Custom, Excise & Service Tax Tribunal
Dsm Sugar Mansurpur vs Meerut-I on 14 September, 2018
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL
REGIONAL BENCH : ALLAHABAD
COURT No. I
APPEAL Nos.E/60070 & 60227/2013-EX[DB]
(Arising out of Order-in-Appeal No. 96-97/APPL/PD/MRT-I/2013 dated
17/07/2013 passed by Commissioner of Central Excise (Appeals), Meerut)
M/s DSM Sugar Mansurpur & Rupesh Goel Appellants
Vs.
Commissioner of Central Excise & S.T., Meerut-i Respondent
Appearance:
Shri Aalok Arora, Advocate for Appellants Shri Mohammad Altaf, Assistant Commissioner (AR), for Respondent CORAM:
Hon'ble Smt. Archana Wadhwa, Member (Judicial) Hon'ble Mr. Anil G. Shakkarwar, Member (Technical) Date of Hearing : 09/08/2018 Date of Pronouncement : /09/2018 FINAL ORDER NOs-72204-72205/2018 Per: Archana Wadhwa As per facts on record, appellant is engaged in the manufacture of sugar and molasses falling under Chapter 17 of the First Schedule to Central Excise Tariff Act, 1985. They were also availing the facility of Cenvat credit of duty paid on inputs, capital goods and input services in terms of Rule 3 of Cenvat Credit Rules, 2004.
2. During the course of audit conducted in the appellant's factory, it was found that they were re-packing the sugar from bulk packs of 100kg/50kg to 1kg/5kg small packs. Revenue 2 APPEAL Nos.E/60070 & 60227/2013-EX[DB] entertained a view that such repacking from bulk packs to small packs does not amounts to manufacture and as such the appellants would not be entitled to the Cenvat credit of duty paid on the packing material as also on inject printer used exclusively for packing of small packs of 1kg/5kg.
3. In view of the above, proceedings were initiated against the appellants by issuance of two show cause notices dated 01.08.2011 & 15.02.2012 for the period from July, 2006 to January, 2011 and February, 2011 to March, 2011 proposing denial of Cenvat credit to the extent of Rs.47,79,132/- and Rs.7,14,619/- respectively. The said show cause notices were contested by the appellant on merits as also on limitation. However, the Original Adjudicating Authority did not find favour with the appellants submissions on both the counts and confirmed the demand of Rs.54,93,751/- along with confirmation of interest and imposition of penalty of identical amount. In addition, the penalty of Rs.20,000/- was also imposed on Shri Roopesh Goel, Deputy Manager (Commercial) under Rule 26 of Central Excise Rules, 2002. The said order of Original Adjudicating Authority stands upheld by Commissioner (Appeals) and hence the present two appeals.
4. After hearing the learned Counsel appearing for the appellants and learned A.R. appearing for the revenue, we find that after repacking of the sugar in small packs of 1kg/5kg, the same are being accounted for by the appellants 3 APPEAL Nos.E/60070 & 60227/2013-EX[DB] in their stock register under column "Quantity manufactured"
and small packs are being sold by them against invoices on payment of specified duty, by utilizing the Cenvat credit so availed by the appellants. The revenue's only ground for denial of the credit is that such activity of repacking in smaller packs does not amounts to manufacture. However, it is not being disputed by the revenue that the smaller packs were being cleared by the appellant on payment of duty, by treating the same as manufactured goods.
4. Tribunal in the case of M/s Asian Colour Coated Ispat Ltd. Vs CCE, Delhi-III reported at 2015 (317) ELT 538 (Tri.- Del.), by majority order has observed that even if the activity undertaken by an assessee does not amount to manufacture, the credit availed on the inputs used in such final products which stands cleared on payment of duty would still be available to the assessee. Further, in the case of Hi-Tech Blow Moulders Pvt. Ltd. Vs Commissioner of Central Excise, Bangalore reported at 2016 (341) ELT 419 (Tri.-Bang.), the revenue's proposal to deny the credit on the ground that process undertaken by the assessee was not amounting to manufacture, was not accepted by the Tribunal and the credit was held admissible. In the case of M/s Hikal Ltd. Vs Commissioner of Central Excise, Raigad reported at 2017 (346) ELT 316 (Tri.-Mum), it was held that credit on account of availing duty cannot be denied if manufactured goods cleared after repacking or relabeling, on payment of duty of 4 APPEAL Nos.E/60070 & 60227/2013-EX[DB] Excise. To the same effect is decision of the Tribunal in the case of ABS Steel Ltd. Vs Commissioner of Central Excise, Raipur reported at 2017 (347) ELT 642 (Tri.-Del.).
The Hon'ble Bombay High Court in the case of Commissioner Vs Ajinkya Enterprises 2013 (294) ELT 203 (Bom.) as also the Hon'ble Gujarat High Court in the case of Commissioner of Central Excise, Bangalore Vs Creative Enterprises 2009 (235) ELT 785 (Guj.) has dealt with an identical issue and has held that Cenvat credit cannot be denied on the ground that activity does not amount to manufacture when the final products stands cleared on payment of duty.
5. Inasmuch as, the issue stands decided by the above referred decisions, we set aside the impugned order and allow both the appeals with consequential relief. As the appeals have been allowed on merits itself, the alternative submissions on limitation of demand being barred by limitation is not being adverted too.
(Pronounced in Court on- /09/2018)
(Anil G. Shakkarwar) (Archana Wadhwa)
Member (Technical) Member (Judicial)
akp