Custom, Excise & Service Tax Tribunal
M/S. Balmer Lawrie & Co. Ltd vs Commissioner Of Central Excise, Mumbai on 5 April, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. II APPEAL NO. E/715/11 [Arising out of Order-in- Appeal No. M-I/RKS/25/2011 dated 13.1.2011 passed by the Commissioner(Appeals)Central Excise, Mumbai] For approval and signature: Honble Mr Ramesh Nair, 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 :
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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M/s. Balmer Lawrie & Co. Ltd
:
Appellant
VS
Commissioner of Central Excise, Mumbai
:
Respondent
Appearance
Ms. Padmavati Patil, Advocate for the Appellants
Shri. H.M. Dixit, Asstt. Commissioner(A.R.) for the Respondent
CORAM:
Honble Mr. Ramesh Nair, Member (Judicial)
Date of hearing: 5/4/2016
Date of decision: /2016
ORDER NO.
This appeal is directed against Order-in- Appeal No. M-I/RKS/25/2011 dated 13.1.2011 passed by the Commissioner(Appeals)Central Excise, Mumbai, whereby Ld. Commissioner(Appeals) allowed the Cenvat credit amounting to Rs. 86,030.05 however disallowed the Cenvat credit amounting to Rs. 1,12,432/- and penalty of equal amount of Rs. 1,12,432/- was also maintained.
2. The fact of the case is that the appellant received back some duty paid goods cleared on their own invoices due to defect/rejection. The goods were brought in the factory, the appellant had taken Cenvat credit on the returned goods for reprocessing during 14/7/2001 to 31/3/2005 on the strength of their own invoices. The show cause notice was issued with an allegation that appellant is not entitle for Cenvat credit on their own invoices and they have not followed the procedure laid down under Rule 173H of CER, 1944 read with Rule 16 of CER, 2002. The adjudicating authority while adjudicating the show cause notice confirmed the demand of Rs. 1,98,461/- on the ground that the appellant has not maintained a separate account for returned goods and there is no proper documents evidencing payment of duty on rejected goods, no permission was taken from the department before bringing such goods into their factory. Aggrieved by the adjudication order, appellant filed appeal before the Commissioner(Appeals), Ld. Commissioner (Appeals) partly allowed the Cenvat credit on going into verification of the documents and disallowed the part amount of Cenvat credit. Ld. Commissioner(Appeals) has gone into the factual aspect of the documents. Being aggrieved by the impugned order of the Commissioner (Appeals), appellant is before me.
3. Ms. Padmavati Patil, Ld. Counsel for the appellant submits that there is no dispute that all the returned goods were cleared by the appellant on payment of duty and on the returned goods the credit was availed on the strength of their own invoices which are nothing but duty paid invoices. She submits that appellant followed the provision laid down under Rule 16 of CER, 2002. She submits that it was wrongly alleged and confirmed by the original authority that no duty paying documents are available and no procedure was followed. As per Rule 16, no procedure is prescribed for taking the duty paid returned goods, probably adjudicating authority going on the erstwhile 173H contended that the procedure should have been followed, whereas 173 H has no applicability in the present case. Ld. Commissioner(Appeals) has gone beyond the scope of show cause notice and adjudication order for disallowing the part amount of Cenvat credit. The allegation and even finding of the adjudicating authority is only to the extent duty paying documents and compliance with the procedure. There was no dispute about the fact that goods were received by the appellant and credit was taken on the duty paid invoice of appellant itself. Therefore Ld. Commissioner while disallowing the credit gone beyond the scope of show cause notice which is not permissible in the law.
4. Shri. H.M. Dixit, Ld. Asstt. Commissioner(A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order. He submits that appellant has availed credit on their own invoices on return of rejected goods, credit cannot be allowed on appellants own invoice.
5. I have carefully considered the submissions made by both sides and perused the record.
6. The fact that appellant received rejected goods which initially supplied on payment of duty under cover of their duty paying invoices. The goods were returned alongwith some duty paid invoice. Appellant had taken credit on the said invoice. In the show cause notice whole dispute raised was credit cannot be allowed to the appellant on their own invoices and the procedure was not followed. In this regard, I reproduce Rule 16 of Central Excise Rules, 2002.
Rule 16. Credit of duty on goods brought to the factory. -
(1) Where any goods on which duty had been paid at the time of removal thereof are brought to any factory for being re-made, refined, re-conditioned or for any other reason, the assessee shall state the particulars of such receipt in his records and shall be entitled to take CENVAT credit of the duty paid as if such goods are received as inputs under the CENVAT Credit Rules, 2002 and utilise this credit according to the said rules.
(2) If the process to which the goods are subjected before being removed does not amount to manufacture, the manufacturer shall pay an amount equal to the CENVAT credit taken under sub-rule (1) and in any other case the manufacturer shall pay duty on goods received under sub-rule (1) at the rate applicable on the date of removal and on the value determined under sub-section (2) of section 3 or section 4 or section 4A of the Act, as the case may be.
Explanation. - The amount paid under this sub-rule shall be allowed as CENVAT credit as if it was a duty paid by the manufacturer who removes the goods.
(3) If there is any difficulty in following the provisions of sub-rule (1) and sub-rule (2), the assessee may receive the goods for being re-made, refined, re-conditioned or for any other reason and may remove the goods subsequently subject to such conditions as may be specified by the Commissioner.
From the plain reading of the above Rule, it clearly provides that on the duty paid goods brought in the factory, the assessee can avail the Cenvat Credit as if there is receipt of input. Rule does not prohibit taking credit on the assessees own invoices. The appellant own invoice in present case is duty paid invoice therefore whether the invoice is of appellants own or issued by person returns the goods back, it is one and the same. It is immaterial who has issued invoice but important is whether invoice is duty paid invoice. Therefore irrespective of fact where the invoices are of appellant or otherwise if duty paid goods is brought in the factory of the assessee credit can be allowed. As regard the contention of the show cause notice as well as adjudication order that the procedure has not been followed, on going through the aforesaid Rule 16, I find that no procedure is prescribed for taking credit on the returned goods, therefore only requirement is duty paid goods should be brought in the factory and same should be recorded in their books and at the time of re-issue of such repaired/reprocessed goods proper duty has to be paid therefore no procedure such as making application or taking permission is required for compliance of Rule 16. Therefore in my view Cenvat credit availed on the returned goods is allowable. I therefore modify the impugned order and allow the appeal of the appellant.
(Order pronounced in Court on__________________ ) Ramesh Nair Member (Judicial) sk 7 E/715/11