Custom, Excise & Service Tax Tribunal
Amod Stamping Pvt Ltd vs Vadodara-I on 10 August, 2022
Customs, Excise & Service Tax Appellate Tribunal
West Zonal Bench At Ahmedabad
REGIONAL BENCH- COURT NO.3
Excise Appeal No.13913 of 2014
(Arising out of OIO-VAD-EXCUS-001-COM-20-14-15 dated 30/09/2014 passed by
Commissioner of Central Excise, Customs and Service Tax-VADODARA-I)
Amod Stamping Pvt Ltd .........Appellant
Opp. Pramukh Oxygen Co,
Near Bhenslore Distillery, Daman Kunta Road,
Daman, U T Of Dadra & Nagar Haveli
VERSUS
C.C.E. & S.T.-Vadodara-I .........Respondent
1st Floor...Central Excise Building, Race Course Circle, Vadodara, Gujarat-390007 WITH i. Excise Appeal No. 13914 of 2014 (Amod Stamping Pvt Ltd) ii. Excise Appeal No. 13990 of 2014 (Tanmay S Patel) iii. Excise Appeal No. 13991 of 2014 (Malhotra Transport Co) iv. Excise Appeal No. 13992 of 2014 (Golden Logistics) v. Excise Appeal No. 13993 of 2014 (Bhari Golden) vi. Excise Appeal No. 11659 of 2016 (Amod Stamping Pvt Ltd) vii. Excise Appeal No. 11660 of 2016 (Amod Stamping Pvt Ltd) viii. Excise Appeal No. 11661 of 2016 (Amod Steel Processors) ix. Excise Appeal No. 11662 of 2016 (Shri Tanmay Patel) (Arising out of OIO-DMN-EXCUS-000-COM-008-16-17 dated 06/06/2016 passed by Commissioner of Central Excise and Service Tax-DAMAN) APPEARANCE:
Shri Saurabh Dixit, Advocate for the Appellant Shri Dinesh Prithiani, Assistant Commissioner (AR) for the Respondent CORAM: HON'BLE MEMBER (JUDICIAL), MR. RAMESH NAIR HON'BLE MEMBER (TECHNICAL), MR. RAJU Final Order No. A/ 10958-10967 /2022 DATE OF HEARING: 29.06.2022 DATE OF DECISION: 10.08.2022 RAMESH NAIR
2|Page E/13913-13914,13990-13993/2014 E/11659-11662/2016 These appeals have been filed by Amod Stamping Pvt. Ltd (Daman), Amod Stamping Pvt. Ltd (Vadodara ), M/s. Amod Steel Processors along with the Director and transporters. The details of the period and amount involved in these appeals are as follows:
M/s. Amod Stamping P. Ltd., Daman:- SCN F. No. DGCEI/AZU/36-
328/2012-13 Dt. 03.06.2014
Period involved: 01.05.2009 TO 20.07.2010
Sr. Appeal No OIO No Appellant Cenvat Credit
No demand/Penalty
1 E/11659/2016- DMN-EXCUS-000- Amod Rs. 6,33,08,063/-
DB COM-008-16-17 Stamping alongwith Interest
dt. 06.06.16 Pvt. Ltd and Penalty of Rs.
(Daman) 6,33,08,063/-.
2 E/11660/2016- DMN-EXCUS-000- Amod Rs. 4,76,52,148/-
DB COM-008-16-17 Stamping (Penalty)
dt. 06.06.16 Pvt. Ltd
(Vadodara)
3 E/11661/2016- DMN-EXCUS-000- Amod Steel Rs. 1,56,55,915/-
DB COM-008-16-17 Processors (Penalty)
dt. 06.06.16 (Dist.
Vadodara)
4 E/11662/2016- DMN-EXCUS-000- ShriTanmay Rs. 50,00,000/-
DB COM-008-16-17 Patel (Penalty)
dt. 06.06.16 (Director)
M/s. Amod Stamping P. Ltd.,Vadodara:-SCN F. No. DGCEI/AZU/36-
327/2012-13 dt. 27.02.2014
Period Invoved: 2008-2012
Sr. Appeal No OIO No Appellant Duty
No demand/penalty
5 E/13913/2014- VAD-EXCUS-001- Amod Rs. 3,81,95,652/-
DB COM-20-14-15 dt. Stamping alongwith Interest
30.09.14 Pvt. Ltd and Penalty of Rs.
3|Page E/13913-13914,13990-13993/2014
E/11659-11662/2016
(Vadodara) 3,81,95,652/-.
6 E/13914/2014- VAD-EXCUS-001- Amod Rs. 25,00,000/-
DB COM-20-14-15 Stamping (Penalty)
dt.30.09.14 Pvt. Ltd
(Daman)
7 E/13990/2014- VAD-EXCUS-001- Tanmay S Rs. 25,00,000/-
DB COM-20-14-15 dt. Patel (Penalty)
30.09.14 (Director)
8 E/13991/2014- VAD-EXCUS-001- Malhotra Rs, 1,00,000/-
DB COM-20-14-15 dt. Transport Co (Penalty)
30.09.14
9 E/13992/2014- VAD-EXCUS-001- Golden Rs, 1,00,000/-
DB COM-20-14-15 dt. Logistics (Penalty)
30.09.14
10 E/13993/2014- VAD-EXCUS-001- Bhari Golden Rs, 1,00,000/-
DB COM-20-14-15 dt. (Penalty)
30.09.14
1.1 The facts involved in the above cases are identical and inter-
connected. Hence all the appeals are being taken up together for decision. M/s. Amod Stamping P. Ltd. had two manufacturing units, one at Samiyala, Vadodara and one at Daman. It is the case of the revenue department that the Daman Unit had sent certain cenvatted inputs (CRGO sheets) to their Vadodara unit, to undertake processing thereon, in terms of Rule 4(5)(a) of the Cenvat Credit Rues, 2004. The processed goods in the nature of core/stampings etc. however were not received back by the Daman unit, but were cleared directly from Vadodara unit to the customers. However, it is alleged that it was so shown on records by the Appellants that the goods were in fact returned back by the Vadodara unit to the Daman unit and from there, the said goods were cleared to the customers, whereas there was no movement of goods from Vadodara to Daman at all. The Daman unit had admittedly paid the Central Excise duty on such removals, irrespective of the fact whether the finished goods were physically cleared from Daman unit to customers (as claimed by the Appellant) or in fact cleared from Vadodara to customers directly, but wrongly shown to have been returned to Daman and cleared to customers from there.
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1.2 There are two separate Orders in Original passed by revenue authorities in the present set of appeals. The OIO No.DMN-EXCUS-000-COM- 008-16-17 dt. 06.06.16 has confirmed the demand of Cenvat Credit on inputs sent by Daman unit to Vadodara unit/ Amod Steel processors (both job workers), on Daman unit, on the ground that processed goods have not been returned back to Daman unit, and such goods were not used in Daman unit but at Vadodara unit/ Amod Steel Processors.
1.3 At the same time, OIO No.VAD-EXCUS-001-COM-20-14-15 dt. 30.09.14 is issued against the Samiyala (Vadodara) unit, raising demand of Central Excise duty on processed goods alleged to be cleared by them to various customers of Daman unit, on the grounds that it was not actually returned back to Daman, but instead, cleared directly to Customers from Vadodara itself.
02. Shri Saurabh Dixit, Learned Counsel appearing for the Appellants argued that admittedly, the goods were sent by Daman unit to Vadodara for job work, under job work procedure. It is his claim that while processed goods were in fact returned back from Vadodara to Daman and cleared from Daman to various customers on duty payment, evenif for the sake of argument, it is believed that the goods were in fact cleared from Vadodara directly to customers, even then since admittedly the duty was paid at Daman on sale price to customers, neither Cenvat Credit can be denied to Daman unit nor Central Excise duty can be demanded from Vadodara unit once again.
2.1 It was further argued that the Appellant has already explained that considering distance between Vadodara and Daman, and given the fact that the Appellant cannot control vehicle numbers mentioned on LR by the transporters, merely because handful of vehicles shown to have transported goods from Vadodara to Daman for return of processed goods, if were found to be transporting goods elsewhere in a time-gap of a few days, cannot lead to any inevitable conclusion that goods have not been returned back from Vadodara to Daman at all. it was also argued that the committed statements of the transporters being contrary to factual and documentary evidences, must be discarded.
2.2 He also argued that since no duty demand has been raised against M/s. Amod Steel Processor (another job worker) to whom CRGO sheets were
5|Page E/13913-13914,13990-13993/2014 E/11659-11662/2016 sent under job work procedure from Daman, it shows that the goods were duly returned back to Daman and cleared from Daman to customers.
2.3 It was submitted that the statements of the employees and Director of the Appellant is also non-inculpatory and does not prove that the goods never came back to Daman and finished goods cleared from Daman to customers at all. He argued that the confirmations from the Customers to the effect that they received the finished goods under invoices from Daman unit are already on record. He argued that the evidences relied upon by revenue authorities are self-contradictory and that the revenue has not shown if the goods were cleared to customers directly from Vadodara itself, how the transportation has taken place, since for the vehicle details considered in the proceedings, the nature of allegation is that such vehicles were having permit to operate only within Gujarat and Daman, then how did the goods travel from Vadodara to other states where customers are located, i.e. New Delhi, Tamil Nadu, Maharashtra etc. 2.4 He also argued that when duty payment on finished gods at Daman is not in dispute, the Cenvat Credit cannot be denied on the grounds that inputs were not put to use at Daman, since the entire arrangement was under job work procedure and the Daman unit is also registered as a manufacturer under Central Excise laws.
2.5 It was submitted that it was already demonstrated before lower authorities that there is no excess credit accumulation at Daman as compared to Vadodara unit, because of which there would be a preference to pay duty at Daman. Even VAT/Sales Tax authorities at Vadodara and Daman both have accepted this transaction to be correct and no case has been booked under Sales Tax laws by either authorities. The issue regarding "temporary transit permit" from Daman Transport Department, evenif in certain cases such permit is not readily available, it does not ipso facto mean goods did not enter or leave Daman at all. He relied upon the decisions in the cases of M/s. Gujarat victory Forgings P. Ltd. 2019 (7) TMI 5 - CESTAT AHMEDABAD as also in the cases of Taha Wires P. Ltd. 2022 (2) TMI 544 - CESTAT AHMEDABAD and 2019 (1) TMI 1956 - CESTAT AHMEDABAD to argue that records from check posts are not authentic to conclude whether goods were transported or otherwise.
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2.6 He submitted that the impugned order itself admits at Para 10.6 thereof that had the Appellant opted for the procedure under Rule 4(6) of Cenvat Credit Rules 2004 by taking necessary permission, there would not be any demand. He relied upon the following decisions in support of the contention that since Daman unit had already paid duty on finished goods, it cannot be demanded from Vadodara unit at all:
THERMAX BABCOCK & WILCOX LTD. 2018 (364) E.L.T. 945 (TRI. - LB)- PARA 7.5 TO 7.16 DHANA SINGH SYNTHETICS P. LTD. 2015 (326) E.L.T. 609 (TRI. - AHMD) COMMISSIONER V. DHANA SINGH SYNTHETICS PVT. LTD. - 2016 (337) E.L.T. A140 (S.C.) SANGHI INDUSTRIES LTD. 2014(302) ELT 564 (TRI-AHMD) - PARA 12 AND 13 HINDUSTAN LEVER LTD. 2006 (206) E.L.T. 848 (TRI. - BANG) VANDANA DYEING P. LTD. 2014(307) ELT 528 (TRI-MUMBAI) ESSAR STEEL LTD. V. CCE, RAIPUR - 2016 (341) E.L.T. 145 (TRI.) 2.7 He finally argued that demands under both the cases negate each other. According to him, the demands are otherwise time-barred and the Credit must be allowed to Daman unit considering the fact that duty stands paid on finished goods by them, and the duty demand on Vadodara unit cannot be sustained since duty is already paid by Daman unit, and there cannot be duplication of duty demand as such. The various personal penalties are being contested as not being sustainable.
03. Per contra, Shri Dinesh Prithiani, Learned Assistant Commissioner (AR) supported the findings of Adjudicating authority and submits that there is no concrete proof of processed goods being returned to Daman and being cleared from Daman to Customer as shown by the Appellants and hence the input stage credit cannot be allowed to Daman unit. He submits that the transporters have admitted to the effect of non-transportation of goods and that evenif duty was paid by Daman, since no permission under Rule 4(6) of the Cenvat Credit Rules, 2004 was obtained, the duty demand must be raised against Vadodara unit. He relied upon various case laws including that
7|Page E/13913-13914,13990-13993/2014 E/11659-11662/2016 in the case of M/s. Thermax Bobcock(supra) to justify the demand raised against the Appellants.
04. We have considered the submissions made by both sides and perused the case records. The primary dispute in the issue based on the impugned orders relates to the fact that the Daman unit of the Appellant Company had imported CRGO sheets and availed Cenvat Credit thereof. They had sent such sheets to their own Vadodara factory as also one M/s. Amod Steel Processors to carry out job work under Rule 4(5)(a) of the Cenvat Credit Rules, 2004, which is not in dispute. The processed goods though shown to have been returned back to Daman, were not in fact returned back, but instead, cleared directly to customers from Vadodara itself, however, shown to have been cleared to customers from Daman by managing transport documents to this effect. It is on this basis that the Cenvat Credit stands denied to Daman unit, since it is alleged that they did not use the goods at their end.
4.1 At the same time, duty demand on Vadodara unit has been raised on the grounds that since the transportation proof for return of processed goods (core/stampings) back to Daman is questionable, and since the transport documents for clearance of finished goods from Daman to customers too is also doubtful, the finished goods must have been cleared from Vadodara to the customers directly, and since Vadodara unit is the manufacturer, the duty demand stands raised on them. Admittedly, no similar duty demand is raised on M/s. Amod Steel Processors (another job worker) meaning thereby that the inputs processed at their end are not sent to customers, but appears to have been returned back to Daman unit. It is also admitted that Daman unit had paid duty at appropriate rate on the entire quantity of finished goods shown to have been sent from Daman to the eventual customers, who also received such goods.
4.2 We find that admittedly the various customers have received the processed goods and also certified to this effect and at the same time, no cogent evidence is adduced by revenue to show that such goods in fact physically travelled from Vadodara to customers premises, instead of from Daman to customer premises, as claimed by the Appellant. In any case, we find that the entire controversy can be decided on legal basis, without entering into the chequered controversy regarding return movement of
8|Page E/13913-13914,13990-13993/2014 E/11659-11662/2016 goods to Daman and from Daman to eventual customers, in light of certain admitted facts.
4.3 We find merits in the legal contention raised by the Ld. Counsel for the Appellants that since the inputs were originally sent under Rule 4(5)(a) procedure to job workers, and since finally duty stands discharged by the Principal at Daman on finished goods, evenif it is cleared directly from job workers to eventual customers, neither Cenvat Credit requires to be denied to the Appellant at Daman nor duty demand can be raised on the job worker at Vadodara, even though they are the actual manufacturers, since the duty admittedly stands paid at Daman, and even collected by revenue authorities as such.
4.4 We also find merit in the contention raised by the Appellant while relying upon the various decision of this Tribunal that not seeking formal permission under Rule 4(6) of the Cenvat Credit Rules, 2004 is merely a procedural lapse and so long as duty is paid by the Principal, neither credit can be denied on inputs sent under Rule 4(5)(a) to the job worker, nor duty demand can be once again raised on the job worker on the finished goods.
4.5 We also note the fact that the present case is not one where the Appellant claimed the benefit of Notification No.214/86-CE, but instead, one where job work procedure under the Cenvat Credit Rules, 2004 was adopted. Rule 4(6) thereof has a specific provision to permit the finished goods to be cleared directly from job worker's premises where the Principal pays duty thereon, which is done in the present case. As regards not seeking permission under Rule 4(6), the impugned order itself at Para 10.6 suggests that had such permission been sought, there would not have been any demand as such. In our considered view, not seeking such permission is merely a procedural lapse and there is no loss to the revenue department in the matter as such anyway. In fact, the Larger Bench of the CESTAT in the case of Thermex Bobcock (supra) in this regard held as follow:
"7.5 Similarly Rule 4(6) is concerned with the condition under which the finished goods, manufactured from the inputs on which Cenvat credit has been availed, can be cleared by the principal manufacturer from the premises of job worker on payment of duty or for export under Bond subject to approval of the jurisdictional Commissioner of the principal manufacturer. This rule is applicable only when principal manufacturer discharges the Excise duty on finished goods which is manufactured by the job worker. This Rule does not allow the job worker to remove
9|Page E/13913-13914,13990-13993/2014 E/11659-11662/2016 finished goods without payment of duty. Such a situation arises in case where the Cenvated inputs are sent for job work and finished goods manufactured therefrom is cleared from the job work premises. It is a facility to avoid the return of the finished goods to the factory of principal manufacturer and also to save the logistic cost. Thus Rule 4(5) and Rule 4(6) have been issued under Cenvat Credit Rules, 2001 and 2002 Rules as the conditions under which Cenvat credit can be allowed to a principal manufacturer and it is not a statutory provision to grant exemption from payment of duty to the manufacturer and in the present case, the job worker.
7.8 In the case under reference, the facts of non-payment of duty on final products by the principal manufacturer is not disputed. The goods received from the job worker were not used in the manufacture of dutiable final products but in goods on which no duty was paid. In such case when the principal manufacturer did not intend to pay duty on the final products, the job worker who is manufacturer of intermediate goods is liable to pay duty. Non-compliance of Notification No. 214/86-C.E., dated 25-3-1986 by the principal manufacturer has resulted into duty liability upon the job worker. Moreover, it is admitted by the appellant (job worker) that the inputs were not sent by the principal manufacturer under Notification No. 214/86-C.E. If the contention of the appellant is accepted it would lead to the situation where neither the principal manufacturer nor the job worker would pay duty, which has not been legislated.
7.10 In the present case the fact remains is that neither the goods after job work were cleared as such on payment of duty nor were used in manufacture of dutiable final products by the principal manufacturer. Hence the duty liability would be on the real manufacturer of goods i.e. the job worker. Since the principal manufacturer pays the duty on the product arising out of manufacture even at the job worker's end, he is eligible to avail credit. The Rule 4(5)(a) thus is a facility to the principal manufacturer to send goods for job work on which Cenvat has been availed. It is nothing to do with the duty payment of goods.
7.11 Rule 4(6) is a facility to the principal manufacturer to clear the goods directly from the premises of job worker after payment of duty. Notably it is not the case of the appellant that the principal manufacturer paid duty at anytime as the goods manufactured by him were exempted from duty. Thus the liability for payment of duty on such intermediate goods manufactured by the job worker is on job worker only.
7.12 The Tribunal order in case of Vandana Dyeing Pvt. Ltd. v. CCE, Mumbai - 2014 (307) E.L.T. 528 (Tri.) and Mukesh industries Ltd. v. CCE, Ahmedabad - 2009 (248) E.L.T. 203 (Tri.) were rendered considering Rule 4(5)(a) of Cenvat Credit Rules, 2001 and 2002 Rules as parimateria to 57F(4) of erstwhile Central Excise Rules, 1944. However in our considered view Rule 57F(4) provided for payment of duty by the principal manufacturer whereas Rule 4(5)(a) only provides sending of Cenvat availed inputs for job work and return of same to the principal manufacturer implying that the principal manufacturer shall pay duty on the same. Accordingly those judgments are of no help to the appellant. 10 | P a g e E/13913-13914,13990-13993/2014 E/11659-11662/2016 7.14 The appellant also relied upon the judgment of Hon'ble Apex Court in case of M/s. International Auto Ltd. v. CCE, Bihar - 2005 (183) E.L.T. 293 (S.C.). In the said case the dispute related to valuation of goods for the purpose of levy of duty at the job worker's end. The controversy was not related to liability of duty of job worker. It is undisputed in the present case that the principal manufacturer was not paying duty on removal of final products and had also not opted to avail the benefit of Notification No. 214/86-C.E. Hence the liability is on the manufacturer of intermediate product, i.e. job worker in the present case.
7.15 The reliance placed upon the Circular No. 306/22/97/-CX, dated 20-3-1997 is also misplaced since the circular was with reference to the situation upon eligibility of the job worker to claim credit where no duty was paid by them. However the facts of the present case are different as it deals with the situation as to who should be liable to pay duty when the principal manufacturer is not discharging duty either on job work goods or on final products in which such job work goods are consumed. In such case the responsibility lies to the job worker who is the ultimate manufacturer of the goods to discharge the excise duty.
7.16 Revenue has placed reliance upon the Tribunal judgment in case of M/s. Facit Asia Ltd. v. CCE - 1991 (54) E.L.T. 347 (Tri.). Tribunal was seized of the question as to whether the duty paid by the job worker is available to the principal manufacturer when the job worker could have availed exemption under Notification No. 214/86-C.E. The Tribunal rightly held that if the job worker has paid duty even though he was eligible to avail exemption under the Notification, the principal manufacturer was eligible for the credit thereof as he was liable to pay duty on clearance of the final goods. Tribunal held that had the Notification No. 214/86 not issued, even under Rule 57F(2) the job worker had to pay duty. Thus it follows that it is only by virtue of notification (supra) the goods manufactured at job workers end are exempted only if the same or the final product in which such intermediate goods are used are liable for duty at the end of the principal manufacturer which is absent in the present reference.
7.21 Revenue has also relied upon the judgment of the Apex Court in case of M/s. Empire Industries Ltd. v. UOI - 1985 (20) E.L.T. 197 (S.C.) holding that neither hardship nor loss of benefit is criteria in fiscal statutes as the job worker is liable to pay duty. Further, that the job worker being manufacturer of intermediate goods is liable for duty as has been held in case of Britannia Biscuit Co. Ltd. v. CCE, Madras - 1997 (89) E.L.T. 22 (S.C.). Therefore it is settled position of law that the job worker as the manufacturer of goods, unless otherwise exempted, is liable to pay duty. In the present reference, the undisputed fact being that the principal manufacturer did not pay duty and did not follow the procedure and conditions of Notification No. 214/86-C.E. supra, the job worker as a manufacturer is liable to duty on the job worked goods."
That since admittedly, in the case on hand, the Principal manufacturer, i.e. the Daman unit, paid duty on finished goods, evenif it is produced at job worker's end, there is no question of recovery of duty once again from job 11 | P a g e E/13913-13914,13990-13993/2014 E/11659-11662/2016 worker at Vadodara unit at all. As regards the Cenvat Credit demand on Daman unit, having paid duty as principal manufacturer, which is admitted by revenue authorities as well, the input stage credit too cannot be denied to them in the facts and circumstances of the present case.
05. As per our above discussion and findings, we are of the clear view that the appeals therefore deserve to be allowed, since the demand cannot be sustained on merits for the above reasons. Accordingly, the demand of Cenvat Credit on Daman unit as well as duty demand on Vadodara unit is clearly not sustainable. Since the demands are not sustainable, all penal action also must be dropped. Therefore, the impugned orders are set aside, and the appeals are allowed with consequential relief, if any, in accordance with law.
(Pronounced in the open court on 10.08.2022) (RAMESH NAIR) MEMBER (JUDICIAL) (RAJU) MEMBER (TECHNICAL) Mehul