M/S. Anabond Limited vs Cce, Pondichery

(Arising out of Order-in-Appeal No. 107/2006 dated 19.12.2006, passed by the Commissioner of Central Excise (Appeals), Chennai).

M/s. Anabond Limited : Appellant /Respondent

Vs.

CCE, Pondichery : Respondent/Appellant

Appearance

Shri G. Natarajan, Adv., For the appellant/respondent

Shri L. Paneerselvam, AC (AR) For the respondent/appellant

CORAM

Honble Shri R. PERIASAMI, Technical Member

FINAL ORDER No. 41079-41080 / 2015

Date of Hearing/Decision: 26.03.2015

Both the assessee and the department filed appeals against the Order of the Commissioner (Appeals) dated 19.12.2006.

2. The issue relates to the demand of reversal of Cenvat Credit on the used capital goods cleared without payment of duty by the appellant to the their own unit located at SEZ. The adjudicating authority confirmed the reversal of Cenvat credit of Rs. 2,84,700/- and imposed equal penalty and also appropriated the amount already paid by them. The appellant preferred appeal and the Commissioner (Appeals) upheld the demand and set aside the penalty imposed under Rule 15(1) of CCR,2004. Hence, the present appeal. The assessee preferred appeal by contesting the demand whereas the Revenue filed appeal against the impugned order against Commissioner (Appeals) setting aside the penalty.

2. The Ld. Advocate appearing for the appellant submits that the period involved in this appeal is October2005. The appellants have supplied the inputs and capital goods to their own unit located at SEZ without reversal of cenvat credit under Notification No. 58/2003, which is applicable only for manufacture of excisable goods and not applicable for clearance of inputs and capital goods as such. He relied on the Circular F.No. 68/2003-Cus dated 30.07.2003 and drew attention to para-13 & 14 of the said circular. However, he relied to the supplementary instructions to the manual para 3-4 of Chapter 5 which clearly clarifies that supply of inputs and capital goods on which credit was already availed can be removed to SEZ without reversal of credit. However, he submits that there was no provision under the rules for recovery of cenvat credit availed on inputs and capital goods cleared as such during the period. It was only introduced in the year 2013 w.e.f. 01.03.2013, where explanation was inserted only prospective. Further, he submits that the entire credit was disallowed without allowing depreciation as per the Boards Circular. On the Revenue appeal, he submits that the Commissioner (Appeals) has rightly set aside the penalty. The following are the case laws relied by the Ld. Advocate, in support of his contention:-

1. CCE Hyderabad Vs. Navodhaya Plastic Industries Ltd.

2013 (298) ELT 541 (Tri.-LB)

2. Ispat Metallics Industries Ltd. Vs. CCE, Raigad.

2006 (194) ELT 417 (Tri.-Mum.)

3. CCE, Chennai Vs. M/s. Wabco TVS (India) Ltd.

2012-TIOL-1819-CESTAT-MAD

3. On the other hand, the LD. AR reiterated the findings in the impugned order and submits that SEZ and EOU are to be considered in equal terms and the inputs purchased by the appellant was subsequently transferred to SEZ and hence equal amount of credit to be reversed as per Rule 3(5) of CCR. Ld. AR relied on the following case laws in support of his contention:-

1. CCE, Chennai-II Vs. Sundaram Brake Linings Ltd.

2014 (299) ELT 343 (Tri.- Chennai)

2. Lakshmi Automatic Loom Works Ltd. Vs. CCE, Trichy 2008 (232) ELT 428 (Tri.-LB).

4. I have carefully considered the submissions by both sides and perused the records. The short issue involved in this case relates to reversal of cenvat credit on the input and capital goods cleared as such to their own unit at SEZ. I find that the period involved in this case is October, 2005. The appellants cleared inputs and capital goods etc. by following the procedure laid down under Notification 58/2003. On identical issue the Tribunal in the case of M/s. Wabco TVS (India) Ltd. (supra) rejected the Revenue appeal and held that the clearance of goods to their own unit at SEZ in not required reversing the cenvat credit. Therefore, Tribunals decision applies to the facts of the present case. Further, I find that as rightly contended by the appellant there is no specific recovery mechanism of credit on the inputs and capital goods cleared during the relevant period. The specific provision was introduced only w.e.f. 01.02.2013. This issue was specifically dealt by the Tribunal at Mumbai in the case of Ispat Metallics Industries Ltd. (supra). By following these Tribunals decisions, I hold that the appellants are not liable to reverse Cenvat credit availed on the capital goods cleared to their own unit at SEZ. Once the appeal is allowed, the question of penalty does not arise. Accordingly, the assessees appeal is allowed and the Revenue appeal is rejected.

(Operative part of the Order pronounced in the open Court on26.03.2015)

(R. PERIASAMI) TECHNICAL MEMBER BB 1