Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, Raigad vs Isibars Ltd on 23 March, 2010
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No. I APPEAL No. E/3093/03 (Arising out of Order-in-Appeal No. RJB/M-III/307/2003 dated 22.8.2003 passed by Commissioner of Central Excise (Appeals), Mumbai-III) For approval and signature: Hon'ble Mr. P.G. Chacko, Member (Judicial) and Hon'ble Mr. S.K. Gaule, Member (Technical) ======================================================
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?
====================================================== Commissioner of Central Excise, Raigad Appellant Vs. Isibars Ltd. Respondent Appearance: Shri H.B. Negi, Authorised Representative (SDR), for appellant Shri P.V. Patankar, Advocate, for respondent CORAM: Hon'ble Mr. P.G. Chacko, Member (Judicial) and Hon'ble Mr. S.K. Gaule, Member (Technical) Date of Hearing: 23.3.2010 Date of Decision: 23.3.2010 ORDER NO................................. Per: P.G. Chacko, Member (J),
In this appeal filed by the Revenue, the appellant opposes a refund claim filed by the respondent. During the period of dispute (April to December 2001), the respondent had undertaken job work on the billets (raw material) supplied by the principal manufacturer and had returned the job-worked goods (wire rods and bars) to the raw material supplier without payment of duty, claiming the benefit of Notification 214/86-CE. For undertaking the job work of converting the billets into wire rods and bars, the respondent had procured furnace oil on payment of duty and used the same as fuel. They also took CENVAT credit of the duty paid on the fuel. Subsequently, however, they had to reverse this credit at the instance of the department. Later on, they filed a refund claim claiming refund of an amount of Rs.12,52,519/- equivalent to the credit so reversed. The department issued a show-cause notice proposing to reject the refund claim on the ground that the respondent did not substantiate their claim on merits and also did not prove that the incidence of duty had not been passed on to any other person. By a corrigendum to the notice, the department added one more ground for rejection of the refund claim, which was to the effect that the job-worked goods was not the final product of the respondent. The proposals in the show-cause notice and the corrigendum thereto were contested by the party. In adjudication of the dispute, the Deputy Commissioner rejected the refund claim on all the grounds raised in the show-cause notice. The Deputy Commissioner's order was set aside by the Commissioner (Appeals) in an appeal filed by the party. The appellate authority observed to the effect that Rule 6(2) of the CENVAT Credit Rules did not require a manufacturer of final product to pay 8% of the price of exempted final products while clearing other final products on payment of duty where any fuel was used as common input. The appellate authority further observed that the principle of unjust enrichment was not applicable to the case on hand.
2. In the present appeal filed by the Revenue against the appellate Commissioner's order, it is submitted that the benefit of Rule 57AD(2) of the Central Excise Rules, 1944 and Rule 6(2) of the CENVAT Credit Rules cannot be extended to fuels including furnace oil. We have not found any elaboration of this point in the Revenue's memo of appeal, nor has the learned SDR been able to add anything to it. On the other hand, it is submitted by the learned counsel for the respondent that what was claimed by them was only re-credit of the CENVAT credit reversed earlier in their account. It is submitted that the respondent was entitled to take CENVAT credit of the duty paid on furnace oil which was used in the job work of converting billets into wire rods and bars which were supplied to the principal manufacturer without payment of duty. In this context, the learned counsel has relied on the Tribunal's Larger Bench decision in Sterlite Industries (I) Ltd. vs. CCE, Pune 2005 (183) ELT 353 (Tri.-LB).
3. The Larger Bench was dealing with a similar factual situation. Following the apex court's ruling given in Escorts Ltd. vs. CCE 2004 (171) ELT 145 (SC), the Larger Bench held that MODVAT credit of the duty paid on the inputs used in the manufacture of final product cleared without payment of duty for further utilisation in the manufacturer of final product to be cleared on payment of duty by the principal manufacturer could be availed by the job worker unaffected by the provisions of Rule 57C. The said Rule had injuncted a manufacturer of final product from taking MODVAT credit of the duty paid on inputs used in or in relation to the manufacture of final products exempted from payment of duty or chargeable to 'nil' rate of duty. The Larger Bench decision proceeded on the premise that Rule 57C was not applicable to a job worker who claimed MODVAT credit on inputs used in or in relation to the manufacture of the job-worked goods. In other words, the job-worked goods cleared by the job worker to the principal manufacturer were not recognised to be "exempted" for purposes of Rule 57C. Those goods were dutiable in the hands of the principal manufacturer who admittedly paid duty thereon.
4. The learned counsel has further pointed out that the appeal filed by the department against the Tribunal's Larger Bench decision in Sterlite Industries case was dismissed by the Hon'ble High Court on the ground that no question of law arose. In other words, the law laid down by the Tribunal's Larger Bench stood approved. We note that this aspect is clearly discernible from the text of the High Court's judgment in Tata Motors Ltd. vs. UOI 2009 (244) ELT 337 (Bom.).
5. In the result, in terms of the Tribunal's Larger Bench decision, it is held that the respondent is entitled to take re-credit of the CENVAT credit in question in their CENVAT account. We note that the appellant has not raised the plea of unjust enrichment in this appeal.
6. The appeal is dismissed.
(Pronounced in Court) (S.K. Gaule) Member (Technical) (P.G. Chacko) Member (Judicial) tvu 1 5