Custom, Excise & Service Tax Tribunal
Tetra Pak India Pvt Ltd vs Commissioner Of Central Excise, Pune I on 6 November, 2009
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. Appeal No. E/1228/2003 (Arising out of Order-in-Original No. 04/CEX/03 dated 07/02/2003 passed by Commissioner of Central Excise, Pune-I.) For approval and signature: Honble Mr.P.G. Chacko Member (Judicial) ======================================================
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 : No 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?
====================================================== Tetra Pak India Pvt Ltd Appellant Vs Commissioner of Central Excise, Pune I Respondent Appearance:
Ms. Padmavati Patil, Advocate, for Appellant Shri S.S. Katiyar, S.D.R, for Respondent CORAM:
Honble Mr.P.G. Chacko Member (Judicial) Date of Hearing: 06.11.2009 Date of Decision: 06.11.2009 O R D E R NO..
1. This appeal by M/s Tetra Pak India Pvt Ltd is against denial of MODVAT Credit of Rs 5,19,865/- for the period November, December 1996 and equal amount of penalty. The appellant company was engaged, at the material time, in the manufacture of packaging materials. They commenced production on commercial basis in January 1997. A trial run of the plant was held from October to December 1996, wherein the raw materials, in question, were used. The finished goods manufactured out of such raw materials, during the course of the trial run, were later on cleared on payment of duty. MODVAT Credit of the duty paid on the raw materials was taken on the premise that the benefit was admissible in respect of raw material used for research and development purposes. In a show-cause notice issued to the appellant in February 2002, the department objected to such availment of MODVAT Credit and sought to recover the entire credit taken from January to March 1997 amounting to Rs 36,19,723/- under Rule 57I of the Central Excise Rules, 1944 read with the proviso to Section 11A (1) of the Central Excise Act. Penalty equal to duty was proposed under Rule 57 I (4) read with Section 11AC. Interest on duty was demanded under Rule 57 I (5) read with Section 11AB. These demands were contested. In adjudication of the dispute, the learned Commissioner of Central Excise confirmed the demand of duty to the extent of Rs 5,19,865/- under Rule 57 I read with Section 11A and imposed equal amount of penalty on the assessee under Section 11AC. He also ordered for recovery of interest on duty under Section 11AB. In his order, the learned Commissioner observed inter alia, that the above credit had been taken on inputs which were consumed before the commencement of actual production and before obtaining Central Excise registration. He also noted that the Central Excise registration had been obtained on 8.1.1997. The present appeal is against the Commissioners order.
2. The learned Counsel for the appellant submits that they had obtained Central Excise registration as early as on 11.10.1996. In this connection, the counsel refers to the registration certificate available at page 10 of the paper book. With reference to this document, learned SDR points out that the registration was granted to M/s Tetra Pak Converting (India) Ltd and not to M/s Tetra Pak India Pvt Ltd. In this context, the counsel submits that the erstwhile company, Tetra Pak Converting (India) Ltd, was amalgamated with M/s Tetra Pak India Ltd as per the Honble High Courts judgment dated 3.4.2000 in Company Petition No 29 of 2000. She also produces a copy of the High Courts judgment which indicates that Tetra Pack Converting (India) Ltd stands amalgamated with a few other companies including Tetra Pak India Ltd and that the surviving corporate entity is Tetra Pak India Ltd. In view of the documentary evidence adduced by the counsel, there is no scope for any objection vis-`-vis the plea raised by the counsel that the appellant company had obtained Central Excise registration on 11.10.1996. Nowhere in the show-cause notice was there any proposal to deny MODVAT Credit with reference to the date of CE registration of the company. This aspect came to the fore when the adjudicating authority chose to deny a part of the MODVAT Credit in question with reference to the date of Central Excise registration. Unfortunately the date noted by the adjudicating authority was not correct.
3. Adverting to the merits of the case, learned counsel submits that raw materials used in the trial run of the plant are also covered by the definition of input given under the erstwhile Rule 57 A of the Central Excise Rules, 1944. Such raw material should also be held to have been used in or in relation to the manufacture of the final product. In this connection, counsel relies on a few decisions including Commissioner vs Duracell (India) Pvt Ltd 2001 (137) ELT 882 (Tri-Del) and National Fertilizers Ltd vs Collector 1996 (88) ELT 704 (Tribunal). In the latter case, raw Naphtha used in the trial run of a fertilizer manufacturing plant was held to be eligible for concessional rate of duty under an exemption notification, while, in the former, it was held that inputs used in trial production of final product were used in or in relation to the manufacturer of the final product.
4. I have heard the learned SDR also in this connection.
5. In the instant case, it appears from the show-cause notice that the credit in question was taken during January to March 1997. It is the claim of the appellant that they started commercial production in January 1997. Thus it appears, the credit was taken during the above period in respect of raw materials received in the factory and consumed prior to Jan 1997. In other words, the raw material was used in the trial run of the plant. It is settled law that raw materials used in the trial production of the final product are inputs for purpose of MODVAT/ CENVAT Credit.
6. In the result, the impugned order is set aside and this appeal allowed.
(Dictated in Court.) (P.G. Chacko) Member (Judicial) rk 4