Custom, Excise & Service Tax Tribunal
M/S. Paper Packaging Pvt. Ltd vs Commissioner Of Service Tax Mysore on 8 December, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: E/22400/2014-SM [Arising out of Order-in-Appeal No. MYS EXCUS 000-ADC APP HAB 063 - 2014 dated 20.06.2014 passed by Commissioner of Central Excise (Appeals), Mysore.] M/s. Paper Packaging Pvt. Ltd. K.I.A.D.B. Industrial Area, Mandli, Shimoga 577 202. Appellant(s) Versus Commissioner of Service Tax Mysore. KARNATAKA Respondent(s)
Appearance:
Shri S. R. Savant, Advocate For the Appellant Mrs. Ezhilmathi, AR For the Respondent Date of Hearing: 08/12/2016 Date of Decision: 08/12/2016 CORAM:
HON'BLE SHRI S.S GARG, JUDICIAL MEMBER Final Order No. 21400 / 2016 Per : S.S GARG The present appeal is directed against the impugned order dated 20.6.2014 passed by the Commissioner (A) whereby he has rejected the appeal of the appellant and confirmed the Order-in-Original.
2. Briefly the facts of the present case are that the appellant is a manufacture of kraft paper and is availing CENVAT credit of duty paid on inputs and capital goods as provided under CENVAT Credit Rules (CCR), 2004. During the course of audit, it was observed that during the period from January 2012 to January 2013, appellant had availed CENVAT credit under capital goods account on the goods HR beams, sheets, channels, plates, falling under Chapter 72 of the Schedule to the CETA and computerized attendance recording system i.e., finger print reader falling under Tariff Heading 8471 3090 of CETA. Thereafter a show-cause notice proposing to recover the CENVAT credit wrongly availed was issued to the appellant. After considering the reply of the appellant, the adjudicating authority allowed the CENVAT credit of Rs.25,904/- availed on pipes and Rs.3,399/- availed on finger print reader but disallowed CENVAT credit of Rs.1,09,108/- being credit availed on ineligible items and ordered recovery of the same along with interest and also imposed penalty under Rule 15(1) of CCR. Aggrieved by the said order, the appellant filed appeal before the Commissioner (A), who upheld the Order-in-Original. Hence the present appeal.
3. I have heard the learned counsel for the parties and perused the records.
4. Learned counsel for the appellant submitted that as per Rule 2(l) of the CCR, 2004 clearly provides that CENVAT credit is eligible on the goods used in the factory of manufacture of final product and not used in the manufacture of final product. He further submitted that the appellants are eligible to avail CENVAT credit as per Notification No.67/95-CE dated 16.3.1995 for the fabrication of the machinery. He also submitted that the show-cause notice has been issued without proper investigation and if the proper investigation was conducted, the appellant would have brought to the notice of the authority that the beams, sheets, channels and plates form part of the machinery. He further submitted that the credit taken on these four items have gone into the process of manufacture of machinery and this aspect has not been considered by the adjudicating authority. He also submitted that the learned adjudicating authority did visit the appellants factory on 10.10.2013 and in para 17 of the OIO has stated that the assessee has placed on record only invoices and a certain photographs vaguely indicating how the items, in question were utilized without giving specific details as to what quantity of structural steel items was used in manufacture of machinery or its parts and components and accessories. Learned counsel in support of his submissions relied upon the following decisions:
i. IOCL vs. CCE, Rohtak: 2014 (307) ELT 560 (Tri.-Del.) ii. Vishwanath Sugars Ltd. vs. CCE, Belgaum: 2009 (236) ELT 289 (Tri.-Bang.) iii. CCE, Guntur vs. City Lubricants: 2011 (266) ELT 131 (Tri.-Bang.) iv. Hindustan Petroleum Corporation Ltd. vs. CCE, Visakhapatnam: 2015 (317) ELT 134 (Bang.) v. CCE, Raipur vs. Hi-Tech Power & Steels Ltd.: 2015 (315) ELT 428 (Tri.-Del.) vi. C.E.A No.61 of 2008 filed by CCE, Belgaum in the High Court of Karnataka: 2014 (310) ELT A50 vii. India Cements Ltd. vs. CCE, Salem: 2015 (325) ELT 109 (Mad.)
5. On the other hand, the learned AR reiterated the findings in the impugned order and also relied upon following judgments:
i. Saraswati Sugar Mills: 201 (270) ELT 465 (SC) ii. Madras Cements Ltd.: 2010 (254) ELT 3 (SC) iii. Madras Cements Ltd.: 2005 (192) ELT 902 (Tri.-Chennai) iv. Bajaj Hindusthan Ltd. UOI : 2013 (295) ELT 20 (All.) v. CCE, Ghaziabad vs. Rathi Steel & Power Ltd.: 2015 (321) ELT 200 (All.)
6. After considering the submissions of both the parties and perusal of the material on record, I am of the considered opinion that this case needs to be remanded back to the original authority to verify the actual use of the items alleged to have been stated by the appellant to have been used in the fabrication which is used for production of the paper. The adjudicating authority on its previous visit to the factory on 10.10.2013 has only seen the invoices and the photographs but has not fully examined the usage of the specific items of material. Since both the parties are taking a contrary stand with regard to the actual usage of the said items, learned counsel for the appellant submitted that they have entire records of their usage and the same will be produced before the adjudicating authority if the adjudicating authority properly investigates and verifies the usage of the said materials. In view of these facts, I set aside the impugned order and remand the case back to the original authority to examine the usage of the items by visiting on the spot and thereafter pass a reasoned order keeping in view the decisions relied upon by the parties. The adjudicating authority will dispose of the appeal within two months after receipt of copy of the order and before deciding they will afford an opportunity to produce all the documents to the appellant, which they may rely. With these observations, the appeal is disposed of.
(Operative portion of the Order was pronounced in Open Court on 08/12/2016.) S.S GARG JUDICIAL MEMBER rv 5