Custom, Excise & Service Tax Tribunal
M/S Garden Silk Mills Ltd (Pfy Division) vs Commissioner Of Central ... on 3 February, 2016
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Zonal Bench, Ahmedabad -ooOoo- Appeal No. : E/10295,10296/2013 Appln No MA(Extn)15419/2014 [ Arising out of OIO-01-05/DEM/2012 dtd 28.9.2012 passed by Commissioner of Central Excise-SURAT-I ] 1. M/s Garden Silk Mills Ltd (PFY Division) - Appellant(s) 2. Shri Deepak Prabhakar Marathe Vs Commissioner of Central Excise-SURAT-I - Respondent (s)
Represented by :
For Assessee : Shri C.Harishankar, Sr. Advocate Shri S Sunil, Advocate For Revenue : Shri P R V Ramanan, Special Counsel For approval and signature :
Mr. P.K. Das, Hon'ble Member (Judicial) Mr. P.M. Saleem, Honble Member (Technical) 1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No 2 Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
No 3 Whether their Lordships wish to see the fair copy of the Order?
Seen 4 Whether Order is to be circulated to the Departmental authorities?
Yes CORAM :
Mr. P.K. Das, Hon'ble Member (Judicial) Mr. P.M. Saleem, Honble Member (Technical) Date of Hearing / Decision : 03/02/2016 ORDER No. A/10145-10146 / 2016 dtd 3/2/2016 Per : Mr.P.K. Das, These appeals are taken up for hearing as per judgement dtd 30.6.2015 of the Honble Gujarat High Court in Special Civil Application No 2153 of 2015 [Garden Silk Mills Ltd (PFY Division) Vs UOI and Others]. By the said judgment dtd 30.6.2015, the Honble High Court set aside the Final Order No A/12058-12059/2014 dtd 27.11.2014 passed by this Tribunal in the present appeals, and directed the Tribunal to decide the appeals after offering opportunity of hearing to the appellant as expeditiously as possible.
2. For the purpose of proper appreciation of the case, the relevant facts of the case, in brief, are narrated below:
(i) M/s Garden Silk Mills Ltd, a public Limited company (hereinafter referred to as the Company), is engaged in the manufacture of Partially Oriented Polyester Yarn (POY) classifiable under CH 54 of the Schedule to the Central Excise Tariff Act 1985 through its three different divisions/ factories/units, namely:
a) PFY Division: Central Excise Registration No AAACG 8932 CXM002 manufacturing Partially Oriented Polyester Yarn (POY).
b) DT Division: Central Excise Registration No AAACG 8932 CXM003 manufacturing Draw Twisted Polyester Filament Yarn (DT), Draw Wound Polyester Filament Yarn, Texturised Polyester Filament Yarn.
c) Vareli Unit/Division: Central Excise Registration No AAACG 8932 CXM001 manufacturing Grey MMF, Texturised Yarn, Sized Yarn, Draw Wound Yarn etc.
(ii) PFY Division and DT Division are located at Jolwa and have a common boundary wall within the same premises. The Vareli unit is located at a distance of about 4.5 km from Jolwa. The present appeal is filed by PFY Division (hereinafter referred to the Assessee).
(iii) By letter dtd 14.7.2003, the Company requested to the Deputy Commissioner of Central Excise to issue a common Registration Certificate (in short R.C.) for merging their PFY Division and DT division. By a letter/order dtd 25.9.2003, the Deputy Commissioner of Central Excise allotted a new R.C. for both the units, PFY unit and DT unit.
(iv) The Company further filed fresh application on 14.7.2004 for including their Vareli unit for a single common R.C. for all their three units on the ground of having common management. By letter/order, dated 28.7.2004 the Deputy Commissioner of Central Excise allowed a common R.C. to the assessee for all the three units vide R.C. No AAACG8932CXM002 and the other R.Cs. were cancelled. The Deputy Commissioner allowed maintenance of a single consolidated PLA/Cenvat Account for all three units.
(v) Subsequently, by letter/order dated 24.1.2005 the Deputy Commissioner withdrew the facility of maintenance of single consolidated PLA/Cenvat credit account for different units. The Assessee filed appeal before the Commissioner (Appeals) against order dtd 24.1.2005 of the Deputy Commissioner, for withdrawal of the said facility.
(vi) The Assessee by letter dtd 28.2.2005, again requested the Deputy Commissioner of Central Excise for separate registration for all their three units, as they wanted to avail the benefit of Notification No 30/2004-CE, dtd 9.7.2004 as amended.
(vii) By order/letter dtd 11.3.2005, the Deputy Commissioner rejected the request of the appellant for separate R.C. for three units, aginst which the appeal was filed by the Assessee before the Commissioner (Appeals).
(viii) By OIA dtd 12.4.2005, the Commissioner (Appeals) allowed the appeal of the Assessee, filed against the rejection of the request for separate R.C. for the three units and directed the Adjudicating Authority to issue three separate R.Cs. Similarly, by OIA dated 21.08.2005, the Commissioner (Appeals), decided earlier appeal filed by them against the Order dtd 24.1.2005 and remanded the matter to the Adjudicating Authority to pass order after considering the earlier OIA dtd 12.4.2005.
(ix) The Revenue filed appeal before the Tribunal against the OIA dtd 12.4.2005 of the Commissioner (Appeals), which was dismissed by Order dtd 2.5.2008. Again, the Revenue preferred appeal before the Honble Gujarat High Court, which was also turned down by order dtd 10.9.2009. Then, appeal was filed before the Honble Supreme Court and by order dtd 15.3.2010 the appeal of the Revenue was dismissed.
(x) As the Revenue challenged the OIA dtd 12.04.2005 of the Commissioner (Appeals), no separate R.C. for the three divisions was granted. Ultimately, after the order of the Honble Gujarat High Court on 23.9.2009 separate R.Cs. were issued to the DT unit and Vareli Unit. Thereafter, the Assessee started to maintain records of PLA/Cenvat account separately as per R.C. issued.
(xi) Prior to 23.9.2009 the Assessee was paying duty on the basis of single R.C. as provided to the Assessee and availed Cenvat Credit. According to the Revenue, since 15.4.2005 as the Assessee applied for separate R.C. for the three units, it would be considered that these units are separate three units as on 15.4.2005. Hence, the transfer of cenvat credit from DT unit to the Assessee and utilisation by the Assessee is irregular. Accordingly, four show cause notices were issued proposing demand of cenvat credit related to transfer of cenvat credit from DT unit to the Assessee unit during the period from 15th April, 2005 to 22nd Sept. 2009 and one show cause notice was issued for non-reversal of cenvat credit by the Assessee on input, semi-finished goods and finished goods lying at two units viz., DT unit and Vareli unit at the time of considering these three units as separate units as on 15.4.2005. By the impugned order, the Adjudicating Authority confirmed the demand of cenvat credit alongwith interest and imposed penalty on the Assessee and a penalty was imposed on Shri Deepak Prabhakar Marathe, Authorised Signatory and Manager of the Assessee. Hence, the Assessee and Shri Deepak Prabhakar Marthe filed these appeals.
3. Shri C Harshanker, Ld Sr. Advocate, with Shri S Sunil, Ld Advocate, appearing on behalf of the appellants submits that the entire case was made out on an erroneous basis that on 15.4.2004 the three units are to be considered as three separate registered unit as the Assessee requested for three separate R.Cs. He drew the attention of the Bench to OIA dtd 12.4.2005 and OIA dtd 31.8.2005 of the Commissioner (Appeals) that the company will be eligible to have separate R.C. for their three units and, if this decision is implemented, the three units would have required to maintain separate PLA as well as Cenvat Credit account for the different units. The Dept. challenged the order of the Commissioner (Appeals), before the Tribunal, the Honble High Court and Supreme Court. In fact, after the order of the Honble High Court, the Deputy Commissioner of Central Excise on 23.9.2009 granted separate R.C. for other two units. So, the Assessee rightly maintained a single consolidated Cenvat Account/PLA for the purpose of discharging duties for clearance of the goods for home consumption during the period 15.04.2005 to 22.09.2009, and therefore DT unit transferred the Cenvat Credit to the Assessee unit for discharging the duty as the Assessee only holding R.C. He submits that there is no dispute on availment of the Cenvat Credit by the Assessee. They discharged the duty through a common pool maintained by a single consolidated cenvat account as per the direction of the Dept. It is well settled that there is no one-to-one co-relation in the Cenvat Scheme and inter unit transfer of credit while holding a single R.C. would not vitiate utilisation of credit by the Assessee. The Ld Senior Advocate drew the attention of the Bench the order of the Deputy Commissioner, Commissioner (Appeals) and various provisions of the Cenvat Scheme.
4. The other argument of the Ld. Sr Advocate is that the Adjudicating Authority proceeded on the basis that the Assessee requested for three separate R.Cs. to avail the benefit of Notification No 29/2004-CE and 30/2004-CE both dtd 9.7.2004 for its DT Division and Vareli division. He submits that separate proceedings were initiated for availing the benefit of exemption Notification, which has no relation with the present proceedings. The Ld Sr. Advocate also contested the demand of duty as barred by limitation. He submits that there is no suppression of fact with intent to evade payment of duty. The Department was well aware the activities of the Assessee and therefore extended period of limitation cannot be invoked. The Ld Senior Advocate submitted Written Submission alongwith compilation of case laws.
5. Shri P.R.V. Ramanan, Ld Special Counsel appearing on behalf of the Revenue submits that by letter dtd 28.7.2004, the Deputy Commissioner of Central Excise had permitted the Assessee to maintain a single consolidated Cenvat account/PLA for the purpose of discharging the duties payable for the monthly clearance. Subsequently, by letter dtd 24.1.2005 withdrew the maintenance of common PLA and Cenvat Account, while continuing single registration for all the three units. It is submitted that the words Cenvat and Cenvat Credit do not convey the same meaning. Section 3 of Central Excise Act 1944, the duty of excise is called Cenvat and it refers to the duty in the nature of excise. On the other hand, Cenvat Credit Rules 2004 issued under Section 37 of the Central Excise Act 1944 and Section 94 of the Finance Act 1994 provides for allowing credit of different types of duty and Service Tax paid on Input, Input Service and Capital Goods and the expression used for such credit in the said Rule 2004 is Cenvat Credit. So, the aforesaid expressions do not connote the same meaning and are not synonymous. The Deputy Commissioner by letter dtd 28.7.2004 directed to maintain a consolidated Cenvat Account and there is no mention of Cenvat Credit. So, the transfer of cenvat credit from DT unit to the Assessee was not permitted by letter dtd 28.7.2004. It is not correct to say that the said letter permitted the Assessee to maintain a consolidated Cenvat Credit account.
6. It is also submitted that with effect from 15.4.2005 till 23.9.2009, the Assessee paid Cenvat Credit on its clearance of goods to DT unit and the DT availed Cenvat Credit and recorded in Cenvat Credit account. Again, at the end of each month DT unit transferred by one single entry the credit availed by it to the Cenvat Credit account maintained by the Assessee, the duty so transferred to the Cenvat Credit account maintained by the Assessee was used for the clearance of DT unit and PFY unit. In the present case, four show cause notices proposed demand of CENVAT Credit in respect of utilization of such transfer of Cenvat Credit by the Assessee. The fact that the Assessee paid duty on its clearances to the DT Unit showed that the said Units were regarded by the Company as separate factories. This fact is acknowledged by the Company in its letter dated 28/2/2005. Here the facts relating to the setting up and working of the Units have not undergone any change. The provisions of law have also not undergone any change. The Company claimed and availed of duty exemption under Notification 30/2004 by declaring that the Assessee and DT Unit were independent and separate factories while at the same time, for the purpose of availment of CENVAT credit of duty by the Assessee they claimed that the two factories were one. Thus, the Company conduct is clearly one of approbation and reprobation, which in law, is not justifiable. It is submitted that the transfer of Cenvat Credit from DT unit to the Assessee was not in terms of Rules 10 of the Cenvat Credit Rules 2004.
7. The matter was heard at length on 21.1.2016, 28.1.2016 and today i.e., 3.2.2016. The Ld Sr. Advocate, Shri C Harishaker, on behalf of the Assessee and the Ld Special Counsel, Shri P R V Ramanan on behalf of the Revenue argued the matter. The Ld Sr. Advocate submitted Written Submission on 28.1.2016 and additional written submission on 27.1.2016. The Ld Special Counsel submitted Written Submission on 28.1.2016 during the course of hearing and the order is being passed on 3.2.2016.
8. Heard both the sides and perused the records.
9. By the impugned Adjudication Order, the Adjudicating Authority disallowed and ordered recovery of cenvat credit of Rs.30,19,18,590.00 availed and utilised by the Assessee during the period from 15.4.2005 to September 2009. The Assessee by letter dated 28.2.2005 and 15.4.2005 applied for three separate R.C. for the three divisions/units. The Adjudicating Authority held that on 15.4.2005 the Assessee applied for three separate R.Cs. for three units and therefore, from 15.4.2005 these three Division/units would be considered as separate different units. The findings of the Adjudicating Authority are reproduced below:-
35. I find that the products manufactured by the assessee and their DT Division are different. Hence, it would not be out of context to say that it was possible to segregate the records and entries of the assessee and DT Division as soon as they received the Order of the Appellate Commissioner in their favour. Despite applying for a separate registration on 28.02.2005 and on 15.04.2005 after the receipt of the Appellate Order, they continued to keep a common record of the assessee and their DT Division. It is obvious that as soon as the Appellate Commissioner had held in their favour, they should have segregated heir records related to all three Units, especially those of DT Division and the assessee. They should have started filing different returns for the assessee and their DT Division immediately, which has not been done. Despite having this clear knowledge, they filed common returns for the assessee and their DT Division, which is quite misleading.
10. As the Assessee and the other units had been considered as separate units as on 15.4.2005 by the Department on the basis of the letter of the Company, it is alleged in the notice that their DT Division has wrongly transferred the Cenvat credit totally amounting to Rs. 25,36,49,274/- in the four SCNs during he period April-2005 to Sept-2009 without issuing any Central Excise invoices and without clearing the goods from their premises. In turn, the Assessee have availed the Cenvat credit of the entire amount without receipt of the goods and without having any Central Excise invoices. Regarding the other SCN involving Cenvat credit amounting to Rs. 4,82,69,316/-, the Assessee had not reversed Cenvat credit on the inputs, semi-finished goods & finished goods lying as a stock at their two Divisions, namely DT Division Jolwa and DW Division, Verily at the time of considering these three division as separate three units, an on 15.04.05.
11. In the present appeal, it is to be decided as to whether on 15.4.2005 three divisions/units of the Company would be considered as three separate units requiring the maintenance of separate PLA/cenvat Account for discharging duties for clearance of goods as held by the Adjudicating Authority on the basis of Application dtd 15.4.2005of the Assessee OR on 23.9/2009 as claimed by the Assessee on the basis of separate R.Cs. were issued to the other units by the Deputy commissioner of Central Excise and whether the transfer credit from D.T. Unit to the Assessee is regular.
12. On perusal of the records, we find that prior to 25.9.2003 three units/divisions of the Company were holding three R.Cs. as mentioned above. By order dated 25.9.2003, the Deputy Commissioner of central Excise as per application of the Assessee allowed merger of DT unit with the Assessee unit and a common R.C. of the Assessee was in operation for discharging duty. Again, at the request of the Assessee, the Deputy Commissioner of central Excise by Order dated 28.7.2004 allowed the merger of Vareli unit with Assessee unit. Thus, on 28.07.2004, these three units were clubbed and the Assessees R.C. was in operation and the R.C. of the other two units were cancelled. The Order dated 28.7.2004 reads as under:
F.No.Div.-II/RC/GSM.Div/2002-03 Surat dated 28.07.2004 To, M/s Garden Silk Mills Ltd., Shara Gate, Surat Gentlemen, Sub: Clubbing of Central Excise registration certificate for two separate manufacturing premises under the provision of clause II of notification No. 35/2001 CE (NT) dated 26.06.2001 AS AMENDED ISSUED UNDER Rule-9 of C.Cx. Rules 2001.
Please refer to your letter F. No. GSM/EX/10 dated 14.07.2000 on the above cited subject.
Your request has been accepted by this office and your Central Excise registration No. AACC8932CXM001 dated 27.02.2003 issued to your vareli unit has been cancelled and you are allowed to operate under your jolwa factory registration NO. AACC8932CXM002 dated 25/09/2003. you are directed to maintain separate records of the production and clearance of the excisable goods at the respective plants i.e., factories but maintain a single consolidated Cenvat Account /PLA for the purpose of discharging the duties payable for the monthly clearances.
Yours faithfully, (A.K. AGGARWAL) Deputy Commissioner Central Excise, Div-II, Surat-I.
13. Subsequently, by order dated 24.1.2005 the Deputy Commissioner of Central Excise, modified the earlier Order dated 28.7.2004 in so far as the facility of common PLA and cenvat account was withdrawn, but the common registration will continue. The relevant portions of Order dtd 24.1.2005 are reproduced below:
Please refer to this office letter of even no. dtd. 28.07.2004 on the above subject wherein your request for clubbing of Central Excise Registration for Jolwa and Vareli units were allowed and you were directed to maintain separate account of the production and clearance of the excisable goods at the respective plants i.e. factories but maintain a single consolidated Cenvat account/PLA for the purpose of discharging the duties payable for the monthly clearances.
However, on further scrutiny it is observed that the facility of common registration provided to the textile sector vide para 2 of the notification No. 35/2001-CE(NT) dtd. 26.06.2001 as amended issued under Rule 9 of Central Excise Rules, 2001 was for a limited purpose of granting a common registration and it nowhere provided that different factories of a manufacturer can maintain a single PLA and Cenvat Account. No rule under Central Excise Rules, 2002 or Cenvat Credit Rules, 2002 permit a manufacturer to maintain a common PLA Cenvat Credit account or different factories. In present case, the goods manufactured by Jolwa plant was cleared on payment of duty to Vareli unit, therefore, keeping in mind the above mentioned provisions of law, the maintenance of common PLA and Cenvat Credit Account for both the plants viz. Jolwa and Vareli plants is against the provisions of the Central Excise law.
In view of the above, I am directed to inform you the facility of common PLA and Cenvat Account provided to you is hereby withdrawn with immediate effect. However, the common registration will continue for both the Jolwa and Vareli units. The Assessee was aggrieved with the direction of the Deputy Commissioner of Central Excise vide order dated 24.01.2005 and filed appeal before the Commissioner (Appeals).
14. At this stage, the Assessee desired to avail the benefit of exemption notification No 30/2004-UE dated 9.7.2004 as amended by Notification No 10/2005-UE dtd 28.2.2005 and requested to the Deputy Commissioner of Central Excise for separate R.C. for all their three units/divisions. By Order dated 11.3.2005, the Deputy Commissioner of Central Excise rejected the request of the Assessee. So, the Assessee filed another appeal before the Commissioner (Appeals) against rejection of separate R.C. for three units.
15. By Order-in-Appeal No VP/181/SRT-I/2005 dated 12.4.2005, the Commissioner (Appeals) decided the appeal against the Order dated 11.3.2005 rejection of separate R.C. for three units. By the said order dated 12.4.005 the Commissioner (Appeals) set aside the impugned order dated 11.3.2005 and hold that the Assessee would be eligible to have separate registration for their three separate units. He has not expressed any view of the eligibility of benefit of exemption Notification, which will be decided in separate proceeding. So, the Assessee again by letter dated 15.4.2005 requested the Deputy Commissioner of Central Excuse to issue separate R.C. for their three units in terms of the Order of the Commissioner (Appeals). It is significant to note that on the basis of the said letter dt.15.04.2005 of the Assessee, in the impugned order before us, the Adjudicating Authority held that on 15.4.2005, it would be considered as three separate units and they would maintain accounts PLA/cenvat Accounts.
16. Further, by Order in Appeal No VP/440/SRT-I/2005 dated 31.8.2005 the Commissioner (Appeals) decided the appeal against Order dated 24.1.2005, as stated above. As the Assessee already applied for separate R.C. for three units and by Order dated 12.4.2005, the Commissioner (Appeals) directed to issue separate R.C. for three units, in the present Order-in-appeal dated 31.8.2005, it was remanded the matter to the Adjudicating Authority for de-novo decision taking into consideration of earlier Order (Appeal) dated 21.4.2005. The relevant portions of Order (Appeal) dated 31.8.2005 are reproduced below:
The appellant has contended that when Deputy Commissioner had taken a conscious decision in one way, his successor cannot revoke that decision and permission, unless, of course, is found that there was any breach of any conditions subject to which such decision or permission was given. On careful examination of the order of the lower authority, I find that the appellant, through their letter F. No. GSM/EX/05 dated 28.02.2005, has applied to the jurisdictional Deputy Commissioner for de-registering the factory permission to segregate, the two factories viz. GSML, PFY & DT Division as well as GSML, Vareli, from the purview of Central Excise registration issued for all the three common factories. This was denied by the Deputy Commissioner vide his letter F.No.Div-II/RG/GSM-Div/2002-03/Part dated 11.03.2005. Against this decision, an appeal was filed before the Commissioner (Appeals). This was decided vide OIA No. VP/181/SRT-I/2005 dated 12.04.2005. In the said order, it has been held that the appellant will be eligible to have separate registrations for their three factories. This decision, if implemented, would have already resulted in separate registrations for the three units and consequentially requiring the maintenance of separate PLA as well as Cenvat Credit Accounts for the different factories.
17. The Revenue had not implemented the Order dated 12.04.2005 of the Commissioner (Appeals) and filed appeal before the Tribunal. By Order dated 2.5.2008, the Tribunal rejected the appeal filed by the Revenue and directed to issue separate R.Cs. to the three units. The Assessee filed application before the Tribunal directing the Revenue to implement Tribunal Order dated 2.5.2008. By order dated 19.6.2009 the Tribunal directed the Revenue to implement the Order dated 2.5.2008, Then, Revenue filed application before the Tribunal for rectification of mistake in Final Order dated 2.5.2008. By order dated 25.8.2009, the Tribunal disposed of the application filed by the Revenue, as under:
The present application stands filed by the Revenue in respect of Order No.M/772/WZB/AHD/2009, dt.19.06.2009 directing the Revenue to implement the Tribunals Order No.A/947/WZB/AHD/ 2008, dated 02.05.2008 vide which the appeal filed by the assessee was allowed. The Revenue was directed to implement the above order of the Tribunal and provide registration to the assessee within a period of one month from the date of passing the order on 19.06.2009.
2. It stands contended before us that the original order passed on 02.05.2008 was challenged by the Revenue before Honble High Court along with a stay application. As such, the prayer in the application is to extend the period for implementation of the Tribunals order till the matter is decided by the Honble High Court.
3. We find no merits in the above contention of the Revenue. The order following the appeal was passed on 02.05.2008 and it is more than one year, which has passed without implementation of the Tribunals order. Admittedly, there is no stay of operation of the said order by the Honble High Court. In this scenario, Revenue was duty bound to carry out the implementation within a period of one month from today, as directed in the order dt.19.06.2009. We also note that the period of one month granted by the Tribunal on 19.06.2009 expired on or around 19.07.2009 whereas the present application for extension of time stands filed by the Revenue on 28.07.2009 i.e. after the expiry of the period of one month. As such, we do not appreciate the Revenues inaction to implement the Tribunals order. In the interest of justice, we extend the period by another one month from today and report compliance on 24.09.2009. Miscellaneous application is disposed off in above terms.
18. Revenue filed appeal before the Honble Gujarat High Court against the Order of the Tribunal. By Order dated 10.9,2009 in Tax Appeal No 1665 of 2009 (Commissioner of Central Excise and Customs, Surat I Vs M/s Garden Silk Milks Ltd), the Honble Gujarat High Court dismissed the appeal field by the Revenue. After the order of the Honble Gujarat High Court, the Deputy Commissioner of Central Excise, issued separate R.C. both dated 3.9.2009 to DT division and Vareli Unit, which are reproduced below:
(A) R.C. of DT Division:
FORM RC CENTRAL EXCISE REGISTRATION CERTIFICATE [Under Rule 9 of the Central Excise Rules, 2002]
This is to certify, subject to conditions specified below, that M/S GARDEN SILK MILLS LIMITED (DT DIVISION), A REGISTERED COMPANY (Registrant and its constitutions) is registered for operating as a MANUFACTURE OF EXCISABLE GOOODS at JOWVA, TAL. PALSANA, SURAT-394315 GUJARAT (address of the business premises) on the basis of the application dated 28.02.2005.
Registration Number is : AAACG8932CXM007 As per CESTAT Order No. M/1057/WZB/AHD/09, dt. 25.08.2009.
Sd/-
Signature of the
Date: 23.09.2009 Deputy Commissioner of Central Excise
Place: Division-II, Surat-I (With Name and Official Seal)
(B) R.C. of VARELI Division:
FORM RC
CENTRAL EXCISE REGISTRATION CERTIFICATE
[Under Rule 9 of the Central Excise Rules, 2002]
This is to certify, subject to conditions specified below, that M/S GARDEN SILK MILLS LIMITED (DT DIVISION), A REGISTERED COMPANY (Registrant and its constitutions) is registered for operating as a MANUFACTURE OF EXCISABLE GOOODS at VARELI, TAL. KADODARA, SURAT-394327 GUJARAT (address of the business premises) on the basis of the application dated 28.02.2005.
Registration Number is : AAACG8932CXM008 As per CESTAT order No. M/1057/WZB/AHD/09 DATED 25.08.2009.
Sd/-
Signature of the
Date: 23.09.2009 Deputy Commissioner of Central Excise
Place: Division-II, Surat-I (With Name and Official Seal)
Revenue filed appeal before the Honble Supreme Court against the order of the Honble High Court. The Honble Supreme Court, by order dated 15.3.2010 in Special Leave to Appeal (Civil) CC 3379/2010, dismissed the Leave Petition filed by the Revenue.
19. From the facts, as narrated above, it is clear that from 28.7.2004, as per order of the Deputy Commissioner of Central Excise, only the R.C. of the Assessee was in operation and the R.Cs. of other two units/Divisions were cancelled. The Assessee was discharging duties through their R.C. for clearance of goods. Further, by letter/order dated 11.3.2005, the Deputy Commissioner of Central Excise rejected the request of the Assessee for issue separate R.Cs. for the three divisions/units and the said Order was set aside by the Commissioner (Appeals) by Order (Appeals) dated 12.4.2005 and directed the Deputy commissioner to issue separate R.C. for three units/divisions. Moreover, by Order dated 24.1.2005, the Deputy Commissioner of Central Excise directed the Assessee for maintenance of separate PLA/Cenvat account for the different factories and the common R.C. will continue. By Order dated 31.8.2005, the Commissioner (Appeals) set aside the said Order dated 24.1,.2005 and remanded to the Deputy commissioner of Central Excise for a de-novo decision after considering order (Appeals) dated 12.4.2005. In the said order (Appeal) dated 31.08.2005, the Commissioner (Appeals) categorically observed as under:
This was denied by the Deputy Commissioner vide his letter F.No. Div-II/RG/GSM-Div/2002-03/Part dated 11.03.2005. Against this decision, an appeal was filed before the Commissioner (Appeals). This was decided vide OIA No. VP/181/SRT-I/2005 dated 12.04.2005. In the said order, it has been held that the appellant will be eligible to have separate registrations for their three factories. This decision, if implemented, would have already resulted in separate registrations for the three units and consequentially requiring the maintenance of separate PLA as well as Cenvat Credit Accounts for the different factories. (Emphasis supplied) Thus, it is clear that maintenance of separate PLA/Cenvat Account would arise only after implementation of the earlier Order (Appeal) dated 12.4.2005 to issue separate R.Cs. for three units. Revenue had not filed appeal against the Order dated 31.8.2005 of the Commissioner (Appeal). Perhaps, the earlier order dated 12.4.2005 of the commissioner (Appeal) was appealed before the Tribunal by the Revenue. In our considered view, Commissioner (Appeal) rightly held that after issuance of separate R.C. for three units, they would maintain separate PLA/Cenvat account and prior to that only one PLA/cenvat account would be maintained by the Assessee for discharging duties for clearance of goods. The Order dated 12.4.2005 of Commissioner (Appeal) was implemented on 23.9.2009, when the other two R.Cs. were issued to DT Division and Vareli Division as quoted above. On close reading of the above R.Cs., it is clear that the said R.Cs. dt.23.09.2009 were issued as per application dt.28.02.2005. So, the finding of the Adjudicating authority that the Assessee applied for separate R.Cs. on 28.02.2005 and 15.04.2005 and from 15.04.2005, it would be considered as separate units, are contrary to R.Cs. dt.23.09.2009. We agree with the submission of the Ld Sr Advocate that prior to 23.9.2009, three units cannot be considered as separate and different. The entire findings of the Adjudicating Authority is that on 15.04.2005, the three units would be considered as separate and the Assessee should follow Rule 10 of Rules, 2004 for transfer of credit. There is no need to discuss this issue, as it is observed that on 23.09.2009, three units would be considered as separate units.
20. Section 6 of the Central Excise Act 1944 provides any prescribed person, who is engaged in the production or manufacture or any process of production or manufacture of any specified goods included in the Schedule to the Central Excise Tariff Act 1985 shall get himself registered with the proper officer in such manner as may be prescribed. Rule 9 of the Central Excise Rules 2002 provides every person, who produces, manufactures, carries on trade etc., uses excisable goods, shall get registered. The registration shall be subject to such conditions, safeguard and procedures as may be specified by Notification by the Board. Notification No 35/2001-CE(NT) dtd 26.6.2001 as amended time to time, was issued in exercise of power conferred by Rule 9 of the Central Excise. The Central Board of Excise and Customs specified the conditions, safeguards and procedures for registration of a person under the said Rules and exemption from registration in specified cases. Para (2) of the Notification No 35/2001-CE (NT) (supra) provides if the person has more than one premises require registration, separate registration certificate shall be obtained for each of such premises. The first proviso to Para 2 of the said Notification provides that if such person manufactures the goods falling under CH 54 and other Chapters of the First schedule to Central Excise tariff Act 1985 as specified, and has more than one premises requiring registration; he may obtain a single registration for all such premises, which falls within the jurisdiction of one Principal Commissioner, Central Excise, or Commissioner Central Excise, as the case may be, subject to condition that such person while making application declares the details of such premises in the form specified in Annexure-1 of the said Notification. In the present case, the Company manufactures the goods falling under CH 54 and has more than one premise and they applied for single registration. By Order dated 28.9.2003 and 28.7.2004, the Deputy Commissioner of Central Excise and Customs allowed a single R.C. for three units and extended the facility of common PLA and Cenvat account. In our considered view, such orders would be in force, till the order of the Commissioner (Appeals) was implemented and new R.Cs. were issued by the authority. The Assessee cannot discontinue the maintenance of common PLA/Cenvat Account on its own, unless three separate R.Cs. are issued as ordered by the Commissioner (Appeals). So, the findings of the Adjudicating Authority that as the Assessee applied for separate registration on 15.4.2005 and from that date three Divisions would be considered separately registered as three separate factories, against the provisions of the law and facts of the case.
21. The Ld Special Counsel submits that the apex court having declared the law, the date of effectiveness of separate registration for the two units would have to be 28.2.2005. We are unable to accept the contention of the Ld Special Counsel. The expressions separate registration certificate shall be obtained for each of such premises in Para 2 of Notification No. 35/2001-CE (NT) dtd 26.6.2001 as amended indicate that the registration certificate shall be obtained by the Assessee. By order dated 12.4.2005, the Commissioner (Appeals) directed that the three factories should be issued separate registration by Deputy Commissioner. Further, by Order dtd 31.8.2005, the Commissioner (Appeals) observed, if the earlier OIA is implemented (ie., the separate registration for the three units), consequently requiring the maintenance of separate PLA/Cenvat Account. So, unless the Deputy Commissioner would issue the separate registration for the three units as per direction of the Commissioner (Appeals), it cannot be considered as separate units.
22. The Adjudicating Authority observed that despite applying for separate registration on 28.2.2005 and on 15.4.2005 and after receipt of appellate order, the Assessee continued to keep the common record of the assessee and their DT Division. It is obvious that as soon as the Appellate Commissioner held in their favour they should have segregated their records related to three units especially those of DT division and the assessee. The findings of the Adjudicating Authority are totally contrary to the facts and law of the case. It is observed that unless the Assessee obtains a separate registration certificate from the Department, they cannot maintain separate records. They cannot file separate returns for the Assessee and the DT division. If the Order dtd 12.4.2005 was implemented and the separate registration would be issued as per the direction of the Commissioner (Appeals), the Assessee could maintain separate records for the three units. Hence, the Assessee rightly maintained a consolidated Cenvat Account/PLA for the purpose of discharging duties for clearance of the excisable goods from their factory on the basis of singe registration certificate during the material period. It is revealed from the R.Cs. dated 23.09.2009 as quoted above that as per application dated 28.02.2005 the Deputy Commissioner issued R.Cs. on 23.09.2009. Hence, the Assessee should not be punished for delay of issuing R.Cs., which is against all cannons of natural justice and fair play.
23. The Ld Special Counsel submits that the appellants applied for separate registration for the purpose of availing exemption Notification. We agree with the submission of the Ld Sr Advocate that a separate proceeding was initiated against the eligibility of the exemption notification which has no relation with the present proceedings. The Ld Special Counsel submits that the order dtd 27.10.2014 of the Tribunal in respect of the other proceeding on eligibility of the exemption notification, the Revenue filed appeal before the Honble Supreme Court. The Honble Supreme Court admitted the appeal filed by the Revenue. Hence, we would not like to pass any opinion on the admissibility of the Exemption Notification, which is a separate proceedings and pending before the Honble Supreme Court.
24. The present appeal is restricted to whether on 15.04.2004, three units would be considered as separate units and the transfer of credit from DT unit to the Assessee and utilisation of the said credit for clearance of the finished goods by the Assessee. Rule 3 of the Cenvat Credit Rules 2004 provides a manufacturer of final product shall be allowed to take cenvat credit of the duty paid on any excisable goods received in the factory or manufacturer of the final product. Sub-Rule (4) of Rule 3 of Rules 2004 provides the Cenvat Credit may be utilized for payment of any duty of excise on any final product. Thus, there is no one-to-one co-relation between the inputs and final product. The Assessee was holding a single registration certificate during the material period and they have rightly discharged duty liability for clearance of the goods for home consumption by utilising credit from Cenvat Account on inter-unit transfer of credit from DT Division to the Assessee, by a common pool. In any event, substantial benefit of the Assessee of utilisation of Cenvat Credit by a common pool cannot be denied by a technical infraction of provision of law, if any.
25. In view of the above discussions, we hold that the assessee rightly utilized the Cenvat Credit transferred by DT units, for clearance of the goods for home consumption during the period April 2005 to Sept. 2009 as the Assessee was holding single registration certificate during the said material period. Accordingly, the demand of Cenvat Credit alongwith interest and penalties are set aside. The penalty imposed on Shri Deepak Prabhakar Marathe, General Manager and Authorised Signatory of the assessee, is also set aside. The appeals filed by the appellants are allowed. The application for extension of stay is dismissed as infructuous.
(Dictated and pronounced in the Court)
(P.M. Saleem) (P.K. Das)
Member (Technical) Member (Judicial)
Swami`
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