Custom, Excise & Service Tax Tribunal
Deepak Nitrite Ltd vs Commissioner Of Central Excise, Raigad on 26 November, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No. I APPEAL No.E/3159/05-Mum (Arising out of Order-in-Appeal No. AT/387/RGD/2005 dated 25/07/2005 passed by Commissioner of Central Excise (Appeals), Mumbai) For approval and signature: Honble Mr. M.V. Ravindran, Member (Judicial) and Honble Mr. C.J. Mathew, 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 : No 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?
====================================================== Deepak Nitrite Ltd. Appellant Vs. Commissioner of Central Excise, Raigad Respondent Appearance: Shri S.R. Dixit, Advocate for Appellant Shri S. Hasija, Supdt (AR), for Respondent CORAM: Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. C.J. Mathew, Member (Technical) Date of Hearing : 26/11/2015 Date of Decision : 26/11/2015 ORDER NO Per: M.V. Ravindran
This appeal is directed against Order-in-Appeal No. AT/387/RGD/2005 dated 25/07/2005.
2. The relevant facts that arises for consideration are appellant herein are manufacturer of excisable goods falling under chapter 28, 29 of the schedule to Central Excise Tariff Act 1985. During the period June, 2003 to June, 2004 appellant had sent raw materials on payment of duty to the job worker for the manufacture of the product para cumidine (the said product), the job worker after manufacture of the said product, sends back to appellant on payment of duty; after the process inspection, quality test and repackaging, the said product is cleared from factory on payment of appropriate duty. The department is of the view that the said product cleared by the appellant from the factory premises is clearance of input as such, they are required to reverse the CENVAT credit availed the said product when they received from the job worker. Show cause notice was issued which was adjudicated after following the due process of law; the demand of the duty liability with interest was confirmed and penalties were imposed. On an appeal, the first appellate authority also concurred with the adjudicating authority.
3. Learned counsel would submit that the clearances of said product was effected after enhancement of product value, the said product was not input which was cleared as such. It is his submission that the duty paid by them on the said product is on the basis of the transaction value as a final product, as the same was to be considered as the manufactured as per note no. 10 chapter no. 29, he take us through the note no. 10 and submits that the said note applies in the case in hand and the appellant had relabeled, removed moisture from the said product which was received from the job worker, hence the treatment undertaken by the appellants on the said product will amount to manufacture. He would then submit that the judgment of the tribunal in the case of Thermax Ltd. 2014-TIOL-1832- CESTAT-AHM will be clearly applicable as also the majority judgment of the tribunal in the case of Jindal Drugs Ltd. 2015-TIOL-857-CESTAT-Mum.
4. Learned departmental representative would draw our attention to the show cause notice and the annexure there to and submit that many times, the appellant removed the said product at the prices lower than the amount paid by him to the job worker. It is his submission that the process undertaken by the appellant will not fall under the mischief of note no. 10 to the chapter 29 as appellant is not doing any packing or repacking or rendering any other treatment to make the said product marketable. He would rely upon the judgment of the tribunal in the case of TRF Ltd.-2012 (277) E.L.T. 349 (Tri.-Kolkata).
5. We have considered the submissions made at length by both sides and perused the records.
6. The issue involved in this case is whether the appellant is required to reverse the Cenvat Credit availed as sought by the revenue authorities or otherwise, on the clearances of the said product.
7. Undisputed facts are the appellant receive the said product on discharge the duty liability from the job worker, the job workers duty liability is not question; the said product is undergoing the process of removable of moisture, checking of quality control and tests, packing and labeling; the said product is cleared by the appellant to their purchasers as their product on the transaction value by discharging Excise duty.
8. On the backdrop of the factual matrix as recorded herein above, it is to be considered whether the claim of the revenue that appellant has to reverse the CENVAT credit availed by him on said product or duty on transaction value as adopted by the appellant is sufficient compliance of the law for discharging of the Central Excise Duty.
9. The provisions of section 2 (f) of the Central Excise Act 1944, defines manufacture, the said definition is reproduced.
Section 2(f) manufacture includes any process,-
(I) incidental or ancillary to the completion of a manufactured product;
(ii) which is specified in relation to any goods in the Section or Chapter notes of 16[the First Schedule] to the Central Excise Tariff Act, 1985 (5 of 1986) as amounting to 17[manufacture;or]
(iii) which, in relation to the goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or labeling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer,]
10. The case in hand as already reproduced herein above, the said product is undergoing the process of removal of moisture is not in dispute. In our considered view, removal of moisture is also a process, as a customer purchases said product from the appellant needs to have specification of non-existence of moisture in the final products for his consumption. Removal of moisture is a process which may be done by traditional method of exposure to heat by spreading the said products in the sun light or in dryers. Be that as it may, removal of moisture is a process that would render the product marketable to their customers cannot be disputed.
11. It is also further to be noted removal of moisture from said product, appellant has empty from the containers which was received from the job workers, and after removal of moisture, quality tests repack them in new containers and lable the said product as their own products, which activity falls within abmbit of chapter note no. 10 of the chapter 29 and we have to hold that the said product is manufactured by the appellant, it can be seen that the CENVAT credit was correctly availed by the appellant, the duty liability is discharged on the transaction value is correct. To our mind the case of revenue treating the said product as removal of inputs as such, is misconceived.
12. This view is expressed by the majority decision in the case of Jindal Drugs Ltd. (supra) where in it was held that labeling would amount to manufacture.
13. The case law is relied upon the learned departmental representative in the case of TRF Ltd. (supra), would not carry the case of the revenue any further as in that case, the facts were totally different, license was for manufacture by the appellant, only an inspection was done with repacking and hence it was held that it is not amounting to manufacture. While the facts, in the case in hand, are different in as much the said product under goes the process of moisture removal which in our view in the facts of this case, can be considered as treatment meted out which will render the said product marketable.
14. In view of the forgoing, we hold that the impugned order is unsustainable and liable to be set aside and we do so, the impugned order is set aside and the appeal is allowed with the consequential relief, if any.
(Dictated in Court) (C.J. Mathew) Member (Technical) (M.V. Ravindran) Member (Judicial) akp 1 6 APPEAL No.E/3159/05-Mum