Custom, Excise & Service Tax Tribunal
M/S. Govinda Enterprises Pvt. Ltd vs Commissioner Of Central Excise, ... on 1 November, 2017
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, KOLKATA
EASTERN ZONAL BENCH: KOLKATA
Appeal No.E/75834/2017
(Arising out of Order-in-Appeal No.06/KOL-V/2017 dated 30.01.2017 passed by the Commissioner of Central Excise(Appeal-I), Kolkata)
M/s. Govinda Enterprises Pvt. Ltd.
Applicant (s)/Appellant (s)
Vs.
Commissioner of Central Excise, Kolkata-V
Respondent (s)
Appearance:
Shri B.N.Chattopadhyay, Consultant for the Appellant (s) Shri S.Guha, AC(AR) for the Respondent (s) CORAM:
Honble Shri P.K.Choudhary, Member (Judicial) Date of Hearing/Decision:-01.11.2017 ORDER NO.F/O-77636/17 Per Shri P.K.Choudhary
1. The brief facts of the case is that the appellant was receiving raw materials from M/s. Paharpur Cooling Towers Ltd. (PCTL) on job work basis under Rule 4(5)(a) of the Cenvat Credit Rules. The appellant was undertaking some process on the goods and returned the same claiming 7% burning loss of the raw materials. The show cause notice dated 22.02.2010 was issued that though 7% burning loss/scrap was permitted on net weight basis, the appellant had accounted for total of 7% as burning loss and no wastage was declared. It is the case of the Revenue that in such fabrication work maximum burning loss of 2% is allowed and accordingly proposes to demand central excise duty alongwith interest and penalty. Vide Order-in-Original the Adjudicating Authority confirmed the demand of Rs.40,537/- alongwith interest and imposed equal penalty under Section 11AC of Central Excise Act, 1944. On appeal the Commissioner (Appeals) upheld the Adjudication Order. Ld. Consultant on behalf of the appellant submits that the goods were sent to the appellant for job work under Rule 4(5)(a). He filed a copy of the rules and submits that if goods are not received within 180 days, manufacturer or provider of out put service shall pay an amount equivalent to the Cenvat Credit attributable to the inputs or capital goods by debiting the Cenvat Credit or otherwise. Ld. Consultant further submits that accordingly there is no occasion for demanding the duty from the appellant. Demand, if any, should be raised on the principal manufacturer i.e. M/s. PCTL and not on the appellant.
2. Ld. AR reiterated the findings of the Lower Authorities.
3. Heard both sides and perused the appeal record.
Ld. Consultant appeared on behalf of the appellant relied on the decision of the Tribunal in the case of Collector of C.Ex., Calcutta-II vs. Multiwyn Industrial Corp. [1995(80) E.L.T. 708(Tribunal)]. I find that the appellant has claimed 7% as burning loss while processing and fabricating raw materials received by them under Rule 4(5)(a) challans of M/s. PCTL. Ld. Consultant drew the attention of the bench to the purchase order issued by M/s. PCTL, wherein in Remarks Column at Sl. No.4 it is mentioned 7% burning loss/scrap will be permitted on net weight basis. Accordingly, appellant has claimed the shortage of raw materials @7%. It is seen from the decision of the Tribunal as relied on by the Ld. Consultant in the case of Collector of C.Ex., Calcutta-II vs. Multiwyn Industrial Corp. (Supra) that the show cause notice was issued not to the job worker but to the principal manufacturer. The relevant portion of the said order is reproduced below:
9.The appeal does not succeed, however, on the? other grounds. The Assistant Collector has observed in his order that the burning losses vary from 5 to 8% and in some cases, can go upto 10%; whereas in the present case such losses were almost uniformly 10%. He had allowed 5% losses and demanded duty on the losses in excess thereof. He has also observed that the losses should be of varying levels and not uniform as reported by them. There is no basis for such a finding. The loss due to burning in the manufacturing process will depend upon various factors like the material used, product made, the process, power supply including breakdown etc. Merely because the losses were reported around 10% it cannot be held that such figures did not represent the correct position and that the inputs were not accounted for. Moreover, the normal quantum of losses as per the enquiries conducted is reported to be in the range of 5% to 8%. There is no reason indicated, why the minimum level has been applied and excess thereabove disallowed. The method employed is arbitrary and cannot be upheld. The amount of duty involved is also about Rs. 10,000 /-. If there was some doubt felt by the Assistant Collector that the respondents had not accounted for the inputs sent out by them to their job workers for processing and had shown excess losses. The findings have not been supported by any reliable enquiry and data arrived at. The respondents, in any case, are entitled to the benefit of doubt. I accordingly dismiss the appeal in regard to the plea for restoration of the Assistant Collectors order.
4. In view of the above discussions, it is my considered view that the demand of the appellant is not justified and accordingly the impugned order is set aside and the appeal filed by the appellant is allowed.
(Dictated and Pronounced in the Open Court) S/d. (P.K.Choudhary) MEMBER (JUDICIAL) ss 3 Appeal No.E/75834/2017