Custom, Excise & Service Tax Tribunal
M/S. Bosh Chassis Systems India Ltd vs Commissioner Of Central Excise, Pune I on 26 November, 2014
IN THE CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
Appeal No.
E/441/10
- Mum
(Arising out Order-in-Appeal No. P-I/VSK/243/2009 dated 13.11.2009 passed by the Commissioner of Central Excise (Appeals), Pune I)
For approval and signature:
Honble Mr. Ashok Jindal, 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 Yes
of the Order?
4. Whether Order is to be circulated to the Departmental Yes
authorities?
M/s. Bosh Chassis Systems India Ltd.
Appellant
Vs.
Commissioner of Central Excise, Pune I
Respondent
Appearance:
Shri Sachin Chitnis, Advocate for the appellant Shri Ashutosh Nath, AC (AR) for the respondent CORAM:
Honble Mr. Ashok Jindal, Member (Judicial) Date of hearing : 26-11-2014 Date of decision : 26-11-2014 O R D E R No:..
The appellant is in appeal against the impugned order wherein Cenvat credit of inputs have been denied along with interest and equivalent amount of penalty has been imposed.
2. The brief facts of the case are that the appellant is a manufacturer of motor vehicles parts. In the manufacturing activity, some part were manufactured and sent for further processing to the job worker and also sent some chemicals to be utilised in the said process. The appellants have fixed the norm of inputs and chemicals for process. In some cases, input/chemicals were used in excess as per the norms fixed for the appellant. For that the appellant has imposed penalty on the job worker to maintain efficiency and accuracy of the product. Revenue is of the view that the excess use of inputs and recovery of penalty from the job worker is required to be reversed as same has not been used in manufacture of final product. Therefore, show-cause notice was issued. Both the lower authorities confirmed the demand against the appellant. Aggrieved from the said order, the appellant is before me.
3. The ld. counsel for the appellant appeared before me and submits that an identical issue came up before this Tribunal in Bajaj Electrical Ltd. and this Tribunal vide Order no. A/249-250/10/SMB/C-IV dated 10.06.2010 held that the appellant is entitled to take Cenvat credit and appeal was allowed. Therefore, it is prayed that in this case also appeal be allowed by giving entitlement of Cenvat credit.
4. On the other hand, ld. AR reiterates the finding of the impugned order.
5. Heard both sides.
6. Considering the fact that similar issue came up before this Tribunal in Bajaj Electrical Ltd. (supra) wherein this Tribunal observed as under:-
On careful examination of the submissions made by both the sides, I find the issue is that whether the CENVAT credit availed on purportedly higher utilization of inputs can be denied on the ground that inputs were not utilized in or in relation to the manufacture of the final product. In this case it was explained by the appellants that it is not a case of non-utilisation of input in the final product but it is a case of excess utilization on account of processing loss which may occur on account of number of technical factors like power cuts, quality of raw material and other related factors and in order to encourage efficiency and productivity the appellant collects penal charges related to excess utilization of material by way of debit notes. So the credit cannot be denied on the ground that the inputs are not utilized, in or in relation to the manufacture of final product. Further I find that the issue involved in this case is squarely covered by the decision of Galaxy Surfactants Ltd. (supra) wherein it was held that The total loss of the yield was not in one go but was over a period of time, as explained by the appellants. It may happen, in some cases that instead of getting 95% yield, the appellants may receive goods to the tune of 94.5% or so. It is the accumulated shortages, which are ultimately taken note of by the appellants, and as a part of the contract between the appellant and job worker, job charges are reduced to that effect, for which purpose the debit notes have been raised. This fact, by itself, does not give any right to the Revenue to demand duty on such shortages, when admittedly such shortages are not on account of less yield. As such, we are of the view that the impugned orders are not sustainable. The same are accordingly set aside and appeal allowed with consequential relief.
7. Thereafter the Tribunal held that the appellant is entitled to take Cenvat credit and is not required to reverse any Cenvat credit. In these circumstances, following the precedent decision of this Tribunal in the case of Bajaj Electrical Ltd. (supra), I hold that the appellant is entitled to take Cenvat credit and are not required to reverse Cenvat credit on account of excess consumption of input. Therefore, impugned order is set aside and appeal is allowed with consequential relief, if any.
(Dictated in Court) (Ashok Jindal) Member (Judicial) //SR 4