Commissioner Of Central Excise vs M.R.F. Ltd

[Arising out of Order-in-Appeal No.47/2007 (M-I) dt. 31.7.2007 passed by the Commissioner of Central Excise (Appeals), Chennai]

Commissioner of Central Excise, Chennai Appellant

Versus

M.R.F. Ltd. Respondent

Appearance:

Shri Karthik Sundaram, Advocate For the Appellant Shri L. Paneer Selvam, AC (AR) For the Respondent

CORAM:

Honble Shri R. Periasami, Technical Member

Date of hearing/decision :26.3.2015

FINAL ORDER No.41075/2015

1. Revenue filed this appeal against OIA No.47/07 dt. 31.7.2007.

2. The brief facts of the case are that the respondents one of the units located at Tiruvottiyur are registered with Central Excise for manufacture of truck tyres, flaps, tractor tyres etc. They are also engaged in export of various tyres and flaps and availing cenvat credit on the duty paid on the packing materials and subsequently cleared the packing material to Export Processing Godown (EPG) at Puzhal for packing of export goods. The said packing materials were subsequently cleared without payment of duty under CT-2 Certificate under cover of invoices to EPG for use in the packing of tubes and tyres. Therefore, taking of cenvat credit in respect of packing material meant for use exclusively at their EPG unit is incorrect. The adjudicating authority in his OIO confirmed the demand of Rs.16,77,692/- towards ineligible cenvat credit for clearance of packing materials made to EPG. He also imposed equal penalty under Rule13 (2) of CCR read with Section 11AC of Central Excise Act. On appeal, Commissioner (Appeals) allowed the appeal of the assessee. Hence the present appeal by Revenue.

3. Ld. A.R reiterates the grounds of appeal and submits that respondents received packing material but cleared to their own Export Processing Godown (EPG)which is a bonded warehouse and availed cenvat credit but not reversed the credit while removing the packing materials to their EPG and not followed the procedure. The Commissioner (Appeals) in the impugned order relied his own previous OIA No.20/07 dt. 31.7.2007 which is under a different context where the same packing material was cleared to another unit where it formed as an input for the other unit. In the present case, the respondents packing material are not used as an input in the manufacture of final goods.

4. On the other hand, Ld. Advocate appearing for the respondent reiterates the finding of Commissioner (Appeals) order and submits that Commissioner (Appeals) has rightly allowed their appeal. He produced a copy of OIA No.20/2007 relied upon by LAA available at page 27 of the paper book and also drew attention to Rule19 of CER 2002 and Rule 3 (4) of CCR 2002 and also relied on Boards circular. He submits that LAA relied his own OIA No.20/07 dt. 31.7.2007 while passing the impugned order. He submits that Revenue has not filed any appeal against the earlier order. He submits that Revenue cannot raise a new ground. He submits para-9 of the SCN alleges and para-13 invokes Rule 3 (4) of CCR where the allegation is input is cleared as such whereas in the grounds of appeal, Revenue has come out with a new ground that packing material is not an input. He further submits that rule 3(4) of CCR is not applicable for export. All clearances of packing materials were made only to their export godown under CT-2 Form under Notification No.43/2007 dt. 26.6.2007. As per rule 19 (2) of CER, read with rule 6 (5) (vi) of CCR, 2002, goods were cleared for export to their EPG unit under bond. The respondents are eligible for credit and therefore Commissioner (Appeals) has rightly allowed their appeal.

5. After hearing both sides and on perusal of records, I find that there is no dispute on the packing material which is eligible for cenvat credit. The only dispute is that respondent has cleared packing material under CT2 certificate to their own EPG for export purposes which is declared as Export Processing Godown having a Customs Bonded Warehouse and the packing material used in the finished goods which are ultimately exported from the bonded warehouse at EPG and also there is no dispute on the export of finished goods which contained packing material from the EPG and the appellant followed procedure under Central Excise Rules and duly followed CT-2 procedure as per notification 43/2007 dt. 26.6.2007. The respondents are eligible for cenvat credit on the packing material. I find that as per sub-rule (5) (vi) of Rule 6 of CCR, the provisions of rule 6 is not applicable as the goods were cleared for export under bond in terms of provisions of CER. Accordingly the respondents are not required to reverse the cenvat credit while clearing under CT-2 certificate to their EPG unit and there is merit in the contention of respondent that LAA has relied his own OIA No.20/07 in the impugned order. I do not find any infirmity in the impugned order which is upheld. Accordingly, Revenue appeal sis rejected. The cross objection filed by respondent gets disposed.

(Operative part of the order pronounced in open court on 26.3.2015)

(R. PERIASAMI) TECHNICAL MEMBER

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