Custom, Excise & Service Tax Tribunal
M/S Varun Coatings vs Cce Thane Ii on 11 March, 2014
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI
COURT NO. II
APPEAL NO. E/370, 1996/06 Mum
(Arising out of Order-in-Appeal No. BR/259/Th-II/05 dated 27.10.2005 and BR/40/Th-II/05 dated 22.2.2006 passed by the Commissioner of Central Excise (Appeals), Mumbai I)
For approval and signature:
Honble Shri 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 :
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 Varun Coatings
:
Appellant
Versus
CCE Thane II
Respondent
Appearance Shri Vishal Kumar, Authorised Signatory For appellants Shri V.C. Khole, A.R. For Respondents CORAM:
Shri Ashok Jindal, Member (Judicial) Date of Hearing : 11.03.2014 Date of Decision : 11.03.2014 ORDER NO.
Per Ashok Jindal The appellant is in appeals against the impugned orders wherein duty demands have been confirmed against them on the premise that the appellant has undertaken the activities of reprocessing of the goods.
2. Brief facts of the case are that the appellants are jobworker of M/s Asian Paints (I) Ltd. On the direction of M/s. Asian Paints, the appellant has received retail packs which were converted into bigger packs in the months of January and February 2002. The appellant did the repacking from small packs to bigger packs and cleared the same without payment of duty. In fact they have not taken credit on the inputs. The Revenue was of the view that the reprocessing activity amounts to manufacture of final goods. Accordingly, the Revenue held that the appellant is liable to pay duty on their clearance. The other issue in this case is that during the course of reprocessing, certain inputs were destroyed by flood which were cleared by the appellant on payment of duty on transaction value. But the Revenue was of the view that as inputs has not gone into the manufacture therefore, the appellants are required to reverse the entire amount of credit taken by them. Accordingly, impugned proceedings were initiated and duty demands against the appellant were confirmed along with the interest. Penalties equivalent to duty was also confirmed by way of these two impugned orders. Aggrieved by the orders, the appellant is before me.
3. Shri Vishal Kumar, authorized representative of the appellant appeared and submits that as per the direction of the principal manufacturer i.e. M/s. Asian Paints, they have did only repacking of the goods from retail to bulk packing and they have not done any reprocessing of the goods. The activity of repacking of duty paid finished paints from retail into bulk packs does not amount of manufacture, therefore, they are not liable to pay duty. It is further contended that they have not taken any CENVAT credit on the invoice issued by the M/s Asian Paints for re-packing. Therefore, they have not issued any invoices. The main reliance by the adjudicating authority is only on a inter office memo written by M/s Asian Paints dated 18.01.2001 wherein it has been stated that the goods were sent to the appellant for reprocessing. In fact, the person who has written this letter was not knowing the difference between re-packing and re-processing under the excise law. Further it is contended that the appellant is not having any facility for reprocessing but they have facilities only for repacking. No evidence has been produced by the Revenue as the appellant has done the reprocessing. In these circumstances, the demand on account of manufacturing is not sustainable.
4. On the other hand, the learned A.R. submits that as per the letter dated 18.01.2002 of M/s Asian Paints (I) Ltd., the goods were sent to the appellant for reprocessing therefore, the appellant has reprocessed the goods. Hence they are liable for payment of duty. He further submits that as inputs were not used for processing of the inputs therefore, the entire credit taken on inputs has to be reversed.
5. After hearing both the sides, I find that the appellant received the goods from their principal manufacturer for only repacking of the paints from retail packs to bulk packs. There is no evidence on record that the appellant has reprocessed the goods and having any facility at their unit for reprocessing of the same. In the absence of any evidence, merely on the basis of words sent for reprocessing cannot be taken as evidence for ascertain the fact the appellant has taken the goods for reprocessing of the goods. Therefore, it is held that the appellant has done only the repacking from retail packs to bulk packs of the impugned goods which does not amounts to manufacture during the impugned period. Therefore, the demand of duty is not sustainable, consequently, penalty is also not sustainable.
6. As inputs were destroyed in flood and not gone into manufacturing therefore, the appellants are required to reverse the credit taken there on. The fact is that the appellant has paid duty on the transaction value. The appellant is directed to reverse the entire amount of credit taken on the inputs destroyed in flood. As there is no malafide intention of the appellant for taking credit on inputs destroyed in flood therefore no penalty is warranted.
7. In nut shell, it is held that the appellant is not required to pay duty on repacking of the goods and the appellant is required to reverse the entire amount of credit availed on inputs destroyed in flood and the penalty is not warranted. The appeals are disposed of in the above terms.
(Dictated in Court) (Ashok Jindal) Member (Judicial) nsk ??
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