Custom, Excise & Service Tax Tribunal
M/S. Manik Machinery Manufacturers P. ... vs Commissioner Of Central Excise, ... on 18 February, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. II APPEAL NO. E/1867/10 [Arising out of Order-in- Appeal No. SB/56/M-IV/10 dated 20/7/2010 passed by the Commissioner of Central Excise(Appeals), Mumbai] For approval and signature: Honble Mr Ramesh Nair, 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 : seen
of the Order?
4. Whether Order is to be circulated to the Departmental: Yes
authorities?
=======================================================
M/s. Manik Machinery Manufacturers P. Ltd
:
Appellants
VS
Commissioner of Central Excise, Mumbai-IV
:
Respondent
Appearance
Shri. S.P. Tavkar, Consultant for the Appellants
Shri. V.K. Shastri, Dy. Commissioner(A.R.) for the Respondent
CORAM:
Honble Mr. Ramesh Nair, Member (Judicial)
Date of hearing: 18/2/2016
Date of decision: 18/2/2016
ORDER NO.
Per : Ramesh Nair
This appeal is directed against Order-in- Appeal No. SB/56/M-IV/10 dated 20/7/2010 passed by the Commissioner of Central Excise(Appeals), Mumbai whereby the Commissioner (Appeals) upholding the order-in-original, rejected the appeal of the appellant.
2. The fact of the case is that the appellant are engaged in the manufacture of Spray Guns and Spares, falling under Chapter 84 of Central Excise Tariff Act, 1985. As a market strategy, appellant supplied playing cards as a free gift alongwith their final product i.e. Spray Guns. Playing cards are procured on payment of excise duty on which appellant has availed Cenvat credit. The Revenues contention is that the playing card is neither input nor used in or in relation to the manufacture of final product i.e. spray guns therefore it does not fall under the category of input or input services therefore Cenvat credit is not admissible under Cenvat credit Rules, 2004. Accordingly the Adjudicating authority denied the Cenvat credit of Rs. 49,533/- for the period February, 2008. Being aggrieved by the Adjudication order, the appellant filed appeal before the Commissioner(Appeals) who concurring with the adjudicating authority upheld demand and rejected the appeal filed by the appellant therefore appellant is before me.
3. Shri. S.P. Tavkar, Ld. Consultant appearing on behalf of the appellant submits that there is no dispute that playing cards are purchased on payment of duty and supplied alongwith final product as a free gift. The expenses towards purchase of playing cards is borne by the appellant therefore cost of playing cards stand included in the final product which suffered the excise duty therefore playing cards even though not directly used in the manufacture but supplied alongwith final product therefore Cenvat credit should be allowed. He submits that as per the definition of input, input need not to be directly used in the manufacture or it is not required to be contained in the final product. In the present case playing cards are dispatched alogwith final product therefore as per the definition of input provided under Cenvat Credit Rules, 2004, Cenvat credit is admissible. He submits that in various judgments wherever a different product is supplied alongwith manufactured final product in the combo pack Cenvat credit has been allowed. He placed reliance on following judgments;
(a) Cello Home products Vs. Commissioner of Central excise, Daman[2012(284) ELT 52 (Tri. Ahmd.)]
(b) Commr. of C. Ex. Cus. & S.T. Daman Vs. Prime Health Care Products[2011(272) ELT 54(Guj)]
(c) G. S. Enterprises Vs. Commissioner of Central Excise, Jaipur[2014(313) ELT 340(Tri. Del.)]
4. On the other hand, Shri. V.K. Shastri, Ld. Dy. Commissioner(A.R.) appearing on behalf of the Revenue, reiterates the findings of the impugned order. He further submits that the playing cards purchased and supplied alongwith final product by the appellant is neither used in the manufacture of spray guns, nor it is accessory to the spray guns, therefore it does not qualify as input for the manufacture of final product of the appellant i.e. spray guns. Merely because it is supplied as free gift to the customers, play cards it cannot qualify as input. He placed reliance on following judgments.
(a) Goran Pharma Pvt Ltd Vs. Commissioner of C. Ex. Bhavnagar[2008(231) ELT 645(Tri. Ahmd.)]
(b) Aster Pvt Ltd Vs. Commr. of C. Ex. & S.T. Vadodara[2015(18) ELT 304(Tri. Ahmd.)]
(c) G. S. Enterprises Vs. Commissioner of Central Excise, Jaipur[2002(144) ELT 387(Tri. Del.)] upheld by Honble High Court as reported in [2003(151) ELT A297].
5. I have carefully considered the submissions made by both sides and perused the record.
6. I find that the whole concept of Modvat/Cenvat scheme to avoid cascading effect of tax sufferred on input. In that stream whatever input is going into final product either directly or indirectly, duty suffered on that input should be set off and only on value addition duty is levied. In the present case the playing cards even though it does not participate directly in the manufacture of final product i.e. spray guns but undisputedly the same is purchased by the appellant and expenditure of the same stands absorbed in the cost of the final product which ultimately suffered the duty as a whole, therefore in my considered view the playing cards which is supplied alongwith final product should be eligible for input credit. The definition of input also clearly suggest that the input need not to be used directly in the manufacture and also not required to be contained in the final product but if it is used even in relation to the final product credit should be allowed. In the present case the playing cards indeed supplied alongwith final product it fulfilled the criteria of inputs, therefore credit cannot be denied of the duty paid on playing cards. Though there are contrary judgments on this issue but comparing the judgments of both the sides, I find that Tribunals Single and Division bench in cases Cello Home products(supra) and G. S. Enterprises (supra) respectively held that items supplied alongwith final product for sale promotion have been considered as input and Cenvat credit was allowed. In the case of Prime Health Care Products(supra) Honble Gujarat High Court on the identical issue also allowed the credit in respect of bought out tooth brush supplied alongwith tooth paste manufactured by the assessee. The Honble High Court has allowed the Cenvat credit on the tooth brush considering it as input. As regard the judgments relied upon by the Ld. A.R., I find that since there is reasoned judgment of the Honble High Court of Gujarat, it prevails over all the decisions given by the Tribunal, therefore following the Honble Gujarat High court judgment, I am of the considered view that Cenvat credit in respect playing cards supplied by the appellant alongwith spray guns is admissible. The impugned order is set aside. Appeal is allowed.
(Dictated in court) Ramesh Nair Member (Judicial) sk 6 E/1867/10