Custom, Excise & Service Tax Tribunal
M/S. Ab Stampings Pvt. Ltd vs The Commissioner Of Central Excise on 11 June, 2010
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT BANGALORE
Bench - Single Member Bench
Court - I
Date of Hearing: 11.06.2010
Date of decision: 11.06.2010
Appeal Nos. E/781/2008 & E/1075/2009
(Arising out of Orders-in-Appeal No. 85/2008 dated 08.08.2008 & 368/2009 dated 22.09.2009 passed by the Commissioner of Central Excise, Mangalore)
For approval and signature:
Honble Mr. M. V. Ravindran, Member (Judicial)
1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
No
3. Whether their Lordship wish to see the fair copy of the Order?
Seen
4. Whether Order is to be circulated to the Departmental authorities? Yes
M/s. AB Stampings Pvt. Ltd. ..Appellant(s)
Vs.
The Commissioner of Central Excise
Belgaum ..Respondent(s)
Appearance
Mr. S.R Savant, Advocate, for the appellant
U. Raja Ram, JDR, for the Revenue
Coram:
Honble Mr. M. V. Ravindran, Member (Judicial)
FINAL ORDER Nos.___________________ 2010
Per M. V. Ravindran
These two appeals are directed against the Orders-in-Appeal No. 85/2008 dated 08.08.2008 & 368/2009 dated 22.09.2009. Since both the appeals raise a common issue, they are being disposed off by a common order.
2. The relevant facts that arise for consideration are that the appellants are manufacturers of electric stampings. They procured AC Motors/Generators from M/s. Kirloskar Electric Company Ltd. and availed Cenvat credit of the duty paid on such Motors/Generators. Lower authorities on scrutiny of the ER-1 Returns, came to the conclusion that these were neither capital goods nor inputs used in their factory and the show cause notices were issued for reversal and demand of wrongly availed Cenvat credit along with interest and penalty. The Adjudicating Authority confirmed the demands and imposed penalties besides demanding interest. Aggrieved by such an order, assessee filed an appeal before the learned Commissioner (Appeals) who also held the same view and rejected the appeal filed by the assessee.
3. Learned Counsel appearing on behalf of the appellant submits that the appellant had availed Cenvat credit on the AC Motors/Generators. It is his submission that these motors and generators were cleared from the factory premises during the relevant period, they prepared Excise invoices and paid the amount of Central Excise duty on such motors and generators. It is his submission that both the lower authorities in these cases have not considered this aspect and has confirmed the entire amount which has been taken as Cenvat credit and imposed penalties. It is his submission that having paid the duty on clearance of motors, from the factory premises, they have factually paid back the amount to the department. It is his submission that the reversal of Cenvat credit, if any, should be the amount which is the difference between credit taken and amount paid on such generators and motors, on removal removed from the factory premises. For this proposition, he would rely upon the decision of the Co-ordinate Bench in the case of Sona Koyo Steering Systems Ltd. Vs. CCE, Delhi - 2007 (5) STR 15 (Tri.-Del.) and also on the decision of the High Court of Punjab & Haryana in the case of CCE, Vs. Rane NSK Steering Systems Ltd. - 2009 (13) STR 327 (P&H).
4. Learned DR on the other hand would submit that the appellant herein is not entitled to avail Cenvat credit on AC Motors/Generators. It is his submission that the appellant is a manufacturer of electric stamping, in that process, the appellant could not use the AC Motors/Generators. It is his submission that the said goods cannot be considered as inputs or capital goods used in or in relation to the manufacturing of the final products as provided under Rule 3 of the Cenvat Credit Rules, 2004. It is his submission that having availed the credit wrongly, the appellant is liable to reverse back the amount along with interest and penalties wrongly imposed. He would distinguish the decision of the Tribunal in the case of Sona Koyo Steering Systems Ltd. Vs. CCE, Delhi (supra) and CCE Vs. Rane NSK Steering Systems Ltd. (supra) on the ground that the facts are totally different.
5. I have considered the submissions made at length by both sides and perused the records.
5.1. It is undisputed that the appellant has availed the Cenvat Credit on AC Motors/Generators incorrectly. It is also undisputed that AC Motors and Generators were cleared from the factory premises of the appellant, they have paid an amount as Central Excise duty and reflected them in the monthly ER-1 Returns to the authorities. On perusal of an annexure prepared, it indicates the amount of credit taken by the appellant on motors, the amount paid by them while preparing the duty paying documents. It is seen that there is a payment of duty. In my considered view, the appellant is liable to pay only the differential amount due, of the amount of credit taken and the amount paid on clearances of such motors. I am fortified in my view, by the decision of the Principle Bench of the Tribunal in the case of Sona Koyo Steering Systems Ltd. Vs. CCE, Delhi (supra). I may reproduce the ratio:
Clearly, demand does not arise. First of all, the credit taken was returned by paying duty at the time of clearance of items. That the items were not inputs are also not of much consequence inasmuch as, the appellant could have also dealt with these items as a trader and Modvat provisions would allow the same treatment. Secondly, since equal (credit) or more amounts have been returned at the time of removal of these parts, the requirement in law of reversing credit at the time of clearance of inputs as such remains satisfied. It is well settled that when there is no duty demand, penalties are not attracted.
5.2. It can be seen from the above reproduced portion that an identical situation arose before the Division Bench. The decision of the Division Bench is binding on me.
6. Further, I find that the decision of the Honble High Court of Punjab & Haryana also in an identical matter in the case of CCE Vs. Rane NSK Steering Systems Ltd. (supra) settled the law. I may with respect reproduce the entire judgment:
2009 (13) S.T.R. 327 (P&H)
IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH
M.M. Kumar and Rajesh Bindal, JJ.
COMMISSIONER OF CENTRAL EXCISE Versus RANE NSK STEERING SYSTEMS LTD.
1CEA No. 159 of 2006, decided on 20.02.2007 REPRESENTED BY: Ms. Daya Chaudhary, A.S. G.I., for the Appellant [Order per: M.M. Kumar, J.J. The revenue has approached this Court by filing the instant appeal under Section 35G of the Central Excise Act, 1944 against the order dated 3.4.2006 (Annexure P.3) passed by the Customs Excise and Service Tax Appellate Tribunal, New Delhi (for brevity the CESTAT) while deciding Appeal No. E/327/05-NB(S) along with an application for interim directions. It has been claimed that the following substantial question of law would arise for our adjudication:-
Whether a manufacturer can avail Cenvat credit on input which are not used by them in or in relation to manufacture of their final product?
2. We have perused the impugned order passed by the CESTAT with the able assistance of the learned counsel for the revenue and find that the assessee respondent was considered as manufacturer and on that basis he deposited the excise duty. Once the assessee-respondent has paid the excise duty then he is naturally entitled to avail Cenvat credit. The net result is that there is no prejudice caused to the revenue and the entries have been cancelled by each other. Therefore, we do not find that the aforementioned question is a substantial question of law requiring our determination. The appeal is accordingly dismissed. 6.1. It can be seen from the above reproduced judgment of the Honble High Court, that once an amount is paid as Excise Duty by the appellant, the net result is that there is no prejudice caused to the Revenue. In view of this, I find that the amount of duty demandable from the appellant and the interest payable thereof and the consequent penalties can be only to the extent of the duty amount arising as difference, between the credit taken and the duty paid on the AC Motors/Generators, which were removed from the factory premises.
7. Accordingly, after allowing the appeal on merits, I remand the matter back to the Adjudicating Authority, only for limited purpose of quantification and charging of interest and the consequent penalties.
8. The appeals are disposed off as indicated hereinabove.
(Pronounced & dictated in open Court) (M.V.RAVINDRAN) MEMBER (JUDICIAL) //iss//