M/S. Agro Tech Foods Ltd vs C.C.E & S.T. Jaipur-I

[Arising out of Order-in-Appeal No. 250(GRM)CE/JPR-I/2006 dated 31.10.2006 by the Commissioner of Customs, Central Excise & Service Tax (Appeals), Jaipur].

For approval and signature:

Honble Shri Ashok Jindal, Member (Judicial)

Hon'ble Shri B. Ravichandran, Member (Technical)

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?

M/s. Agro Tech Foods Ltd. .Appellants

Vs.

C.C.E & S.T. Jaipur-I .Respondent

Appearance:

Shri Rahul Tangri, Advocate for the Appellant

Shri Govind Dixit, DR for the Respondent

CORAM:

Hon'ble Shri Ashok Jindal, Member (Judicial)

Hon'ble Shri B. Ravichandran, Member (Technical)

Date of Hearing: 04.09.2015

FINAL ORDER NO. 52862/2015-EX(DB)

Per Ashok Jindal:

The appellant is in the appeal against the impugned order denying Cenvat Credit on inputs and demanding duty under section 11D of the Central Excise Act 1994.

2. The facts of the case are that during the period October 2004 to December 2004 the appellant procured refined edible soya oil on payment of duty and repacked the same in smaller packing of 1,2 and 5 liters and cleared the same on payment of duty in terms of the notification no. 37/03-CE dated 30.04.2003. Revenue is of the view that in terms of notification no. 6/2002-CE dated 01.03.2002 as amended by notification no. 37/03-CE dated 30.04.2003 the 100% soya refined edible oil manufactured out of refined edible oil on which appropriate duty of excise has already been paid attracts nil rate of duty. Therefore, appellant was not required to pay duty at the time of clearance of repacked refined edible soya oil. As the appellants final product was exempted and therefore, they are not required to pay duty and they are not entitled to avail Cenvat Credit on inputs and packing material used in manufacturing the final product. In these set of facts, a show cause notice was issued for denial of Cenvat Credit wrongly availed on input and packing material along with interest and to recover amount collected by the appellant from their customs in the guise of Central Excise duty under section 11D of the Central Excise Act 1994 along with interest. The proposal also made for imposing penalty on the appellant. Both the lower authorities adjudicated the matter denying Cenvat Credit and confirmed the duty under section 11D of the Act along with interest and imposed penalty on the appellant. Aggrieved from the said order appellant is before us.

3. The Ld. Consultant appearing on behalf of the appellant submits that as per notification no. 37/2003-CE dated 30.04.2003 (Sl. No. 244 (B), 244 (C)) the refined edible oil attracts the duty at the rate of 1 per kg. The refined edible oil attracts nil rate of the duty if it is manufactured out of refined edible oil on which appropriate duty has been paid and as per the explanation to that for the purpose of exemption the refined edible oil means fixed vegetable oil and subsequent to their extraction have undergone one or more of the following process:

a) Treatment with alkali or acid

b) Bleaching

c) Deodorization

and confirms the standard of refined vegetable oil. In fact, appellant is engaged only in the activity of repacking in retail pack out of bulk packing and appellant has not taken any activity of process namely treatment with alkali acid, bleaching or deodorization, etc. Therefore, clause (C) at Sl. No. 244 of the notification is not applicable to the appellant and as per Chapter note 4 of Chapter 15 of the Central Excise Tariff Act 1985 the activity of repacking from bulk to retail pack amounts to manufacture as the appellant is engaged in the activity of manufacturing and covered by clause (B) of Sl. No. 244 of the notification is liable to pay duty at the rate of Rs. 1 per kg and paying duty on their product. Therefore, their product cannot be said as exempted goods. Consequently, impugned proceedings are to be set aside. To support this contention he relied on the decision of this Tribunal in the case of Sariba Agro Ltd. Vs. CCE Guntur-2009 (243) ELT 47 (Tribunal Bang.). He further submits that as there are 2 entries in the notification no. 37/2003-CE dated 30.04.2003 (Sl. No. 244(B) & (C)). One is without any condition and one is imposing certain conditions. In that case which entry is more beneficial to the appellant, appellant is entitled to take benefit of the said entry. As held by the Honble Apex Court in the case of HCL Ltd. Vs. CCE-2001 (130) ELT 405 (SC), which has been followed by this Tribunal in the case of Manglam Alloys Ltd. Vs. CCE Ahmedabad reported in 2010 (255) ELT 124 (Tri-Amd). Therefore, impugned order is to be set aside.

4. On the other hand, Ld. AR supported the impugned order.

5. Heard the parties. Considered the submission.

6. In this case the appellant is engaged in the activity of repacking from bulk to retail packs of 1,2 and 5 liters and as per Chapter note 4 of Chapter 15 of the Central Excise Tariff Act 1984 the activity of repacking from bulk to retail amounts to manufacture. Therefore, it is not in dispute that activity undertaken by the appellant amounts to manufacture. Now the issue before us is that whether the final product cleared by the appellant is exempted as per clause (C) of the Sl. No. 244 of the Notification or is liable to duty as per clause B of Sl. No. 244 of the Notification or not. Identical issue came up before this Tribunal in the case of Sariba Agro Ltd. (Supra) wherein the facts of the case are as under:

2.1 The appellant is manufacturing packed refined edible oil processed from seed extraction and crude oil and clearing the same to ATFL on payment of appropriate duty after packing into unit containers of 500 ml / 1 ltr / 5 ltrs, and is charging Rs. 2002 per Metric Tonne from ATFL for processing the crude oil to refined oil and packing into unit container. Occasionally, ATFL provide the refined edible oil in bulk purchased from outside on payment of duty of Rs. 1/- per kg. The appellant is repacking the same and clearing it ATFL on payment of duty of Rs.1/- per kg. and taking into credit the duty paid on refined oil provided by ATFL. Besides the above, the appellant is also taking into credit of the duty paid on packing material used for packing the refined edible oil manufactured by him as well as supplied by the ATFL.

7. We have also exempted notification which is reproduced here for better appreciation:

8. In that case this Tribunal hold that as it is seen that entry no. 244 (B) & (C) do not have any condition and are also not mutually exclusive. It is settled law that when there are two views possible on notification, the view which is more beneficial to the assessee is to be applied. In this case appellant feels that payment at discharge of duty at Rs. 1 per kg of unit container of refined edible oil manufactured by them would be more advantageous to them and has chosen to pay them. With notification itself give 2 options. Choice of the appellant to chose an option which is more beneficial to them cannot be faulted with. Same view was taken by this Tribunal in the case of Manglam Alloys Ltd. (Supra) wherein this Tribunal has observed as under:

8. In this case, we find that at Sr. No. 200 the entry is melting scrap : of iron or steel which earlier excluded the stainless steel and at Sr. No. 202, the entry is scrap of stainless steel for the purpose of melting. As per Chapter 72, it has been clarified that steel covers stainless steel. So we are of the view that appellant can claim exemption under Notification No. 21/2002 at Sr. No. 200 & 202 as per the ratio of the case laws discussed above. In this case, the appellants have claimed the exemption at Sr. No. 200, which cannot be denied as per the law laid down by the Honble Apex Court in the case of HCL Ltd.

9. We also observed that the appellant is procuring refined edible soya oil and is not engaged in any process namely treatment with alkalies, bleaching or deodorization. In that case we hold that entry at Sl. No. 244 (C) of the notification is not applicable. Therefore, in the light of above cited decisions in the case of Sariba Agro Ltd. (Supra) we hold that appellant has rightly claimed entry 244 (B) of the notification no. 37/03-CE dated 30.04.2003 and chose to pay duty at the rate of Rs. 1 per kg. In these circumstances, Cenvat Credit cannot be denied to the appellant and appellant is availing Cenvat Credit and paying duty on their final product. Therefore, provisions of section 11D are not applicable to the facts of this case.

10. With these observation we set aside the impugned order and allow the appeal with consequent relief if any.

(Dictated and pronounced in the open court)

(B. Ravichandran) (Ashok Jindal) Member (Technical) Member (Judicial)

Bhanu

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E/3780/2006-EX(DB)