Custom, Excise & Service Tax Tribunal
M/S Cadbury India Ltd vs Cce, Mumbai-Iii on 10 March, 2015
IN THE CUSTOMS, EXCISE AND SERVECE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT NO. IV APPEAL NO. E/1284/11 (Arising out of Order-in-Appeal No. PKS/17/BEL/2010 dated 29.04.2011 passed by the Commissioner of Central Excise (Appeals), Mumbai III). For approval and signature: Honble Shri Ramesh Nair, Member (Judicial) ========================================================
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 :Yes 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? ======================================================== M/s Cadbury India Ltd. : Appellant Versus CCE, Mumbai-III : Respondent Appearance Shri M.P. Baxi, Advocate : For Appellant Shri Rakesh Goyal, Addl. Commr. (A.R.) : For Respondent CORAM: Honble Mr. Ramesh Nair, Member (Judicial) Date of Hearing : 10.03.2015 Date of Decision: 10.03.2015 ORDER No. . Per: Ramesh Nair
The appeal is directed against Order-in-Appeal No. PKS/17/BEL/2010 dated 29.04.2011 passed by the Commissioner of Central Excise (Appeals), Mumbai III, wherein the learned Commissioner sustaining the Order-in-Original, rejected the appeal filed by the appellant.
2. Brief fact of the case is that M/s Cadbury India Ltd. (hereinafter referred to as the appellant) used cocoa beans as inputs in the manufacturing of Chocolate. The process required first to crush cocoa beans and while crushing cocoa beans, shell got separated and then cocoa butter and power is obtained. The appellants sell these cocoa-shells in open market without payment of duty availing benefit of exemption Notification No. 15/2005-CE dated 02.05.2005. The appellant imported the cocoa beans and took credit @ 4% of Additional Customs Duty. Since, the appellants had not kept separate account of inputs for exempted as well as dutiable goods as required under Rule 6(2) of the CENVAT Credit Rules, 2004 (said Rules), therefore show-cause cum demand notice was issued for the recovery of amount equal to 10% of the value of the exempted goods i.e. shells. The adjudicating authority after due process of law, confirmed the demand of Rs. 4,32,217/- under Section 11A of the Central Excise Act, 1944 (said Act) along with appropriate interest. A penalty of equivalent amount was also imposed under the provisions of Section 11AC of the said Act.
2.1 Being aggrieved by the Order-in-Original No. 105/2010-11/DC/W.I/M.III dated 22.12.2010. The appellant filed an appeal before the Commissioner (Appeals) which was rejected, hence the appellant is before me.
3. Shri M.P. Baxi, learned Counsel for the appellant submits that the demand of 10% of value of exempted goods i.e. shells was confirmed under Rule 6(2) of the CENVAT Credit Rules, 2004. On the ground that the shells is cleared under exemption Notification No. 15/2005-CE dated 02.05.2005. He submits that the appellant has taken credit on input namely cocoa beans and during the process of cocoa beans, shells emerge unavoidable and unintentionally which is a by-product or waste. In the process carried out, obtained cocoa butter and cocoa powder and in such process generated has waste i.e. cocoa shells. He submits that in case of by-product or waste, the payment of 10% as provided in Rule 6(2) of the CENVAT Credit Rules, 2004 it is not applicable. In this support, he relies on the following judgements:-
(i) Rallis India Vs. UOI 2009 (233) ELT 301 (Bom.)
(ii) Jai Steels (India) Vs. CCE 2010 (253) ELT 700 (Tri.-Del.)
(iii) CCE Vs. Pioneer Agro Industries Ltd. 2010 (255) ELT 258 (T)
4. On the other hand Shri Rakesh Goyal, learned A.R. appearing on behalf of the Revenue, reiterates the findings of the impugned order.
5. I have carefully considered the submissions made by both the sides. From the facts of the case, it is undisputed that cocoa shells arise during the manufacturing process of cocoa butter and cocoa powder. The appellant is not manufacturing cocoa shells it is arisen unavoidably during the process of manufacturing cocoa butter and cocoa powder. Therefore the cocoa shells is nothing but by-product or waste. This shows that Rule 6(2) of CENVAT Credit Rule and payment of 10% provided therein is not applicable. This issue is squarely covered by the Hon'ble Supreme Court judgment in the case of Rallis India (supra) and also Hindustan Zinc Ltd. -2014 (303) ELT 321 (S.C.). In both judgments the Hon'ble Supreme Court has taken consistent view that if product is emerging unavoidably during the course of final product, the same shall be considered as by-product only and therefore payment of amount as provided under Rule 57CC of erstwhile Central Excise Act, 1944 and Rule 6 of CENVAT Credit Rules, 2004 is not applicable. In view of the above settled position, I am of the considered view that in the present case also the lower authority has wrongly confirmed the demand of 10% in terms of Rule 6(2) of the CENVAT Credit Rules, 2004. Therefore, the impugned order is set aside and the appeal is allowed.
(Pronounced in Court) Ramesh Nair Member (Judicial) Sp/ 4