Custom, Excise & Service Tax Tribunal
M/S. Ercon Composites vs C.C.E. Jaipur on 28 July, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
PRINCIPAL BENCH, COURT NO. IV
Appeal No. E/2897/2006-EX(DB)
Arising out of Order-in-Appeal No. 195/HKS/CE/JPR-II/06 dated 28.03.2006 by the Commissioner of Customs, Central Excise & Service Tax (Appeals), Jaipur].
For approval and signature:
Honble Ms. Archana Wadhwa, Member (Judicial)
Hon'ble Shri V.Padmanabhan, Member (Technical)
1
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
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 of the Order?
Seen
4
Whether Order is to be circulated to the Departmental authorities?
Yes
M/s. Ercon Composites .Applicants
Vs.
C.C.E. Jaipur .Respondent
Appearance:
Shri O.P. Aggarwal, Advocate for the Applicants Shri R.K. Mishra, DR for the Respondent CORAM:
Hon'ble Ms. Archana Wadhwa, Member (Judicial) Hon'ble Shri V.Padmanabhan, Member (Technical) Date of Hearing: 28.06.2016 Date of Pronouncement: 28.07.2016 FINAL ORDER NO. 52684/2016-EX(DB) Per Archana Wadhwa:
The appellants are engaged in the manufacture of fiber reinforced products and were claiming the benefit of Cenvat Credit on duty paid on the inputs. After availing the Credit in respect of unsaturated polyester raisin and S.K.Jain Hardware, they cleared the said inputs against CT-3 certificate issued to one M/s. Ercon Composites, a 100% EOU.
2. The dispute in the present appeal relates to as to whether while clearing the said inputs against CT-3 certificates the appellant is liable to reverse the cenvat credit availed on the same. The lower authorities, by resorting to the provisions of Rule 3(4) of the erstwhile Cenvat Credit Rules, 2002, which require an assessee to pay an amount equal to the credit availed in respect of inputs which are removed from the factory as such, confirmed the demand of Rs.15,440/-.
3. Hence the present appeal.
4. The appellants have pleaded categorically that at the time of clearance of the said inputs from their factory against CT-3 certificate the duty stands debited by them in bond equal to the duty amount. They have further contended that such clearances have to be treated as export of goods, in which case they would be entitled to the Cenvat Credit. They referred to the various decisions of the Tribunal laying down that clearances to 100% EOU are to be treated as export clearances, in view of the law laid down by the Larger Bench of the of the Tribunal in the case of Amitex Silk Mills (P) Ltd. Vs. CCE reported at 2006 (72) RLT 11 (CESTAT-LB). If such clearance is to be treated as export clearances the assessee would be entitled to the Cenvat Credit in terms of the Boards Circular No. 283/117/96-CX dated 31.12.1996. They also relied upon the various decisions of the Tribunal.
5. After hearing the Ld. DR for the Revenue and after going through the impugned orders, we find that CT-3 certificates were issued by the Department to the 100% EOU, in terms of the notification no. 22/2003-CE dated 31.03.2003, which allowed the 100% EOU to obtain final products from the other manufacturers free of duty on the basis of CT-3 certificates. Revenues contention is that the goods do not stand procured directly from the input manufacturer and as such benefit of notification was not available to 100% EOU. However, we find that the said dispute has been the subject matter of the various decisions. The Honble High court of Karnataka in the case of CCE Bangalore Vs. Solectron Centum Electronics Ltd. 2014 (309) ELT 479 (Kar.) has observed as under:
In so far as the inputs are concerned, it is not in dispute that the assessee while purchasing the said goods for its DTA nit has paid duty. It is only when those inputs as such were removed to the EHTP unit, the Cenvat Credit availed was reversed. It is because, if the assessee had purchased those inputs for its EHTP unit by virture of aforesaid Notification, there was no duty payable, as the said inputs were removed with the previous permission of the department as reflected in CT-3. There was no liability to pay the duty and already Cenvat Credit has been taken, it was reversed under protest and therefore, they were entitled to the refund of the said amount. That question is also answered in favour of the assessee and against the Revenue.
6. The said decision of the Honble High Court of Karnataka stands followed by the Tribunal in the case of CCE Hyderabad Vs. Matrix Laboratories Ltd. 2015 (330) ELT 523 (Tri-Bang). While dealing with the identical situation, the Tribunal examined the dispute from various angles and observed as under:
The above discussion would show that on merits appellants have made out a case and therefore the appeal has to be allowed on this basis itself. Further, I also find that the Commissioner (Appeals) has rightly relied upon the circular issued by the Board wherein it has been clarified that inputs can be considered as excisable goods and clearance of the same can be placed on par with clearance of excisable goods. Even though Rule 19(2) of Central Excise Rules was not cited nor discussed by any of the lower authorities, I still feel that also will be relevant. According to Rule 19(2) of Central Excise Rules, any materials can be cleared without payment of duty by a manufacturer for export. Provisions of Rule 19(2) which provide for clearance of goods without payment of duty irrespective of the fact that they were manufactured by the assessee or otherwise in my opinion would cover the issue in favour of the appellant. Further another point which was submitted by the learned counsel for the respondent that would be relevant is that after 2004, 100% EOU was eligible for the Cenvat credit. Therefore even if the assessee were to reverse the Cenvat credit the receiving unit would have taken the credit and if they could not utilize the same for payment of duty they could have claimed refund. Therefore the situation was totally revenue neutral and assessee by resorting to the procedure of issue of CT-3 certificate and obtaining the inputs without paying duty did not get any undue benefit at the cost of the Revenue, when the situation is totally revenue neutral, and in the circumstances discussed above, extended period could not have been invoked at all. Therefore on the ground of limitation also, the appellant has a strong case and the whole demand is not sustainable. I find that the Commissioner (Appeals) has not at all discussed the issue of limitation, since he allowed the appeal filed by the respondent on merits he considered that, that would be sufficient. The discussion above would show that appeal filed by the Revenue is devoid of merits and deserves to be rejected. I do so.
7. In as much as the dispute stands resorted by the above decision we find no reason to uphold the impugned order. Accordingly, same are set aside and appeal is allowed with consequential relief to the appellant.
[Pronounced in the open Court on _____________]
(V.Padmanabhan) (Archana Wadhwa) Member (Technical) Member (Judicial)
Bhanu
2
E/2897/2006-EX(DB)