Custom, Excise & Service Tax Tribunal
C.C.E. Ludhiana vs M/S Millenium Wires (P) Ltd on 3 June, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
PRINCIPAL BENCH, COURT NO. III
Excise Appeal No. E/2947/2009 -Ex[SM]
[Arising out of Order-In-Appeal No. 145/CE/Ldh/2009 dated: 4.8.09 passed by Commissioner (Appeals) Chandigarh]
For approval and signature:
Hon'ble Mr. S.K. Mohanty, Member (Judicial)
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 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?
4
Whether Order is to be circulated to the Departmental authorities?
C.C.E. Ludhiana ...Appellant
Vs.
M/s Millenium Wires (P) Ltd. Respondent
Appearance:
Mr. G R Singh, DR for the Appellant Mr. Sudhir Malhotra, Advocate for the Respondent CORAM:
Hon'ble Mr. S.K. Mohanty, Member (Judicial) Date of Hearing. 03.06.2015 FINAL ORDER NO. 53119 /2015 Per S. K. Mohanty:
The Revenue is in appeal against the impugned order dated 4.8.2009 passed by the Commissioner (Appeals) Customs & Central Excise, Chandigarh, wherein cenvat demand alongwith interest and equal amount of penalty confirmed in the Adjudication Order were set aside. The reason assigned in the impugned order for allowing the appeal in favour of the respondent are that even if the process undertaken for converting the input i.e. SE Copper Wire into small spools does not amount to manufacture, but since the duty has been paid on the final product, such payment should be treated as reversal of ineligible credit taken on the inputs and the assessee cannot be called upon to pay the credit once again.
2. The Revenue has challenged the impugned order on the ground that the input on which cenvat credit has been taken by the Respondent and the final product manufactured in the factory are the same and not distinct and identifiable commodity. According to the Revenue, since no manufacturing activity have been carried out in the factory of the Respondent, taking of cenvat credit on the disputed goods is not in conformity with the Cenvat Credit Rules and accordingly the credit taken on the said input is required to be reversed.
3. The Ld. DR Sh. G R Singh appearing for the Revenue relies on the decision of this Tribunal in the case of PSL Ltd. vs Commissioner of C. Ex, Rajkot reported in 2008 (224) ELT-66 (Tri. Ahmd), B.R. Knit Fab vs Commissioner of C. Ex reported in 2007 (215) ELT 444 (Tri. Del), PV Sanghvi vs Commissioner of Central Excise, Mumbai-II reported in 2004 (171) ELT 24 (Tri. Mum) to justify his stand that in absence of any manufacturing activity, the credit taken on the inputs are not permissible and as such the same is required to be reversed.
4. Sh. Sudhir Malhotra, the Ld. Advocate appearing for the Respondent submits that the credit taken on the disputed goods have been utilized for clearance of the finished products from the factory and such utilization of credit is in conformity with Rule 3(5) of the Cenvat Credit Rules, and as such, no further credit is required to be reversed with regard to the input received in the factory as the same would amount to double payment of duty for which no provisions exist in the statute for collection of such amount. To support his above stand, the Ld. Advocate for the Respondent relies on the decision of this Tribunal in the case of Crompton Greaves Ltd. vs Commr. of C. Ex, Mum-II reported in 2008 (230) ELT 488 (Tri. Mum) & Stump Scheule & Somappa Ltd. vs Commr. of C. Ex. Bangalore reported in 2005 (191) ELT 1085 (Tri. Bang.).
5. I have heard the Ld. Counsel for both the sides and perused the records.
6. In the impugned order, the Ld. Commissioner (Appeals) has allowed the benefit to the respondent on the ground that once the duty has been paid on the final product, the same should be treated as reversal of the ineligible credit taken on the inputs and there is no requirement for insisting the assessee again to pay/ reverse the cenvat credit. I find that the observations of the Ld. Commissioner (Appeals) are in conformity with Rule 3(5) of the Cenvat Credit Rules, 2004, which provides that in case of removal of inputs as such from the factory, the manufacturer of final products shall pay an amount equal to the credit taken in respect of the inputs. Further, I find that the dispute in the present case has arisen because of the fact of taking cenvat credit on the disputed inputs used for conversion of the final product. Assuming that no credit has been taken for the activities not amounting to manufacture then there was no scope for payment of any Central Excise Duty on removal of final product. However, since the final product has suffered duty, reversal of credit taken by the Respondent on the inputs will not result in any loss of Revenue to the Government exchequer. In this context, I find support from the decisions relied on by the Respondent. The issue decided in the said cases are that the cenvat credit can be taken on the inputs notwithstanding the fact that no final product emerges as a result of manufacturing activity by utilizing the inputs. The decisions cited by the Ld. DR for Revenue are not applicable to the facts of the present case, because the issue in hand has been specifically dealt with by the Commissioner (Appeals) in the line with the decisions of Tribunal cited by the Respondent..
7. In view of the above, I am of the opinion that there is no infirmity in the impugned order, and thus, the appeal filed by the Revenue is dismissed.
(Dictated and pronounced in open court) (S.K. Mohanty) Member(Judicial) Neha Page | 1