Custom, Excise & Service Tax Tribunal
Mecgale Pneumatics Pvt. Ltd. vs Commissioner Central Goods And Service ... on 17 August, 2022
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
MUMBAI
WEST ZONAL BENCH
EXCISE APPEAL NO: 1297 OF 2012
[Arising out of Order-in-Original No: 39/2012/C dated 28th May 2012 passed by
the Commissioner of Central Excise & Customs, Nagpur.]
Meegale Pneumatics Pvt Ltd
N-65 MIDC, Hingana Industrial Area
Nagpur - 40016 ... Appellant
versus
Commissioner of Central Excise
Telenkhadi Road, Civil Lines, Nagpur - 440001 ...Respondent
APPEARANCE:
Shri Bhushan Jain, Chartered Accountant for the appellant Ms Anuradha Parab, Assistant Commissioner (AR) for the respondent CORAM:
HON'BLE MR C J MATHEW, MEMBER (TECHNICAL) HON'BLE MR AJAY SHARMA, MEMBER (JUDICIAL) FINAL ORDER NO: A /85706/2022 DATE OF HEARING: 17/08/2022 DATE OF DECISION: 17/08/2022 PER: C J MATHEW In this appeal, M/s Meegale Pneumatics Pvt Ltd disputes the recovery of ₹ 1,04,92,036 ordered under rule 14 of CENVAT Credit E/1297/2012 2 Rules, 2004, along with appropriate interest, and penalties of ₹ 10,00,000 and ₹ 1,00,000 imposed under rule 15 of CENVAT Credit Rules, 2004 and rule 25 of Central Excise Rules, 2002 by order-in- original no.39/2012/C dated 28th May 2012 of Commissioner of Central Excise & Customs, Nagpur. Allegedly, the appellant, a manufacturer of parts for 'material handling systems', had, in contravention of rule 4(1) of CENVAT Credit Rules, 2004 by storing otherwise eligible 'inputs' at unregistered premises and without taking statutory permission mandated under rule 8 of CENVAT Credit Rules, 2004 for the period from 1st May 2010 to 31st January 2011, been rendered ineligible for the credit availed.
2. Learned Counsel for appellant drew our attention to letter of the appellant dated 7th May 2010 seeking approval for incorporation of the adjoining plot in their central excise registration after letter dated 16th February 2010 for incorporation of another plot was kept pending by central excise authorities. It was pointed out that the earlier proposal was rejected in letter dated 18th October 2010 even as the other remained undisposed. Learned Counsel informed that the rejected proposal was, upon reconsideration at the instance of the jurisdictional Commissioner of Central Excise, revived and, along with the pending proposal, approved for incorporation in the registration on 6th June 2011.
E/1297/2012 3
3. He submitted that 'EA 2000 Audit' was carried out on 21st February 2011 and, on the objection dated 30th March 2011 culminating in the impugned order, the appellant was directed to reverse the credit availed for the period. He further submits that there is no dispute on the credit having been taken on 'inputs' as well as utilisation for manufacture and clearance of 'output' during the period of dispute. He relied upon the decision of the Tribunal in Mangalam Enterprises v. Commissioner of Central Excise & Customs, Vadodara [2003 (159) ELT 393 (Tri-Mumbai], in Crop Health Products Ltd v. Commissioner of Central Excise, Ghaziabad [2004 (178) ELT 458 (Tri-Del)] and in Nebula Chemicals v. Commissioner of Central Excise, Mumbai-VII [2004 (176) ELT 202 (Tri-Mumbai)].
4. Learned Authorized Representative contends that the impugned order has, on facts, rightly held that such storage was in breach of the rules and, therefore, disentitled the assessee to eligibility for credit during the disputed period.
5. On the admitted facts, it is seen the disputed credit is attributable to 'inputs' stored at premises that, though not included in the registration, was pending for approval of such inclusion. Considering that the approval was granted, and though belatedly, without any objections thereto, it is cause for wonderment that such delay was tolerated by the supervisory authority. It is also no less E/1297/2012 4 surprising that the officials engaged in 'EA 2000 Audit' did not consider it necessary to ascertain the cause of such 'unalloyed' breach of conditions; perhaps the nomenclature, permanently linked to its conception, is responsible for depriving it of the robustness that audit should be imbued with if it is to have continued relevance. The authority concerned would do well to give some thought to this. Most surprising of all is that the adjudicating Commissioner, despite taking note of the facts narrated in response to show cause notice, preferred to gloss over the unexplained delay on the part of his own organization and consequential illegitimizing of the availment credit, has, in what can be charitably described, disposed the adjudicating obligation mechanically. It would also appear that the substantive difference between insistence upon conditions of exemption notification, which the case law relied upon by him pertain to, and scheme of credit has not been appreciated by the adjudicating authority.
6. There is no allegation of mis-utilization of the input goods or that these were used for manufacture of non-entitled output goods. The decision, in re Mangalam Enterprises, holding that '3. It is clear from the records of the case that there is no dispute whatsoever about the receipt of the inputs in the factory and its utilization by the appellant in the manufacture of finished products. Similarly the aforesaid circulars of the Commissioner and Circular No. 206/40/96 CX., dated 1-5-96 issued by the Central Board of Excise and Customs permit E/1297/2012 5 storage of inputs outside the factory premises. The decision of the Tribunal in Thermax case also relates to storage of goods outside the licensed factory premises and the Tribunal held that the credit was permissible. Since both the sides are not disputing the actual receipt of duty paid inputs and their utilization in manufacture of specified final products, we find no justification for denying the credit or imposition of penalty. The deviations from normal practice necessitated by business exigencies are no ground for denial of legally available facility. The storage of inputs outside the factory premises, prior to being brought to the factory, is specifically recognized by the aforesaid Circulars of the Board and the Commissioner.' with appellant herein on better footing by having applied for permission, leads to the conclusion that business exigency cannot be made to wait on bureaucratic inertia. In re Crop Health Products Ltd, it was held that '4. We find that appellant vide Letter dated 17-5-1997 made a request to the Commissioner of Central Excise to grant permission to store the duty paid inputs outside the factory. As per Board's Circular dated 1-5-1996 the Commissioner can grant permission to the manufacturer for storage of modvatable goods outside the factory premises. We find that the appellant was repeatedly writing to the Commissioner for grant of permission. From the record we find from 1997 to 2003 appellant wrote 12 letters and ultimately the permission was granted. The mere inaction on the part of the Revenue authorities on the request made by the assessee cannot be made basis for penalising the manufacturer. In the facts and circumstances of the case as the appellants were rightly E/1297/2012 6 asking for permission which was ultimately granted after six years, the confiscation of the goods and imposition of penalty is not sustainable. Impugned order is set aside and the appeals are allowed.'
7. We, therefore, do not find it appropriate to uphold the impugned order in the light of the factual circumstances in which inputs were stored 'inappropriately' as well as the decisions of the Tribunal supra. Consequently, we set aside the impugned order and allow the appeal.
(Order pronounced in the open court on 17th August 2022) (AJAY SHARMA) (C J MATHEW) Member (Judicial) Member (Technical) */as