Custom, Excise & Service Tax Tribunal
S M Machines Pvt. Ltd vs C.C.E., Delhi-Iii on 21 October, 2016
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL SCO 147-148, SECTOR 17-C, CHANDIGARH 160 017 COURT NO. II APPEAL NO. E/52023-52024/2015 [Arising out of Order-in-Appeal No. 67-68/CE/Appl-II/Delhi/2015 dated 23.03.2015 passed by the Commissioner of Central Excise (Appeals), Delhi-III] Date of hearing/decision: 21.10.2016 For approval and signature: Honble Mr. Devender Singh, 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 :
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?
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S M Machines Pvt. Ltd.
:
Appellant
VS
C.C.E., Delhi-III
:
Respondent
Appearance:
Shri S.J. Singh and R.K. Hasija, Advocates for the Appellant
Shri Harvinder Singh, Ld. A.R. for the Respondent
CORAM:
Honble Mr. Devender Singh, Member (Technical)
FINAL ORDER NO. 61617-61618/2016
Per : Devender Singh
The Appellants have filed these two appeals against the order of Commissioner of Central Excise (Appeals), Delhi-III.
2. M/s S M Machines Pvt Ltd are holding Central Excise Registration for manufacture of Lubricants Oil and Grease falling under Chapter 27 of Central Excise Tariff. They are also doing job work for M/s Rico Auto, Gurgaon. They are availing Cenvat Credit on the capital goods namely CNC Lathe Machines, SPM and inserts, which are used exclusively for the job-work purpose. Credit was also availed on the repair and maintenance of capital goods, which were used for the manufacture of goods of job worker. The department during the course of audit raised the objection that the Cenvat Credit on purchase of capital goods and repair and maintenance of capital goods, which are used solely and exclusively for the job work was not admissible as no central excise duty or service tax was paid on the final product. For the period 2009-10 and 2011-12, two show cause notices were issued demanding Rs. 8,65,598/- and Rs. 53,105/- respectively alongwith interest and proposing penalty under Rule 15(2) of the CCR, 2004. The matter was adjudicated, wherein the adjudicating authority allowed the credit on service tax involved in repair and maintenance of capital goods, but confirmed the demand of Rs. 7,72,675/- pertaining to cenvat credit on capital goods alongwith interest and imposed penalty of equivalent amount. The party went in appeal against the said order. Commissioner (Appeals) upheld the order of the adjudicating authority in relation to both the show cause notices. Against the same, the appellants are before this Tribunal.
3. Ld. Advocate for the appellants submits that the issue is squarely covered by the judgment of this Tribunal in the case of Kyungshin Industrial Motherson Ltd. vs. C.C.E., Chennai 2007 (216) E.L.T. 719 (Tri.-Chennai) and the same has been upheld by the Honble Madras High Court in C.C.E., Chennai vs. Kyungshin Industrial Motherson Ltd. 2016 (332) E.L.T. 69 (Mad.). Further, he invited attention to facts of this case and stated that in the said case, the allegation was wrong availment of Cenvat Credit on duty paid on the capital goods, which were exclusively used in the manufacture of excisable goods under exemption Notification No. 214/86-CE. Ld. Advocate also argued on limitation and stated that there was no requirement of law to make declaration in ER-1 and part of the demand was therefore time barred.
4. Ld. A.R. for the Revenue reiterated the findings of the Commissioner (Appeals).
5. Heard both the parties and perused the records.
6. I find that the issue to be considered is whether cenvat credit was correctly availed by the appellants on capital goods used exclusively for manufacturing goods as a job worker for their principal manufacturer. As correctly pointed out by the Ld. Advocate for the appellants, the issue is no longer res integra and squarely covered by the judgment of this Tribunal in the case of Kyungshin Industrial Motherson Ltd. (supra), wherein the Tribunal held as below:
5. In the instant case, it is not in dispute that the capital goods in question were used for the manufacture of wiring harness which were removed without payment of duty, under job work procedure, to the principal manufacturer. Finished goods so removed by job worker without payment of duty would not come within the scope of the expression exempted final products used under Rule 57R(1) ibid or under equivalent provisions of law like Rule 6(4) of the Cenvat Credit Rules, 2004. In the result, the availment of Modvat Credit on such capital goods by the appellant (job worker) is in order and consequently the entire demand is liable to be vacated. The appeal succeeds and is allowed with consequential relief. The above order of the Tribunal was upheld by the Honble Madras High Court in the case of C.C.E., Chennai vs. Kyungshin Industrial Motherson Ltd. 2016 (332) E.L.T. 69 (Mad.). While upholding the Tribunal order, in para 16 of the said judgment, the Honble Madras High Court has held as under:
16. We find on fact that in this case also, the Tribunal was correct in holding that wiring harness was removed without payment of duty under job work procedure to the principal manufacturer and that semi-finished goods removed by the job worker from its unit to the principal, without payment of duty, would not come within the scope of expression exempted final product used in Rule 57R(1) equivalent to Rule 6(4) of the CCR, 2004. The Tribunal has rightly held that availment of Madvat Credit on capital goods to be job work is in order. For the reasons aforesaid, the substantial question of law is answered in favour of the assessee and against the Revenue.
7. Following the above judgments, the order of the Commissioner (Appeals) is set aside and the appeals filed by the appellants are allowed.
(Dictated and pronounced in the open court) Devender Singh Member (Technical) RAS 2 E/52023-52024/2015 - CHD