Custom, Excise & Service Tax Tribunal
M/S Mfci-Oen Connectors Ltd vs Commissioner Of Central Excise, Cochin on 11 January, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: E/214/2007-DB [Arising out of Order-in-Appeal No. 05/2007 dated 31/01/2007 passed by Commissioner of Central Excise, Customs & Service Tax (Appeals), cochin] For approval and signature: HON'BLE SHRI M.V. RAVINDRAN, JUDICIAL MEMBER HON'BLE SHRI ASHOK K. ARYA, TECHNICAL MEMBER 1 Whether Press Reporters 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 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? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes M/s MFCI-OEN CONNECTORS LTD. ELECTROGIRI, MULANTHURUTHY, KERALA 682314. Appellant(s) Versus Commissioner of Central Excise, COCHIN C. R. BUILDING, I S PRESS ROAD, ERNAKULAM, COCHIN - 682018. Respondent(s)
Appearance:
Mr. Raja Kannen, Advocate For the Appellant Mr. Ajay Saxena, Commissioner (A.R.) For the Respondent Date of Hearing: 11/01/2016 Date of Decision: 11/01/2016 CORAM:
HON'BLE SHRI M.V.RAVINDRAN, JUDICIAL MEMBER HON'BLE SHRI ASHOK K. ARYA, TECHNICAL MEMBER Final Order No. 20022 / 2016 PER M.V. RAVINDRAN This appeal is directed against the Order-in-Appeal No. 5/2007 dated 31.1.2007.
2. Heard both sides and perused the records.
3. On perusal of the records, it transpires that the issue involved in this case is regarding valuation of machineries cleared by the appellants to the job-workers. The appellant herein manufactured two Delta D Assembly machines and used the same within their factory premises for manufacturing of final products on which appropriate duty liability was discharged. Subsequently, the appellant cleared these machineries to their job-workers for manufacturing of articles for their use. The Revenue authorities were of the view that the appellant has to discharge the duty liability on the machinery cleared. Acceding to the directions of the Revenues authorities, the appellant calculated the assessable value of the machineries by availing the benefit of depreciation as per the Central Board of Excise & Customs letter F. No. 495/16/93-Cus-VI dated 26.5.93 and discharged the duty liability. Revenue authorities are of the view that since the machineries were cleared to the job-workers, the appellant could not claim the depreciation to discharge the duty liability and issued a show-cause notice which was confirmed by the adjudicating authority after following the due process of law confirmed differential duty liability of Rs. 56,139/- and interest thereof and imposed penalty under Section 11AC of the Central Excise Act, 1944. The appeal to the first appellate authority got rejected.
4. We find that the first appellate authority as well as the adjudicating authority has erred in appreciating the law correctly. In our considered view that it is undisputed that the appellant has cleared the machineries to their job-workers from whom they got the goods manufactured. Such manufactured goods were brought to their factory for use and final products were cleared on payment of appropriate duty. It is responsible statement of the learned counsel, that the machineries subsequently returned back to the appellant, though this position is not forthcoming from the records. In our considered view that the discharge of duty liability by the appellant as the value after availing benefit of depreciation seems to be correct for more than one reason.
4.1. Firstly, the machinery which has been manufactured by the appellant is said to be in the year 1996 and was put to use by the appellant in their factory premises is an accepted fact. The subject machines were sent out to job-workers in the year 2002-03 is also undisputed. The machinery being manufactured in the year 1996 was disputed by the first appellate authority in his impugned order while we find from the adjudication order that the adjudicating authority has recorded that it is claimed by the assessee that the machinery was manufactured in 1996, but the said claim of the assessee is not controverted in anyway in the adjudication order. The first appellate authority was hearing the appeal filed by the assessee could not have come to a conclusion that the said machineries were indeed not manufactured in 1996, without any evidence.
4.2. Secondly, we find that C.B.E.C. in Circular No. 643/34/2002-CX. dated 1.7.2002 at point No. 14 while accepting the discharge of duty liability in respect of capital goods on which Cenvat credit has been taken and put to use cleared for subsequently, categorically stated that in respect of capital goods adequate depreciation may be given as per the rates fixed in letter F. No. 495/16/93-Cus-VI dated 26.5.1993, issued on the Customs side.
5. From the above, clarification, it is clear that if any capital goods on which Cenvat credit has been availed and put to use and subsequently removed, depreciation needs to be given as per the clarification of C.B.E.C. If that be so, in the case in had, such directions would apply inasmuch as the machineries manufactured by the appellant and were used in the manufacturing of final products is not disputed. Hence, claiming of depreciation for discharging the duty seems to be in consonance with the law.
6. In view of the above, we hold that the impugned orders are unsustainable and liable to be set aside and we do so.
7. The impugned orders are set aside and the appeal is allowed.
(Pronounced in open court) (ASHOK K. ARYA) TECHNICAL MEMBER (M.V. RAVINDRAN) JUDICIAL MEMBER /vc/