Custom, Excise & Service Tax Tribunal
M/S G.S. Enterprises vs C.C.E. Jaipur on 5 October, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
PRINCIPAL BENCH, COURT NO. III
Excise Appeal No. E/1984/2007-E[SM]
[Arising out of Order-In-Appeal No. 98(GRM) CE/JPR-I/2007 dated 30.03.2007 passed by CCE Jaipur]
For approval and signature:
Honble Mr. S.K. Mohanty, Member (Judicial)
1
Whether Press Reporters may be allowed to see 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 of the Order?
4
Whether Order is to be circulated to the Departmental authorities?
M/s G.S. Enterprises Appellant(s)
Vs.
C.C.E. Jaipur Respondent(s)
Appearance:
Mr. S. Sunil (Advocate) for the Appellant Mr. Dharam Singh (DR) for the Respondent CORAM:
Honble Mr. S.K. Mohanty, Member (Judicial) Date of Hearing/ Decision. 05.10.2016 Final Order No. 54883 /2016 Per S. K. Mohanty:
Brief facts of the case are that the appellant is engaged inter alia, in the manufacture of Razors and Razor Blades, falling under Chapter Heading No. 8212 of the Central Excise Tariff Act, 1985. The appellant undertakes the activity on job work basis. The appellant assembles and packs the components supplied by M/s Gillette India Ltd., Bhiwadi. The appellant procures blades and razors on payment of Central Excise duty from the principal supplier Ms. Gillette India Ltd. and avails cenvat credit of duty paid thereon. Since, the blades were removed along with razors free of cost to Gillette India Ltd., the department initiated proceedings against the appellant for disallowance of the cenvat credit in terms of Rule 6(1) of the Cenvat Credit Rules, 2004. The Show Cause Proceedings initiated by the department, culminated in the adjudication order dated 29.08.2006, wherein demand of Rs. 3,80,715/- was confirmed under Rule 14 of the Cenvat Credit Rules, 2004 read with Section 11A of the Central Excise Act along with interest. Further equal amount of penalty was also imposed under Rule 15 ibid. In appeal, the Ld. Commissioner vide impugned order has confirmed the adjudged demand. Hence, the present appeal is before the appeal.
2. Heard the Ld. Counsel for both sides and perused the records.
3. The short question involved in this appeal for consideration by the Tribunal is, as to whether, blades removed from the factory alongwith razors should be considered as exempted goods and whether the embargo contained in sub-rule (1) of Rule 6 ibid should be applicable for reversal of cenvat credit taken on the blades.
4. I find that the issue in hand is squarely covered by the decision of this Tribunal in the case of G.M. Enterprises vs CCE Jaipur (Final Order No. 53048/2015 dated 18.09.2015). The relevant paragraph in the said decision is extracted herein below.
5. The lower authorities ordered the recovery of irregular credit taken on blades, which were later supplied with the razors in a combined package to the customers with an indication that razor is free. In this case, we find that there is no dispute regarding valuation of final products cleared. There is no allegation of short payment of duty on account of non-inclusion of free supplied blades in the valuation of final products viz. razor blade combo packed together. Still, the department went ahead and denied the credit on the blades under the provisions of Rule 6(1) of the Cenvat Credit Rules, 2004. It is clear that Rule 6(1) will apply in respect of the inputs used in or in relation to the manufacture of exempted goods. Now, it would appear that the department equated the supposed free blades with exempted goods. Otherwise, Rule 6(1) has no relevance. Calling a free supplied good as exempted goods is legally unsustainable. Ld. Commissioner (Appeals) categorically states that the Boards circular dated 28.10.2002 regarding MRP based valuation under Section 4 A is not relevant to the dispute as in the present case, there is no dispute about the appellants assessable value or MRP of the product. Considering the ld. Commissioner (Appeals) categorical assertion, it is clear that there is no under-valuation or short payment of duty on the final products cleared, which includes the free supplied blades. Equating such free supply to exempted clearance is untenable as already explained. As such, the provisions of Rule 6 of the Cenvat Credit Rules, 2004 has no application here.
5. In view of above, I do not find any merits in the impugned order and allow the appeal in favour of the appellant.
(Dictated and pronounced in open court) (S. K. Mohanty) Member(Judicial) Neha 3 | Page E/1984/2007-E[SM]