Custom, Excise & Service Tax Tribunal
M/S. Shriram Pistons & Rings Ltd vs Cce, Chennai Iii on 17 July, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
E/669/2009
(Arising out of Order-in-Original No. 23/2009 dated 15.9.2009 passed by the Commissioner of Central Excise, Chennai III)
M/s. Shriram Pistons & Rings Ltd. Appellant
Vs.
CCE, Chennai III Respondent
Appearance Shri Raghavan Ramabhadran, Advocate for the Appellant Shri L. Paneerselvam, AC (AR) for the Respondent CORAM Honble Shri R. Periasami, Technical Member Honble Shri P. K. Choudhary, Judicial Member Date of Hearing / Decision: 17.07.2015 Final Order No. 40987 / 2015 Per P. K. Choudhary This is an appeal against denial of CENVAT credit. The appellants are engaged in the manufacture of piston, piston rings, piston assemblies etc falling under Chapter Sub Heading 8409 9114 of the First Schedule to the Central Excise Tariff Act, 1985 for automobiles at the appellants factory at Ghaziabad and cleared on payment of duty on stock transfer basis to the appellants unit at Hosur. The piston and piston rings are repacked and re-labelled with part number and supplied to the customers like TVS Motors and Ashok Leyland on just in time basis on payment of duty. The adjudicating authority disallowed the CENVAT credit of Rs.2,05,36,106/- under Rule 14 of CENVAT Credit Rules, 2004 and imposed equivalent penalty (Oct. 2007 to June 2008), he also confirmed Rs.1,02,96,279/- in respect of other show-cause notice and imposed equal penalty (July 2008 to Feb. 2009). Hence the present appeal.
2. The learned counsel for the appellant submits that the issue involved in this case is denial of CENVAT credit on stock transfer from Ghaziabad to Hosur. The goods are labelleld at Hosur and sold which would amount to manufacture under Section 2(f)(iii) of the Central Excise Act, 1944 and thus the inputs used for such activities are eligible for CENVAT credit. The learned counsel further submits that Section 2(f)(iii) of the Central Excise Act, 1944 deems the activity of packing/ repacking or labelling/relabelling as a process of manufacture if it renders the product marketable to the customer. The appellant-assessee upon receipt of goods from their Ghaziabad factory, unpacks it and packs it according to the requirement of the buyers. This repacking is essential because the goods received from the Ghaziabad unit are based on approximate requirement which is not the same as the actual requirement. Subsequently, they affix labels on the packages indicating the contents of the box and the details of the buyer. He further submits that re-packing and re-labelling is necessary to render the product marketable. He relied on the decision of the Tribunal in the case of Nestle India Ltd. Vs. CCE, Chandigarh 2011 (270) ELT 575. He further submits that the packages received from the Ghaziabad unit are not complete until they are specifically packed and labeled as per the requirements of the customers. In the automobile industry, part number is an important identification and essential of labeling. He further submits that the repacking and relabeling done by the appellant amounts to manufacture under section 2(f)(iii) read with Note 6 of Chapter XVII. The learned counsel further submits that for the subsequent periods i.e. from March 2009 to December 2009 and January 2010 to June 2010, proceedings in the show-cause notices were dropped by the Commissioner vide Order-in-Original Nos. 38/2010 dated 30.12.2010 and 21/2012 dated 30.3.2012 and submits that once the Department having accepted the allegation in the above mentioned proceedings cannot now contest the same for the previous period and for this he relied on the following case laws:-
(a) Jayaswals Neco Ltd. Vs. CCE 2006 (195) ELT 142 (SC)
(b) Boving Fouress Vs. CCE 2006 (202) ELT 389 (SC)
(c) CCE Vs. Tikitar Industries 2012 (277) ELT 149 (SC)
3. The learned AR for Revenue reiterated the findings of the adjudicating authority and submits that the activities carried out by the appellant did not amount to manufacture in terms of Section 2(f)(iii) of the Central Excise Act, 1944. He further submits that CENVAT credit availed at Hosur factory is not correct as the goods procured from the Ghaziabad factory were already marketable and the activities at Hosur factory do not amount to manufacture under section 2(f) of the Central Excise Act, 1944. The activity namely repacking and relabeling carried out by the appellant was neither mentioned in the Note to Section XVI nor in the Note to Chapter 84 of CETA, 1985 as amount to manufacture.
4. On hearing both sides and on perusal of the records, we find that the period involved in the present case is from October 2007 to February 2009. There is no dispute on the fact that the activity of repacking and relabelling amounts to manufacture as per the definition given under section 2(f)(iii) read with Note 6 of Chapter XVII. We also find that the Department has already accepted this issue in favour of the assessee vide Order No. 38/2010 dated 30.12.2010 and Order No. 21/2012 dated 30.3.2012 for the subsequent period (March 2009 to December 2009 and from Jan. 2010 to June 2010). The relevant portion of the order dated 30.3.2012 is reproduced as under:-
11. It is also seen from the records that for the earlier period, my predecessor Commissioner had held that the activity of unpacking, repacking, labeling and relabeling of pistons, piston rings and piston assemblies at Hosur unit amounted to manufacture vide Order-in-Original No. 38/2010 dated 31.12.2010 and the same has been accepted by the Department. Further, the repacked products were cleared on payment of duty on a higher value and the department accepted the payment of duty on the final products. There is no justification to deny the credit on the goods used while accepting the duty on the final products. Having accepted the duty on the final products as manufactured, it is not open to the department to deny the credit on the inputs that the final products were not manufactured. Therefore, I do not find any merit to deviate from the decision taken by the predecessor Commissioner. Accordingly, I pass the following order.
12 I confirm that the activities of unpacking, repacking and re-labelling of Piston, piston rings, piston assemblies falling under Chapter sub heading 84099114 of the Central Excise Tariff Act, 1985 by M/s. Shriram Pistons & Rings Ltd. amounted to manufacture in terms of Section 2(f)(iii) of the Central Excise Act, 1944 read with S. No. 100 of the Third Schedule to the Central Excise Act, 1944 and the notes thereof.
13. I hereby drop all further proceedings initiated in the SCN No. 3/2011 dated 4.2.2011 with consequential relief.
5. It is seen from the above adjudication order that the activities of unpacking, repacking and relabeling amounted to manufacture in terms of Section 2(f)(iii) of the Central Excise Act, 1944 and there is no dispute on these facts. Further, the repacked products were cleared on payment of duty on a higher value and the Department accepted the payment of duty on the final products. There is no justification to deny the credit on the goods used while accepting the duty on the final products. Having accepted the duty on the final products as manufactured, it is not open to the Department to deny the credit on the inputs that the final products were not manufactured. Further, the Department has also accepted the adjudication orders dated 30.12.2010 and 30.3.2012. Therefore, the appellants are eligible for CENVAT credit.
6. For the foregoing reasons, the impugned order is set aside and the appeal is allowed with consequential relief.
(Operative portion of the order was pronounced
in open court on 17.7.2015)
(P.K. CHOUDHARY) (R. PERIASAMI)
Judicial Member Tehnical Member
Rex
6