Customs, Excise and Gold Tribunal - Delhi
Surya Roshni Ltd. vs Cce on 12 September, 2003
Equivalent citations: 2004(163)ELT270(TRI-DEL)
ORDER
V.K. Agrawal, (T), Member
1. The issue involved in this appeal, filed by M/s. Surya Roshni Ltd., is whether the benefit of exemption under Notification No. 3/2001-CE dated 1.3.2001 is available in respect of bulbs manufactured by them having retail sale value not exceeding Rs 20 per bulb.
2.1 Shri B.L. Narsimhan, learned Advocate, submitted that the Appellants manufacture bulbs and avail the benefit of Notification No. 3/2001-CE which provides concessional rate of duty in respect of bulbs of M.R.P. not exceeding Rs. 20 per bulb subject to the condition that no Credit of duty paid on the inputs has been availed by the manufacturer and the duty has to be paid in cash or through account current; that for the purpose of manufacture of bulbs the Appellants also manufacture "Filament, Capping Cement/Calcite Mixture, Lead Glass Tubing, and Glass Shell; that these items are also being used for the manufacture of Fluorescent tube lights, which are dutiable; that sometimes they also clear these item on payment of Excise duty outside the factory; that for the manufacture of these 4 items they received various duty paid inputs on which initially Modvat Credit is taken by them; that in view of the condition subject to which the benefit of Notification No. 3/2001 is available every fortnight of the month prior to the payment of Excise duty at concessional rate they reverse the Modvat Credit attributable to the inputs which went into making of 4 product which in turn in used in the manufacture of bulbs having M.R.P. not exceeding Rs. 20 per bulb; that the Commissioner under the impugned Order has denied the concessional rate of duty under Notification No. 3/2001 (Srl. No. 262) on the ground that as the Modvat Credit has been taken initially by the Appellants, the condition of the Notification has not been complied with.
2.2 The learned Advocate, further, submitted that they had taken Modvat Credit of the inputs used in the manufacture of 4 intermediate products since at that point of time it is not possible to know as to how much quantity of those inputs would go into manufacture of GLS bulbs; that however, they have worked out proportionate Modvat Credit attributable to the inputs used in the manufacture of 4 intermediate products which went into the manufacture of partially exempted bulbs on fortnightly basis reversed the Modvat Credit on fortnightly basis as the duty is paid on the bulbs on fortnightly basis at the relevant time; that no part of the Credit taken initially was utilized by them and even before payment of duty on the final product, the Credit initially taken was reversed; that in addition they were always having sufficient balance in the Modvat Credit account and as such there was no benefit availed by them and it was only for the convenience of documentation that the Credit was reversed on fortnightly basis and not on daily basis. He has relied upon the decision of the Supreme Court in the case of Chandrapur Magnet Wires Pvt. Ltd. Vs. CCE, (2002-Taxindiaonline-41-SC-CX) and the following decisions of the Tribunal:-
(1) Vam Organics Ltd. Vs. CCE, 2003 (56) RLT 402, (2) Franco Italian Co. Pvt. Ltd. vs. CCE - 2000 (120) ELT 792 (T), (3) Tube Investments of India Ltd. Vs. CCE, Madurai - Final Order No. 795/2002-SZB at Chennai dated 16.7.2002 He finally submitted that in Tube Investments case the Credit was reversed by the Assessee much after the clearance of the final product and as such the benefit of Notification cannot be denied to them on the ground that the Modvat Credit was not reversed at the time of clearance; that the Tribunal in the said matter accepted the contention of the appellants therein that the reversal of the Credit was done on monthly basis on the ground of convenience which does not take away from the fact that the Credit due remains reversed.
3. Countering the arguments Mrs. Charul Baranwal, learned SDR, reiterated the findings contained in the impugned Order and emphasized that the decision of the Supreme Court in the case of Chandrapur Magnet Wires would be applicable only when the manufacturer debit Modvat Credit before removal of the exempted final product; that it is apparent from the method of reversal of Modvat Credit adopted by the Appellants that the reversal of the Credit had been made at the stage when intermediate products were cleared internally for captive consumption in the manufacture of bulb in respect of which benefit of notification No. 3/2001 is availed of; that instead reversal of Credit was made on fortnightly basis and it cannot, therefore, be claimed by them that reversal had been made before removal of the consignment from the factory. She further submitted that the Commissioner has given a very specific finding in the impugned Order that "the Appellants has not placed before him any evidence to show that in respect of each consignment of such bulbs, reversal has been made invariable before removal of such consignment from the factory. In other words, it may be said that the notice had failed to establish, (onus of which lies on them) that no input in which CENVAT Credit has been taken were contained in any of the consignment of such bulbs cleared on payment of duty at the concessional rate." He, therefore, submitted that the demand of duty has, therefore, been rightly made against the Appellants.
4. We have considered the submissions of both the sides. Notification No. 3/2001 (Srl. No. 262) provides concessional rate of duty in respect of Vacuum and gas filled bulb of retail sale price not exceeding Rs. 20 per bulb subject to the condition that no Credit of the duty paid on inputs or capital goods exclusively used in the manufacture of these goods has been taken under CENVAT Credit Rules and the duty is paid in cash or through the account current. The facts which are not in dispute are that the Appellants are availing the benefit of Modvat Credit of the duty paid on inputs which are used in the manufacture of filament, capping cement, lead glass tubing, glass shell. It has also not been disputed by the Revenue that the Modvat Credit of the duty taken on these inputs are reversed by the Appellants on fortnightly basis prior to the payment of Excise duty on the impugned bulbs. It has been held by the Supreme Court in the case of Chandrapur Magnet Wires that "we see no reason why the assessee cannot make debit entry in the Credit account before removal of the exempted final product. If this debit entry is permissible to be made, Credit entry for the duties paid on the inputs utilized in manufacture of the final exempted product will stand deleted in the accounts of the assessee. In such a situation, it cannot be said that the assessee has taken credit for the duty paid on the inputs utilized in the manufacture of the final exempted product under Rules 57A. In other words the claim for exemption of duty on the disputed goods cannot be denied on the plea that the assessee has taken credit of the duty paid on the inputs used in the manufacture of these goods."
The Supreme Court has referred to Board's circular in which it was clarified by the Ministry of Finance that the manufacturer may be allowed to take the Credit of duty paid on all inputs used in the manufacture of the final product, provided that the credit of duty paid on the inputs used in the exempted products is debited in the credit account before the removal of such exempted final products. The learned Advocate has clarified that the reversal of the Modvat Credit was done on fortnightly basis since during the relevant period duty payment of the final product was done on fortnightly basis. As undisputedly the Modvat Credit taken on the inputs which has gone in or in relation to the manufacture of the impugned bulbs stand reversed, the condition of the notification No. 3/2001-CE has been complied with. We, therefore, set aside the impugned Order and allow the appeal.