Customs, Excise and Gold Tribunal - Bangalore
L And T Komatsu Ltd. vs Commissioner Of Central Excise on 10 December, 2004
Equivalent citations: 2005(182)ELT358(TRI-BANG)
ORDER T.K. Jayaraman, Member (T)
1. These 04 (four) appeals are against the Orders-in-Appeal No. 537/2002 dated 19-9-2002 and No. 589/2002 dated 1-10-2002 passed by the Commissioner of Central Excise & Customs (Appeals), Bangalore.
2. The appellants availed CENVAT credit under Rule 57A on certain inputs. The notices were sent to the job worker under Rule 57F(4) by debiting 10% as provided in the Rule. The job worker used in addition to the inputs received from the appellants, other goods and returned the goods to the appellants after paying duty on the value of the goods produced by them. In other words, the job worker instead of returning the goods without payment of duty to the appellants, paid duty on the value which included the value of the inputs received from the appellants. On receipt of the goods from the job worker, the appellants availed 10% credit on the strength of Rule 57F(4) challan as provided in the Rules and also availed credit on duty paid by the job worker under Rule 57A. The Revenue initiated the proceedings against the appellants on the ground that the appellants availed credit twice on the same input. Apart from demanding duty, the appellants have been visited with huge penalty. The Order of the Original Authority has been confirmed by the Commissioner (Appeals). Aggrieved over the Order of the Commissioner (Appeals), the appellants have come before this Bench.
3. Shri S. Prakash, Manager (Fin.) appeared on behalf of the appellants & Shri L. Narasimha Murthy, learned SDR appeared on behalf of the Department.
4. We have considered the rival contentions. The main reason for demanding duty in the case is that the amount paid by the job worker could not be considered as duty and should be deemed only as deposit. This finding of the Commissioner (Appeals), to say the least, is perverse. The appellant has strictly followed the Rules as far as the movement of inputs to the job worker and their return after the process. There is absolutely no question of availing of credit on the inputs twice as contended by the Revenue. While adopting 10% of the duty on the inputs at the time of removal of the same to the job worker and crediting the same at the time of return of the goods from the job worker, the appellant has followed the prescribed procedure. When the appellants availed the credit on return of the goods from the job worker, he actually availed the duty paid by the job worker on the returned goods. The Revenue has to keep in mind the fact that when the appellants availed credit, the amount availed as credit has gone to the exchequer earlier because the job worker paid the duty on the goods manufactured by him using the inputs received from the appellant. The duty paid by the job worker is at a value which includes the value of the inputs received by him. But this is not a reason to hold that the appellant had taken credit twice. There is no logic at all in the contention of the Department. Moreover the appellant's case is squarely covered by the ratio of the Tribunal decision in the case of Elgi Ultra Industries Ltd. v. CCE, Coimbatore - 2002 (149) E.L.T. 743 (Tribunal) = 2002 (50) RLT 699 (CEGAT - Chennai). In the above case it has been held that the appellants are entitled to taking credit of the amount debited @ 10% while sending inputs to job worker and of duty paid by job worker, as job worker has not taken credit in respect of inputs. In the present case also the job worker has not taken any credit of duty on input received from the appellants. In the case of Kerala State Electronic Corporation v. Collector of Central Excise, Kochi -1996 (84) E.L.T. 44 (Tribunal), the Tribunal has held that the Modvat credit should be allowed as per the amount of duty indicated in the duty paying documents and the fact that the duty is short paid or excess paid is not relevant for factory. In the case of Facit Asia Ltd. v. Collector of Central Excise -1991 (54) E.L.T. 347 (Madras - CEGAT), the Tribunal has held that the input credit is not deniable to the manufacturer just because the job worker paid duty on the intermediate component on the normal procedure in respect of returning to them without payment of duty. It was also brought to our notice that the Department is taking contradictory stands in respect of different assessees. The appellant submitted that in one case, the department has issued show cause notice to the job worker demanding excise duty for not including the value of the goods received from the principle manufacturer, whereas in the present case, the Department even objects to the job worker paying central excise duty. In view of our findings above, we hold that the appellant has not violated any provisions of the act or Rules in availing Modvat credit of duty paid by the job worker on the goods returned to the appellants. Hence we allow the appeal with consequential relief.