Custom, Excise & Service Tax Tribunal
M/S.Ericsson India Private Limited vs Cce & St, Jaipur-I on 21 August, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066.
BENCH-DB
Excise Appeal No.E/4000/2012 [Ex. DB]
Excise Appeal No.E/55374/2013 [Ex. DB]
[Arising out of Order-in-Original No.53/2012(CE)-Commissioner dated 31.08.2012 passed by the Commissioner of Central Excise, Jaipur-I]
For approval and signature:
Honble Mrs.Archana Wadhwa, Member (Judicial)
Honble Mr. R.K.Singh, Member (Technical)
1. Whether Press reporters may be allowed to see the No
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?
__________________________________________________
M/s.Ericsson India Private Limited Appellant
Vs.
CCE & St, Jaipur-I Respondent
Present for the Appellant : Shri Amit Jain, Advocate
Present for the Respondent: Shri Pramod Kumar, JCDR
Coram:Honble Mrs. Archana Wadhwa, Member (Judicial)
Honble Mr. R.K.Singh, Member (Technical)
Date of Hearing/Decision: 21.08.2014
FINAL ORDER NO.53407-53408 DATED: 21.08.2013
PER: ARCHANA WADHWA
Both the appeals are being disposed by a common order as the issue involved is identical though the impugned orders are different.
2. The appellants are engaged in the manufacture of transmission equipments and procured various parts of the same from their parent company located in Sweden. The said parts are being imported by them and are being cleared on concessional rate of duty in terms of Notification No.24/05-Cus., which requires payment of countervailing duty only. The CVD paid by them is being availed as credit.
3. During the course of manufacture of transmission equipment some of the parts so imported by them are found to be defective. Inasmuch as the said parts were under warranty period, a claim is lodged by the appellant to the centre of the same. The appellants claim is accepted, the imported defective parts are re-exported and compensation comes either by the way of cash payment or replacement of the parts. The replaced parts, when imported, are again cleared on payment of CVD and the credit of the said duty so paid is again taken by the assessee.
4. The dispute in the present appeal relates to credit of the countervailing duty availed by the appellant in respect of the parts, which were originally imported, and subsequently found defective, consequently re-exported. As per Revenue, the same amounts to clearance of the inputs, as such, thus, invoking the Provisions of Rule 3 (5) of the Cenvat Credit Rules, 2004. Accordingly, the Revenue initiated proceedings against the appellant for reversal of the credit in terms of the said Rule, which stands culminated in the present impugned orders passed by the lower authorities.
5. The appellants contention is that the inputs have not been cleared by them as such and thus there is no obligation on them to re-pay the credit so availed by them. By drawing our attention to the allegations made in the show cause notice, ld. Advocate submits that it is established that the inputs were issued from the store room, were received at the production floor and were put to use for the purpose of assembling the various parts. It is only after the various parts are assembled, they are tested and the damage, if any, is detected at that stage. If that be so, the Provisions of Rule 3 (5) cannot be invoked inasmuch as the same relates to clearance of the inputs as such. By relying upon various decisions, the ld. Advocate submits that it is well settled law that an assessee cannot be asked to reverse the credit, once the inputs have been issued for use in the manufacture of the final product and are found to be defective or damaged at the assembly line.
6. Ld. JCDR Shri Promod Kumar appearing for the Revenue draws our attention to the findings of the Commissioner, which are to the effect that the inputs are found defective, even before the same are to be used by the assessee and, as such, the assessees are under a legal liability to reverse the credit.
7. Having appreciated the submissions made by both sides and have been gone through the allegations made in the show cause notice, we find that the findings of the Adjudicating Authority that the inputs are found defective or damaged prior to their issuance from the store are factually incorrect. It stands described in the show cause notice dated 21.03.2012 that the appellants factory was visited by the Officers and the process of manufacture of finished goods was examined. It stands mentioned in the show cause notice that the components were issued from the store room to the production floor where assembly of the components/finished products takes place. Further, the notice referred to the statements of various senior personnels of the assessee company clearly deposing that the testing is done either during the manufacturing process or after the assembling of the components. The conclusion in the show cause notice is also to the effect that the practice of the component being followed is known to the assessee only during the process of testing in the assembly line, as prior testing of the component before assembling is not being done by the assessee. As such, we are of the view that the findings of fact arrived at by the adjudicating authority in the impugned order are incorrect.
8. As regards the legal position, we find that it is settled that once the inputs are issued for manufacture of the final product and are further used and are found defective in the assembly line, the assessee cannot be asked to reverse the credit. Reference in this regard can be made to the Honble Delhi High court decision in the case of Asahi India Safety Glass Ltd. vs. Union of India reported in 2005 (180) ELT 5 (Del.). In-fact, the following decisions deal with an identical situation, where the inputs originally imported were subsequently, re-exported on being detected as damaged or faulty.
1. CCE, Jaipur-I vs. RFH Metal Casting (P) Ltd. 2005 (184) ELT 194 (T)
2. Indus Theco Pvt. Ltd. vs. CCE, Raigad 2007 (212) ELT 85 (T)
3. Videocon International Ltd. vs. CCE, Vadodara-II 2009 (235) ELT 135(T)
4. Gujrat Heavy Chemicals Ltd. Vs. CCE, Madurai 2010 (258) ELT 574 (T)
5. Zydex Industries vs. CCE, Vadodara 2007 (219) ELT 602 (T)
6. Gujrat Heavy Chemicals Ltd. Vs. CCE Madurai 2010 (258) ELT
7. Capital Industries vs. CCE, Delhi 2010 (261) ELT 572 (T) Further, the following decisions are to the effect that removal, as such means removal of the inputs before putting them to use:-
1. Cummins India Ltd. vs. Commissioner of C.Ex. Pune-III 2007 (219) ELT 911 (Mum.)
2. Shree Rajasthan Syntex Ltd. vs. CCE, Jaipur, 2012 (280) ELT 470 (Del.)
3. Shree Rajasthan Syntex Ltd. vs. CCE, Jaipur, 2012 (282) ELT 550 (Del.) It is only in those situations that assessee is liable to reverse the credit so taken by them.
9. In view of the forgoing, we find no merits in the Revenues stand. Accordingly, the impugned orders are set aside and both the appeals are allowed with consequential relief to the appellant.
[Dictated & Pronounced in the open Court].
(R.K.SINGH) (ARCHANA WADHWA) MEMBER (TECHNICAL) MEMBER (JUDICIAL) Anita ?? ?? ?? ?? 2 2