Custom, Excise & Service Tax Tribunal
Ginger Clothing Pvt. Ltd vs Commissioner Of Central Excise on 24 September, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI COURT No. II Appln.No.E/S/95071/13 APPEAL No.E/86809/13 (Arising out of Order-in-Appeal No.BR/69/Th-I/2013 dated 24/01/2013 passed by Commissioner of Central Excise (Appeals), Mumbai) For approval and signature: Honble Mr. P.R. Chandrasekharan, Member (Technical) Honble Mr. Anil Choudhary, Member (Judicial) 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 :Yes 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? ========================================
Ginger Clothing Pvt. Ltd., Appellant Vs. Commissioner of Central Excise, Respondent Thane Appearance: Shri.Sanjay Dwivedi, Advocate for appellant Shri.V.R.Kulkarni, Dy. Comm. (AR) for respondent CORAM: Honble Mr. P.R.Chandrasekharan, Member (Technical) Honble Mr.Anil Choudhary, Member (Judicial) Date of Hearing : 24/09/2013 Date of Decision : 24/09/2013 ORDER NO Per: P.R.Chandrasekharan
1. The appeal and stay petition are directed against Order-in-Appeal No.BR/69/Th-I/2013 dated 24/01/2013 passed by Commissioner of Central Excise (Appeals), Mumbai.
2. The facts relevant to the case are as follows:
2.1 The appellant, M/s.Ginger Clothing Pvt. Ltd., Dombivali, is a manufacturer of knitted readymade garments. The appellant manufactures such garments not only for sale in DTA but also for export purposes. The appellant availed benefit of Notification No.30/2004-CE dated 09/07/2004 in respect of readymade garments sold in the DTA which is subject to the condition that the appellant does not avail credit of the duty paid on inputs under the provisions of Cenvat Credit Rules. The appellant did not avail any credit of excise duty paid on inputs; however, the appellant availed Cenvat Credit amounting to Rs.39,951/- of the excise duty paid on capital goods, which were used in the manufacture of knitted garments both for domestic clearance as well as for export. The appellant also procured zippers and hangers for the manufacture of readymade garments for export purpose under Notification No.43/2001-CE (NT) dated 26/06/2001 which provides for procuring without payment of duty excisable goods for the manufacture/processing of export goods and the exportation out of India subject to following the procedures prescribed under Central Excise (Removal of goods at concessional rate of duty for manufacture of excisable goods) Rules, 2001 (Rules in short). The appellant could not utilise, part of the zippers and hangers and the appellant cleared this unutilized zippers and hangers in the DTA on payment of excise duty. However, for payment of such duty the appellant availed Cenvat Credit of excise duty paid on capital goods used for the manufacture of knitted garments. The Revenue was of the view that the appellant is not eligible for availing Cenvat Credit on the capital goods, inasmuch as the capital goods have been used exclusively in the manufacture of exempted goods. Since the appellant was not eligible for Credit, he could not have utilised the credit for payment of duty on zippers and hangers which were not used in the manufacture of goods exported. Accordingly, a notice was issued demanding recovery of the amount of credit taken on capital goods under the provisions of Rule 14 of the Cenvat Credit Rules, 2004 read with Section 11A along with interest thereon and also proposing to impose penalty under Section 11AC. It was further proposed to demand duty on the plastic hangers and zippers which have been cleared into the domestic market on the ground that ineligible credit has been used for payment of duty thereon. The notice was adjudicated and the duty demand was confirmed along with interest and an equivalent amount of penalty was also imposed. Aggrieved of the same, the appellant preferred an appeal before the lower appellate authority who rejected the appeal and hence, the appellant is before us.
3. The Ld. Counsel for the appellant submits that the appellant manufactured knitted garments not only for the purpose of DTA clearance but also for the purposes of export. Goods which are exported are not exempted goods. As regards the goods cleared in the DTA, the appellant availed the benefit under Notification No.30/2004 dated 09/07/2004 which prescribed that Cenvat Credit of duty paid on inputs should not be taken. It is not in dispute that the appellant has not taken any Cenvat Credit of duty paid on inputs in respect of such clearances. There is no bar in the said notification in availing capital goods credit; therefore, the capital goods was rightly availed. Inasmuch as the capital goods have been put to use for the manufacture of export goods, it cannot be said that the appellant utilised the capital goods exclusively in the manufacture of exempted goods. Therefore, the availment of credit by the appellant of the duty paid on capital goods is sanctioned by law. As regards, the utilization of the credit, the appellant has utilised the capital goods credit for clearance of zippers and hangers which the appellant obtained duty free but could not use in the manufacture of export goods. Therefore, the appellant was required to discharge duty liability on the zippers and hangers procured duty free which were not used in the manufacture of export goods. Therefore, in terms of the Rule 6 of the Central Excise (Removal of goods at concessional rate of duty for manufacture of excisable goods) Rules, 2001, the appellant had to discharge duty liability on the goods which were not used for the intended purpose. Therefore, the discharge of duty on the hangers and zippers utilizing eligible credit is also in accordance with law and therefore, the impugned order is not sustainable in law. Accordingly, he pleads for grant of stay and allowing the appeal.
4. The Ld. Additional Commissioner (AR) appearing for the Revenue points out that as per the proviso to Rule 6 of the said Rule, if the goods found to be defective or damaged or unsuitable or surplus to the needs of the manufacturer, he may return the said goods to the original manufacturer of the goods from whom he had obtained these and every such returned goods shall be added to the non-duty paid stock of the manufacturer of the subject goods and dealt with accordingly. In the present case, the appellant should have opted for the procedure under the proviso and should not have cleared the goods on payment of duty. Therefore, it is his contention that the payment of duty on the subject goods by utilizing ineligible credit is not sustainable in law.
5. We have carefully considered the submissions made by both the sides.
6. As the issue lies in a narrow compass, we are of the considered view that the appeal itself can be disposed of at this stage. Therefore, after dispensing with the requirement of pre-deposit, we take up the appeal itself for consideration and disposal.
7. There is merit in the contention of the Counsel for the appellant that export goods are not exempted goods. In the present case, the appellant has exported the readymade garments manufactured by them. Only in respect of DTA clearance, the appellant chose to avail the exemption. As regards the export goods, they did not avail of the exemption. Therefore, the availment of capital goods credit cannot be said to be for exclusive manufacture of exempted goods. Therefore, the appellant was rightly entitled to Cenvat Credit duty of excise duty paid on the capital goods used in the manufacture of export goods. Coming to the utilization of the said credit, the appellant has utilised said credit for payment of duty on hangers and zippers which were procured duty free in terms of the Notification No.43/2001. Inasmuch as the goods were not used for the intended purpose, the appellant was liable to discharge duty liability on the zippers and hangers in terms of Rule 6 of the Central Excise (Removal of goods at concessional rate of duty for manufacture of excisable goods) Rules, 2001. Rule 6 provides two options. One option is to clear the goods on payment of duty. The other option is to clear the goods without payment of duty to the manufacturer of hangers and zippers who shall add the same to his non-duty paid stock and dealt with accordingly. The appellant chose to first option. There is no bar in the said Rules, which bars the appellant in clearing the goods on payment of duty. Therefore, the appellant has discharged the duty on the hangers and zippers in accordance with law. In view of the above, the impugned order is not sustainable in law. Accordingly, the same is set aside and the appeal is allowed. Stay application also stands disposed of.
(Dictated in Court) (Anil Choudhary) Member (Judicial) (P.R. Chandrasekharan) Member (Technical) pj 1 7