Custom, Excise & Service Tax Tribunal
Laurel Wires Ltd vs Cce Nashik on 29 November, 2017
IN THE CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
Appeal No.
E/89771/14
(Arising out Order-in- Appeal No. NSK-EXCUS-000-APP-29-14-15 dated 16.07.2014 passed by the Commissioner of Central Excise(A), Nashik)
For approval and signature:
Honble Shri Raju, Member (Technical)
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 No CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy Seen
of the Order?
4. Whether Order is to be circulated to the Departmental Yes
authorities?
Laurel Wires Ltd.
Appellant
Vs.
CCE Nashik
Respondent
Appearance:
Shri Prashant Patankar, Advocate for the appellant Shri Sanjay Hasija, Supdt. (AR) for the respondent CORAM:
Honble Shri Raju, Member (Technical) Date of hearing : 27.10.2017 Date of decision : 29.11.2017 O R D E R No: ..
Per: Raju This appeal has been filed by Laurel Wires Ltd. against demand of cenvat credit.
2. Ld. Counsel for the appellants pointed out that they have two units located at different places. They had availed 50% cenvat credit on certain goods in Unit-I. However, the said capital goods were transferred to Unit-2. At the time of transfer the appellants availed balance 50% in terms of 4(2)(a) of the Cenvat Credit Rules and reversed the entire credit while transferring the same. This transaction happened in 2009. The goods were not installed in unit -2 so the appellants had not taken cenvat credit in unit-2. With effect from 17.03.2012 Rule 10A of the Cenvat Credit Rules was introduced which permitted transfer of SAD credit from one unit to another under certain circumstances. Sub-rule (2) of Rule 10A prescribes that while transferring the said credit the manufacturer or producer shall submit the monthly return, as specified under these rules separately in respect of transferring and recipient registered premises. He pointed that while these transfer of credit took place in June 2012 they could not file the said return in January 2013 due to various hurdles in ACES in the revenue computers system. He argued that this is only a procedural requirement which should not come in the way of transfer of credit which is a substantial right.
3. He argued that revenue has invoked Rule 3(5B) to deny the cenvat credit. He pointed that Rule 3(5B) can only be invoked if the inputs or capital goods are written off fully or partially. In the instant case, the said goods have not been written off fully or partially, therefore invocation of Rule 3(5B) is without any basis. He pointed that another reason for refusal for cenvat credit is that the appellants have failed to produce the evidence of not claiming depreciation. He pointed that they had clearly stated in the reply to the Commissioner (Appeals) that since unit -2 had not started commercial production, no depreciation whatsoever in any asset was claimed. He pointed that since no depreciation whatsoever was claimed no other evidence was needed.
4. Ld. AR reiterates the impugned order. He argued that the Commissioner (Appeals) has not passed order on these issues specifically as the appellants had not challenged the contravention of Rule 3(5B), Rule 4(4) and Rule 9 and 10A of Cenvat Credit Rules 2004. He pointed that the grounds of appeal filed by the appellants before the Commissioner (Appeals) failed to challenge the Order-in-Original on this grounds. He pointed that vide 09.07.2014 the appellants had raised these issues before the Commissioner (Appeals) but in the absence of any grounds of appeal in the appeal filed by the appellants the same were not entertained by the Commissioner (Appeals) but in the absence of any grounds of appeal in appeal filed by the appellants the same were not entertained by the Commissioner (Appeals). He argued that these grounds cannot be raised before the Tribunal.
5. It is seen that the Commissioner (Appeals) has given findings solely on the issue of penalty and not given any finding on the other issues raised by the appellants before the Tribunal. The reason for doing so is that the appellants have challenged only penalty before the Commissioner (Appeals). The impugned order holds that the appellants have not challenged the demand on merit. In the grounds of appeal before the Tribunal it is seen that while all grounds pertaining to Rule 4(4), Rule 3(5B) etc. have been raised, there is no assertion about the finding of Commissioner (Appeals) that the demand was not challenged before the Commissioner (Appeals).
6. I find that before the Commissioner (Appeals) the appellants had challenged the demand on the ground that the cenvat credit cannot be denied even if part of the duty was paid by using DEPB. They have also challenged the confirmation of demand on the grounds that return was filed late. It is seen that the applicability of Rule 3(5B), 4(4) and 4(2)(a) of the Cenvat Credit Rules is a pure question of law and open to the appellants to raise it before the Tribunal even if it is not raised before the lower authorities, so long as the demand was challenged.
7. I find that Rule 3(5B) applies only to input/ capital goods which are either written off fully or partially or where this provision for writing off is made. In absence of any assertion by the revenue, the said rule cannot be invoked to deny cenvat credit to the appellants.
8. The first proviso to Rule 4(2)(a) prescribes that appellants can avail credit of entire central excise duty on capital goods if the same are cleared in the same financial year. In the instant case, the capital goods were cleared from the factory in the same financial year therefore the appellants could have availed the entire credit on the capital goods. Revenue cannot prevent the appellants their availing the entire credit in view of proviso to Rule 4(2)(a). The appellants have, in their letter dated 09.07.2014 addressed to the Commissioner, has clearly stated that they have not availed depreciation of any asset as they have not started commercial production. The Commissioner (Appeals) has not considered the above assertion made by the appellant. In these circumstances, invocation of Rule 4(2)(a) of Cenvat Credit Rules has no basis.
9. In view of above, the impugned order cannot be sustained. The appeal is consequently allowed.
(Pronounced in Court on ..............................) (Raju) Member (Technical) //SR
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