Karnataka High Court
The Commissioner Of Central Excise vs M/S. Vishal Precision Steel Tubes on 15 March, 2017
Author: Jayant Patel
Bench: Jayant Patel
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 15TH DAY OF MARCH 2017
PRESENT
THE HON'BLE MR.JUSTICE JAYANT PATEL
AND
THE HON'BLE MR.JUSTICE N.K.SUDHINDRA RAO
C.E.A.No.27/2016
BETWEEN:
The Commissioner of Central Excise
Bangalore-V Commissionerate
T.T.M.C. Building,
Old Airport Road, Domlur,
Bangalore-560 071.
...APPELLANT
(By Sri.K.V.Aravind, Advocate)
AND:
M/s.Vishal Precision Steel Tubes
And Strips Pvt. Ltd.,
Plot No.47, KIADB Industrial Area,
Hoskote, Bangalore-562114.
... RESPONDENT
(By Sri.N.Anand, Adv.)
This C.E.A. is filed under Section 35G of the Central
Excise Act, arising out of order dated 06.08.2015 passed in
2
Final Order No.21765/2015 by the CESTAT, South Zone
Bench, Bengaluru.
This C.E.A. coming on for orders this day, JAYANT
PATEL J., delivered the following:-
JUDGMENT
The present appeal is directed against the order dated 06.08.2015 passed by the Tribunal, whereby, the Tribunal for the reasons recorded in the order, has allowed the appeal.
2. We have heard Mr.K.V.Aravind, learned counsel appearing for the Revenue and Mr.N.Anand, learned counsel appearing for the Respondent.
3. We may record that the Tribunal in the impugned order at paragraph-2 has observed thus:-
"2. It is undisputed that the appellants were paying duty of excise on their final product by utilizing the CENVAT credit. As such, the question required to be decided is 3 that irrespective of the fact that whether the activity of the appellant amounts to manufacture or not and when admittedly, the credit availed is being utilized for payment of duty of excise on the said activity, whether there would be any obligation on the part of the assessee to reverse the credit. Though the appellants have referred to various decisions of the Tribunal confirmed by the Hon'ble Bombay High Court, we find tht all such decisions stands considered by the majority order of the Tribunal in the case of Asian Colour Coated Ispat Ltd., Vs. CCE [2015 (317) ELT 538 (Tri-Del)]. Wherein it stands held that when the CENVAT credit availed on the inputs stand utilized for payment of duty on the final product, there would be no requirement of reversal of the said credit even if the activity undertaken by the assessee does not amount to manufacture. By following the said decision, we set aside the impugned order and allow 4 the appeal with consequential relief to the appellant".
4. The aforesaid order shows that when the CENVAT credit is availed on the inputs stand utilized for payment of duty on the final product, there would be no requirement of reversal of the said credit. Even if the activity is undertaken by the assessee does not amount to manufacture.
5. We may usefully refer to the decision of the Bombay High Court in the case of Commissioner of Central Excise, Pune-III vs. Ajinkya Enterprises [2013(294) E.L.T.203 (Bom)], wherein, the Bombay High Court at paragraphs 8 and 9 observed thus:-
"8. We see no merit in the above contentions. As rightly contended by the representative of the assessee appearing in person, till 1st March, 2005 the Revenue has accepted that the activity carried on by the 5 assessee constituted manufacturing activity in view of Bioard Circular dated 7th September 2001 and accordingly, held that the assessee is entitled to take credit of duty paid on HR/CR coils. It is only because, the Board, on 2nd March, 2005 has withdrawn the Circular dated 7th September, 2001, the Revenue is claiming that the activity carried on by the assessee does not amount to manufacturing activity. The question is, whether on the facts of the present case, the Revenue, based on the Circular dated 2nd March 2005, is justified in calling upon the assessee to reverse the credit or pay the amount to the extent of the credit liable to be reversed, with interest and penalty?
9. It is relevant to note that the Board in its Circular dated 7th September, 2001 had only held that the activity of cutting/slitting/of HR/CR coils into sheets or strips constitutes manufacture. Admittedly, the assessee had carried on additional activities such as pickling and oiling on the 6 decoiled HR/CR coils, which is a complex technical process involving huge investment in plant and machinery. Since these additional activities were not considered by the Board in its Circular dated 7th September, 2001,, the withdrawal of the said Circular cannot be a ground to hold that the activity carried on by the assessee did not constitute manufacturing activity. It is only on 24th June, 2010, the Board has issued a Circular to the effect that the process of pickling does not amount to manufacture. Therefore, during the relevant period, that is, during the period from 2nd March, 2005 to 31st December, 2005, it could not be said that the issue was settled and that the assessee paid duty on decoiled HR/CR coils knowing fully well that the same were not manufactured goods. If duty on decoiled HR/CR coils was paid bona fide, then availing credit of duty paid on HR/CR coils cannot be faulted".7
6. The another decision of High Court of Gujarat in the case of Commissioner of Central Excise & Customs, Surat-III vs. Creative Enterprises 2009 (235) E.L.T.785(Guj.) at paragraph-6, it was observed thus:-
"6. When one goes through the order of the first appellate authority, it is apparent that the respondent has been held to be a manufacturer as defined in Section 2(f) of the Central Excise Act, 1944. The appellate authority has taken into consideration the activities carried on by the respondent- assessee. The Tribunal is justified in holding that if the activity of the respondent-assessee does not amount to manufacture there can be no question of levy of duty and if duty is levied. Modvat credit cannot be denied by holding that there is no manufacture".
7. It is an undisputed position that the final product is treated as dutiable and duty is paid by the 8 assessee. When once duty is paid by the assessee treating the activity as manufacturing activity by the Department, CENVAT credit is available and there is no question of reversion of CENVAT credit. As such, in view of the aforesaid two decisions of the High Court namely, Bombay High Court and Gujarat High Court, we do not find any question of law would arise for consideration as sought to be canvassed.
8. Hence, the appeal is merit less and accordingly, it is dismissed.
Sd/-
JUDGE Sd/-
JUDGE Srl.