Custom, Excise & Service Tax Tribunal
M/S Jnm Fibres Pvt Ltd vs Cce, Jaipur-Ii on 9 November, 2011
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
PRINCIPAL BENCH, NEW DELHI
Court No.IV
E/Appeal No.2051/2009-SM
(Arising out of order in appeal No. 302/DK/CE/JPR.II/09 dated 20.4.09 passed by the Commissioner of Customs & Central Excise, (Appeals), Jaipur)
Date of Hearing: 9.11.2011
For Approval and signature:
Honble Mr.Mathew John, Technical Member
_________________________________________________
1. Whether Press Reporters may be allowed to see
The order for publication as per Rule 27 of the
CESTAT(Procedure) Rules, 1982?
2. Whether it would 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?
4. Whether order is to be circulated to the
Department Authorities?
M/s JNM Fibres Pvt Ltd Appellants
Vs
CCE, Jaipur-II Respondent
Appeared for the Appellant: Shri O.P. Agarwal, C.A
Appeared for the Respondent: Smt. R. Jagdev, SDR
Coram: Honble Shri Mathew John, Member (Technical)
ORDER
Per Mathew John:
The appellants are manufacturers of excisable goods who have been availing credit on excise duty paid on inputs and captial goods used in the manufacture of excisable goods. During November, 2006, they cleared certain capital goods on which Cenvat credit was taken when the capital goods were received in the factory and were used for period ranging from two and a half years to seven years. At the time of clearance of the capital goods, they paid excise duty based on the transaction value at which the capital goods were sold.
2. Revenue was of the view that they should have reversed Cenvat credit equal to the amount which they had taken at the time when the goods were received in the factory. In support of this argument, they rely on the decision of the tribunal in the case of Modernova Plastyles Pvt Ltd Vs Commissioner reported in 2008 (232) ELT 29 (Trib.LB). A demand for excise duty based on such argument was issued to the appellants which was confirmed by the adjudicating authority who also imposed a penalty of Rs. 10,000/- upon the appellants under Rule 25 of the Cenvat Credit Rules, 2004. Aggrieved by the order, the appellants filed appeal with the Commissioner (Appeals). The Commissioner (Appeals) confirmed the duty demand, however, he set aside the penalty of Rs.10,000/-. Aggrieved by the order of the Commissioner (Appeals), the appellants have filed appeal before the Tribunal.
3. The Counsel for the appellants submits that when capital goods are removed after being put to use, it cannot be considered that the goods are removed as such and therefore, the provisions of Rule 3(5) of Cenvat Credit Rules, 2004 would not apply to such clearance and there is no need for reversing any cenvat credit because they had actually used the capital goods in the manufacture of excisable goods. The contention is that during the material time, there was no provision under the Cenvat Credit Rules, 2004 to demand any duty on account of removal of such used capital goods. Nevertheless, the appellants have paid duty based on transaction value. Further, he argues that this issue has been considered by the Tribunal and different High Courts holding that Rule 3(5) of Cenvat Credit Rules, 2004 is not applicable to the situation. He relies on the following decisions:-
1. M/s RPG Cables Ltd Vs CCE Mysore 2011-TOIL-1277-CESTAT-BANG
2. CCE Ludhiana Vs Khalsa Cotspin (P) Ltd 2011 (270) ELT 349 (P&H)
3. CCE Chandigarh Vs. Raghav Alloys Ltd 2011 (264) ELT 367 (Madras)
4. Cummins India Ltd Vs CCE Pune-III 2007 (219) ELT 911 (Tri Mum)
5. Panyam Cement & Mineral Industries Vs CCE Tirupathi 2008 (86) RLT 682 (CESTAT-Ban)
4. The learned DR on other hand, cites the following decisions of the Tribunal to support that the entire credit taken should be reversed:
1. Greenply Industries Ltd Vs CCE Jaipur 2010 (259) ELT 103 (Tri. Del)
2. CCE Hyderabad Vs. Navodhaya Plastic Industries 2010 (259) ELT 68 (Tri Bang)
3. CCE Goa Vs. Betts India Pvt Ltd 2009 0)ELT 119 (Tri. Mum) This is an issue on which legal position changed a few times. The interpretation of the legal position by Judicial forums are also contradictory. I note that two different High Courts have held that provision of Rule 3(5) of Cenvat Credit Rules, 2004 which is the provision relied upon by Revenue will not be applicable to the situation at hand. Further I note that the appellant did in fact reverse credit based on transaction value. Therefore, I do not find any merit in the arguments of Revenue. The appeal is allowed with consequential relief to the appellants.
(Order dictated and pronounced in the open Court.) (MATHEW JOHN) Member (Technical) MPS* 4