Custom, Excise & Service Tax Tribunal
Vako Seals Pvt Ltd vs Commissioner Of Central Excise, ... on 11 January, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. II APPEAL NO. E/190/11,E/1201/11 [Arising out of Orders-in- Appeal No. SB(137) 137/M-V/2010 dated 7/12/2010 & No. SB(69) 69/M-V/2011 dated 4/5/2011passed by the Commissioner(Appeals) Central Excise, Zone-I, Mumbai] For approval and signature: Honble Mr Ramesh Nair, Member(Judicial) Honble Mr. Raju, Member (Technical) =======================================================
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 : seen
of the Order?
4. Whether Order is to be circulated to the Departmental: Yes
authorities?
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Vako Seals Pvt Ltd
:
Appellants
VS
Commissioner of Central Excise, Mumbai-V
:
Respondent
Appearance
Shri. J.N. Tiwari, Advocate for the Appellants
Shri. D.K. Sinha, Asstt. Commissioner(A.R.) for the Respondent
CORAM:
Honble Mr. Ramesh Nair, Member (Judicial)
Honble Mr. Raju, Member (Technical)
Date of hearing: 11/1/2016
Date of decision 11/1/2016
ORDER NO.
Per : Ramesh Nair
These appeals are directed against Orders-in- Appeal No. SB(137) 137/M-V/2010 dated 7/12/2010 & No. SB(69) 69/M-V/2011 dated 4/5/2011passed by the Commissioner(Appeals) Central Excise, Zone-I, Mumbai, whereby Ld. Commissioner(Appeals) upheld the Orders-in-Original No. 03/02/AC/KDN/2011 dated 13/1/2011 and No. 13/06/V/2010/ADDL/SKR dated 15/1/2010.
2. The fact of the case is that the appellant is engaged in the manufacture of rubber product falling under Chapter Heading 40.16 of Schedule to the Central Excise Tariff Act, 1984. The appellant received bodies of valve under the cover of Annexure II challan under the job work provision laid down under erstwhile Rule 57F(3) of the Central Excise Rules, 1944 and Rule 4(5)(a) of Cenvat Credit Rules, 2004. The appellant carried out the process of bonding of rubber product manufactured by them and the processed goods returned to the principle supplier of valve bodies. The appellant are discharging the excise duty on the valve of rubber product used by them plus job work charges. However they have not included value of the valve bodies. Show cause notices were issued wherein it was contended that the appellant being manufacturer should include the value of the goods received from their buyer accordingly the value of valve bodies supplied by principle manufacturer should be added in the total value of the processed goods. The adjudicating authority confirmed the demands and imposed penalties and the same were upheld by the Commissioner (Appeals) vide the impugned order dated 4/5/2011 and 7/12/2010 therefore the appellants are before us.
3. Shri. J.N. Tiwari, Ld Counsel for the appellant submits that the appellant is manufacturer of rubber product, on which they are paying excise duty. In the present case they have not only paid the excise duty on the rubber product manufactured by them but also on the job work charges. As regard the inclusion of value of valve bodies, he submits that valve bodies were received by the appellant under job work challan in terms of Rule 57F(3) of the Central Excise Rules, 1944 and Rule 4(5)(a) of Cenvat Credit Rules, 2004. As per these procedure the job worker is not suppose to pay any duty on the basis of declaration/undertaking filed by the principle manufacturer in terms of Notification No. 214/86-CE dated 25/3/1986 therefore under the provision of Rule 57F(3) of the Central Excise Rules, 1944 and Rule 4(5)(a) of Cenvat Credit Rules, 2004 read with Notification No. 214/86-CE excise duty is not payable on the job work activity by the appellant. He submits that the very same issue is squarely covered by the Honble Supreme Court Judgment in case International Auto Ltd Vs. CCE reported in [2005 (183)ELT 239 (SC)].
4. Shri. D.K. Sinha, Ld. Asstt. Commissioner(A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order. He further submits that the appellant is admittedly discharged the excise duty on the job work goods therefore value of the entire goods processed by the appellant should be assessable value value of machines bodies supplied by the principle should be added in terms of Honble Supreme Court Judgment in case of Ujagar PrintsLtd Vs CCE[1989(39) ELT 493(SC)].
5. We have carefully considered the submissions made by both the sides.
6. We find that appellant is manufacturer of rubber product on their own therefore they are required to discharge excise duty only on the product manufactured by them. The payment of duty on the rubber product is not under dispute. In the present case the appellant is not paying excise duty on the machine body supplied by the principle manufacturer under job work provision as laid down under Rule 57F(3) of the Central Excise Rules, 1944 and Rule 4(5)(a) of Cenvat Credit Rules, 2004. In our view the rubber product which is manufactured by the appellant are only dutiable manufacturing activity of the appellant. They are correctly discharging the duty on such rubber product. As regard the dispute raised by the Revenue that the value of machines body supplied by the principle should be added in the assessable value of the job work goods, we are of the view that activity over and above of manufacture of rubber product i.e. rubber bonding in the machine body is purely job work activity. It is undisputed fact that machine bodies are supplied by the principle under Rule 57F(3) of the Central Excise Rules, 1944 and Rule 4(5)(a) of Cenvat Credit Rules, 2004 read with Notification No. 214/86-CE. The appellant also filed declaration to this effect to the Jurisdictional Asstt Commissioner in compliance of condition of the Notification No. 214/86-CE which clearly provides exemption from payment of excise duty on the job work activity subject to condition the principle supplier of raw material discharging the excise duty on their final product wherein job work goods is used. This fact is also not under dispute, in view of declaration filed by the principle supplier of the machine bodies. In the given fact, we are of the view that the job work activity since clearly covered under job work provisions, no duty is required to be paid on the job work activity in terms of Notification No. 214/86-CE. Accordingly value of machine bodies supplied by the principle manufacturer need not to be added or same should not be levied with excise duty. The issue in the present case is squarely covered by the judgment in case of International Auto Ltd (supra) where in Honble Supreme Court has held as under:
6. We are of the view that the submission of the appellant is correct. The Tribunal appears to have been confused between the manufacture of the final product, namely, excavators and the manufacture of the intermediate product, namely, the floor plate assemblies. The scheme of Modvat permits the person who clears the ultimate final product to take the benefit of the Modvat scheme at the time of clearance of such final product. The manufacturer of the final product, in this case TELCO, would therefore, be entitled not only to adjust the credit on the inputs supplied by it to the intermediate purchaser such as the appellant but also to the credit for the duty paid by the intermediate purchaser on its products. The reliance on the decision in Burn Standard Company Ltd. (supra) by the Tribunal was misplaced. That case has no doubt held that the value of the free inputs were to be included in the final product. In that case, the final product was wagons and the question was whether the items which were supplied free by the Railway Board to the assessee could be included in the value of the wagons. This Court came to the conclusion that it could. The first distinguishable feature is that this Court in that case was neither concerned with the Modvat scheme, nor with the provisions of Rule 57F(2)(b). Furthermore, the Court was not considering a situation where the question was of the liability of an intermediate product being subjected to excise duty. What was in consideration was the final product, namely, wagons.
7. In this appeal as we have already noted, the final? product was the excavator. According to the Modvat scheme, it is the Modvat of such final product which would have to include the cost of the inputs and in respect of which Modvat credit could be taken at the time of clearance of the final product. The Tribunal having misconstrued the provisions of Rule 57F(2)(b), its decision cannot stand. The decision of the Tribunal is accordingly set aside and the appeal is allowed.
In C.A. Nos. 4086-87/2001 :
8. For the reasons elaborated by us in the judgment delivered in C.A. No. 176/2000 (M/s. International Auto Ltd. v. Commissioner of Central Excise, Bihar) these appeals must be allowed. The penalty imposed on the appellant is set aside. However, it is recorded that the appellant is not claiming refund of any duty that had been paid by it pursuant to the demand which is set aside by us.
Following the ratio of the above decision and our above detailed discussion, we are of the view that appellant are not required to pay duty on the machine body supplied by the principle manufacturer therefore the impugned order is not sustainable. Hence the same is set aside and appeals are allowed.
(Operative part pronounced in court ) Raju Member (Technical) Ramesh Nair Member (Judicial) sk 7 E/190/11,E/1201/11