Gopal Iron & Steel Company (Guj) Ltd ) vs )

[ Arising out of OIA No 191/2009(Ahd-II)CE/ID/Commr(A)/Ahd dated 31.3.2009 Passed by The Commissioner, Central Excise, Ahmedabad II ]

Gopal Iron & Steel Company (Guj) Ltd ) Appellant (s) ) Vs ) ) The Commissioner, Central Excise ) Respondent (s) :

Ahmedabad II )

Represented by : For Assessee : Shri P M Dave (Adv) Shri Kuntal Parikh (Adv.) For Revenue : Shri S K Shukla (AR)

For approval and signature : Mr. P.K. Das, Hon.ble Member (Judicial)

1

Whether Press Reporter 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 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

CORAM :

Mr. P.K. Das, Hon.ble Member (Judicial)

Date of Hearing / Decision : 7/1/2015

ORDER No. A/10355 / 2015 dtd 7/1/2015

Per : Mr. P.K. Das,

The Appellants are engaged in the manufacture Articles of Iron and Steel under Chapter 72 of the First Schedule to the Central Excise Tariff Act 1985.The appellant availed cenvat credit on Furnace Oil used in the manufacture of dutiable goods and job work material cleared under Notification No. 214/1986 dtd 25.3.1986. The appellant wrongly reversed cenvat credit an amount of Rs 11,36,541/- on the furnace oil used in the job work material. Thereafter, the appellant vide letter dtd 30.4.2007 requested to the Department for permission to re-credit the said amount. A Show Cause Notice dtd 3.7.2007 was issued to show case as to why the permission for suo moto re-credit would not be rejected. It is alleged that the appellant has debited the amount of Cenvat Credit availed on fuel used for the purpose of job work. The Adjudicating Authority rejected the appellants request for allowing of Rs 11,36,541/- to re-credit in Cenvat account. By the impugned order, Commissioner (Appeals) upheld adjudication order.

2. The Learned Advocate on behalf of the appellant submits that the appellant erroneously reversed the credit and they requested to permit to re-credit the said amount in cenvat account. He submits that the Commissioner (Appeals) proceeded on the basis that the furnace oil used for job work for final product and cleared under Notification No 214/86-CE and therefore they are not eligible for cenvat Credit on inputs. He submits in their own case for the earlier period the Tribunal in the case of Gopal Iron and Steel Co (Guj.) Ltd vs CCE, (AHD), 2009(249)640 (AHD) allowed the appeal on the same issue on merit. He also relied upon various decisions as under:

a) Sterling Industries (I) Ltd vs CCE, Pune  2005(183).ELT.353 (Tri.LB)

b) Commissioner vs. Sterling Industries (I) Ltd  2009(244)ELT.A89(Bom.)

c) CCE,, Jalander vs Kapsons Industries Ltd  2007(218)ELT.460 (Tri.Del)

d) Welspun India Ltd vs CCE, Daman  2009(248)ELT.898(Tri.Ahd.)

e) CCE, Ludhiana vs Modi Sales  2009(235)ELT.356(Tri.Del.)

f) Monarch Catalyst P Ltd vs CCE Thane 1  2013(291)ELT.478 (Tri.Mum.)

g) CCE Vadodara 1 vs J H Kharawala (P) Ltd  2009(235)ELT.332(Tri.Ahd)

h) Sudhir Forging vs CCE, Ludhiana  2010(251)ELT.478(Tri.Del.)

3. On the other hand, Ld Authorised Representative for the Revenue submits that the show Cause notice was issued proposing to reject the permission for re-credit on the ground that they have not filed refund claim under Section 11B of the Central Excise Act 1944. He submits that the issue is in favour of the Revenue as per order of the Larger Bench of the Tribunal, in the case of BDH Industries Ltd vs CCE - 2008(229) ELT.364(Tri.LB).

4. After hearing both the sides and on perusal of the records, I find from the impugned order of the Commissioner (Appeals) observed that furnace oil used in the manufacture of final product cleared on job work material under exemption Notification No 214/86-CE. The Commissioner (Appeals) observed that the appellant cannot take the cenvat credit of inputs, which has been used in the manufacture of goods cleared under the exemption notification. I find that the appellants own case as reported in 2009(247)ELT.640 (Tri. Ahd) on the identical facts allowed the appeal on identical issue, as under:

 5.?After appreciating the submissions made by both sides, I find that in para 7 of his order, the appellate authority has held in favour of the appellant by observing that Tribunals Larger Bench decision is fully applicable even in the context of New Rule 6. Nevertheless, he has gone ahead and rejected the appeal on the ground that the appellant has not brought anything on record to show that the principle manufacturer has paid duty on their final product. I fully agree with the learned advocate that the appellants having manufactured the goods on job work basis in terms of Notification No. 214/86, which allows movement of input from principle manufacturers factory to the job worker only on the condition of principle manufacturer paying duty on the final product, the observations made by Commissioner (Appeals) cannot be upheld. In any case, I find that the appellate authorities have only expressed a doubt about the non-payment of duty by the principle manufacturer and has not come to a final conclusion about such non-payment. Even the doubt is also not justified in view of the scope and provisions of notification No. 214/86 and in view of the admitted fact of the appellant having done the job work in terms of the said notification. Accordingly, I find no merits in the impugned order and set aside the same.

5. So, the appellant is eligible to avail cenvat credit on merit and the finding of the Commission (Appeals) is not sustainable. The Larger Bench decision in the case of BDH Industries Ltd (Supra) as relied upon by the Learned Authorised Representative would not be applicable in the facts and circumstances of the case. In that case, the issue involved is that as to whether it is permissible to take suo moto credit. In the present case, I find that the appellant have not taken suo moto credit of the amount which was reversed by them. In other words, they have applied for permitting them to re-credit the amount. I agree with the submission of the Learned Advocate that this was not disputed by the Commissioner (Appeal).

6. In view of the above discussion, the impugned orders are set aside. The appeal filed by the appellant is allowed with consequential relief.

(Dictated and pronounced in the Court)

(P.K. Das) Member (Judicial)

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