Forbes Gokak Ltd vs Commissioner Of Central Excise, ...

[Arising out of Order-in-Appeal No. 200/2012 dated 11/04/2012 passed by the Commissioner of Central Excise, Mangalore]

For approval and signature:

HON'BLE MRS. ARCHANA WADHWA, JUDICIAL MEMBER

1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? No 3 Whether Their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes

Forbes Gokak Ltd. (Gokak Mills Division), 100% EOU Konnur Village, Gokak Falls, Gokak Belgaum - 591 308 Appellant(s)

Versus Commissioner of Central Excise, Customs and Service Tax, Belgaum No. 71, Club Road, Central Excise Building, Belgaum  590 001 Karnataka Respondent(s)

Appearance:

Mr. N. Anand, Advocate # 152, Race Course Road, Bangalore  560 001 Karnataka For the Appellant

Mr. S. Teli, AR For the Respondent

Date of Hearing: 22/06/2015 Date of Decision: 22/06/2015 CORAM:

HON'BLE MRS. ARCHANA WADHWA, JUDICIAL MEMBER

Final Order No. 21403 / 2015

Per: ARCHANA WADHWA

After hearing both the sides duly represented by Mr. N. Anand, Advocate and Mr. S. Teli, AR I find that the appellant is engaged in the manufacture of cotton yarn. They have two units one a 100% EOU and another as DTA unit, which are located next to each other. The appellant was availing cenvat credit of service tax paid on Maintenance and Repair Services, Banking Services, Erection and Commissioning Services, Testing and Analysis Services, Commission on Export and GTA Services in their 100% EOU.

2. In the said premises they were having a Diesel Generated Set engaged in the production of electricity. A part of the electricity was being used by them in their said 100% EOU and a part was being used in the adjacent DTA factory. Revenue by entertaining a belief that the appellant has utilized common cenvatable input services in the production of electricity, a part of which is being wheeled out to DTA unit, was of the view that the appellant is required to reverse the proportionate credit relatable to the electricity wheeled out to DTA unit. Accordingly proceedings were initiated against them by way of issuance of show-cause notice dated 06.04.2010, raising demand of duty of Rs. 23,00,000/- (Rupees Twenty Three Lakhs) approximately for the period April 2005 to December 2007. The said demand stands confirmed by the lower authorities along with confirmation of interest and imposition of penalty.

3. Learned advocate has drawn my attention to various services, in respect of which the cenvat credit stands availed by the assessee. The said services are Banking Services, Erection and Commissioning Services, Maintenance and Repair, Testing and Analysis, Commission on Export and GTA Services. Revenue has not specifically referred to any service which can be said to be a common service for running of the business as also for production of electricity. Admittedly Banking Services, Commission on Export Services and GTA Services cannot be said relatable to the production of electricity.

Learned advocate has also drawn my attention to the provision of Rule 6(5) of Cenvat Credit Rules, which start with a non-obstante clause. In terms of the said provisions of law, if common input services, as mentioned therein are used in the manufacture of taxable as also exempted products, the provisions of Rule 6(3) would not be applicable. Most of the services except the Commission on Export and GTA Services stand covered as specified services in the said Rule. Admittedly Commission on Export and GTA Services can be said to have any connection with the production of electricity. Inasmuch as all other services specified in the said Rule stand utilized as common services, there is no requirement of reversal of the proportionate credit as it is not the Revenues case that the said services stand utilized exclusively for the manufacture of the exempted final services. Reliance in this case can be made on the Tribunal decision in the case of CCE, Goa Vs. V.M. Salgaonkar & Bros. Pvt. Ltd. [2008 (10) S.T.R. 609 (Tri.-Mum.)]. As such on this ground itself, without adverting to the appellants plea that electricity cannot be considered to be excisable goods, I set aside the impugned order and allow the appeal.

4. Otherwise also I find that the demand stands raised by invoking the longer period of limitation. The appellant has been reflecting the credit availed by it in their monthly returns and there is no suppression of the said fact from the Revenue, much less with any malafide intent. In such a scenario the invocation of longer period is not justified. Accordingly the appellant succeed on the said point also.

5. In view of the above the impugned order is set aside and appeal is allowed with consequential relief.

(Order pronounced in open court)

(ARCHANA WADHWA) JUDICIAL MEMBER

iss