Custom, Excise & Service Tax Tribunal
M/S Bajaj Auto Ltd vs Commissioner Of Central Excise, Pune-I on 27 January, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. III Appeal No. E/3096/05 (Arising out of Order-in-Original No. 10/CEX/2005 dated 31.5.2005 passed by the Commissioner of Central Excise, Pune-I). For approval and signature: Honble Shri Ramesh Nair, Member (Judicial) Honble Shri Raju, 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 : 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 Bajaj Auto Ltd. Appellant Vs. Commissioner of Central Excise, Pune-I Respondent Appearance: Shri M.P.S. Joshi, Advocate for Appellant Shri Ashutosh Nath, Assistant Commissioner (AR) for Respondent CORAM: SHRI RAMESH NAIR, MEMBER (JUDICIAL) SHRI RAJU, MEMBER (TECHNICAL) Date of Hearing: 27.01.2016 Date of Decision: 10.02.2016 ORDER NO. Per: Raju
The appellants are manufacturer of motor vehicles. During the period April, 1994 to December, 1994, the appellants claimed credit of certain items as capital goods amounting to Rs. 43,52,388.89. Two show-cause notices were issued to the appellants seeking to deny the credit on capital goods on the following grounds: -
Broad Description of input Reason for disallowing the credit
(a) Gauges, Material Handling Equipment, Timer, Temperature indicator These inputs are not the parts of those machines which are used for producing or processing of any goods or for bringing about any change in any substance for manufacture of final product.
(b) Hoist
-do-
(c) Electrodes As at (a) above and the electrodes are itself consumed, it is not toll or appliances or machine parts.
(d) Hose pipe and pipe fitting As at (a) above
(e) Computer and computer parts As at (a) above
(f) Traction Batteries It is used in yal (forklift) which is not capital goods as per (a) above.
b) The inputs intimated cannot be considered as CAPTIAL GOODS as per the explanation to Rule 57 Q(1)(b). The details are in Annexure-B 14,57,639.35
d) The goods are not originally consigned to the assessee in the duty paying documents as detailed in Annexure-D 2,235.00
f) They have taken credit on traders and incomplete invoices, the credit is not available as detailed in Annexure-F 3,650.87 The total credit of duty recoverable as per the Annexures- B, D, and F 14,83,525.22 The matter was adjudicated earlier vide Order-in-Original No. 27/CEX/98 dated Nil August, 1998. The appellant approached the Tribunal, which after considering the matter remanded the issue back to the Commissioner with following observations: -
The issue relates to availability of modvat credit on capital goods. It is seen that number of items are involved and the case laws on the capital goods have developed since passing of the impugned order. Both the parties, therefore, agreed that the matter may be remanded to the adjudicating authority for de novo adjudication in light of the decisions cited by the learned Counsel in respect of the items involved in the present appeals. Consequently, the matter has been adjudicated again and out of Rs. 43,52,388.89, a demand of Rs. 22,84,325.56 has been confirmed. A penalty of Rs.5 lakhs has also been imposed under Rule 173Q of the Central Excise Rules, 1944.
2. Learned Counsel for the appellant argued that the Commissioner has disregarded all the case laws that they have cited, without going into merits of the same. He argued that they had cited the following case laws in their reply to the Commissioner dated 21.12.2004: -
(a) Indian Farmers Fertiliser Co-op. Ltd. 1996 (86) ELT 177 (SC)
(b) Jindal Strips 2003 (156) ELT 918 (Tri-Mum)
(c) Visvesvariya Iron & Steel 2000 (125) ELT 1171 (Tri)
(d) Bajaj Auto Ltd. 2001 (136) ELT 970 (Tri-Mum)
(e) Birla Corporation Ltd. 2003 (160) ELT 268 (Tri)
(f) Baker Mercer Ltd. 2002 (140) ELT 412 (Tri-Mum)
(g) Rajasthan State Chemical Works 1991 (55) ELT 444 (SC)
(h) Jindal Strips Ltd. 1998 (98) ELT 747 (Tri)
(i) Jaypee Reva Cements 1997 (96) ELT 167 (Tri)
(j) Geep Industrial Syndicate Ltd. 1996 (88) ELT 753 (Tri)
(k) Mahindra & Mahindra 1996 (87) ELT 258 (Tri)
(l) CCE Vs. Zenith Papers 2002 (146) ELT 518 (P&H)
(m) CCE Vs. Jagadambay Enginnering & Welding Works 2002 (143) ELT 496
(n) Manikgarh Cement Ltd. 2001 (136) ELT 1085 He argued that there are no findings with respect to the applicability of the aforesaid decisions to the impugned case. The Commissioner has completely relied on the decision of Commissioner of Central Excise, Indore Vs. Surya Roshni Ltd. 2001 (128) ELT 293 (Tri-LB). He argued that it cannot be a basis of discarding of the case law which they had cited specifically for most of the items covered in the dispute.
2.1 Learned Counsel argued that the credit on the refractors/transformers and pollution control equipments was denied solely on the ground that these items got covered under the definition of capital goods vide Notification No. 11/95-CE(NT) dated 16.3.1995 and 14/96-CE(NT) dated 23.7.1996. The Commissioner observed that since they were introduced later as a capital goods it implies they were not covered in the definition earlier and therefore the credit was disallowed. Learned Counsel argued that the issue has been examined by the Tribunal in case of Jawahar Mills Ltd. Vs. CCE 1999(108) ELT 47 (Tri-LB). The Tribunal has, while holding that the credit of items like control panels, capital, welding electrodes would qualify as capital goods under Rule 57Q, observed as under: -
41. In the light of the above, the issue as to? whether the amendment effected in Notification 11/95, dated 16-3-1995 under Rule 57Q and Notification 14/96-C.E. dated 23-7-1996 is retrospective, becomes academic. We have to decide the matter according to the language of the provision as it stood at the material time. We are required to examine Explanation 1(a) as it stood in 1994-95 and 1995-96 and we therefore, see force in the contention of the assessees that the items which are recognised as eligible to capital goods credit by Notification 14/96 are items covered by Explanation 1(a) and it cannot be contended by the Revenue that these items are not covered by the Headings mentioned in Notification 14/96 or that the items are not capital goods within the meaning of Explanation 1(a) under Rule 57Q as it stood during the relevant period. This decision has been upheld by the Hon'ble Supreme Court as reported in 2001 (45) RLT 739 (SC). It was argued that the Commissioners observation that these items have been included later on, does not mean that the same were not covered under the principal definition of capital goods.
2.2 Learned Counsel pointed out that the Commissioner has disallowed the credit on electrodes on the ground that the same were consumable on the basis of Tribunals decision in the appellants own case cited at 1998 (98) ELT 479, where the Tribunal has held that electrodes qualified as input. The Commissioner has denied credit on the Hose, air cleaners as these goods do not appear to be even remotely involved in producing, processing of the goods.. He has denied credit on the computer and peripherals thereof stating that these goods are in no way even remotely relatable to the manufacture of the final product and they are apparently utilized for office work.. He has denied credit on Nuts, bolts & screws stating that these goods are consumables. By no stretch of imagination can these goods be covered as capital goods during the impugned period. He has denied credit on screw driver, hacksaw stating that by virtue of their name and usage, it is amply clear that by no stretch of imagination can these goods be held to be capital goods, more so in view of the specific definition of capital goods that was prevailing during the impugned period.. He has denied credit on adhesive polycot, lubricating oil stating that these items are entirely consumable in nature. By no argument can these goods be said to be capital goods.. He has denied credit on Int Lock, Cast Iron for Dia, Water heater stating that these items are used as spares for maintenance equipment.. He has observed that the maintenance work is exclusive of the manufacturing activity. He has denied credit on Collet, Tooling Collet on the ground that these goods are consumables in nature and therefore, they do not fall within the purview of capital goods definition. He has denied credit on Thermilite Sheets, Thermo sheets, ceramic coating, Formica sheet, Promil sheets, PVC pipe on the ground that these goods were not covered under the ambit of capital goods during the impugned period.
3. Learned AR relies on the impugned order.
4. We have gone through the rival contentions. We find that the appellant had cited various case laws in support of their claim but the order of Commissioner does not specifically deal with any of them. We find that the order of Commissioner is based on his assumptions and not on facts. For example, he has held in case of Hose, air cleaners that they do not appear to be even remotely involved in producing, processing of the goods. It is not clear whether he is certain about it or it is a hunch. He has not supported his conclusion on basis of any facts of the case. In respect of Computer terminal, computer parts, computer hardware plotter, he again observed that these are apparently utilized for office work. Here again there is no basis in arriving at these findings, especially in view of the claim of the appellant in their reply (at sr. No. 98) of Annexure that the said computer terminal are used as part of CNC machine. Similarly, the credit has been denied on Nuts, bolts and screws which are claimed to be used for the maintenance of the machine have no basis.
4.1 It is noticed that almost in all cases, the Commissioner has not given any reasons for arriving at the conclusion. He has simply given final conclusion stating that how the same were entitled or not entitled to the capital goods CENVAT Credit. A perusal of the list of the items on which the credit has been denied includes items which have been described as spares in the excise invoice. The items on which credit have been denied are consumables include industrial fans, centrifugal fans, tube assembly, coupling, auto parts etc. It is seen that the impugned order does not give any reasoned findings but is based on presumptions and assumptions. Accordingly, we are constrained to set aside the impugned order and remit the matter once again to the Commissioner to give reasoned findings to arrive at decision. Meanwhile, we find that both sides have cited numerous case law which is relevant for the purpose of reaching the conclusion, the Commissioner will give an opportunity to the appellant to present their case before taking a final decision.
(Pronounced in Court on 10.02.2016) (Ramesh Nair) (Raju) Member (Judicial) Member (Technical) Sinha 7 Appeal No. E/3096/05