Rajasthan High Court - Jaipur
Commissioner Central Excise Jaipur -I vs Ms Mound Trading Co Pvt Ltd on 16 July, 2019
Author: Chief Justice
Bench: Chief Justice
HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
D.B. Central/excise Appeal No. 41/2018
Commissioner Central Excise Jaipur-I, NCR Building Statue
Circle, C-Scheme Jaipur
----Appellant
Versus
M/s Mound Trading Company Private Limited, Plot No. E-7(a) &
E8, RIICO Industrial Area, Neemrana, District Alwar Rajasthan
----Respondent
For Appellant(s) : Mr. Sandeep Pathak with Ms. Vartika Mehra For Respondent(s) : Mr. Sachin Chitnis HON'BLE THE CHIEF JUSTICE HON'BLE MR. JUSTICE SANJEEV PRAKASH SHARMA Judgment 16/07/2019
1. The only question of law sought to be urged by the Revenue in this appeal under Section 35-G of the Central Excise Act, 1944 is that whether the credit availed of, by the assessee/respondent in the facts of the present case was authorized by law or the rules, especially Rule 2(l) of the Cenvat Credit Rules, 2004.
2. The facts of the present case are that the assessee provided contractual services and job work of manufacturing biscuits and other confectionery items, to M/s Parle Products Ltd. The mode adopted was that products were manufactured by the assessee, but for and on behalf of M/s Parle Products Ltd., which cleared the goods under Central Excise Act. The parties had, by mutual agreement, decided that the assessee would also transport the finished products to the premises of M/s Parle Products Ltd., apart from processing, manufacturing the confectionery and other (Downloaded on 01/09/2019 at 07:35:57 PM) (2 of 4) [EXCIA-41/2018] items, as also packing and other services. The agreement further provided, as follows:-
" Mound Trading Co. Pvt. Ltd would avail Cenvat credit of Central Excise duty paid on the raw and packing materials, capital goods.
Mound Trading Co. Pvt. Ltd. would make Excise Invoice/Stock Transfer Notes (STN's) to Depots/or Wholesalers of Parle Products Pvt Ltd. and would pay Excise duty on assessable value as shown in the Invoice of M/s Parle Products Pvt. Ltd., Mumbai."
3. Alleging unauthorized availment of Cenvat credit, show cause notice was issued to the respondent/assessee contending that it could not claim the credit (which it had done) since it provided input services to M/s Parle Products Ltd. and that the latter entity alone could claim credit. This show cause notice was confirmed by the Order in Original. Upon appeal, the CESTAT by impugned order set aside the Order in Original. The Revenue has preferred this appeal against the order of CESTAT.
4. At the outset, the learned counsel for the appellant submitted that reliance upon previous CESTAT Bench ruling in Lao More Biscuits Pvt. Ltd. vs. CCE Ahmedabad-II, 2017 (47) STR 267, in the impugned order, was not appropriate. It is submitted that the judgment had, inter alia, relied upon a decision of the Gujarat High Court in the case of Commissioner of Central Excise vs. Parth Polywoven Pvt. Ltd. 2012 (25) STR (Guj.) 4.
5. It is argued that, in that case the issue involved was with regard to outward and inward clearances and place of removal and not with respect to credit. It is also argued that the person liable to pay the service tax was M/s. Parle Products Pvt.Ltd and that any clearance made on its behalf, that credit too, ought to issue in favour of Parle; that the assessee cleared and provided services and could not claim the credit, as it did in the present case.
6. Lastly, the learned counsel for the appellant urged that the question of revenue neutrality which weighed with the CESTAT (Downloaded on 01/09/2019 at 07:35:57 PM) (3 of 4) [EXCIA-41/2018] in allowing the assessee's appeal is no longer res integra. Learned counsel relied upon the Larger Bench ruling in Jay Yuhshin Ltd. vs. Commissioner of Central Excise, (2000) 119 ELT 718.
7. In Jay Yuhshin Ltd. (supra), it was held that revenue neutrality is a fact dependent issue and that mere allegations about no tax effect in regard to Modvat scheme or any other credit scheme, should not be sufficient.
8. From the factual narrative and the record, it is apparent that according to the agreement of the parties, the assessee manufactured articles which were ultimately cleared by its principal i.e. M/s. Parle Products Pvt. Ltd. There is no dispute that Central Excise levy was borne by Parle. The assessee was merely authorized to manufacture the goods.
9. So far as provisions of Service tax is concerned, this Court notices that there were two components. One, job work itself i.e. manufacture of confectionery and biscuits, which was the provision of service, i.e. the main service to M/s. Parle Products Pvt. Ltd. and secondly, the transportation services. It is the second component which is in issue in the present case. There is nothing either on record or in the show cause notice or even in the Order in Original which suggests that the agreement, which parties entered into whereby service tax was to be borne by the assessee and input credit was to be claimed by it, was prohibited in law. Furthermore, it is not revenue's case that M/s. Parle Products Pvt. Ltd. availed of, such Cenvat credit as a matter of fact.
10. In these circumstances, the CESTAT, in our opinion correctly held by following its previous ruling in Lao More Biscuits Pvt. Ltd. (supra) that the assessee could not be accused of claiming credit from Cenvat. Similar issues was decided in M.P. Biscuits Pvt. Ltd. vs. Commissioner of C.EX. Allahabad, 2012 (282) E.L.T. 563 and Commissioner of Central Excise, Indore vs. M/s. MB Bakers Pvt. Ltd., 2014 TIOL 2666. In these decisions, consistently, Cenvat credit was permitted to job workers, like the assessee.
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11. For the above reasons, this Court is of the opinion that no question of law arises. The appeal, is therefore, dismissed. All applications too are disposed of.
(SANJEEV PRAKASH SHARMA),J (S. RAVINDRA BHAT),CJ Anil Makwana /34 (Downloaded on 01/09/2019 at 07:35:57 PM) Powered by TCPDF (www.tcpdf.org)