Custom, Excise & Service Tax Tribunal
M/S. Cable Corporation Of India vs M/S. Cable Corporation Of India on 27 October, 2011
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
COURT NO.1
APPEAL NO.E/685/04-Mum & E/976/04-Mum
(Arising out of Order-in- Appeal No. SDK(229) 229/MV/2003 dtd.31/10/2003 passed by the Commissioner of Central Excise (Appeals), Mumbai )
For approval and signature:
Honble Mr S.S.Kang, Vice President
Honble Mr.Sahab Singh, Member(Technical)
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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 :
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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1. M/s. Cable Corporation of India
:
Appellants
VS
Commissioner of Central Excise, Mumbai.V
2. Commissioner of Central Excise, Mumbai.V
Vs
M/s. Cable Corporation of India
Respondents
Appearance
Ms. Aparna Hirandagi, Advocate for Appellant company
Shri Y.K.Agarwal, ACAR for Department
CORAM:
Mr. S. S. Kang, Vice President
Mr.Sahab Singh, Member(Technical)
Date of hearing: 27/10/2011
Date of decision: 27/10/2011
ORDER NO.
Per : S.S.Kang
Heard both sides.
2. The appellants M/s. Cable Corpn.of India as well as Revenue filed appeals against the Order-in-Appeal passed by the Commissioner(Appeals).
3. The brief facts of the case are that the appellants M/s. Cable Corpn.of India (hereinafter referred to as assessees) are engaged in the manufacture of high voltage cables. In the manufacture of cables, the assessees are using various compounds as raw materials. The assessees cleared certain quantity of raw material describing as scrap to various dealers. The Revenue during investigation, taken samples of the material cleared by the assessees from the dealers place and the same was sent for chemical examination and as per the chemical examination report, the material in question is polyolefinic type of synthetic resin. The remnant of samples was retested as per the request of the assessees and the chemical examination report specifically stated that no contamination is detected in the samples. The show-cause notice was issued to the assessees denying the credit in respect of the material cleared as scrap and for imposition of penalty. The adjudicating authority confirmed the demand of Rs. 6,34,537/- with interest and also imposed penalty of equal amount under Rule 57 I of the Central Excise Rules.
4. The assessees filed appeal and the Commissioner (Appeals) upheld the demand and set aside the penalty on the ground that there is no suppression with intent to evade payment of duty on the part of the assessees. Against this order, the assessees as well as the Revenue filed appeals.
5. The contention of the assessees is that for the manufacture of the compound the assessees are receiving virgin granules and during the manufacture, the same are being tested and during the testing, some of the raw material was found to be contaminated which is not fit for use in the manufacture of final product and the same has been cleared as scrap. Such scrap was cleared by issuing invoices on 29.9.1999. The assessees vide letter dated 12.10.1999 informed the Revenue regarding clearance of the scrap. The contention is that as the raw material was put to use in or in relation to the manufacture of final product, therefore, credit cannot be denied. The assessees relied in the case of Tata Engineering & Locomotive Co.Ltd. vs. Commr.of Cen.Excise, Pune wherein the Honble Bombay High Court held that credit is available in respect of the inputs which are subjected to destructive test before put to use in or in relation to the final product.
6. The Revenue relied on the statement of Shri L.T.Wagh, Deputy General Manager of the assessee company where he disclosed that the granules are tested before same being accounted for by stores department. The Revenue also relied on the result of the test reports which shows that the material in question is not contaminated. The contention of the Revenue is that as the raw material on which the credit has been taken is cleared as scrap, therefore, the assessees are liable to penalty also.
7. We find that as per the modvat scheme the manufacturer is entitled to take credit in respect of the duty paid on the inputs which are used in or in relation to the manufacture of final product. As per the statement of Shri Wagh dated 14.10.99, the raw material is tested before being accounted for by stores department and certain raw material which is not found fit for use in or in relation to the manufacture of final product is cleared as scrap. This samples were obtained by the department from the dealers to whom the material was cleared and as per the test report no contamination is detected in the samples. The samples were retested as per the request of the assessees and the result is the same.
8. The assessees relied on the Bombay High Courts judgment in the case of Tata Engineering & Locomotive Co.Ltd. supra. The Honble High Court after considering the fact that the parts on which credit was availed put to stress test and certain parts after test could not be put to use as the same were deformed and the same are cleared as scrap. In these circumstances, the Honble High Court held that the credit is admissible in respect of parts which are cleared as scrap. In the present case, the facts are different. Raw material is being tested before the same is accounted for by stores department. Certain material which is contaminated is cleared as scrap. In these circumstances, the raw material on which credit has been availed is not used for in or in relation to the manufacture of final excisable goods, therefore, the assessee is not entitled for credit on such quantity of raw material. Hence, we uphold the impugned order whereby the demand alongwith interest is confirmed in this regard.
9. In respect of penalty, we find that the assessee had filed before clearance of the disputed goods necessary declaration under Rule 173 B and vide letter dated 12.10.1999 which is received by the jurisdictional Asstt.Commissioner on 19.10.99 informed the department regarding clearance of the material as scrap. Therefore, no suppression with intent to evade duty can be alleged against the assessee. We also uphold the impugned order whereby the penalty is set aside.
10. Both the appeals are dismissed.
(Pronounced in court) Sahab Singh Member(Technical) S. S. Kang Vice President pv 5