Custom, Excise & Service Tax Tribunal
M/S Rswm Ltd vs Cce, Jaipur Ii on 1 November, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Principal Bench, New Delhi COURT NO. IV Excise Appeal No. 2872 of 2010 (SM) [Arising out of the Order-in-Appeal No. 213 (KKG) CE/JPR-II/ 2010 dated 29/03/2010 passed by The Commissioner (Appeals-II), Central Excise, Jaipur.] For Approval and signature : Honble Shri Rakesh Kumar, 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? 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 RSWM Ltd. Appellant Versus CCE, Jaipur II Respondent
Appearance Shri Bipin Garg, Advocate for the appellant.
Shri A.K. Jain, Authorized Representative (Jt. CDR) - for the Respondent.
CORAM : Honble Shri Rakesh Kumar, Member (Technical) DATE OF HEARING : 01/11/2013.
Final Order No. 58245/2013 Dated : 01/11/2013 Per. Rakesh Kumar :-
The appellant are manufacturers of manmade yarn chargeable to Central Excise duty. They have two units located at different locations. The other unit had cleared certain Cenvat credit availed used capital goods to them as scrap during 2006-2007 on payment of duty of Rs. 3,31,362/- in terms of the provisions of Rule 3 (5A) of Cenvat Credit Rules. The appellant unit took Cenvat credit of this duty. The department was of the view that since what the Appellant unit had received was scrap and not capital goods, they are not eligible for this Cenvat credit. On this basis, after issue of show cause notice, the Assistant Commissioner vide order-in-original dated 30/09/08 confirmed the above-mentioned Cenvat credit demand alongwith interest and imposed penalty of equal amount on them under Rule 15 (2) of the Cenvat Credit Rules, 2004 readwith Section 11AC of Central Excise Act and another penalty of Rs. 5,000/- on them under Rule 15 (1) ibid. On appeal being filed to Commissioner (Appeals), the Commissioner (Appeals) vide order-in-appeal dated 29/03/2010 upheld the Cenvat credit demand and also upheld the imposition of penalty under Section 11AC and only set aside the penalty of Rs. 5,000/- on the appellant under Rule 15 (1) of Cenvat Credit Rules. Against this order of the Commissioner (Appeals), this appeal has been filed.
2. Heard both the sides.
3. Shri Bipin Garg, Advocate, the learned Counsel for the appellant, pleaded that the issue involved in this case stands decided in favour of the Appellant by judgment of the Tribunal in the case of Maharshi Alloys (P) Ltd. vs. CCE, Tirupathi reported in 2006 (195) E.L.T. 118 (Tri. Bang.), and that this judgment had been cited before the lower authorities but the same has not been accepted on the ground that the Tribunals judgment in the case of Maharshi Alloys (P) Ltd. vs. CCE, Tirupathi (supra) is in respect of Cenvat Credit Rules, 1944 pertaining to Modvat and, hence, is not applicable, that this view of the Commissioner (Appeals) is incorrect, that the judgment of the Tribunal in the case of Maharshi Alloys (P) Ltd. vs. CCE, Tirupathi (supra) is squarely applicable to the facts of this case and in view of this, judgment of the Tribunal, the impugned order is incorrect.
4. Shri A.K. Jain, the learned Jt. CDR, defended the impugned order by reiterating the findings of the Commissioner (Appeals) and pleaded that the judgment of the Tribunal in the case of Maharshi Alloys (P) Ltd. vs. CCE, Tirupathi (supra) is distinguishable, as in that case, though the used dismantled crane was cleared as scrap, a Chartered Engineer had certified the same as usable, while this is not so in this case and the capital goods after being used for some time had been cleared as scrap. He, therefore, pleaded that there is no infirmity in the impugned order.
5. I have considered the submissions from both the sides and perused the records.
6. The appellant unit had received certain scrap capital goods from their other plant. There is no dispute that the duty on the capital goods received by the appellant unit as scrap had been paid in terms of Rule 3 (5A) of the Central Excise Rules, according to which when the Cenvat credit availed capital goods are cleared as scrap, an amount equal to the duty on the transaction value is required to be paid. The Departments objection is that since what had been received by the appellant unit was scrap and not capital goods, they cannot avail the Cenvat credit even if they may have used the scrap as capital goods. It is also the contention of the department, that scrap can be used only as input and not as capital goods. This view of the department is not correct, as even if the appellant unit had received scrap capital goods, it is not disputed that they had used the same as capital goods. The question as to whether any goods are capital goods or otherwise has to be determined on the basis of how the same are used. Moreover, this issue stands decided in favour of the appellant by this Tribunal in the case of Maharshi Alloys (P) Ltd. vs. CCE, Tirupathi (supra) and just because in this judgment is in respect of the provisions of Central Excise Rules, 1994 pertaining to the Modvat credit, it cannot be said that the ratio of this judgment would not be applicable. In my view, the ratio of the Tribunals judgment in the case of Maharshi Alloys (P) Ltd. vs. CCE, Tirupathi (supra) is squarely applicable to the facts of this case, even if this case, there is no certificate of Chartered Engineer regarding the usability of the goods as capital goods, as the use of the goods received by the Appellant from their other units as capital goods is not disputed. Therefore, the impugned order is not sustainable. The same is set aside. The appeal is allowed.
(Pronounced in the open court.) (Rakesh Kumar) Member (Technical) PK ??
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