Custom, Excise & Service Tax Tribunal
Pensla Exports Pvt. Ltd vs Cce, Ludhiana on 30 November, 2017
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SCO 147-148, SECTOR 17-C, CHANDIGARH 160 017
COURT No. I
APPEAL NOs. E/1703-1704/2009
[Arising out of Order-in-Original No. 15/CE/Jal/09 dated 27.03.2009 passed by the Commissioner of Central Excise (Appeals), Chandigarh.
Date of hearing: 18.04.2017
Date of decision: 18.04.2017
For approval and signature:
Honble Mr. Ashok Jindal, Member (Judicial)
Honble Mr. Devender Singh, Member (Technical)
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Pensla Exports Pvt. Ltd.
Sh. Arvind Gupta :
Appellant(s) VS CCE, Ludhiana.
:
Respondent(s) ======================================== Appearance:
Sh. Sudhir Malhotra, Advocate for the Appellant(s) Sh. Satyapal, AR for the Respondent(s) CORAM:
Honble Mr. Ashok Jindal, Member (Judicial) Honble Mr. Devender Singh, Member (Technical) FINAL ORDER NO.62095-62096/2017 Per : Ashok Jindal The appellants are in appeal against the impugned order.
2. The brief facts of the case are that the appellants are engaged in the manufacture of G.I. Gate Clip, G.I. Hooks, Piano Hinges/Hinges, Hangers, Picture Hooks, Gate Latch, Penal Pins, Brackets & G.I. Bucket, Haps & Staple, Washer, Rake, Ghamela, Gurmala/Trowel, Chiesal, Pulley, Rake, Shoevel, Karni, Wrecking Bar etc. The appellant procured certain inputs and availed Cenvat Credit thereon and final goods have been exported by the appellants either through merchant exporters or in their own name. The appellants availed Cenvat Credit on inputs used in the manufacturing of their final goods and also availed rebate of duty excise paid on the goods exported. The investigation was conducted on 15.11.2006 and certain records were resumed. On the basis of scrutinized records, it was alleged that as the appellants are not having facility to manufacture the goods, therefore, they are not entitle to claim rebate of duty on excise paid on the goods exported and also not entitled to avail Cenvat Credit on inputs. In these set of facts, the show cause notice was issued and the matter was adjudicated. After adjudication, the Cenvat Credit was denied on the inputs and rebate of duty of excise paid on export goods was held recoverable from the appellants and penalties on both the appellants were imposed. Aggrieved from the said order, the appellants are before us.
3. The Ld. Counsel for the appellants submits that in the Adjudication order, it is erred by denying/demanding Cenvat Credit and simultaneously demanding rebate sanctioned to the appellants which amounts to double demand of duty which is bad in law. It is his submission that the appellants during the period in question took Cenvat Credit of Rs. 64,73,939/- out of which the Cenvat Credit was sanctioned to Rs. 37,47,065/-. The rebate of Rs. 1,17,396/- disposed pertains to the period prior to the show cause notice and rebate of Rs. 15,76,511/- received against the goods purchased and exported as such. The total rebate sanctioned is Rs. 40,15,112/- whereas the actual rebate was sanctioned to the appellants for the period in question is Rs. 37,40,065/-.
4. The Ld. Counsel further submits that it is incorrect to say that there was no manufacturing capability to manufacture the impugned goods. He submits that manufacturing process alongwith raw material utilized and machinery used in the manufacturing of finish goods have been placed on record and the manufacturing process, raw material utilized and manufacturing capability of the firm was duly verified by Dr. B.R. Ambedkar, National Institute of Technology in 2008. He further submitted that the central excise staff during the course of visit has verified the machinery installed and list of machinery was prepared and the same is placed on record. The premise was again visited on 28.06.2007 and verified the machinery installed. The appellants also furnished Chartered Accountant Certificate certifying that they have not purchased any machinery after inspection/visit except Air-conditioner/Refrigerator. The goods exported were manufactured out of the same set of machines verified by visiting staff. He further submitted that audit of the appellants was conducted upto March, 2006 and there is no allegation against the appellants and no any discrepancy was found that the unit was not working or workable condition. He further submitted that appellants had filed declarations under Rule 173 (B) of Central Excise Rules, 1944 declaring therein goods manufactured and list of raw material used. The appellants had also filed job work declaration for getting job work done. The appellants unit got ISO-9001 certification and the audit report dt. 25.08.2006 done by the said department is also placed on record. The goods were also sent for export through merchant exporter and some goods were received back under intimation to the Department and same were recorded in RG-I (Daily Stock Account). The Jurisdictional Central Range Officer physically verified the goods returned under his date signature dated 11.08.2006. It is his further submission that difference in mentioned in RG-1 and reflected in ER-1 returns were replied in detailed explaining the clerical mistake at the relevant time which were reflected in subsequent ER-1 return.
5. He further submitted that the Adjudicating Authority relied on the expert opinions of M/s Ambay International & M/s Sikka Forging Private Ltd. who were not the exporters and it has not been brought on record that the said parties manufactured the goods like appellants. He further submits that in respect of electrical consumption, on perusal of chart showing comparative electricity consumption by the appellants and M/s Ambay International and & M/s Sikka Forgings Pvt. Ltd. there is no production figures of M/s Sikka Forgings Pvt. Ltd. reflected in the chart and also in the show cause notice. Further, neither nature of raw material used nor the manufacturing processes undertaken by M/s Sikka Forgings Pvt. Ltd. & M/s Ambay International qua appellants has not been brought on records. Therefore, the statement of M/s Sikka Forgings Pvt. Ltd. and M/s Ambay International are not relevant to the facts of the case. He further submitted that there is no dispute regarding export of the goods by the appellants and the Revenue has failed to bring on record that if the goods have not been manufactured then how the goods were exported by the appellants. He further submitted that without prejudice the above, drawback is admissible on goods exported if the Cenvat Credit is not claimed and during the period 2005-06 and 2006-07, there were minimal difference between rebate claimed and drawback admissible on export of the impugned goods. There is no material benefit to the appellants for resorting the rebate claim and therefore, subsequently, the appellants surrendered central excise registration and resorted to drawback.
6. On the other hand, the Ld. AR opposed the contention of the Ld. Counsel and submits that the certificate issued by the Dr. B.R. Ambedkar, National Institute of Technology have no relevance to the facts of this case as the said certificate has been obtained in the month of October, 2008 whereas the investigation was conducted in November, 2006 and it was found that the appellants are not capable to manufacture the impugned goods. He further submitted that the said certificate does not deal with the goods manufactured by the appellants, therefore, the said certificate is of no relevance. He further submitted that the appellants have used the wire as inputs for manufacture of the goods in question but the said wire has been used for manufacture of small quantity of the goods exported. He further submitted that precision tube which has been shown used in the manufactured of forged or cast items and appellants have no facility of forging/casting in their factory. Further, the appellants ensured bolt as input for manufacture forged and cast items. In fact bolt itself is complete finish excisable goods and cannot be treated as input for manufacturing forged and cast items shown to have been manufactured by the appellants. The items manufactured are broadly classified either as Hand Tools or Garden Tools Or Hardware Goods besides MS Scrap which has been declared as generated/manufactured during the course of manufacture of said goods. The said goods can be manufactured either by way of casting or forging and they had not manufactured any castings items as no machines were there during the course of visit and it is also submitted that for casting and forging, furnish is basic requirement for the unit and for forging, power hammering is essential required. In fact, these machines were not installed, therefore, it is correctly held that these items have not been manufactured by the appellants. The appellants have shown in their statement and stated that the forging and casting has been done on job work basis from job worker but they have paid very few charges to the job worker on account of forging and casting. The appellants have shown the very less consumption of electricity and fuel charges from that it is very clear that the appellants have not manufactured the goods in question. He further submitted that as per Rule 18 of the Central Excise Rules, 2002, the Central Government is empowered to issue notification providing for grant of rebate of duty paid on excisable goods exported subject to condition and limitation and fulfillment of the procedure and specified in Notification No. 40/2001-CE (NT) dt. 26.06.2001 and Notification No. 19/2004-CE (NT) dt. 06.09.2004 issued under Rule 18 of the Central Excise Rules, 2002 allows the rebate of duty of excise paid on the exported goods subject to conditions that excisable goods are exported after payment of duty directly from the factory or warehouse except as otherwise permitted by the CBEC by a general or special order. As appellants have not undertaken any manufacturing activity, the goods exported under claim of rebate by them, on payment of duty from ineligible Cenvat Credit, is a violation of Rule 18 of the Central Excise Rules, 2002. Hence, the rebate of duty of excise paid on the goods exported was not admissible to the appellants and as they have not manufactured exported goods. They have fraudulently availed the Cenvat Credit, therefore, impugned order is to be upheld.
7. Heard both the sides and considered the submissions.
8. On careful consideration of submissions made by both the sides, we find that the core issue before us is that whether the appellants have manufactured the goods in question in their factory or not?
9. We have to see on the basis of the evidence available on records whether appellants are having manufacturing facility in the factory or not? In support of the claim, the appellants have relied on the Dr. B.R. Ambedkar, National Institute of Technology certificate certifying that the appellants having manufacturing facility. The said certificate have no much relevance to the facts of the case as the said certificate has been obtained in October, 2008 and period in dispute is prior to that but the evidence which are in favour of the appellants are the Annexure B1 i.e. the list of machinery installed in the factory premises which were found during the course of visit. The list of machinery is extracted as under:-
Further, the such of machinery found on 28.06.2007 is also installed in their factory and the details of the machinery as under:-
We further find that that chartered engineer has issued a certificate that the appellant has not purchased any machinery during the period from 2007-2008 except Air-conditioner/Refrigerator which supports the fact that the appellants are having manufacturing facility in their factory.
10. Further, we find that the audit was conducted in the factory premise of the appellants upto March 2006 and no discrepancy were found. We also find that the appellants have filed declaration under Rule 57(f)(c) of the Central Excise Rules, 1944 dt. 01.01.2001 declaring to remove the inputs for partially process goods.
11. Further, we find that the appellant has obtained ISO-9001/2000 certification. The audit was conducted in respect of the goods manufactured by the appellants and as per the certificate which has been extracted as under:-
The appellants are having inadequate infrastructure to manufacture of building hardware, Garden and Agricultural Hand Tools and they are having D.C. power backup capacity. Further, the appellants filing regular ER-3 returns and same has not been disputed. Moreover, the goods sold through merchant exporters have been returned back under ARE-1 and same has been enter after due verification by the Range Officers. All these evidences show that appellants are having manufacturing facility of the impugned goods and the same was not disputed during the period in question.
12. On the contrary, the allegation of the Revenue is that the appellants are not having manufacturing facility in their factory, therefore, goods have not been manufactured by them but the fact which is an admitted fact that the goods in question have been exported by the appellants. Therefore, the burden of proof cast on the Revenue that if the appellants are not having manufacturing facility then from where the goods were procured and exported by the appellants. The said crucial evidences is missing in the case.
13. In that circumstances, benefit of doubt goes in the favour of the appellants as they have shown the ample number of machinery installed in the factory which have been used for the manufacturing of finished goods. As crucial evidences of diversion of inputs and procurement of finished goods is missing in the investigation, therefore, the Cenvat Credit cannot be denied to the appellants and consequently, rebate claim already sanctioned to the appellants is not recoverable in the fact and circumstances of the case.
14. In that circumstances, the impugned order is set aside and the appeals are allowed with consequential relief if any.
(Order Pronounced on in the Court on 30.11.2017) Devender Singh Member (Technical) Ashok Jindal Member (Judicial) NS 8 E/1703-1704/2009 -CHD