Custom, Excise & Service Tax Tribunal
Cce, Chennai - Iv vs M/S. Hyundai Motors (I) Ltd on 10 September, 2014
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
E/1254 - 1256/2004
(Arising out of Order-in-Appeal Nos. 33 to 35/2004 (MIV) dated 24.06.2004, passed by the Commissioner of Central Excise (Appeals), Chennai).
For approval and signature
Honble Shri R. PERIASAMI, Technical Member
______________________________________________________
1. Whether Press Reporters may be allowed to see the : No
order for Publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : No
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether the Honble Member wishes to see the fair : Seen
copy of the Order.
4. Whether order is to be circulated to the : Yes
Departmental Authorities? ______________________________________________________
CCE, Chennai - IV : Appellant
Vs.
M/s. Hyundai Motors (I) Ltd. : Respondent
Appearance Shri M. Rammohan Rao, DC (AR) for the appellant Shri S. Muthuvenkataraman, Adv., for the respondent CORAM Honble Shri R. PERIASAMI, Technical Member Date of Hearing : 01.08.2014 Date of Pronouncement: 10.09.2014 FINAL ORDER No. 40586-40588/2014 All the three appeals filed by the Revenue are arising out of a common Order-in-Appeal No. 33 to 35/2004 dated 24.06.2004, passed by the Commissioner (Appeals), therefore all are taken up together for disposal.
2. The brief facts of the case are that the respondents M/s.Hyundai Motors India Ltd., are manufacturers of motor vehicles falling under Chapter 8703 availing Modvat Credit on inputs and capital goods under Rule 57(A) or 57Q of the Central Excise Rules, 1944. Dy. Commissioner of Central Excise Division, disallowed the total credit of Rs.71,11,402/- (Rs. 6,06,916 + RS.20,49,883 + Rs. 44,54,604) and also imposed penalty under Rule 173Q, vide three Order-in-Original Nos. 65,66 & 68/2003 dated 27/8/03, 28/8/03 and 29/8/03 respectively. The respondents preferred appeal before the Commissioner (Appeals) and the Lower Appellate Authority vide O-in-A Nos. 33 to 35/2004 dated 24.06.2004 set aside all the three O-in-Os and allowed the appeals. Hence, the Revenue filed the present appeals.
3. Heard both sides.
4. The Ld. AR of the Revenue reiterates the grounds of appeal and submits that the respondents have not received the inputs in their factory but were supplied directly to the job workers premises, they have availed modvat credit in their books of accounts without receipt of the goods and subsequently raised Modvat invoices/57F4 challans to the job workers. He submits that as per the Modvat provision, the primary conditions for availing credit is payment of duty on the inputs, receipt of the goods in the factory and usage of the inputs in the manufacture of final products. T hey have not fulfilled the mandatory procedural conditions stipulated in the Modvat provisions. He submits that non-observation of procedure is a substantial violation and therefore adjudicating authority had rightly disallowed the credit and imposed penalty. He relied on the decision of the Honble Supreme Court in the case of CCE, New Delhi Vs. Hari Chand Shri Gopal 2010 (260) ELT 3 (S.C.).
5. On the other hand, the Ld. Advocate for the respondents submits that the Commissioner (Appeals) has rightly allowed their appeals as it is revenue neutral. He submits that the only allegation made in the show cause notices is that inputs not received in their factory but delivered directly to the job workers whereas, the department has brought additional grounds in their grounds of appeal, which is beyond the scope of show cause notices. The new allegation not to be taken as it is beyond the scope of show cause notices and orders passed by the adjudicating authority and the appellate authority. He further submits that they have issued 57F4 challans to the job worker only after reversing the credit and the final credit was availed only on receipt of the goods from the job workers. The original duty paying documents issued by the principal supplier of the goods were in the name of M/s. Hyundai Motors Ltd. The Ld. Advocate relied on the following decisions as under:-
1. CCE, Kolkata Patton Electro Ltd.
2009 (248) ELT 380 (Tri.-Kol.)
2. Ford India Pvt. Ltd. Vs. Asst. Commissioner of CE 2011 (272) ELT 353 (Mad.)
3. Vimal Enterprise Vs. UOI 2006 (195) ELT 267 (Guj.)
4. UOI Vs. Bharat Aluminium Co. Ltd.
2011 (263) ELT 48 (Chhattisgarh)
5. Otis Elevator Co. (I) Ltd. CCE, Mumbai 2009 (248) ELT 225 (Tri.- Mum.)
6. Jetex Carburetters Pvt. Ltd. Vs. CCE, Vadodara 2013 (290) ELT 95 (Tri. Ahmd.)
6. I have carefully considered the grounds of appeal filed by the Revenue and the submissions by both the sides, and gone through the records. The Departments main grounds of appeal against the decision of the Commissioner (Appeals) relates to the denial of modvat credit on the inputs without receipt of the inputs in the respondents factory but sent to the job workers directly from the principal supplier to the job workers for doing the job work. Another ground raised by the department is that the respondents have raised challans/modvatable invoices to facilitate availment of modvat credit by the job workers without supplying the raw materials from their factory.
7. On perusal of the records, I find that the period involved in the present appeals relates to November, 1999 to March, 2000 and the relevant provisions applicable for availment of modvat credit is as per Rule 57(A) or Rule 57Q of the erstwhile Central Excise Rules, 1944. On perusal of the impugned order, the Commissioner (Appeals) has discussed the issues in detail including the non-receipt of inputs to the respondents factory but was directly supplied from the principle supplier to the job workers premises. For better understanding the sequence of movement of inputs from the principal supplier to the job workers and to the respondents the relevant para (5) at page 2 of the impugned order is reproduced as under:-
That the inputs had occasioned the movement from the premises of M/s. POS Hyundai to JBM Sungwood Ltd. On getting the information, appellants would first reverse the credit equivalent to the amount involved in the transaction of delivery between M/s. POS Hyundai and JBM Sungwood Ltd. In other words, appellants submit even before receipt of the documents and availment of credit, a credit equivalent to the quantum involved in the transaction would be reversed first. Only on receipt of the input invoices from POS Hyundai, appellants would proceed to avail credit, which credit has already been reversed. In other words, the debit and credit entries are purely revenue neutral and there is no advantage to the appellants, especially due to the fact debit has preceeded the availment of credit. After receipt of the inputs from POS Hyundai, JBM Sungwood would process the goods and pay duty and dispatch the same to the appellants. Here again, appellants confirm on receipt of the goods along with the duty paid invoices, appellants would proceed to avail credit. It is confirmed that credit would be availed only after payment of duty by JBM Sungwood and on receipt of goods along with duty paid invoices.
8. From the above sequence of movements, of inputs from supplier to the job worker and to the respondents, it is seen that they have not received the inputs in their factory but directly supplied from the principal manufacturer to the job workers premises and after the job work is done the goods were returned back to the respondents factory. As rightly discussed by the lower appellate authority in his order, the appellants raised 57F4 challans to the job workers only after reversing the credit in their books of account and they finally availed the credit only on receipt of the goods from the job workers, and all transactions of movement & receipt are maintained by the respondents. The original payment of duty on the inputs made by the principal manufacturer, the duty paying documents is in the name of respondents and the final receipt of the goods from the job workers to the respondents factory is not disputed by the Department. It is relevant to state that the substantial condition for availing modvat credit on inputs under the provisions of 57A or 57Q of CER is (1) evidence of duty payment of inputs (2) receipt of the inputs and (3) usage of the inputs in the excisable goods. In the present case, all the three conditions have been satisfied. Though the goods have been directly supplied from the principal manufacturer to the job workers premises, the invoices are raised by the principal supplier is in the name of M/s. Hyundai Motors Ltd. It is also not in dispute that the respondents had duly received the goods from the job workers premises after carrying out the job work.
9. The case law relied upon by the Ld. AR in the case of CCE, New Delhi Vs. Hari Chand Shri Gopal (supra), relates to the denial of exemption notification benefit where the assessee has not followed the statutory requirements for manufacture of intermediate excisable goods and not followed Chapter X procedure of erstwhile CER, 1944 and also not obtained the registration certificate, not executed the bond as provided under Chapter X, not maintained RG-16 Register prescribed for receipt of duty free inputs etc. The said case law is not applicable to the facts of the present case as the issue here is availment of modvat credit on the inputs supplied directly to the job workers premises and returned thereafter to the respondents premises.
10. The Honble HighCourts & Tribunals in number of cases, it has been held that credit cannot be denied on the ground that the inputs were supplied directly to the job workers premises from the principal manufacturers. In the case of Otis Elevator Co. (I) Ltd. CCE, Mumbai (supra), the Honble Tribunal has allowed the appeal on the identical issue. The relevant portion of the said decision is reproduced as under:-
8. Reverting to the facts of the case, there is not any dispute that the inputs in question were not supplied by the manufacturer through any inter-mediator but they were supplied to the appellants, but the delivery was at the place of job worker of the appellants. It is not in dispute that the invoices in relation to the inputs were in favour of the appellants and the payments there under was made by the appellants. Being so, in our considered opinion, the appellants had fulfilled the condition 4 of the said Notification. Mere physical delivery of the goods at the instance of the appellants at a place of job worker cannot be sufficient to treat that the goods were not supplied to the appellants directly. The above decision squarely applies to the facts of the present case. Further, I find that the appellate authority in the impugned order had rightly observed the revenue neutrality as there is no loss of Revenue and also there is no dispute on the duty paid nature of the inputs duly received by the respondents from the job workers premises. Therefore, by respectfully following the above Tribunals decision, I do not find any infirmity in the order of the Commissioner (Appeals), in allowing cenvat credit on the inputs directly supplied to the job workers premises from the principal manufacturer and subsequently received by the respondents. Accordingly, I uphold the impugned order and reject the appeals filed by the Revenue.
(Order pronounced in the open Court on 10.09.2014) (R. PERIASAMI) TECHNICAL MEMBER BB 1