Custom, Excise & Service Tax Tribunal
Yes vs Represented By : Shri P.V. Sheth, ... on 9 April, 2013
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Zonal Bench, Ahmedabad Appeal No. : E/3451 & 3532 of 2005 Arising out of : OIA No. VP/307/Vapi/2005 dated 28.7.2005 Passed by : Commr. (Appeals) C.Excise. & Cus, Vapi For approval and signature : Hon'ble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. H.K. Thakur, Member (Technical) 1 Whether Press Reporter 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 CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? No 3 Whether their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes Appellant (s) : M/s. Deeykar Aluminium Commissioner of Central Excise Vapi Represented by : Shri P.V. Sheth, Advocate Shri H. Mathew, A.R. Respondent (s) : Commissioner of Central Excise Vapi
M/s. Deeykar Aluminium Represented by : Shri H. Mathew, A.R. Shri P.V. Sheth, Advocate CORAM :
Hon'ble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. H.K. Thakur, Member (Technical) Date of Hearing / Decision : 09.4.2013 ORDER No. _____________ /WZB/AHD/2013 Per : Mr. H.K. Thakur;
Appeal No.E/3451/2005 was filed by M/s.Deeykar Aluminium Pvt. Limited against Order-in-Appeal No.VP/307/VAPI/2005 dated 28.07.2005, on the grounds that the Cenvat credit on the quantity of furnace oil which was used by them in the manufacture of goods on job work basis under Notification No.214/86-CE dated 25/07/1986 read with Rule 57A(5) of Central Excise Rules, cannot be denied under Rule 57AD. Appeal No.E/3532/2005 against the same Order-in-Appeal dated 28.07.2005 was filed by Revenue on the grounds that Commissioner (Appeals) has erred by not confirming interest on wrong availment of Cenvat credit as required under Section 11AB of the Central Excise Act, 1944 and also erred by not imposing penalty upon the assessee as per Rule 173 Q(1) of the Central Excise Rules.
2. Appeal No.E/3451/2005 filed by the assessee was allowed by CESTAT Ahmedabad vide order dated 18.02.2008 in view of Larger Bench judgment of CESTAT in the case of Gujarat Narmada Valley Fertilizers Company Limited vs. CCE, Vadodara [2007 (208) ELT 342 (Tri.-LB)] and Appeal No.E/3532/2005 filed by the revenue was rejected. Against order dated 18.02.2008 of CESTAT, Revenue approached the Hon'ble High Court of Gujarat in Tax Appeal No.1132/2009, on the ground that the decision of Gujarat Narmada Fertilizers Company Limited (supra) was further carried in appeal and the Apex Court in the decision reported in 2009 (240) ELT 661 (SC) has reversed the decision of the Hon'ble High Court of Gujarat. Taking note of these facts, Gujarat High Court allowed revenues appeal, reversed the judgment of CESTAT and restored the order passed by Commissioner (Appeal). Honble High Court vide its order dated 30.03.2012 reversed the order dated 18.02.2008 passed by CESTAT Ahmedabad and remanded back the proceedings to CESTAT for fresh consideration in accordance with the law after hearing both sides.
3. Revenue also filed Tax Appeal No.213 of 2011 in the High Court of Gujarat against CESTAT order dated 18.02.2008 for non-imposition of penalty and non-confirmation of interest upon the assessee. This matter also stands remanded to CESTAT by order dated 03.07.2012 passed by Honble Gujarat High Court in Tax Appeal No.213/2011 for fresh consideration.
4. Heard both sides.
5. Shri P.V. Sheth, learned advocate on behalf of the appellant argued that the issue is no more res-integra as the same has now been settled by a number of CESTAT judgments, especially in the case of Sterlite Industries (I) Limited vs. CCE, Pune [2005 (183) ELT 353 (Tri. LB)]. He therefore, argued that the appeal may be allowed as is covered by settled law.
6. Learned A.R. on the other hand reiterates the stand taken by Commissioner (Appeals).
7. We have carefully gone through the records of the case as well as the rival submissions made. It is observed that the issue was under litigation for quite some time but was settled by CESTAT Larger Bench judgment in the case of Sterlite Industries (I) Limited vs. CCE, Pune [2005 (183) ELT 353 (Tri. LB)]. Para-4 of the this judgment reads as follows:-
4.?In only case of Escorts Ltd. v. CC Ex, Delhi [2003 (160) E.L.T. 623 (Tri-Del.)] while interpreting Rule 57C of the Central Excise Rules, the Tribunal rejected the appellants claim of Modvat credit of duty paid on the inputs used in the manufacture of the parts, which were cleared without payment of duty to, appellant's other unit under Chapter X procedure and utilised in the manufacture of tractor which were cleared on payment of duty by observing that since no duty was paid on the part at the time of clearance, Rule 57C will apply and no Modvat credit would be admissible. However, the said decision was subsequently reversed by the Supreme Court as reported in Escort v. C.C.Ex. [2004 (171) E.L.T. 145 (S.C.)]. For appreciation, we reproduce paragraphs 8 & 9 of the said decision.
8.?It is to be seen that the whole purpose of the Notification and the Rules is to streamlines the process of payment of duty and to prevent the cascading effect if duty is levied both on the inputs and the finished goods. Rule 57D(2), which has been extracted hereinabove, shows that in the manufacture of a final product an intermediate product may also come into existence. Thus in cases where intermediate product may also come into existence. Thus in cases where intermediate product comes into existence, even though no duty has been chargeable to Nil rate of duty, credit would still be allowed so long as duty is paid on the final product.
9.?In cases of manufacturers like the Appellants the final product is the tractor. The intermediate product would be parts which are manufactured for being used in the tractor. In such a case the parts would not be the final product. Thus Rule 57C would have no application. The mere fact that the parts are cleared from one factory of the Appellants to another factory of the Appellants would not disentitle the Appellant from claiming benefit of Notification No. 217/86-C.E., dated 2nd April, 1986. As stated above, the Notification itself clarifies that the inputs can be used within the factory of production or in any other factory of the same manufacturer. By applying the ratio of the above decision, it becomes clear that Modvat credit of duty paid on the inputs used in the manufacture of final product cleared without payment of duty for further utilisation in the manufacture of final product, which are cleared on payment of duty by the principal manufacturer, would not be hit by provision of Rule 57C. Inasmuch as, the matter stands decided by the Honourable Supreme Court, we would hold in favour of assessee. The above Larger Bench judgment of CESTAT has been upheld by Hon'ble High Court of Bombay by their order dated 13.08.2008 as reported at 2009 (244) ELT A89 (Bom.). This Larger Bench judgment of Sterlite Industries (India) Limited (supra) was also followed by this Bench in the case of Welspun India Limited vs. CCE, Daman [2009 (248) ELT 898 (Tri. Ahmd.)] and Punjab & Haryana High Court in the case of CCE, Ludhiana vs. Jainsons Wool Coombers Limited [2011 (218) ELT) 360 (P&H)].
8. Respectfully following the settled law, the appeal filed by the assessee is allowed and appeal filed by Revenue is rejected..
(Operative part of the order pronounced in the Court)
(M.V. Ravindran) (H.K. Thakur)
Member (Judicial) Member (Technical)
.KL
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