Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, ... vs M/S. Crompton Greaves Ltd on 4 August, 2010
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI APPEAL NO. E/808/08 (Arising out of Order-in-Appeal No. SRK/233/M-III/2008 dated 29/4/2008 passed by the Commissioner (Appeals) Central Excise, Mumbai Zone-II For approval and signature: Honble Shri Ashok Jindal, Member (Judicial) ============================================================
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 :
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Yes
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
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Commissioner of Central Excise, Mumbai-III
:
Appellants
VS
M/s. Crompton Greaves Ltd.
Respondents
Appearance
Shri V.K. Singh JDR Authorized Representative
Shri Aditya Chitale, Advocate For Respondent
CORAM:
Shri Ashok Jindal, Member (Judicial)
Date of decision : 04/08/2010
ORDER NO.
Per : Ashok Jindal, Member (Judicial)
Heard both sides.
2. Revenue has filed this appeal against the order of the Commissioner (Appeals) wherein the Commissioner (Appeals) uphold the Order-in-Original by rejecting the appeal filed by the Revenue.
3. The facts of the case are that the respondent are repairing electrical motors manufactured by them within warranty period free of charge as well as those manufactured by other manufacturers on labour-job basis. Whenever inputs, (on which Cenvat Credit) is taken, are used for repair work, they reverse the Cenvat Credit. All the clearances were made under Annexure-II challans and duty is paid only on the electrical motors manufactured by them. It was alleged against the respondent that they are doing job work and the activity undertaken by them for repairs under job work challan, they are not liable to pay any duty, the credit taken on the inputs by them is liable to be reversed and the duty paid by them is to be treated as a deposit under Section 11D(1) of the Central Excise Act, 1944. Both the lower authorities dropped the show cause notice and held that the activity undertaken by the respondents is not of the job work. In fact, the activity is repair of the motors and inputs used in repair of the motors were cleared after payment of duty. Aggrieved from the said order, the Revenue is before me.
4. The learned DR submitted that the activity undertaken by the respondent is of job work of the repair of transformers and for that activity the respondent are not liable to pay any duty and in this case but whatever they have deposited may be treated as deposit under Section 11D(1) of the Act. He also relied on the case law in the case of Commissioner of Central Excise, Mangalore KVK Control Panels reported in 2008 (226) E.L.T. 555 (Tri. Bang.).
5. On the other hand the learned Advocate submitted that the respondents are the manufacturer of transformer and same has been cleared after payment of Central Excise duty. In this case they have received back the transformers manufactured and initially cleared by them on payment of duty and in some cases transformers manufactured by some other manufacturers from their customers, for the purpose of repairs. It is not the job work. During the course of repair of these transformers some defective parts are to be replaced with other repair work and where it is required initially replacement of certain part was done, the same does not amount to job work. On these parts the respondent has paid the duty and availed the credit. While these parts are cleared back to their duty customers as fitted in the transformer, the only duty portion was reversed which was availed for these inputs only hence the respondent had discharged their duty liability and they are not liable to reverse the Cenvat credit availed by them on the input used repair of the transfer.
6. On careful examination of the submissions made by both the sides. I have gone through the records in para 21 of the Order-in-Original the Jt. Commissioner has clarified the issue which is reproduced here as under:-
Pursuant to repairing of these transformers, when they are cleared back to the customers, there is no Central Excise duty to be paid on the transformers as the repairing activity does not amount to manufacture. Having said so, the fact remains that since modvatable/cenvatable inputs have been used for such repairs, the same has to be reversed as per the provisions of the Cenvat/modvat rules. It is for this purpose that the assessee while clearing the repaired goods under the Annexure II challan also issues an invoice under Rule 11, indicating therein the nature of inputs used and specifying that Central Excise invoice concerns reissue of repaired goods under Rule 4(5)(a) of the Cenvat Rules 2001/2002/2004. Such a duty payment tantamounts to reversal of the credit availed by them on these inputs. By virtue of this reversal/payment, it amounts to non-availment of credit on the inputs which have been issued for job work of repair. Such a mode of payment is sanctified by the Honble Supreme Court in the case of Chandrapur Magnet Wires, 1996 (81) ELT-3 (SC) and cannot be found fault with. Another way in which this payment can be seen is that it is akin to the removal of inputs in terms of Rule 57F (1) (ii)/Rule 3(4) of Cenvat Credit Rules. Either way, this duty payment cannot be questioned.
It is not the case that the respondent has cleared the whole transformer on payment of duty but they have reversed the only portion of the input used in repair of the said transformers. As regards the applicability of Section 11D of the Act, it was again observed by the Jt. Commissioner that Section 11D speaks of duties of excise collected from the buyers to be deposited with the Central Government and provisions of Section 11D(1) specify that every person who is liable to pay duty under this Act or the Rules made thereunder, and has collected any amount in excess of the duty assessed or determined and paid on any excisable goods under this Act or Rules made thereunder from the buyer of such goods in any manner as representing duty of excise, shall forthwith pay the amount so collected to the credit of the Central Government. This is not the case here. In this case the respondent has reversed the credit availed by them on the inputs used in repair of the transformers on which the respondent availed the Cenvat credit by paying the duty at the time of clearance and there is no allegation against the respondent that they have not paid the duty. Hence, I hold that provisions of Section 11D (1) are not applicable to this case, as same has been held by the Commissioner (Appeals) in his order which is reproduced as under:-
I have gone through the case records and considered the averments made in the appeal. The show cause cum demand notice was issued for treating the duty paid by the respondent as deposit under Section 11D of the Act. Sub-Section (1) of Section 11D makes it clear that only the person who has collected any amount in excess of the duty assessed or determined and paid is required to pay the same to the credit to the Central Government. There is nothing on record that the respondent had collected any amount as duty over and above the amount paid by them. Therefore, the lower authority has rightly dropped the proceedings. The CBEC Circular dated 20.3.1997 was also rightly held to inapplicable as there was no manufacture. Accordingly, the impugned order has to be upheld.
6. The case law cited by the DR is not supporting the case of the department, in fact in that case also it is held that repair of old transformer does not amounts to manufacture. The Adjudicating Authority has also observed the same and passed the order.
7. Both the lower authorities have considered the issue. The view taken by both the authorities is correct in the facts and circumstances of the case. I do not find any reasons to interfere the same.
8. With these observations I do not find any merit in the appeal the same is rejected, impugned order is upheld.
(Pronounced in court) (Ashok Jindal) Member (Judicial) Sm 5