Custom, Excise & Service Tax Tribunal
M/S.G.M.Enterprises vs Cce, Jaipur on 18 September, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI
Date of Hearing/Decision:18.09.2015
Excise Appeal No.E/1728/2006-EX(DB)
[Arising out of Order-in-Appeal No. 36(MPM)CE/JPR-I/2006 dated 24.01.2006 passed by the Commissioner (Appeals), Customs & Central Excise, Jaipur].
M/s.G.M.Enterprises Appellants
Vs.
CCE, Jaipur Respondent
Appearance:
Rep. by Shri C. Harishankar, Sr. Advocate with Shri S. Sunil, Advocate for the appellant.
Rep. by Shri S. Naunthuk, AR for the respondent. For approval and signature:
Honble Shri Ashok Jindal, Member (Judicial) Honble Shri B. Ravichandran, Member (Technical) 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 authoritative report or not?3
Whether Their Lordships wish to see the fair copy of the Order?4
Whether Order is to be circulated to the Departmental authorities?
Coram: Honble Shri Ashok Jindal, Member (Judicial) Honble Shri B. Ravichandran, Member (Technical) Final Order No.53048/2015 dated:18.09.2015 Per B.Ravichandran:
The present appeal is against the order of the ld. Commissioner (Appeals) dated 24.01.2006. The appellants are engaged in the manufacture of razor and razor blades subjected to central excise duty. They undertake job work for M/s.Gillete India Ltd and the components are supplied either by M/s.Gillete India Ltd. or by their vendors. The appellants assemble the components of the razor and pack them with blades/cartridges in blister packing. The goods so produced and cleared were subjected to MRP based assessment. The appellants were availing cenvat credit on blades and razors. Sometimes, blades are shown as sold free in the blister pack with razors. Proceedings were initiated against the appellants for denying cenvat credit on blades cleared free of duty. The case was adjudicated confirming the demand on denial of credit and imposing penalty. On appeal, the Commissioner (Appeals) rejected the appeal. On further appeal, the Tribunal vide Final Order dated 3.7.2005 remanded the matter to the Commissioner (Appeals) for a fresh decision. The impugned order was passed accordingly.
2. In the appeal before us, the appellants plead that as a job worker for M/s. Gillete India Ltd. , they receive parts of razors and tucks of blades from the principal. They undertake the assembly of razor, blister pack razors with tuck of blades and clear such combined blister packs. On packs, it was mentioned that blades were being supplied free with the razors. The Department took the view that since the blades were supplied free cenvat credit taken on such blades should be reversed. The appellants contended that in their own case, this Tribunal held against them vide reported at 2003 (177) ELT 955 (Tribunal). The said decision was as per the earlier decision of the Tribunal in the case of G.S. Industries reported at 2002 (144) ELT 387 (Tribunal). For the latter period, in respect of G.S. Industries, on similar set of facts, the appeal was filed before this Tribunal and the same was allowed vide order reported at 2014 (313) ELT 340 (Tribunal) . The Tribunal followed the decision of the Honble Gujarat High Court in the case of Prime Health Care Products reported at 2011 (272) ELT 54 (Gujarat). During the arguments, ld. Counsel for the appellant contended that the combined composite pack was sold with a MRP for the entire pack. The endorsement to the effect that the blade is free is a marketing strategy and it is a form of trade discount on the pack. He further contended that the department proceeded to recover the cenvat credit on blades in terms of Rule 6 of the Cenvat Credit Rules, 2002. Rule 6 has no application in their case as there is no exempted goods involved.
3. Ld. AR reiterated the findings in the impugned order and relied on the decision of the Tribunal in the case of G.S. Industries (supra).
4. Heard both the sides and examined the appeal records.
5. The lower authorities ordered the recovery of irregular credit taken on blades, which were later supplied with the razors in a combined package to the customers with an indication that razor is free. In this case, we find that there is no dispute regarding valuation of final products cleared. There is no allegation of short payment of duty on account of non-inclusion of free supplied blades in the valuation of final products viz. razor blade combo packed together. Still, the department went ahead and denied the credit on the blades under the provisions of Rule 6(1) of the Cenvat Credit Rules, 2004. It is clear that Rule 6(1) will apply in respect of the inputs used in or in relation to the manufacture of exempted goods. Now, it would appear that the department equated the supposed free blades with exempted goods. Otherwise, Rule 6(1) has no relevance. Calling a free supplied good as exempted goods is legally unsustainable. Ld. Commissioner (Appeals) categorically states that the Boards circular dated 28.10.2002 regarding MRP based valuation under Section 4 A is not relevant to the dispute as in the present case, there is no dispute about the appellants assessable value or MRP of the product. Considering the ld. Commissioner (Appeals) categorical assertion , it is clear that there is no under-valuation or short payment of duty on the final products cleared, which includes the free supplied blades. Equating such free supply to exempted clearance is untenable as already explained. As such, the provisions of Rule 6 of the Cenvat Credit Rules, 2004 has no application here.
6. This Tribunal in the case of G.S. Industries (supra) relying on the decision of the Honble High Court of Gujarat in the case of Prime Health Care Products (supra) held that cenvat credit availed by the assessee in respect of excise duty paid on blades cannot be disallowed. We find that the decision of the Tribunal as above is applicable to the present case also.
7. Considering the above discussion, we find that the impugned order is not sustainable and accordingly set aside the same by allowing the appeal with consequential relief, if any.
[operative portion of the order already pronounced in the court] ( Ashok Jindal ) Member (Judicial) ( B. Ravichandran) Member (Technical) Ckp.
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