Cce & St, Meerut-Ii vs Merino Industries Limited

[Arising out of Order-in-Appeal No.MRT-EXCUS-002-APP-53/13-14 dated 24.06.2013 passed by the Commissioner (Appeals), Customs & Central Excise, Meerut-II]

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?

CCE & ST, Meerut-II Appellant

Vs.

Merino Industries Limited  Respondent

Present for the Appellant : Shri R.K.Gupta, D.R.

Present for the Respondent: Shri S.Sunil, Advocate

Coram: HONBLE MR. S.K. MOHANTY, MEMBER (JUDICIAL)

Date of Hearing/Decision: 27.08.2015

FINAL ORDER NO.54064/2015

PER: S.K. MOHANTY

The brief fats of the case are that the respondent is engaged in the manufacture of Paper based decorative Laminates, Formaldehyde, Pest form Particle Board, Pest Form MOP Board, impregnated Paper & Furniture article etc. The appellant avails cenvat credit on inputs and capital goods used in or in relation to manufacture of the said final products. During the period August, 2009 to July, 2010, the appellant removed certain capital goods outside their factory premises for carrying out job work. However, the appellant did not receive the job work goods after processing within a period of 180 days as provided under rule 4 (5) (a) of the Cenvat Credit Rules, 2004. In view of this, the Department initiated proceedings against the respondent and confirmed cenvat demand of Rs.25,78,578/- alongwith interest and also imposed equal amount of penalty. In appeal against the adjudication order dated 12.12.2012, the Commissioner (Appeals) by the impugned order has set aside the demand on the grounds of revenue neutrality as well as in view of the fact that since the capital goods were available in the factory premises of the job worker, who is one of the group concern of the appellant, there was no requirement for reversal of cenvat credit.

2. Shri R.K. Gupta, the ld. D.R. appearing for the Revenue appellant submits that the condition of Rule 4 (5) (a) of the Cenvat Credit Rules, 2004 has not been fulfilled by the appellant in as much as the capital goods removed for job work have not been received back within 180 days from the date of its removal from the factory, and thus, appellant is statutorily required to reverse an amount equivalent to cenvat credit taken on such capital goods.

3. Shri S. Sunil, the ld. Advocate for the respondent reiterates the findings recorded in the impugned order. He further submits that the show cause proceedings initiated by the Central Excise Department are barred by limitation of time. According to him, the fact of sending the goods on job work basis to the adjacent factory of the respondent was known to the Department in the month of March, 1998 through the letter dated 25th March, 1998 of the respondent and the show cause notice was issued on 30th May, 2011. Since the said notice was issued beyond the period of one year from the date of knowledge regarding the activities of the appellant of sending the goods for job work, the same is clearly barred by limitation of time.

4. Heard the ld. Counsels for both sides and perused the records.

5. Sub Rule (5) (a) of Rule 4 allows removal of input or capital goods to a job worker for carrying out the required processes subject to the condition that if the job worked goods are not returned back in the factory of the manufacturer within 180 days, then the manufacturer shall pay an amount equivalent to cenvat credit attributable to the inputs or capital goods by debiting the cenvat credit or otherwise, It is an admitted fact on record that the goods sent by the respondent to the adjacent factory for carrying out the job work have not been returned back within a period of 180 days from the date of its removal. In view of the statutory provisions as contemplated in Rule 4 (5) (a), I am of the view that the respondent is required to reverse the cenvat credit. The impugned order, dropping adjudged demand is not in conformity with the said statutory provisions and as such the same is liable to be set aside.

6. However, I find force in the submissions of the ld. Advocate for the respondent that the show cause notice is barred by limitation, having been issued after a period of one year from the date of knowledge regarding sending of capital goods to the job worker. On perusal of the records, I find that the Commissioner (Appeals) in the impugned order has not considered the limitation aspect and allowed the appeal in favour of the respondent only on merits. Since the limitation aspect has not been dealt with by the Commissioner (Appeals) and the respondent has not filed any cross objection as per the requirement of section 35 B (4) of the Central Excise Act 1944, the matter should be remanded to the Commissioner (Appeals) for considering the limitation aspect involved in the present case.

7. Therefore, the matter is remanded to the Commissioner (Appeals) for examining the issue of limitation as to whether the show cause notice is time barred or issued within the stipulated time frame. The appeal is allowed by way of remand.

(Dictated and pronounced in the open Court)

(S.K. MOHANTY)

MEMBER (JUDICIAL)

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0 2 E/60179/2013 EX. [SM]