Customs, Excise and Gold Tribunal - Mumbai
Psl Holdings Ltd. vs Commissioner Of Central Excise on 29 April, 2003
JUDGMENT
Archana Wadhwa, Member(J)
1. After dispensing with the condition of predeposit of duty and penalty, we take up the appeal itself with the consent of both sides.
2. Accordingly, we have heard Shri V. Sridharan, learned Advocate for the appellants and Shri S.S. Bhagat, learned J.D.R. for the Revenue.
3. The short point involved in the present appeal is that the appellants are engaged in the manufacture of Spiral Welded Steel Pipes which they were clearing in an uncoated condition to their sister concern situated a few kilometres away for the purpose of coating the same. The appellants were availing CENVAT Credit in respect of various coating materials received in their factory, which was also cleared by them to their sister concern alongwith uncoated pipes. Coating was being done at the other units and the final coated pipes were being cleared by the other units, but the duty was being paid by the appellants on the assessable value which included the value of the coating also. For the said purposes, the appellants had also written a letter to their jurisdictional Central Excise Commissioner on 25.9.2000 seeking his permission that since they were paying duty on the total transaction-value of the coated pipes, they should be allowed to avail the CENVAT Credit benefit in respect of the inputs used for the coating of the pipes. The appellants were issued a show cause notice proposing denial of the said CENTVAT Credit for the period from July, 2000 to November, 2000, on the ground that whatever they had cleared from their factory, was uncoated pipes and inasmuch as the coating material was not used in their factory, they are not entitled to the benefit of the CENVAT Credit. The appellants during adjudication, pleaded that since the duty by them had been paid on the pipes which included the value of the coating also, they were entitled to the CENVAT Credit. The above contention was not accepted by the authorities below who confirmed the demand of duty against the appellants and also imposed the personal penalty upon them.
4. Shri V. Sridharan, learned Advocate appearing for the appellants submits that the Revenue took no objection when they were paying the duty from their factory at the higher value of the coated pipes. As such, he submits that by paying the duty on the higher value and by utilising the CENVAT Credit of Duty paid on the inputs, the entire exercise becomes neutral and by paying duty out of their CENVAT Credit, they are said to have reversed the Credit. The Department is once again asking them to reverse by confirming the demand in the present impugned Order. He also submits that the Credit was taken correctly and duty paid on the coating value be considered as reversal of inadmissible credit, as has been held in the following decisions:-
(i) Deioners Speciality Chemicals (P) Ltd. v. reported in 1997 (96) ELT-659;
(ii) C.C.E. v. Piramal Spinning a Weaving Mills Ltd. reported in 2002(49)RLT-(T);
(iii) Singh Scrap Processors Ltd. v. C.C.Ex., reported in 2002(143)ELT-619(T).
He specifically places reliance on the Tribunal's decision in the case of Singh Scrap Processors (referred supra) holding that once the credit is availed and utilised before the final product reached its dutiable character, the same is not to be reversed.
5. Shri S.S. Bhagat, learned J.D.R. for the Revenue submits that coating of the pipes does not amount to manufacture and the said process was being undertaken not by the appellants but by their sister units situated a few kilometres away from the appellants' factory. The said units were also not registered with the Central Excise Authorities. As such, the appellants cannot avail the Credit in respect of the coating materials not used in their factory, but used in other factories. However, on being queried as to why the duty was being charged by the Revenue on the full value of the coated pipes, Shri Bhagat submits that the appellants on their own have chosen to pay duty on the full coated value in-stead of value of the uncoated pipes.
6. We have considered the submissions made by both sides. The undisputed facts on record are that the appellants were availing the benefit of the CENVAT Credit of Duty paid on the coating materials and were paying the duty of excise on their final product on the full value of the coated pipes. As such the credit availed by them was being utilised for payment of duty on the coated value of the pipes. The adopting such an exercise, the credit availed by the appellants is reversed by way of utilising the same for payment of duty on the final product which they were not required to pay. In these circumstances, in our view, the credited availed by the appellants and utilised by them for the purpose for which the same was not required to be utilised, already stands reversed by them. As such, they cannot be asked to once again reverse the credit so availed. Accordingly, we set aside the impugned Order and allow the appeal with consequential relief to the appellants.
7. Pronounced in the open court.