Custom, Excise & Service Tax Tribunal
M/S. Lumbini Beverages Pvt.Ltd vs Commissioner Of Central Excise, Patna on 15 May, 2012
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, KOLKATA
EASTERN ZONAL BENCH: KOLKATA
Appeal No.Ex.Ap.487/06
(Arising out of Order-in-Original No.8-9/MP/Commissioner/2006 dated 30.05.2006 passed by the Commissioner of Central Excise, Patna.)
FOR APPROVAL AND SIGNATURE
HONBLE SHRI S.K. GAULE, MEMBER(TECHNICAL)
HONBLE DR. D.M.MISRA, MEMBER(JUDICIAL)
1. Whether Press Reporters may be allowed to see
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
CESTAT(Procedure) Rules, 1982 for publication in any
Authorative report or not?
3. Whether Their Lordship wishes to see the fair copy
of the Order?
4. Whether Order is to be circulated to the Departmental
Authorities?
M/s. Lumbini Beverages Pvt.Ltd.
Applicant (s)/Appellant (s)
Vs.
Commissioner of Central Excise, Patna
Respondent (s)
Appearance:
Shri G.P.Singh, Authorized Representative for the Appellant(s) Shri S.Chakraborty, A.C.(A.R.) for the Revenue CORAM:
Honble Shri S.K. Gaule, Member(Technical) Honble Dr. D.M.Misra, Member(Judicial) Date of Hearing :- 15.05.2012 Date of Pronouncement :- 15.05.2012 ORDER NO.
Per Dr. D.M.Misra.
1. This is an appeal filed against the order-in-original No. 8-9/MP/Commissioner/2006 dated 30.05.2006.
2. Briefly stated the facts of the case are that the appellants are engaged in the manufacture of non-alcoholic beverages of different brand name falling under chapter heading No.2201.20 and 2202.20 of CETA, 1985. The appellant was issued with a Show Cause Cum Demand notice on 31.03.2005, inter alia, alleging that they have availed CENVAT Credit wrongly on PVC crates as input to the tune of Rs.76,21,389/-(Rupees Seventy Six Lakhs Twenty One Thousand Three Hundred and Eighty Nine only) during the period from April 2000 to October, 2004. The said demand was confirmed by the adjudicating authority who imposed equivalent penalty under Rule 13/15 of CENVAT Credit Rules, 2001/2002/2004 read with section 11AC of the Central Excise Act. Hence the present appeal.
3. Shri G.P.Singh, CEO of the Appellant submitted that the duty paid PVC crates are purchased by them and the same are used in or in relation to the manufacture of their final products. Hence, the same qualify as input and accordingly they have rightly availed CENVAT Credit on these crates. Explaining the use of the PVC crates, he has submitted that PVC crates are directly used in the packaging of their manufactured goods, just as glass bottles. In the soft drinks industry, plastic crates are integral parts of the manufacturing process, without which glass bottles either empty or filled in can not be moved in/out of the factory. It is essential for marketing of the product. The empty bottles are received from the manufacturers in plastic crates filed with 24 glass bottles each. These bottles are automatically picked up by a machine in the integrated automatic process from the crates. After completing the washing cycle, filling process and final inspection, the filled glass bottles are automatically put back in the crates. Plastic crates move on conveyor after bottles are removed by uncaser, washed and then comes to the caser where the bottles are crated in plastic crates. It is his submission that the aforesaid process of manufacturing shows that High speed Automatic machine cannot function without the use of plastic crates. The process will not be complete if the case packer machine does not work as the conveyor will become jam and bottles even if removed from conveyor manually will become heaps/like a hill and manufacturing will stop. Bottles are cleared with the crates and empty bottles are received with crates.
3.1 He has further submitted that the ld.Commissioner has disallowed the CENVAT credit only on the ground that they have accepted deposits @ Rs.250/- and 190/- per crate from their customers for transporting the finished goods from the factory premises to their customers. He has submitted that though they accept deposits from their customers, but no interest on the deposits are received against such deposits as observed in the Order. Further, he has submitted that the collection of deposits on the crates should not be a ground to disallow the CENVAT Credit of duty paid on such crates which are used in or in relation to the manufacture of the final product and the amortized cost is included in the value of finished goods. In support of his contention he has referred to the ratio of Tribunal in the following cases :-
(1)CCE, Calcutta-I Vs. Black Diamond Beverages Ltd.,1997(91) ELT 422(Tri) (2)Black Diamond Beverages Ltd.Vs.CCE, Cal-I, 1998 (103)ELT 340 (Tri) (3)Parle Beverages Ltd. Vs. CCE 2000(124) ELT 803 (Tri) (4)CCE, Chandigarh Vs. Kandhari Beverages Ltd.2008(223) ELT 147(P & H) (5)CCE, Rajkot Vs. Ajanta Transits for Clock MRF Co 3.2 Ld.Representative further submitted that in a recent Order issued by the Commissioner of Central Excise, Patna pursuant to the remand order of this Tribunal No.A-80-83/KOL/2011 dated 22.03.2011 in the case of Coca-Cola Beverages Pvt.Ltd. CENVAT Credit on plastic crates has been held to be admissible.
3.3 Further he has submitted that since their product is assessed under MRP based assessment under the provisions of section 4A of Central Excise Act, 1944, hence all expenses are included in the value of the goods. Accordingly, collection of deposits from customers on PVC crates is irrelevant to the facts in issue. In this connection he has referred to the judgement of the Tribunal in the case of Commissioner of Central Excise, Mumbai-IV vs. Aqua Bislery (India) Ltd. 2011 (267) ELT 283 (Tribunal-Mumbai).
3.4 Further,he has also submitted that the Show Cause Notice was issued to the Appellant on 31.03.2005 to recover CENVAT Credit for the period 2000-2001 to 2003-2004. It is submitted that all the facts including the process of manufacture wherein PVC crates are used had been submitted to the department along with the declarations under erstwhile Rule 173B and 57G of Central Excise Rules on 31.03.2000 and hence the demand is barred by limitation.
4. Per contra the ld.A.R.(Asstt.Commr.) for Revenue reiterated the findings of the adjudicating authority. He has submitted that as the appellants are collecting security deposits against use of crates hence it cannot be said that the same are used in or in relation to manufacture of final products and accordingly be termed as inputs. Hence the adjudicating authority has rightly disallowed the CENVAT Credit on the PVC crates. He has submitted that the appellant had been collecting deposits from the customers on such crates and not disclosed the said fact to the department and hence there is an element of suppression and accordingly extended period of limitation has been rightly invoked and confirmed against them.
5. We have considered the submissions and perused the record. The issue revolves in a very narrow compass. It is the Revenues case that the appellants are collecting deposits from the customers on the PVC crates used for transporting aerated water in bottles, and hence the CENVAT Credit is not admissible. We do not find any merit in the said allegation. It is not in dispute that the PVC crates are used by the appellants in their factory in the automatic process of placing bottles in the crates during the process of manufacture of aerated water as explained by the representative of the appellants. It is also not in dispute that the amortized cost of the PVC crates are included in its value. We agree with the ld.Representative that since the goods are assessed to duty under Section 4A of Central Excise Act attracting MRP based assessment inclusion of cost of packing or otherwise in the value of finished goods is irrelevant in determining the issue of admissibility of CENVAT Credit of the duty paid on such PVC crates. We find that this Tribunal in the case of CCE, Calcutta-I Vs. Black Diamond Beverages 1997 (91) ELT 422 (Tri.) has held that Modvat Credit under erstwhile Rule 57A of Central Excise Rules is admissible on plastic crates and it is later followed in Black Diamond Beverages Ltd. v. CCE, Cal-I 1998 (103) ELT 340 (Tri.). Similar view was also expressed in the case of Delhi Bottling Co. vs. CCE, Chandigarh 1995 (105) ELT 42 and also in the case of Parle Bevarages Ltd. vs. CCE, Mumbai 2000 (124) ELT 803 (Tri.). We find that even though the judgements were delivered under Rule 57A of the erstwhile Central Excise Rules, 1994 of the Central Excise Rules, where the condition was that the value of the packing materials ought to be included in the assessable value of the finished goods and such condition is no more relevant in the definition of input under the CENVAT Credit Rules, 2004, but the CENVAT Credit would be held as admissible as the larger Bench of the Tribunal in the case of Banco Products (I) Ltd. v. CCE, Vadodara-I 2009 (235) ELT 636 has held that credit is available on plastic crates used as material handling equipments in the factory premises either treating it as capital goods or also as an input. We do not find merit in the observation of the ld.Commissioner that CENVAT Credit is not admissible on the PVC crates as the appellants had collected interest free security deposits on such crates from their customers. We are of the opinion that CENVAT Credit is admissible once it satisfies the definition of input and such input is used in or in relation to the manufacture of the final product. In the instant case the appellants had explained the use of such crates during the process of manufacture and categorical in his submission that disastrous consequence of non-use of such crates would occur while filling the bottles in the respective crates which ultimately facilitates the transportation of the bottles within the factory and from factory to the customers premises. In these circumstances the PVC crates being used as inputs/capital goods in the manufacture of aerated waters accordingly CENVAT Credit is admissible on the same. Ld.Representative has also invited our attention to a recent Order of Commissioner of Central Excise, Patna No.46/51/MP/Denovo/Commissioner/2011 dated 24.10.2011 wherein CENVAT Credit on PVC crates has been allowed. In view of above findings we do not find any substance in the impugned order passed by the ld.Commissioner and accordingly the same is set aside and the appeal is hereby allowed.
(Operative part of the order was pronounced in the open court.)
SD/ SD/
(S.K. GAULE) (D.M.MISRA) MEMBER(TECHNICAL) MEMBER(JUDICIAL)
sm
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Appeal No.Ex.Ap.487/06