Custom, Excise & Service Tax Tribunal
M/S Renu Engineering Industries vs Commissioner, Central Excise & Service ... on 9 October, 2015
In The Customs, Excise & Service Tax Appellate Tribunal West Zonal Bench at Ahmedabad Appeal No.E/260/2012 [Arising out of OIA No.CS/238/DMN/VALSAD/2011-12, dt.16.03.2012, passed by Commissioner (Appeals), Central Excise & Service Tax, Daman] M/s Renu Engineering Industries Appellant Vs Commissioner, Central Excise & Service Tax, Daman Respondent
Represented by:
For Appellant: Shri Prasad Paranjape, Advocate For Respondent: Shri T.K. Sikdar, Authorised Representative For approval and signature:
Honble Mr. P.K. Das, Member (Judicial)
1. Whether Press Reporters may be allowed to see the No Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy of Seen the order?
4. Whether order is to be circulated to the Departmental Yes authorities?
CORAM:
HONBLE MR. P.K. DAS, MEMBER (JUDICIAL) Date of Hearing/Decision:09.10.2015 Order No. A/11405/2015 , dt.09.10.2015 Per: P.K. Das The relevant facts of the case, in brief, are that the Appellants were engaged in the manufacture of Machinery classifiable under Chapter 84 of the Schedule to the Central Excise Tariff Act, 1985. They received the Iron and Steel articles supplied by the principal manufacturer under job work challan issued under Rule 4(5)(a) of CENVAT Credit Rules, 2004, during the period 2003-04 to 2006-07 for manufacturing Fermenters/Columns on job work basis. The Appellants paid the duty on the clearance of the said goods to the principal. They filed refund claim of Rs.39,30,563.00 on the ground that they are job worker and erroneously paid duty on clearance of job work material. The Adjudicating authority rejected the refund claim, which was upheld by the Commissioner (Appeals).
2. The learned Advocate on behalf of the Appellant submits that the Appellants received the material under the challan issued under Rule 4(5)(a) of the CENVAT Credit Rules, 2004 and after due process returned the goods to the principal for use as capital goods within their factory. So, no duty is payable on the job work material cleared to the principal under challan issued under Rule 4(5)(a) of CENVAT Credit Rules, 2004. He submits that both the authorities below denied the refund claim on the ground that these goods were not used in manufacture of Pharmaceuticals or Chemicals, by the Principal and therefore, it is not covered under Rule 4(5)(a) of CENVAT Credit Rules, 2004. He submits that this issue is settled by the Tribunal in various decisions as under:-
i) Vandana Dyeing Pvt. Ltd Vs CCE Mumbai-II 2014 (307) ELT 528 (Tri-Mum.)
ii) Mukesh Industries Ltd Vs CCE Ahmedabad 2009 (238) ELT 203 (Tri-Ahmd)
ii) M.Tex & D.K. Processors (P) Ltd Vs CCE Jaipur 2001 (136) ELT 73 (Tri-Del), upheld by HSC as reported in 2002 (146) ELT A 309.
3. The learned Authorised Representative for the Revenue reiterates the findings of the Commissioner (Appeals). He submits that the Rule 4(5)(a) particularly provides that the goods will be used in the manufacture of final product. In the present case, the goods were not used in the manufacture of final product by the principal. Hence, they are not eligible for the refund.
4. After hearing both the sides and on perusal of the records, I find that the main issue is that the Appellants received the material Iron and Steel articles from the manufacturer under job work challan and manufactured Fermenters/Columns, which was returned to the Principal on payment of duty. According to the Appellant, they are not entitled to pay the duty on the job work material as it was received under Rule 4(5)(a) of CENVAT Credit Rules, 2004. The relevant portion of the said Rule 4(5)(a) is reproduced below:-
(5)(a) The CENVAT credit shall be allowed even if any inputs or capital goods as such or after being partially processed are sent to a job worker for further processing, testing, repair, re-conditioning (or for the manufacture of intermediate goods necessary for the manufacture of final products) or any other purpose, and it is established from the records, challans or memos or any other document produced by the manufacturer or provider of output service taking the CENVAT credit that the goods are received back in the factory within one hundred and eighty days of their being sent to a job worker and if the inputs or the capital goods are not received back within one hundred eighty days, the manufacturer or provider of output service shall pay an amount equivalent to the CENVAT credit attributable to the inputs or capital goods by debiting the CENVAT credit or otherwise, but the manufacturer or provider of output service can take the CENVAT credit again when the inputs or capital goods are received back in his factory or in the premises of the provider of output service.
5. On a plain reading of Rule 4(5)(a) of the said Rules, it is clear that the CENVAT Credit shall be allowed even if inputs or capital goods sent to job worker for further processing, testing, repair etc. for the manufacture of intermediate goods necessary for the manufacture of final product, and it is established from the records that the goods are received back in the factory within the stipulated period. So, Rule 4(5)(a) of the Rules permitted the manufacturer to send the inputs or capital goods to the job workers without reversal of CENVAT Credit.
6. The main contention of the learned Advocate is that the principal sent capital goods under Rule 4(5)(a) challan for processing and returned back to the them and no duty is liabile to be paid. According to the Revenue, the job work material was not used for the manufacture of final product by the principal, as it is engaged in the manufacture of Pharmaceuticals or Chemicals. The Appellant received the Iron and Steel articles and manufactured fermenters/columns on job work basis which were not used in the manufacture of pharmaceuticals or chemicals. Apparently, it is evident from the records that the job work material were not used in the manufacture of final product of the principal and therefore, it is not covered under Rule 4(5)(a) of the said Rules.
7. The learned Advocate contended that the jurisdictional Central Excise officer of the job worker has no authority to question of the use of the material of the Principal. In support of his contention, he relied upon the various decisions. In the case of Vandana Dyeing Pvt. Ltd (supra), the Appellant received the fabrics under Rule 4(5)(a) of the Rules and used in the process of washing and stentering, and thereafter the goods were returned to the supplier of the fabrics. They did not discharge any excise duty on the goods processed. The department was of the view that, since the process of stentering amounts to manufacture, the appellant as a job worker should have discharged excise duty liability on the processed material. In this context, the Tribunal observed that the duty liability has been discharged by the supplier of the raw material and not by the job worker or processor of the goods and the demand on job worker is unsustainable. The other case laws as cited by the learned Advocate are similar in nature. In my view, in these cases, the Assessee received the MMF for processing and after processing sent to the Principal, which is used in the manufacture of final product. In the present case, the fermenters/columns supplied by the Appellant were admittedly not used in the manufacture of final product viz. pharmaceuticals or chemicals. So, none of the case laws would be applicable in the present case.
8. In view of the above discussion, I do not find any merits in the appeal filed by the Appellant. Accordingly, the appeal filed by the Appellant is rejected.
(Dictated & Pronounced in Court) (P.K. Das) Member (Judicial) cbb 2