Customs, Excise and Gold Tribunal - Bangalore
Sree Rayalaseema Dutch Kassenbouw Ltd. vs The Commissioner Of Central Excise on 1 June, 2006
ORDER T.K. Jayaraman, Member (T)
1.This appeal has been filed against the Order-in-Original No. 12/2005 dated 15.4.2005, passed by the Commissioner of Customs and Central Excise, Tirupathi.
2. The appellants manufacture Stable Bleaching Powder, an excisable commodity. They availed SSI exemption under Notification No. 8/2003-CE dated 1.3.2003. The Revenue proceeded against the appellants on two counts. Firstly, the appellants received raw material from M/s Rayalaseema Hi-Strength Hypo Ltd. who are the owners of the brand name "Anisha". The appellants undertook the manufacture of Stable Bleaching Powder under the brand name "Anisha" out of the raw material supplied by M/s Rayalaseema Hi-Strength Hypo Ltd. The finished products were sent to M/s Rayalaseema Hi-Strength Hypo Ltd. who cleared the goods without payment of duty. The Revenue's case is that the appellants should have followed the procedure under Notification No. 214/86 dated 25.3.1986 and since they have not followed it, they are liable to discharge the duty on the finished products sent to M/s Rayalaseema Hi-Strength Hypo Ltd. The demand of duty on account of this ground is Rs. 16,02,337/-. It is further contended by the Revenue that the value of the clearance of M/s Rayalaseema Hi-Strength Hypo Ltd. should have been included in the aggregate value of the clearance of the appellants for the purpose of computing SSI limits of Rs. 3 crores. Consequently, it was held that the SSI exemption is not available to the appellants for the financial year 2003-2004. Consequent demand on account of this ground is Rs. 15,99,611/-. The duty was demanded under proviso to Section 11A of the Central Excise Act. Interest was demanded under Section 11AB of the Act. Equal penalty to the tune of Rs. 32,01,948/- was imposed on the appellants under Section 11AC read with Rule 25 of the Central Excise Rules, 2002. The appellants strongly challenge the impugned order.
3. Shri G. Shivadass, the learned Advocate appeared for the appellants and Shri R.K. Singla, the learned Jt. CDR appeared for Revenue.
4. The learned Advocate urged the following points:
(i) In sending the raw material to the appellants, Rule 4(5)(a) of the CENVAT Credit Rules, 2002 has been followed. The above rule is self-contained code providing for movement of inputs for job work manufacture by a manufacturer and return of the same within the stipulated time from the job worker and its clearances thereafter on payment of applicable duty. As per the above rules, the liability of paying the duty is on the supplier and not on the job worker. The following case laws were relied on:
(a) M. Tex & D.K. Processors Pvt. Ltd. v. CCE 2001 (136) ELT 73 affirmed by S.C. as .
(b) CCE, Jaipur-II v. Tirupati Fabrics & Industries Ltd. 2001 (46) RLT 8
(c) Eveready Inds. Ltd. v. CCE Therefore the demand of Rs. 16,02,333/- is not tenable.
(ii) The goods manufactured by them on job work basis are branded goods. The raw material supplier, M/s Rayalseema Hi-Strength Hypo Ltd. has supplied the packing material printed with the brand name "Anisha". The raw material supplier is not SSI unit. The raw material supplier has filed classification declaration in which the brand name "Anisha" has been clearly indicated. In terms of sub para (b) of Para 3A of Notification No. 8/2003, the value of clearance bearing the brand name of another person is not to be included in the aggregate value of clearances of Rs. 3 crores. In view of the above clear cut provision of the Notification, the value of excisable goods manufactured on job work basis cannot be included in the aggregate value of clearances for home consumption. The following case laws were relied on:
(a) CCE v. Space Foods (P) Ltd.
(b) CCE v. Power Control
(c) K.N. Chari Rubber & Plastics 2001 (135) ELT 773 In view of the above, the demand of Rs. 15,99,611/- is not sustainable.
(iii) Since the demands are not sustainable, the imposition of penalty and demand of interest cannot be sustained.
5. The learned Jt. CDR re-iterated the order of the lower authority.
6. We have gone through the records of the case carefully. We are re-producing the Rule 4(5)(a) which is as follows:
RULE 4.(5)(a) - The CENVAT credit shall be allowed even if any inputs or capital goods as such or after being partially processed are sent to a job worker for further processing, testing, repair, reconditioning or any other purpose, and it is established from the records, challans or memos or any other document produced by the assessee taking the CENVAT credit that the goods are received back in the factory within one hundred and eighty days of their being sent to a job worker and if the inputs or the capital goods are not received back within one hundred eighty days, the manufacturer shall pay an amount equivalent to the CENVAT credit attributed to the inputs or capital goods by debiting the CENVAT credit or otherwise, but the manufacturer can take the CENVAT credit again when the inputs or capital goods are received back in his factory.
A close reading of the above rulings makes it clear that a manufacturer can avail CENVAT credit on inputs or capital goods as such or after being partially processed are sent to the job worker for further processing, test, repair, reconditioning or any other purpose; and the goods are received back in the factory within 180 days from the job worker. It is very clear that the above rule does not contemplate payment of duty by the job worker. The duty liability is squarely on the shoulders of the raw material supplier. Therefore, the demand of duty for the reason that raw material supplier has not followed the provision of Notification No. 214/86 is not correct. Therefore we set aside the demand of Rs. 16,02,337/-. In the case laws cited by the learned Advocate, it has been held that liability to pay duty rests on the raw material supplier and not on the job worker. As regards the inclusion of value of the clearances of branded goods, it has been clearly stated in the relevant Notification at Para 3A(b) that the value of clearance bearing brand name or trade name of another person who is eligible for the benefit of exemption in terms of Para 4 of the Notification, is not to be included in the aggregate value of clearances of excisable goods for home consumption in respect of the manufacturer who avails the benefit of notification. In the present case, as the raw material supplier has his own brand name, he is not entitled for SSI benefit. The goods received from the appellants bearing brand name 'Anisha' were cleared on payment of duty. It is very clear from the above provision that the value of the said clearance is not to be included in the aggregate value of the clearance of the appellants. The case laws cited by the learned Advocate are relevant. Hence the demand on this count is also not sustainable. In the result, the entire demand of duty is set aside. Hence no penalty and interest are leviable. Therefore we set aside the Order-in-Original and allow the appeal with consequential relief.
(Operative portion of the order has been pronounced in the open court) on completion of hearing).