Custom, Excise & Service Tax Tribunal
M/S. Techno Economic Services Pvt. Ltd vs Commissioner Of Central Excise ... on 1 October, 2009
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI APPEAL NO. E/639/08 (Arising out of Order-in-Appeal No.SRK/186/M-III/2008 dated 4.4.2008 passed by the Commissioner of Central Excise (Appeals), Mumbai-II For approval and signature: Honble Shri Ashok Jindal, 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 : Yes
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
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M/s. Techno Economic Services Pvt. Ltd.
:
Appellants
VS
Commissioner of Central Excise Mumbai-III
Respondents
Appearance
Shri R. Sundaram, Advocate for Appellants
Shri Manish Mohan, SDR Authorized Representative
CORAM:
Shri Ashok Jindal, Member (Judicial)
Date of hearing : 1/10/2009
Date of pronouncement : 29/10/2009
ORDER NO.
Per : Ashok Jindal, Member (Judicial)
This appeal is preferred by the appellant against the order of confirmation of Rs. 1,25,219/- under Rule 57 I of the Central Excise Rules, 1944 and imposition of equivalent amount of penalty along with interest at appropriate rate.
2. The brief facts of the case are that the appellants are manufacturing the dutiable as well as the exempted goods and were availing Modvat Credit on the inputs used in the manufacture of process. It was seen that the appellants have availed Modvat Credit on inputs used in manufacture of aforesaid exempted final products cleared by them for export of without payment of duty which was in contravention of Rule 57C of the Central Excise Rules, 1944. Since the appellant was manufacturing both exempted as well as dutiable products using common inputs, they were required to reverse 8% of the value of the final products under provisions of Rule 57CC of the Central Excise Rules, 1944.On being pointing out, they reverse Rs.1,25,210/-.
3. In the AR4s files with the department, the appellants have mentioned that they have not availed Modvat Credit under Rule 57A of the Central Excise Rules 1944, whereas in the input received by the appellants, they had mentioned that they were availing the Modvat Credit under Rule 57A of Central Excise Rules, 1944.
4. In view of the above facts, it was appeared that the appellant, willfully misdeclared on the export documents that they have not availed Modvat Credit on the exempted goods exported by them with an intent to avail the Modvat Credit of the exempted goods. Accordingly, the duty demand was confirmed along with interest and equivalent amount of penalty, the same was confirmed by the lower appellate authority. Aggrieved from the same, the appellants are before me.
5. The learned Counsel appeared on behalf of the appellants submit that the goods on which the appellants have taken the Modvat Credit on the inputs used in dutiable as well as exempted final products, if exempted products are exported outside India the provisions of Rule 6(6)(v) of the Cenvat Credit Rules, 2004 are applicable on the appellant and the Cenvat is available in respect of the inputs used in the manufacture of final products being exported irrespective of the fact that the final products are otherwise exempt. So he prayed that the duty is not leviable on the appellants and further prayed that when duty is not leviable, the interest and penalty cannot be imposed.
6. To support his contention, he place reliance on Repro India Ltd. Vs. Union of India [2009 (235) E.L.T. 614 (Bom.)] wherein it was held that the inputs used in dutiable as well as exempted final products being exported irrespective of the fact that the final products are otherwise exempt. He further place reliance on Sandoz Pvt. Ltd. Vs. Commissioner of Central Excise, Thane-I [2009 (237) E.L.T. 532 (Tri.-Mumbai)], wherein the stay way granted in the same circumstances. He further place reliance on Jyoti Capsules Vs. Commissioner of Central Excise, Kanpur [2009 (239) E.L.T. 667 (Tri.-Del.)] wherein it was held that inputs, common inputs used in dutiable and exempted products, and the exempted goods have been exported, credit not to be denied. He further place reliance on Commissioner of Central Excise, Cehnnai Vs. Global Pharmatech Pvt. Ltd. [2008 (229) E.L.T. 313 (Tri.-Chennai)] wherein it was held input used in the manufacture of final product which was cleared for export without payment of duty under bond credit not deniable. He further place reliance on Asha Industries Vs. Commissioner of Central Excise, Nagpur [2007 (215) E.L.T. 553 (Tri.-Mumbai)] wherein it was held duty paid was not disputed interest and penalty is not warranted.
7. On the other hand, Shri Manish Mohan learned SDR appearing on behalf of the Revenue submitted that the Tribunal in the case of V.B. Information Systems Vs. Commissioner of C. Ex. Pondicherry [2005 (188) E.L.T.424 (Tri.-Chennai)] has held that inputs used for manufacture of both dutiable as well as exempted final product and appellants contended that in the absence of recovery mechanism in Rule 57CC of erstwhile Central Excise Rules, 1944, demand of the amount @ 8% of the sale price of exempted goods, cannot be enforced having regard to Explanation added to Rule 57CC ibid vide Finance Act, 2005 with retrospective effect covering period in question, providing for recovery of dues under said Rule 57CC, demand enforceable against appellants, penalty also imposable.
8. Heard.
9. On careful examination of the submissions made by both the parties and reliance placed before me.
10. I find that there is force in the contention of the appellants that the ratio of the case of Merit Organics Ltd. is applicable wherein it was held that input used in manufacture of dutiable as well as exempted final goods, cleared during period from August, 1999 to September 2003 Separate inventories not maintained in respect of inputs so consumed Liability to pay 8% value of the exempted goods not disputed, and the amount deposited by the appellants during the relevant period, there was no recovery mechanism under Rule 57CC of erstwhile Central Excise Rules,1944 or Rule 6 of Cenvat Credit Rules,2002, which was in subsequently by retrospective amendment vide Sections 82 and 83 of Finance Act, 2005, penalty imposed upon appellants not sustainable and the interest is not imposable. The case law cited by the Ld. SDR in the case of V.B. Information Systems is not applicable in this case as the facts are different in that case the exempted final goods were not exported. Further, I find that the ratio of the case of Repro India Ltd. (supra) is squarely applicable in the facts and circumstances of this case, wherein it was held that Cenvat Credit available in respect of inputs used in manufacture of final products being exported irrespective of the fact that the final products are otherwise exempt.
11. With these findings, I hold that the appellant is entitled for Modvat credit on the inputs in question as the exempted final product were exported. Accordingly, the appeal is allowed with consequential relief.
(Pronounced in court on 29/10/2009) (Ashok Jindal) `Member (Judicial) Sm 5