falling under the category of storage and warehousing services as defined under provisions of Section 65(105)(zza) of the Finance Act, 1994 as amended. He further submitted that appellant had voluntarily disclosed the tax liability and also paid the tax thereon. Therefore, the company is eligible for the credit of duty paid on the storage tank as per the ratio laid down in the case of Ajay Industrial Corporation vs. CCE, Meerut: 2002 (147) ELT 786. He also submitted that the portable cryogenic vessel is used as a packing material for the manufacture of liquid oxygen. It is in fact in the nature of durable and returnable packing material belonging to the company and the company is eligible for the credit of duty paid on these goods under the category of inputs. He further submitted that after the amendment in the definition of inputs from 1.4.2011, these portable cryogenic vessels are used as container for the purpose of carrying and selling the liquid oxygen and therefore, has a direct nexus with the manufacture of liquid oxygen.
5. On the other hand, the learned AR strongly defended the impugned orders.
6. After considering the submissions of both the parties, I find that the Commissioner (A) in the impugned orders has considered all the submissions of the appellant and has held that the appellant have wrongly availed the CENVAT credit on capital goods. Here it is relevant to reproduce the observation of the learned Commissioner (A) in para 8 and 9 of his finding which is reproduced here:
8. I have carefully gone through the records of the case, the grounds of appeal and the submissions made at the time of personal hearing. I find that the issue pertains to availment of Capital Goods credit on two types of items viz.,(i) Vertical Storage Tanks and (ii) Portable Cryogenic Vessels. This issue has already been decided by me, in respect of the same Appellant but for the earlier period, vide Order-in-Appeal nos.456-457/2013 dt.03.9.2013. I find that the issues involved are similar but the present demands are for the subsequent periods) It is an undisputed fact that the said Vertical Storage Tanks are installed in thy" premises of the Customers and not in the premises of the manufacturer. As per the definition of Capital Goods under rule 2(a) of CCR, the said goods should be used in the factory of the manufacturer of the final products. In the instant case, the goods are not installed and used in the factory of the manufacturer and hence, the credit availed is irregular. I do not agree with the contention of the Appellants that the said goods were used for the activity of providing storage facilities as defined under 65(102) of the Finance Act, 1994 and hence, credit should be available under rule 2(a) as the goods 'used for providing output service'. During the relevant period, the Appellants were not registered service providers (ST registration was obtained only during May 2013). The subsequent payment of service tax is not relevant to this case. The credit had been availed for the activity of manufacture and clearance of final products and not for the activity of providing output service. The Appellants have relied on the decision of Hon'ble Tribunal in the case of Ajoy Indl. Corporation Vs. CCE, Meerut. However, the said decision was in the context of Modvat credit under erstwhile Rule 57A of Central Excise Rules, 1944. Further, the issue therein pertained to availability of Modvat credit on inputs in respect of final products which were initially treated as exempted from payment of duty and in respect of which duty was demanded subsequently and paid. This is not at all the issue involved herein. Hence, the credit availed by them on Vertical Storage Tanks is irregular.
9. As regards the credit availed on Portable Cryogenic Vessels, I find that the said Vessels are used for supply/ transportation of gases in liquid form and not for packing. Hence, the argument of the Appellants, that they were packing materials, cannot be accepted. Further, the goods are in the nature of durable and returnable containers. Containers are different from packing material as envisaged in the rule 2(k)(i) of CCR as it existed during, the relevant period upto 31.03.2011. Hence, they cannot be considered as inputs as argued by the Appellants in their replies to the show cause notices and in their grounds of appeal. For the period from 01 .04.2011 onwards, the said containers cannot be held to be 'inputs' as per the amended rule 2(k) of CCR as they are not used in the factory but for supply/ transportation of gases. The adjudicating authority has relied upon the decision of the Hon'ble Tribunal in the matter of Narmada Chematur Petrochem Ltd., Vs. CCE, Vadodaro-11 - 2008 (232) ELT 850 (Tri.-Ahmd.), which is disputed by the Appellants. However, I find that the said decision is squarely applicable as it has been held in the said case that "To be eligible as input as a packaging material, the cost of the packing material should have been included in the assessable value." In this case, as the said Portable Cryogenic Vessels are durable and returnable containers, the question of inclusion of value of the said Vessels in the assessable value of gases does not arise. Further, the Appellants have disputed the applicability of the said decision but have not submitted anything with regard to inclusion of cost in the assessable value. Hence, the availment of credit on the said Portable Cryogenic Vessels is also irregular.
6.1 The learned AR further submitted that it is a simple case of wrong availment of CENVAT credit on capital goods because the said capital goods have not been used in or in relation to the manufacture of final product. He further submitted that appellant is not permitted to built-up a new case which was not set up before the original authority. This submission of learned AR has a force.
7. Keeping in view the facts and circumstances of the case and the reasoning given by the learned Commissioner (A) in para 8 and 9 of the impugned order, I do not find any infirmity in the impugned orders and I therefore uphold the same by dismissing all the four appeals of the appellants.
(Order was pronounced in Open Court on 24/01/2017.) S.S GARG JUDICIAL MEMBER rv 7