Custom, Excise & Service Tax Tribunal
M/S J. K. Lakshmi Cement Ltd vs Cce, Jaipur on 26 December, 2016
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No.2, R. K. Puram, New Delhi, Court No. 1 Date of hearing: 13.12.2016 Date of pronouncement: 26/12/2016 Excise Appeal Nos. 1598 of 2008 & & 60552 of 2013 (Arising out of order No. V(H)Misc/Adj-II/JPR-II/22/13/2507 dated 23/26.08.2013 passed by the Commissioner, Central Excise, Jaipur). M/s J. K. Lakshmi Cement Ltd., Appellant Vs. CCE, Jaipur Respondent
Appearance:
Sh. A. K. Prasad & Ms. Surbhi Sinha, Advocates for the appellant Sh. G. R. Singh, AR for the Respondent Coram:
Honble Mr. Justice (Dr.) Satish Chandra, President Honble Mr. V. Padmanabhan, Member (Technical) Final Order No. 56072 56073 / 2016 Per: V. Padmanabhan:
The appellant is a manufacturer of cement. Unit-I and Unit-II were registered separately during the periods upto 1998. Common registration was issued to both the units in 1998. For manufacture of cement, they make use of limestone mined from the captive mines. For mining of limestone, they use duty paid explosives for which cenvat credit in unit-I stands availed. The limestone mined from the captive mines is initially transported to Unit-I for purposes of crushing. After such process of crushing, part of the limestone is utilised in Unit-I and the rest is sent to Unit-II for use in the manufacture of cement. During the period when two units enjoyed separate registrations, the department took the view that reversal of a part of cenvat credit is required to be done in Unit-I under the provisions of Rule 57CC of the then Modvat Rules. This rule required that when a manufacturer avails credit on inputs which are used partially in the manufacture of duty paid goods as well as partly in exempted goods, they should reverse an amount equal to 8% of the value of the exempted goods. The department considered the part of the limestone transferred by Unit-I to Unit-II after the process of crushing, to be clearance of exempted products. Consequently, they raised demand for reversal of an amount of 8% of the value of limestone cleared to Unit-II.
2. With this background, we heard Shri A. K. Prasad, ld. Counsel for the appellant and Sh. G.R. Singh, ld. AR for the Revenue.
3. Ld. Counsel submits that limestone transferred to Unit-II from Unit-I also has been utilised in the manufacture of duty paid cement. Accordingly, he submitted that there is no justification for asking for reversal of modvat credit under Rule 57CC. He further submits that the appellant has reversed the entire credit taken on the duty paid explosives used by them. They relied upon the judgment of Honble Supreme Court in the case of Chandrapur Magnet Wires (P) Ltd. vs. CCE, Nagpur 1996 (81) ELT 3 (SC) and submitted that once the modvat credit availed has been reversed, it should be considered as not availed ab initio.
4. The authorities below have confirmed the payment of excise duty to the extent of 8% of the value of limestone cleared by Unit-I to Unit-II, under the erstwhile Rule 57CC of the Modvat Rules. However, we find that the entire modvat credit availed by the appellant on the duty paid explosives utilised for mining of limestone has been reversed alongwith interest. We also find that the decision of the Honble Supreme Court in the case of Chandrapur Magnet (supra) cited by the ld. Counsel covers the issue in favour of the appellant. In the light of the decision of the Apex Court, the credit is to be considered as not availed at all. In this view of the matter, the demand made by the Revenue under Rule 57CC cannot be justified and is set-aside.
5. In view of the above, we allow the appeals and set-aside the impugned orders.
(Pronounced on 26/12/2016).
(Justice (Dr.) Satish Chandra) President (V. Padmanabhan) Member (Technical) Pant