Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, ... vs Pearl Insulations Pvt Ltd on 14 December, 2017
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Application(s) Involved: E/CROSS/56/2008 in E/498/2007-DB Appeal(s) Involved: E/498/2007-DB [Arising out of Order-in-Original No. 01/2007 dated 27/02/2007 passed by the Commissioner of Central Excise, Bangalore.] Commissioner of Central Excise, Service Tax And Customs BANGALORE-II PB 5400 CR BUIDING, QUEENS ROAD, BANGALORE, - 560001 Appellant(s) Versus PEARL INSULATIONS PVT LTD NO.505/506 & 507, 4TH PHASE, PEENYA INDUSTRIAL AREA, BANGALORE Respondent(s)
Appearance:
Mr. Parasivamurthy, AR For the Appellant Mr. N. Anand, Advocate For the Respondent Date of Hearing: 14/12/2017 Date of Decision: 14/12/2017 CORAM:
HON'BLE SHRI S.S GARG, JUDICIAL MEMBER HON'BLE SHRI V. PADMANABHAN, TECHNICAL MEMBER Final Order No. 23155 / 2017 Per : V. PADMANABHAN The present appeal has been filed by Revenue against the Order-in-Original No.01/2007 dated 27.2.2007. The respondent has also filed Cross Objection.
2. The assessee is engaged in the manufacture of insulated copper strips (enameled), insulated aluminium strips, bare copper strips, etc., falling under Chapter 85 and Chapter 74 of the Central Excise Tariff Act, 1985. During the course of verification of records of the assessee by the internal audit party, it was noticed that the assessee were manufacturing and supplying pole shoes to M/s. Enercon (I) Ltd. on job work basis. The principal input for manufacture of aforesaid goods was copper which was supplied by M/s. Enercon (I) Ltd. free of cost. The assessee availed CENVAT credit on such cooper supplied free of cost, and manufactured the item pole shoe which was supplied back to M/s. Enercon (I) Ltd. without payment of duty, since the products were exempted vide Notification No.6/2002 dated 1.3.2002 as part of windmill. Since the input copper was received and CENVAT credit was availed on the same and a part of which was used in the manufacture and clearance of exempted products, the assessee reversed an amount at the rate of 10% of the value of exempted products in terms of Rule 6(3)(b) of CENVAT Credit Rules, 2004 but the Department took the view that since the inputs, copper, supplied free of cost, were used exclusively in the manufacture of exempted final product, the assessee was not entitled to avail CENVAT credit on such inputs. Accordingly, show-cause notice was issued for the period October 2005 to December 2005 for demanding the CENVAT credit irregularly availed amounting to Rs.95,01,538/-. After the due process of adjudication, the adjudicating authority passed the impugned order, in which he confirmed the demand of irregularly availed CENVAT credit but the same was ordered to be appropriated out the amount already paid at the rate of 10% of the value of the exempted goods by the assessee in terms of Rule 6(3)(b) of CENVAT Credit Rules, 2004. Aggrieved by the impugned order, Revenue has filed the present appeal contending that the adjudicating authority erred in denying the CENVAT credit of about Rs.95 lakhs but should have approved the reversal of an amount at the rate of 10% made by the assessee in terms of Rule 6(3)(b) of CENVAT Credit Rules, 2004.
3. In the Cross Objection filed by the assessee, they have contended that an amount at the rate of 10% of the value of exempted products cleared, has already been reversed by them. Further, it has been submitted that, in addition, an amount of Rs.4,84,995/- has also been reversed by them during the period of January 2006. It is contended that the adjudicating authority has observed in para 13 of the order that he has declined to impose any penalty under Rule 15(2) read with Section 11AC of the Central Excise Act. Accordingly, they have argued that the Commissioner, in effect, has taken the view that there was no suppression on the part of the assessee and hence, the entire demand is not sustainable and should be set aside.
4. We have heard both sides and considered the appeal records. The dispute has arisen in respect of the work carried out by the assessee for M/s. Enercon (I) Ltd. They have received copper, free of charge, from M/s. Enercon (I) Ltd. and manufactured certain components and cleared the same without payment of excise duty by availing the exemption under Notification No.6/2002 dated 1.3.2002. Since the CENVAT credit has been availed on copper which was used partly for the manufacture of exempted goods, the asseessee on their own have reversed an amount at the rate of 10% the value of exempted goods under Rule 6(3)(b) of CENVAT Credit Rules. The Department, in the proceedings before the lower authority, was of the view that the CENVAT credit of about Rs.95 lakhs availed by them was irregular inasmuch as the copper was meant to be used exclusively in the manufacture of exempted goods. In the impugned order, the adjudicating authority, while confirming the demand of about Rs.95 lakhs, has ordered for appropriation of the same from the total amount already reversed by them. We find no infirmity in the stand taken by the adjudicating authority. In fact, after deducting the irregularly availed CENVAT credit of about Rs.95 lakhs, the assessee will be entitled to the refund/re-credit of the balance amount reversed and it is ordered accordingly.
5. The assessee has argued that there has been no suppression and the entire demand deserves to be set aside. We find that CENVAT credit has been availed on copper which has been received by the assessee and meant exclusively for use in the manufacture of exempted products. Since this fact has not been specifically brought to the notice of the Department, therefore, we find that the demand has been rightly made and this ground in the Cross Objection is rejected.
6. In the result, we find no infirmity in the impugned order passed by the lower authority which is sustained and the appeal filed by the Department is disposed of. The Cross Objection is also disposed of.
(Order dictated in Open Court on 14/12/2017) V. PADMANABHAN TECHNICAL MEMBER S.S GARG JUDICIAL MEMBER rv 2 1