Customs, Excise and Gold Tribunal - Bangalore
Stumpp Scheule And Somappa Ltd. And Anr. vs Cce on 17 March, 2005
Equivalent citations: 2005(191)ELT1085(TRI-BANG)
ORDER
S.L. Peeran (J) Member
1. The stay application was heard on 17.01.2005. The stay application was allowed granting interim stay and with a direction that the appeal would be heard today, in view of the issue having been decided by the Tribunal in the case of Eveready Industries India Ltd. v. CCE-2000 (38) RLT 179 (CEGAT) : 2000 (120) ELT 379 and in MDS Switchgear v. CCE -2001 (132) ELT 405. The issue is common in the case of M/s. SKF India Limited also and hence both the appeals are taken up together for disposal as per law. The appellant M/s. Stumpp Scheule and Somappa Ltd. were removing excisable goods viz. used Metallic Spring falling under Chapter Sub Heading 7320.00, but they were availing CENVAT credit on the inputs viz. Wires of Non-Alloys Steel and Alloy Steel covered under CSH 7217.90 and 7229.90 CET Act, 1985 and were utilizing the same towards the payment of duty on their final products. The period involved is 29.5.2003 to 31.3.2004. The Revenue has proceeded to recover the CENVAT credit availed by them on the allegation that they had wrongly availed the same. In view of the fact that Wires of Non-Alloy Steel drawn from wire rods does not amount to a process of manufacture as held by the Apex Court in the case of (i) M/s.Vishvaman Industries; (ii) Hind enterprises and (iii) M/s. Technoweld Industries, the Board also withdrew the Circulars issued in this context. Therefore, it was contended by the Revenue that as drawing of wires did not amount to manufacture, the availing of CENVAT credit on duty paid wires is not as per law.
2. In the case of M/s. SKF India Ltd, it is alleged that the appellants were engaged in the manufacture of Ball Bearing, Roller Assembly, etc. falling under Chapter 87 of CETA, 1985. They had received wires drawn from wire drawing units and had taken the Credit of CE duty paid on such wires and utilized the same towards payment of duty on their final products viz. Ball Bearings, Roller Assembly, etc. during the period from 01.06.2003 to 31.12.2003. On the same allegation as made in M/s. Stumpp Scheule and Somappa Ltd, the department intimated proceedings to deny the Modvat credit as availed by assessee.
3. We have heard the learned Counsels Shri V. Raghuraman and Shri K S Ravi Shankar for the appellants and Shri L Narasimha Murthy, the learned SDR for the respondents.
4. The Counsels submitted that the issue is no longer res integra and the Tribunal had already categorically laid down that notwithstanding the fact that drawing of wires does not amount to a process of manufacture, yet they are entitled to avail the modvat credit. In this regard, a large number judgments had been filed. It is also submitted that the issue is restricted only to the period in question and now the dispute has been settled as there are amendments brought into rules for grant of Modvat credit.
5. The learned SDR filed comments from the department and reiterated the departmental view.
6. For the purpose of disposal of these appeals, it is sufficient to refer to one judgment on this point by the Delhi Bench of CESTAT in the case of CCE, Indore v. M P Telelinks Ltd. - 2004 (178) ELT 167 (Tri.-Del.). It has been held by the Tribunal that if the department levies and collects Central Excise Duty on the goods cleared from the factory, they cannot claim for the purpose of allowing the CENVAT credit that the process of manufacture had not taken place'. It has been further held that 'if the process of manufacture had not taken place, the question of duty would not arise'. On this very issue of availing Modvat credit on the inputs on which no process has taken place amounting to manufacture, the Tribunal has held that credit has been utilized in removing the inputs as such under provisions of Rule 57AB(1C) of the Act. It is held that after knowing all the points that in whatever manner the issue is looked into, it is completely Revenue neutral and, therefore, the Revenue appeal on this point was rejected. We are of the considered opinion that there is no illegality in the appellants utilizing modvat credit solely on the ground that drawing of wire from wire rods did not amount to a process of manufacture, while utilizing the credit for the manufacture of final product in each of the noted case. The order passed by both the authorities is not as per law and in terms of several judgments cited before us more particularly in the above cited judgment. The impugned orders are set aside and the appeals are allowed with consequential relief is any.