Custom, Excise & Service Tax Tribunal
M/S. App Enterprises vs Cce, Gurgaon on 16 November, 2011
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
Date of Hearing:16.11.2011
Date of Decision:16.11.2011.
Excise Appeal No.1221 of 2009-SM
[(Arising out of Order-in-Appeal No.40/ANS/PCK/2009 dated 9.2.2009 passed by the Commissioner of Central Excise, Gurgaon]
For Approval and signature:
Honble Shri Rakesh Kumar, Member (Technical)
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1. Whether Press Reporters may be allowed to see
The order for publication as per Rule 27 of the
CESTAT(Procedure) Rules, 1982?
2. Whether it would 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 of the order?
4. Whether order is to be circulated to the
Department Authorities?
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M/s. APP Enterprises Appellants
Vs
CCE, Gurgaon Respondent
Appeared for the Appellant: Rep. by Shri Hemant Bajaj, Advocate Appeared for the Respondent: Rep. by Smt. R. Jagdev, SDR Coram: Honble Shri Rakesh Kumar, Member (Technical) ORDER..Dated:16.11.2011 Per Rakesh Kumar:
The appellant are manufacturers of Tannin falling under sub-heading No.3201.00 of the Central Excise Tariff. The Tannin had been manufactured out of imported arecanut/betel nut, free of duty under Notification No.32/97-Cus dated 1.4.97 and the same was exported under bond without payment of duty. For packing of tannin, the appellant purchased duty paid plastic drum in respect of which Cenvat credit was taken. Since the appellants clearances of Tannin were only for the export, they were not in a position to utilize the cenvat credit in respect of the drums. They, therefore, filed an application for the cash refund of the accumulated cenvat credit under Rule 5 of the Cenvat Credit Rules, 2004. The refund amount of Rs.1,26,546/- was allowed by the Asstt. Commissioner vide order-in-original dated 31.10.2007 and while sanctioning the refund, the Asstt. Commissioner gave a finding that the accumulated Cenvat credit cannot be used for domestic clearances, as there are no domestic clearances of their final product. This order of the Asstt. Commissioner was reviewed by the Commissioner and an review appeal was filed before the Commissioner (Appeal) on the following grounds:-
(a) Rule 5 of the Cenvat Credit Rules, 2004 has to be read with the Rule 4 and 3 of the Cenvat Credit Rules, 2004, which prescribe the conditions for admissibility / uses of Cenvat credit, though the unit is not an 100% EOU but because their 100% production is exported under bond without payment of duty coupled with no home clearances, the prima facie availment of Cenvat credit is doubtful and appears non-admissible.
(b) Before allowing cash refund of input credit under Rule 5 on the products which is cleared for export under bond, the credit is first allowed to be utilized by manufacturer towards payment of duty of excise on any final product cleared for home consumption or for export on payment of duty etc. In case such adjustment is not possible cash refund is allowed subject to such safeguards, conditions and limitations as may be specified by Central Govt. by notifications. In this case, the cenvat credit is not utilized at all for clearances for home consumption or for export and its admissibility being not correct, there would be no question of granting cash refund of input credit i.e. HDPE drums used for packing of the final products.
The Commissioner vide Order-in-Appeal dated 9.2.2009 allowed the departments appeal holding that the appellant are not entitled to the cash refund of credit availed in respect of the HDPE drums used in the packing of final products, which were exported. Against this order of the Commissioner (Appeals), this appeal has been filed.
2. Heard both sides.
3. Shri Hemant Bajaj, Advocate, ld. Counsel for the appellant, pleaded that the cenvat credit whose refund has been claimed, had been availed in respect of the drums used for packing of the final product tannin, which had been manufactured out of areca-nut/betel-nut imported free of duty under Notification No.32/97-Cus, that the cenvat credit in respect of the packing materials plastic drums was admissible and had been correctly taken, that since the appellant had absolutely no clearances for home consumption, they were not in position to utilize the accumulated credit for domestic clearances, that in view of this, the cash refund of accumulated credit has been correctly sanctioned under Rule 5 of the Cenvat Credit Rules by the Asstt. Commissioner and that the impugned order disallowing the same is without any basis.
4. Smt. R. Jagdev, ld. SDR defended the impugned order while reiterating the findings of the Commissioner (Appeals).
5. I have carefully considered the submissions from both the sides and perused the records. The appellant are manufacturers of Tannin out of betel nuts imported free of duty under Notification No.32/97-Cus and the Tannin was being exported under bond without payment of duty. For packing of the Tannin, the appellants were procuring duty paid plastic drums in respect of which cenvat credit was being availed. Since the definition of input as given in Rule 2(k) of the Cenvat Credit Rules cover the goods used as packing material, there is no doubt about the admissibility of cenvat credit in respect of HDPE drums used for packing of the final products. There is nothing on record which indicates that the appellant had domestic clearances also in respect of which they could utilize the credit and in this regard, a clear finding has been given by the Asstt. Commissioner. Even the impugned order passed by the Commissioner (Appeals) does not say that the appellant were in a position to utilize the accumulated credit for payment of duty on domestic clearances. In view of this, I do not find any logic in the impugned order holding that the appellant were not eligible for cash refund of the accumulated cenvat credit under the provisions of Rule 5of the Cenvat Credit Rules. In fact, the finding of the Commissioner (Appeals) that the appellant was not entitled to take cenvat credit on plastic drums used for packing the goods exported is itself incorrect. In view of this, the impugned order is not sustainable. The same is set aside. The appeal is allowed.
[Order dictated & pronounced in open court] ( Rakesh Kumar ) Member (Technical) Ckp.
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