Custom, Excise & Service Tax Tribunal
M/S Hawkins Cookers Ltd vs Commissioner Of Central Excise, ... on 27 December, 2012
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. IV Appeal No. E/674/12 (Arising out of Order-in-Appeal No. BC/295/M-III/2011-12 dated 31.1.2012 passed by the Commissioner of Central Excise (Appeals), Mumbai-III). For approval and signature: Honble Shri Anil Choudhary, Member (Judicial) ======================================================
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?
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M/s Hawkins Cookers Ltd.
Appellant
Vs.
Commissioner of Central Excise, Mumbai-III
Respondents
Appearance:
Shri Prakash Shah, Advocate
for Appellant
Shri V.R. Kulkarni, Dy. Commr. (AR)
for Respondent
CORAM:
SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL)
Date of Hearing: 27.12.2012
Date of Decision: .04.2013
ORDER NO.
Per: Shri Anil Choudhary
The present appeal has been filed by the appellant, M/s Hawkins Cookers Ltd. against Order-in-Appeal No. BC/295/M-III/2011-12 dated 31.1.2012 passed by the Commissioner of Central Excise (Appeals), Mumbai-III.
2. The brief facts of the case are that the appellant is engaged in the manufacture of presser-cooker. They cleared the manufactured cookers to their Depot, C.F.A. in bulk cartons (containing many cookers) along with extra cartons (meant for repacking of the cookers independently) before dispatch to their whole sellers and distributors for sale. The appellant availed input tax credit (on such packing material) with the understanding and belief that the extra or individual cartons have been used in relation to the manufacture of final products. It is also their case that the cookers are not sold without the individual cartons as per the requirement and business practice of the appellant. Only for the sake of convenience, the cookers are removed from the factory in bulk packing along with the extra (single) cartons to its depot or C&F agent, which is not on sale. Thereafter, the cookers are repacked in the single cartons at the depot of the appellant from where they are dispatched to the whole sellers or distributors on sale. This practice was regularly being followed for several years and the same was in the knowledge of the department. Further, the packing material being extra-single cartons etc. were duly accounted for in the Books of Account as well as their value etc. duly reflected in the RG-23 register as well as in the monthly returns filed with the department. Further, case of the appellant is that all sales are made from depot or C.F.A. only, which are located at various places through out India and there is no factory-gate sale. This practice is followed to safeguard the product from damage in transport and also to ensure that the customers get the product in a presentable form, as well as the carton being not in the mutilated form either. Further, the product has an MRP price under Section 4A which is all inclusive price i.e. the price of extra (single) cartons is also included. The requirement of Rule 2(f) were complied with.
2.1 It is further case of the appellant that the issue of packing material cleared along with the final product, was finally settled by the Hon'ble Apex Court in the case of Vikram Cement Vs. Commissioner of Central Excise, Indore 2006 (194) ELT 3 (SC).
3. The case of the department is that the packing material (extra carton etc.) was not used in the factory of production and hence CENVAT Credit of duty paid on such packing material was not available to the appellant in terms of Cenvat Credit Rules, 2004. In the year 2004, in the course of audit for the period 2001-05, it was pointed out by the department that the CENVAT Credit taken on the extra (master or single) cartons would not be allowed as the same was not used in the factory of production, but are used in the depot of the appellant for packing of the cookers. On this objection being raised by the Revenue, the assessee immediately reversed the credit availed under protest totaling Rs.6,25,561/- (duty of Rs.4,73,859/- vide Entry No. 956 dated 29.12.2004 for the period from April, 2001 to Sept, 2004 and Rs.1,51,702/- vide Entry No. 216 date 16.6.2005 for the period October, 2004 to May, 2005). After such reversal of duty, the department issue two show-cause notices, first dated 8.2.2005 for the period April, 2001 to Sept, 2004 for an amount of Rs.4,73,859/- and the second show-cause notice dated 7.11.2005 for the period October, 2004 to May, 2005.
4. The matter had earlier come up before this Tribunal in Appeal No. E/2657/06-Mum, wherein vide order No. A/30/C-IV/SMB/2008 dated 2.1.2008, the Tribunal has held as under: -
5. I have considered the submissions. I find that the Commissioner (Appeals) had primarily denied the credit on the ground that the inputs were not used within the factory of production and as per Board Circular, credit is admissible when the inputs/capital goods are used within the factory premises except when used for jobwork outside the factory premises. I find that the Apex Court has in the case of Vikram Cement (cited supra) very clearly held that the credit cannot be denied merely on the ground that the inputs are not used within the factory of the production and clearly stated that the definition under Rule 57AA and other rule nowhere places any such restrictions. All that has to be considered is whether inputs were used in or in relation to manufacture of final products. The moot question in present case is whether the master cartons which are cleared from the factory alongwith the goods, but are used for packing at the depot can be considered to be used in or in relation to the manufacture of final products. In this regard I note that the depot has been defined as place of removal only with effect from 13.05.2003 and prior to that place of removal was factory only. Since prior to 13.5.2003 the goods were packed in primary cartons and transported in that condition only. The master cartons cannot said to be used in or in relation to manufacture of the final product when the same were used at depots only. Accordingly, I hold that the credit in respect of these cartons will not be available prior to 13.5.2003 (emphasis supplied).
6. Subsequent to 13.5.2003 since the depot has been defined as a place of removal and goods for the first time are sold from depot as there is no other sale at the factory gate, the master cartons have to be considered as have been used in or in relation to the manufacture of final products and the credit of duty paid on such master cartons cannot be denied. Once cost of such additional packing at depot has been considered to be inclusive in the assessable value as per the CESTAT decision in the case of Clariant (India) (cited supra), there is no reason why such packing should not be considered has been used in or in relation to the manufacture of final products, when the definition of the inputs includes packing material as well. I, therefore, hold that after 13.05.2003 the credit on such master cartons shall be available (emphasis supplied).
7. As regards the plea of limitation, I find that the plea has been taken before both the lower authorities and the Commissioner (Appeals), but no finding on the same has been given. Since this requires examination as to what sort of information and declaration were filed and whether this matter was within the knowledge of the department or not and whether there was any intention to evade payment of duty at all, the matter is required to be remanded back to the original authority to look into the aspect of the limitation and give us findings thereon. The remand is for the limited purpose of looking into the plea of limitation only.
8. The appeal is partly allowed by way of remand as per above terms. 4.1 On the question of limitation, the Tribunal observed that the appellant had taken a plea before both the lower authorities, but no finding on the same was given and hence, the matter was remanded back to the original authority on the limited aspect of limitation.
4.2 Thus, the Tribunal held that credit was available subsequent to 13.05.2003 and not prior to 13.5.2003 in view of the insertion of clause III under Section 4(3)(c), wherein it was provided that place of removal means also the depot and premises of C&F agent or any other place or premises from where the excisable goods are to be sold after their clearance from the factory. This was inserted w.e.f. 14.5.2003 by Section 136 of the Finance Act, 2003. Aggrieved with the same, the Revenue carried the matter before the Hon'ble Bombay High Court in Central Excise Appeal No. 26 of 2010, which was dismissed, upholding the order of this Tribunal.
5. The appellant thereafter filed further written submissions before the Dy. Commissioner, stating therein that in the facts and circumstances, there is no suppression of facts or any manipulation in the records, neither any willful omission or commission on the part of the appellant nor any collusion etc. attracting extended period of limitation. Further, in view of proper records maintained and timely return filed, and the practice carried on over several years, there is no case made out for suppression of facts or records. Further, in all the earlier Revenue audits, more particularly CERA and EA, 2000, this practice was accepted and never objected. Further, from reading of both the show-cause notices dated 8.2.2005 and 7.11.2005, no allegation is made out, making out the case of intention of evasion of duty or suppression of facts or collusion etc. Hence, in view of ruling of the Hon'ble Apex Court in the case of Kaur & Singh Vs. Commissioner of Central Excise, New Delhi 1997 (94) ELT 389 (SC), no case of extended period is made out under the provisions of the Act.
6. The adjudicating authority vide its Order-in-Original No. 74075/2011-12/BC/21/M-III dated 29.7.2011, held that extended period of limitation is attracted in view of para 3 of the show-cause notice, which states the following allegation: -
3. whereas the assessee is very much aware that availment of CENVAT Credit on the packing materials used at depots/C&F premises is not admissible to them as per Rule 2(f) of the Cenvat Credit Rules, 2001, they knowingly and deliberately availed inadmissible CENVAT Credit and utilized the same towards payment of Central Excise duty ..
4. As such the assessee has contravened the provisions of Rule 2(f) of the Cenvat Credit Rules, 2001. 6.1 The adjudicating authority further observed that mere knowledge of the department regarding the availment of CENVAT Credit on packing material by itself is not sufficient to allege that the department was aware of the fact that the said packing materials were used outside the factory or were being sent to the depot or the C&F agent premises. Further, as per the CBE&C Circular No. 637/2002 dated 8.5.2002 provided that CENVAT Credit is admissible only on inputs/capital goods are used within the factory premises except when used for job-work outside the factory. Accordingly, it was held that the appellant is not entitled to the benefit of limitation of one year and extended period of limitation is attracted. Accordingly, the Dy. Commissioner confirmed a demand of Rs.2,74,365/- for the period prior to 13.5.2003, i.e. 1.4.2001 to 12.5.2003. It was further ordered that the CENVAT Credit of Rs.3,52,096/- availed for the period from 13.5.2003 is allowable in view of the earlier order of this Tribunal dated 2.1.2008. Further, interest at appropriate rate under rule 12 of the Cenvat Credit Rules, 01 read with Section 11AB was ordered to be recovered and a penalty of equal amount Rs.2,73,465/- was imposed under Rues, 2001 read with Section 11AC of the Act.
7. Being aggrieved, the appellant carried the matter before the Commissioner (Appeals), who vide the impugned order held against the appellant observing that the RG-23 Part-II register during the relevant period was maintained by the assessee for the purpose of keeping duty payable on the goods through CENVAT Credit account. Further, description of the goods cleared was not mentioned in the said register. Further, the appellant have not produced any documents to show that the fact of removal of inputs as such was brought to the notice of the department at any time. Hence, in absence of such, there was no way to the department that the assessee had cleared the packing material as such from their factory and these facts first came to the notice of the department only during the course of the audit.
7.1 Being aggrieved the appellant has carried the matter before this Tribunal.
8. Thus, the contention of the appellant is that the Commissioner (Appeals) has erred in holding that the records maintained in RG-23 (P-II) as well as RG-23A P-I & II and filing of proper returns and maintenance of proper records were not sufficient.
8.1 Further, it was urged that there is no case of any clandestine removal on the part of the appellant as in the case of Quality Exports 2001 (135) ELT 430 relied upon by the Commissioner (Appeals) as well as in the case of Faridabad Metal Udyog 2001 (138) ELT 1021, which was the case of mis-declaration. Further, the reliance placed by the Commissioner (Appeals) in the case of Nitin Patki 2011 (273) ELT 104, the order was set aside by the Hon'ble Bombay High Court. Further, in view of the facts and circumstances, extended period of limitation is not invocable and reliance was placed on the ruling of the apex court in the case of Kaur & Singh (supra) as well as in the case of Raj Bahadur Naryan Singh Sugar Mills Ltd. Vs. UOI 1996 (88) ELT 24 (SC) and also on the ruling in the case of Centre of Development for Advanced Computing Vs. CCE, Pune III 2002 (141) ELT 6 (SC). Further, the learned Commissioner (Appeals) failed to appreciate that the demand notice was issued only on 8.2.2005 relating to the period April, 2001 to 12.5.2003 and the same is barred by limitation in view of the fact that Return for May, 2003 was submitted on 10.6.2003. Accordingly, limitation expired on 9.6.2004 much before the date of issue of show-cause notice. Further, in view of the law clarified by the Hon'ble Supreme Court in the case of Vikram Cement (supra), there is no case of any mischief, fraud or contumacious conduct made out on part of the appellant. Hence, the learned Counsel for the appellant strongly contended that the impugned order is fit to be set aside as well as interest and penalty to be quashed.
9. The learned Dy. Commissioner (AR) for the Revenue relied on the finding of the lower authority and also relied on the ruling of the Hon'ble Apex Court in the case of Maruti Suzuki Ltd. Vs. Commissioner of Central Excise, Delhi-III 2009 (240) ELT 641 (SC), wherein it was held that CENVAT Credit on packing material in question used in course of manufacture of final product have been used subsequent to clearance from the factory premises in the depot of the appellant, and it does not amount to use in the course of manufacture and accordingly not eligible for CENVAT Credit.
10. I have carefully considered the rival submissions.
10.1 So far the merits of eligibility of the CENVAT Credit of the input material (packing materials) in question is concerned, the issue is settled by this Tribunal in view of the ruling of the Apex Court in the case of Vikarm Cement (supra), which has been followed by this Tribunal in the case of Clariant (India) Ltd. Vs. Commissioner of Central Excise, Thane- 2006 (196) ELT 353. Further, in the facts and circumstances and considering the case laws relied upon by the parties, I hold that no case of any suppression or mis-declaration or any contumacious conduct is made out against the appellant, and accordingly, it is held that the extended period of limitation is not available. Accordingly, the demand confirmed of Rs.2,73,365/- is set aside and quashed. Further, in the facts and circumstances, no penalty is attracted and accordingly penalty imposed and interest levied are set aside.
11. In the result, the appeal is allowed with consequential relief, if any.
.
(Pronounced in Court on ........................) (Anil Choudhary) Member (Judicial) Sinha 9