Custom, Excise & Service Tax Tribunal
Daimler India Commercial Vehicles P Ltd vs Commissioner Of Gst&Cce(Chennai ... on 13 January, 2026
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
CHENNAI
REGIONAL BENCH - COURT NO. III
Excise Appeal No.41093 of 2018
(Arising out of Order-in-Appeal No.525/2017 (CTA-II) dated 29.12.2017
passed by Commissioner of Central Tax (Appeals-II), CGST & Central Excise
Newry Towers, 2054/I, II Avenue, 12 th Main Road, Anna Nagar, Chennai
600 040)
M/s. Daimler India Commercial
Vehicles Pvt. Ltd., ....Appellant
SIPCOT Industrial Park,
Singaperumal Koil Road,
Oragadam Village, Sriperumpudur Taluk,
Kanchipuram District, Chennai-602 105.
Versus
Commissioner of GST & Central Excise, ... Respondent
Chennai Outer Commissionerate, Newry Towers, No.2054, I Block, II Avenue, 12th Main Road, Anna Nagar, Chennai 600 040.
APPEARANCE:
Shri Raghavan Ramabadran, Advocate for the Appellant Shri Sanjay Kakkar, Authorized Representative for the Respondent CORAM:
HON'BLE MR. P. DINESHA, MEMBER (JUDICIAL) HON'BLE MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL) FINAL ORDER No.40082/2026 2 DATE OF HEARING: 24.11.2025 DATE OF DECISION: 13.01.2026 Per: Shri P. Dinesha This Appeal is filed by M/s. Daimler India Commercial Vehicles Pvt. Ltd. aggrieved by the Order-in-Appeal No. 525/2017 (CTA-II) dated 29.12.2017 passed by Commissioner of GST & Central Excise (Appeals-II), Chennai.
2. Brief facts of the case are that the Assessee who is the Appellant here, in this Appeal, are registered for manufacture of Trucks and Commercial Vehicles and their parts and accessories falling under Chapter 87 of the Central Excise Tariff Act, 1985. They had availed CENVAT credit of Rs.1,19,38,212/- on the basis of invoice No. 2140080001 dated 07.07.2012 issued by M/s.KLT Automotive and Tubular Products Ltd. (KLT, for short) for 'Kink Bending Machine' without the receipt of the goods into the factory premises. A Show Cause Notice No.42/16 dated 30.09.2016 was issued to demand recovery of the said credit and appropriate the amount already reversed by them on 17.01.2014 apart from charging interest and imposing penalty. After due process, the Adjudicating Authority, vide the 3 Order-in-Original No.49/2017 dated 26.04.2017 held that the demand fails to survive on merits as well as limitation and dropped the proceedings initiated in the Notice.
3. The Department being aggrieved by Order-in-Original dt. 26.04.2017 filed Appeal before the First Appellate Authority inter alia on the grounds that the said capital goods were sold by M/s.KLT vide invoice dated 07.07.2012 and credit was taken on the said capital goods only in 2012-13 and 2013-14; that at the time of the sale of the capital goods, the premises of M/s.KLT was not part of the registered premises of the Appellant; that it was the registered premises of M/s.KLT till it was cancelled and thereafter amended and included as registered premises of Appellant; that the claim of showing availment of credit in their ER1 Returns will not any way reveal non-receipt of the machine in their factory; the fact that credit can be taken on capital goods sent directly to the job worker and brought back within two years is valid only from 01.03.2015; the dispute is not about ownership of the capital goods but the receipt of the goods in the factory premises; that the irregularity took place with the complete knowledge of the Appellant and hence, extended period is liable to be invoked and penalty liable to be imposed; that M/s.KLT had 4 raised an invoice without removing the goods to enable the Appellant to take credit and hence liable to be penalised.
4. After hearing the Respondent-Assessee, the First Appellate Authority vide impugned Order-in-Appeal No. 525/2017 dated 29.12.2017 allowed the Revenue's Appeal, which has given rise to the present Appeal before this forum.
5. We have heard Shri Raghavan Ramabadran, Ld. Advocate for the Appellant and Shri Sanjay Kakkar, Ld. Deputy Commissioner for the Revenue; perused the documents placed on Appeal record before us and the case law relied upon during hearing before us.
6. It was contended that the 'Kink Bending Machines' used for manufacture of chassis frame was installed in the premises of the job worker, M/s KLT Automotive and Tubular Products; that M/s Daimler India Commercial Vehicles Private Ltd. (Appellant) have taken over M/s KLT Automotive and Tubular Products and the machines were with them; that department appeal speaks that though CENVAT credit is eligible it has been taken earlier for which only interest may be payable. The only allegation in the Show Cause Notice to deny credit on the Kink Bending Machine is that the machine was not received in the factory of the Assessee. Assessee submitted that as per Rule 4(5)(a), credit on the machine can be availed without receipt 5 in the factory. Rule 4(5)(a) during the impugned period read as under:
„The Cenvat credit shall be allowed even if any inputs or capital goods as such or after being partially processed are sent to a job-worker for further processing, testing repair, re- conditioning or for the manufacture of intermediate goods necessary for the manufacture of final products or any other purpose, and it is established from the records, challans or memos or any other document produced by the manufacturer or provider of output service taking the Cenvat credit that the goods are received back in the factory within one hundred and eight days of their being sent to a job worker and if the inputs or the capital goods are not received back within one hundred eight days, the manufacturer or provider of output service shall pay an amount equivalent to the Cenvat credit attributable to the inputs and he can take the Cenvat credit again when the inputs or capital goods are received back in his factory or in the premises of the provider of output service.' Hence, it was argued that in terms of the Rule, an Assessee is allowed to retain the credit on goods which have been sent on job work. In the present case, the Assessee owing to the size and weight of the Kink Bending Machine did not physically bring the machine to its factory premises, there is also no dispute about the fact that the Assessee is the owner of the machine. There is also no dispute about the said machines exclusively used by M/s.KLT for the manufacture of chassis frames supplied to the Assessee. In such a case, the Assessee submits that they are eligible for taking and retention of credit as per provisions of Rule 4(5)(a). Amendment to Rule 4(5)(a) 6 in 2015 clarifies the position that goods can be sent for job work without actual receipt in the factory.
7. We find that Rule 4(5)(a) was amended vide Notification No. 6/2015-CE dated 01.03.2015 by insertion of a new proviso, which read as follows:
„Provided that credit shall be allowed even if any capital goods are directly sent to a job worker without their being first brought to the premises of the manufacturer or the provider of output service, as the case may be, and in such a case, the period of two years shall be counted from the date of receipt of the capital goods by the job worker.‟ In terms of the above amended Rule, an Assessee can take cenvat credit on the goods sent directly to the job worker's premises without being brought to the factory of the Assessee.
Hence, this amendment is clarificatory in nature and so this position is to be taken as it existed even prior to the insertion.
8. It remains uncontroverted that owing to the size and weight of the machines in question they were not brought to the Appellant's factory premises, there is no dispute as to the Appellant being the owner of said machines and also to the fact that the same were used exclusively for the manufacture of chassis frames, for the Appellant. Hence, there may not be any issue as to the Appellant's eligibility for taking and retention of credit as per Rule 4(5)(a) ibid. In fact this view finds support in 7 CCE Nagpur Vs Indorama Textiles Ltd. - 2010 (260) ELT 382 (Bom.) & OPG METALS Pvt. Ltd. Vs CCE Trichy - 2016 (344) ELT 990 (Tri.-Chennai).
9. In the case of OPG Metals [supra], it has been as held as under:
"7. Hon'ble Supreme Court in the case of Vikram Cement v. Commissioner of Central Excise, Indore reported in 2006(194) EL.T. 3 (S.C.) examined the terms „within the factory of production‟, though in connection with entitlement of credit for inputs. The Hon'ble Supreme Court held that the term means only such generation of electricity or steam which is used within the factory would qualify as an intermediate product. In Steel Authority of India Ltd. v. Commissioner of Central Excise, Bhubaneswar reported in 2007 (219) E.L.T. 960 (Tri-Del.), the Tribunal held that mere location of capital goods outside the factory premises is no ground for denying the credit. In Commissioner of Central Excise, Nagpur v. Indorama Textiles Ltd. reported in 2010(260) EL.T. 382 (Bom.), the Hon'ble Bombay High Court held that when the electricity is used as intermediate goods in the manufacture of final product such electricity can be obtained from outside source also."
10. Further, co-ordinate Bangalore Bench has held in Zenith Machine Tools Pvt. Ltd. Vs CCE Belgaum - 2010 (255) ELT 83 (Tri.-Bang.) as under:
"5. ...
It is undisputed in this case, that the said job worker M/s. Aditya Engineering is doing job work for the 8 appellant. It is also undisputed that the entire job worked material from M/s. Aditya Engineering comes to the appellant for use in the further manufacturing of excisable products. I find that the provisions of Rule 4(5)(a) very clearly envisages eligibility to Cenvat credit on the inputs or capital goods which are sent to a job worker. The only condition in Rule 4(5)(a) is that the said capital goods has to be received back within 180 days of that being sent to job worker and this condition not complied with, then assessee shall reverse an amount equivalent to the Cenvat credit taken and can take the Cenvat credit when the capital goods are received back in the factory or the job worker's premises. I find that there is no dispute that the said capital goods are utilized by the job worker, it would lend support to the argument that there would be a revenue neutrality and the reversal of Cenvat credit would be revenue neutral as the appellant is entitled to take credit on such amount as soon as he receives the capital goods back from the job worker's premises. This being the case, I do not find any reason for reversal of the Cenvat credit on the capital goods which were found in the factory premises of the job worker, who is undisputedly one of the group concerns of the appellant. I also find that the ratio of the decision of the Division Bench of the Tribunal in the case of Pooja Forge Ltd. v CCE - 2006 (196) E.L.T. 18 (Tribunal) = 2007(8) S.T.R. 318 (Tribunal) will cover the issue in favour of the assessee in this case. The ratio of the decision in the case of Pooja Forge Ltd. was taken in appeal by the Revenue to Hon'ble High Court of Punjab & Haryana. The decision of Tribunal was affirmed as reported in 2008(229) E.L.T. 46 (P&H). I also find that the decision of the Tribunal in the case of S.G. Zaveri Pharmapack v. CCE, Mumbai - 2007(217) E.L.T. 591 (Tri- Mum.) and CCE Aurangabad v. Vaishali India Ltd. - 2008 (224) E.L.T. 247 (Tri.) = 2008 (84) RLT 576 (CESTAT-
Mum.) will also cover the issue in favour of the assessee.
6. Accordingly, respectfully following the ratio as laid down by the cases cited hereinabove and also on the 9 facts of the case, I set aside that portion of the impugned order which upheld the reversal of the Cenvat credit on the capital goods which were removed to job worker's premises..."
11. Even otherwise, we find that if at all, it was only a procedural infraction for which, a substantive benefit could not be denied. This view has ben laid down by the Hon'ble Apex Court in the CCE Vs. Home Ashok Leyland Ltd. [2007 (210) ELT 178 (SC)] In any case, it is not the case of the Revenue that the goods in question 'Kink Bending Machine' was ineligible capital goods per Rule 2(a) of the CCR.
12. Apart from the above, we find that on limitation, no case is made out for invoking the larger period since there was nothing that was 'suppressed', the Adjudicating Authority also observes in the Order-in-Original that if at all, it was only a technical violation and that 'it is also on record that the assessee had paid duty, therefore they were eligible to take credit. In such a scenario invocation of longer period cannot be invoked as suppression with intent to evade duty is absent in this case...'. The impugned Order-in-Appeal there is no whisper about mentioning of any evidence to the contrary and hence, the Appellant's claim has been denied as a change of opinion. Even otherwise, there cannot be any room to allege duty evasion as it's clearly a Revenue-neutral situation. We agree 10 with the Revenue-neutral situation because, going by Rule 4(5)(a), if the said capital goods are not received back within 180 days after being sent for job work, then the Appellant has to reverse the amount equal to the credit taken and take the credit when the capital goods are received in their factory.
13. In view of the above discussion, we do not find any merit in the impugned order, the Order-in-Original was in order both on merits as well as on limitation and hence, the impugned Order-in-Appeal does not sustain.
14. In the result, the Appeal is allowed both on merits as well as on limitation with consequential benefits, if any, as per law.
(Order pronounced in open court on 13.01.2026) sd/- sd/-
(VASA SESHAGIRI RAO) (P. DINESHA) Member (Technical) Member (Judicial) vl