Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, ... vs M/S Mega Rubber Technologies Pvt. Ltd on 30 December, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. I Appeal No. E/1338/05 (Arising out of Order-in-Appeal No. BR/19/TH-II/2005 dated 19.1.2005 passed by the Commissioner of Central Excise (Appeals), Mumbai-I). For approval and signature: Honble Shri M.V. Ravindran, Member (Judicial) Honble Shri C.J. Mathew, 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 : Yes 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? ====================================================== Commissioner of Central Excise, Mumbai-I Appellant Vs. M/s Mega Rubber Technologies Pvt. Ltd. Respondent Appearance: Shri Ajay Kumar, Jt. CDR for Appellant None for Respondent CORAM: SHRI M.V. RAVINDRAN, MEMBER (JUDICIAL) SHRI C.J. MATHEW, MEMBER (TECHNICAL) Date of Hearing: 10.11.2015 Date of Decision: 2015 ORDER NO. Per: M.V. Ravindran
Revenue is in appeal against Order-in-Appeal No. BR/19/TH-II/2005 dated 19.1.2005 passed by the Commissioner of Central Excise (Appeals), Mumbai-I.
2. Respondent is absent despite notice. Respondent has sent a written submission on 22.7.2015 requesting to consider the same while deciding the appeal.
3. We have taken on records the said written submissions and considered the same.
4. Learned AR submits that the issues involved in this case are: -
(i) The respondents were receiving rejected articles of rubber back from their customer and availing CENVAT Credit on the same in terms of provisions of Rules, 2001, more specifically rule 16 and where the processing could not be done on the finished goods, they scraped the articles by cutting them into two pieces and cleared such pieces as scrap on payment of Central Excise duty on the scrap value but are not reversing the amount of CENVAT Credit taken on the goods returned back.
(ii) The respondent were clearing articles of rubber manufactured by them with the help of dies/mould on payment of duty but were not considering the value of such moulds and amortising the same for discharging of excise duty on the goods manufactured out such mould.
4.1 It is his submission that the Commissioner (Appeals) has mis-read the provisions of Rule 16 in respect of finished goods which were received back and could not be processed. It is his submission that the provisions of Rule 16(2) are very clear inasmuch as if there is no manufacturing activity undertaken on the returned goods, CENVAT Credit availed on such goods needs to be reversed while in the case in hand, the respondent has only paid the duty on the scrap which is less than the amount of CENVAT Credit availed. It is his further submission that the provision of Rule 16(2) needs to be applied in its entirety.
4.2 As regards the non-inclusion of value of the dies and moulds of the finished goods cleared which were manufactured by such dies and moulds, it is the submissions that the judgment of the Larger Bench in the case of Mutual Industries Ltd. Vs. Commissioner of Central Excise, Mumbai 2000 (117) ELT 578 (Tri-Mum) is directly applicable in the case in hand. He submits that this view has been followed by various other judgment like South East Electronics Components Pvt. Ltd. Vs. Commissioner of Central Excise, Meerut 2003 (160) ELT 389 (Tri-Del).
4.3 It is his further submission that amount of duty liability on non-inclusion of amortization cost is to be confirmed with interest and penalty is to be imposed and the goods manufactured out of such mould needs to be confiscated.
5. The written submissions filed by the respondent indicate that when they received the goods returned by the purchaser, they tried to process the same and sent it back. During the process, some of the finished goods are self destroyed which are cleared as scrap and such scrap arose during the course of manufacture. It is submission that 99% of time the finished goods are reprocessed and 1% of the time, the process undertaken resulted in scrap. He would submit that the judgment of the Tribunal in the case of Sundaram Inds. Ltd. Vs. Commissioner of Central Excise, Madurai 2006 (202) ELT 538 (Tri-Chennai) will be applicable as also Commissioner of Central Excise, Chennai Vs. Kyungshin Ind. Motherson Ltd. 2009 (239) ELT 121 (Tri-Chen) also will be applicable as the scrap which is cleared by the appellant is line rejection.
5.1 In respect of apportioning the value of dies/moulds to the cost of final product, it is his submission that instead of amortization cost, they have paid the excess duty and one time basis on additional consideration of Rs.33,82,762/- received from buyers towards the cost of moulds which were manufactured by use or got manufactured from other manufacturers.
6. We have considered the submissions made at length by both sides and perused the records.
6.1 We find that the first appellate authority has upheld the contentions of the assessee on the provisions of applicability of Rule 16 of Central Excise Rules. The said rules empower the assessee to receive back the finished goods and take CENVAT Credit of the duty paid on such goods and reprocess/manufacture them and clear the goods on payment of duty. At given point of time the process undertaken by the assessee-respondent does not amount to manufacture, the assessee is required to reverse the amount of CENVAT Credit availed on such goods. In the case in hand as seen from the records, it is very clear that the assessee had tried to reprocess the finished goods received and in few cases no duty was paid. The finished goods received back resulted in scrap. The assessee has discharged the duty liability on scrap on the value of the invoices raised by them. In our considered view, this is a correct position of the law and if any inputs are issued to the job-worker for manufacturing and manufacturing activity undertaken on such inputs, the resultant product cleared as scrap and no input as such. Applying the same analogy, we hold that the first appellate authority was correct in setting aside the order of the adjudicating authority, which confirmed the demands raised on this count.
6.2 As regards the demand of duty on the value of moulds used by the respondent in manufacturing the final products to their customers, it is emphasized that they have discharged the Central Excise duty on the cost of the moulds recovered from the customers. This factual aspect is not disputed. If it is a case that the amortization of the cost of moulds is nothing but to collect the Central Excise duty on value of such moulds, then it has already been done so by the assessee in the case in hand. There is no rebuttal in the grounds of appeal that the assessee has not discharged the Central Excise duty on such moulds received by them from their customers on which duty liability has been confirmed. In our view, when the Central Excise duty is paid on moulds at one time or recovered by amortising the cost of goods produces, it is the same i.e. duty on value of mould is to be recovered, which in this case has already discharged by the assessee.
7. In view of the foregoing, in the peculiar facts of this case, we find that the impugned order is correct and legal and does not suffer from any infirmity. The impugned order is upheld and the appeal is rejected.
(Pronounced in Court on ..)
(C.J. Mathew) (M.V. Ravindran)
Member (Technical) Member (Judicial)
Sinha
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Appeal No. E/1338/05