M/S. Bombay Forgings Ltd vs Commissioner, Central Excise& ...

[Arising out of Order-in-Appeal No. AGS(07)08/2010 dtd. 8/1/2010 passed by the Commissioner (Appeals) of Central Excise & Customs, Aurangabad]

For approval and signature:

Honble Mr. Ramesh Nair, Member (Judicial)

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1. Whether Press Reporters may be allowed to see : No 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 : seen of the Order?

4. Whether Order is to be circulated to the Departmental: Yes authorities? =======================================================

M/s. Bombay Forgings Ltd. : Appellants

VS

Commissioner, Central Excise& Customs, Aurangabad : Respondent

Appearance

None for the Appellants Shri V.K. Shastri Asstt. Commissioner (A.R.) for the Respondent

CORAM:

Honble Mr. Ramesh Nair, Member (Judicial)

Date of hearing: 24/6/2015 Date of decision: 24/6/2015

ORDER NO.

Per : Ramesh Nair

The appeal is directed against Order-in-Appeal No. AGS(07)08/2010 dated 8/1/2010 passed by the Commissioner (Appeals), Aurangabad, wherein Ld. Commissioner (Appeals) set aside the order-in-original dated 30/6/2009 and allowed the Revenues appeal.

2. The fact of the case is that appellant has availed Cenvat Credit in respect of M.S. Rod which was used for making tote box which is used for keeping and carrying inputs and finished goods during the course of manufacture in the factory of the appellant. The show cause notice was issued alleging that said M.S. Rod is neither used for manufacturing the finished goods nor fall under definition of input, accordingly it was proposed to demand and recover Cenvat credit of Rs. 3,26,877/-, it was also proposed to impose penalty under Rule 15 of Cenvat Credit Rules, 2004 read with Section 11AC and also recovery of interest under Rule 14 of CCR, 2004 read with Section 11AB. Show cause notice was adjudicated by the Asstt. Commissioner of Central Excise and Customs, Aurangabad vide order-in-original dated 30/6/2009 wherein adjudicating authority dropped the show cause notice by allowing Cenvat Credit on the ground that M.S. Rod used to manufacture of tote boxes which is further used in the manufacture of their final product. Aggrieved by the said order in original Revenue filed appeal before Commissioner (Appeals) who allowed the appeal of the Revenue. Being aggrieved by said impugned order appellant is before me.

3. When the matter is called for none appeared on behalf of the appellant nor any request for adjournment was found on record, therefore I proceed to decide the matter on merit. From the appeal memo, it is seen that appellant has relied upon following judgments:

ELT 226: 23.06.08 599 LLOYDS METALS & ENSINEERS Vs COMMR OF C.EX., NAGPUR CASES:

Aditya Cement Vs. Commissioner 2003 (159) ELT 1005 (Tribunal).

Aditya Cement Vs. Union of India 2008 (221) ELT 362 Relied on Divis Laboratories Ltd. Vs. Commr. 2006 (196) ELT 285 (Tribunal) ELT 226: 30.06.08 742 DHAMPUR SUGAR MILLS LTD Vs COMMR OF C.EX., MEERUT-II CASES:

Commissioner Vs. Hotline Glass Ltd. 2007 (210) ELT 69 (Tribunal) Union of India Vs. Hindustan Zinc Ltd. 2007 (214) ELT 510 ELT 227: 28.07.08 592 COMMR OF C.EX. CHENNAI Vs THIRUMLAI CHEMICALS CASES:

Commissioner Vs. India Cement 2005 (192) ELT 240 (Tribunal) referred Jawahar Mills Ltd. Vs. Commissioner 1999 (108) ELT 47 (Tribunal- L. B.) relied on Union of India Vs. Hindustan Zinc Ltd. 2007 (214) ELT 510. Lloys Metals & Engineers Ltd. Vs. Commissioner 2003 (162) ELT 847 (Tribunal) referred ELT 227 : 14.07.08 265 STEEL AUTHORITY OF INDIA LTD Vs COMMISSIONER OF C.EX. RAIPUR 2008 (227) ELT 265 (Tribunal-Del) CASES: Hindalco Industries Ltd. Vs. Commissioner 1996 (88) ELT 519 (Tribunal) followed SAIL Vs. Commissioner 2008 (222) ELT 233 (Tribunal) followed Union of India Vs. Hindustan Zinc Ltd. 2007 (214) ELT 510 ELT 224 : 28.04.08 560 GKN SINNER METAL LTD Vs COMMISSIONER OF C.EX. PUNE CASES:

Collector Vs. Solaris Chemtech Ltd. 2007 (214) ELT 481 (S.C.)

4. Shri. V.K. Shastri, Ld. Asstt. Commissioner (A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order.

5. I have carefully considered the submission made by Learned A.R. and perused the record.

6. I find that the appellant have availed Cenvat credit in respect of M.S. Rod which undisputedly were used in the manufacture of tote boxes which in turn used for handling of finished goods and for heat treatment. It was found that the said tote boxes are used for conveying same finished goods into furnace and after heat treatment the said goods are taken out of furnace by the help of this tote boxes. In view of this fact, I find that M.S. Rod is used for manufacture of tote box which is in nature of capital goods. The said capital goods is directly used in the manufacture of the final product in the factory of the appellant. Therefore I am of the view that the credit is correctly admissible on M.S. Rod. I observe that in the show cause notice, the issue was raised that M.S. Rod is not used in or in relation to the manufacture of the final product, whereas the Commissioner (Appeals) have decided revenues appeal going completely beyond the show cause notice on the ground that the tote boxes which are manufactured within the factory are exempted from payment of excise duty therefore in terms of Rule 6(1) of CCR Cenvat credit is not admissible.

First of all Ld. Commissioner (Appeals) should not have given any findings on the issue which is not born from the show cause notice. Even if it is presumed that on the findings of the commissioner whether the Cenvat credit is admissible or not, I find that even if capital goods manufactured within the factory of the appellant and admittedly it is exempted, Cenvat credit in respect of input used in the manufacture of such exempted capital goods is permissible. As per CCR, 2004 the Cenvat Credit is allowed on the input as per the Rule 2K explanation (2) input includes goods used in the manufacture of capital goods which are further used in the factory of the manufacture In view of this provisions in the present case M.S. Rod have been used in the manufacture of the capital goods and the capital goods in the manufacture of the final product, Cenvat credit on M.S. Rod is admissible as input. In the fact of the present case, it is undisputed that the final product manufactured by the appellant is cleared on payment of duty and no exemption was availed, therefore contention of the Ld. Commissioner (Appeals) is wrong as Rule 6(1) is applicable only when the final product is cleared under exemption.

The original authority has allowed the Cenva credit by giving reasonable findings which is reproduced below:

It is noted that the allegations are made in show cause notice that M.S. Bars are used for making tote boxes which are used for keeping and carrying inputs and semi finished goods in and around the factory and these M.S. bars are not used for manufacturing the finished goods and it does not fall under the definition of inputs. However, on party reply it is noticed that the tote boxes/trays manufactured from the M.S. Bars by cutting and fabrication in specified sizes in length width and height are mainly used for handling of the semi finished goods in furnce alongwith trays for further heat treatment operation. The party also cited various judgments on the issue. The M.S. bars are used in making of the tote boxes which is the capital goods and the same is mainly used for handling the semi finished goods within the factory premises and loading and uploading the semi finished goods in furnace along with trays for further heat treatment operation. It is seen that the process of handling loading uploading the semi finished goods in factory is necessary and tote boxes are required for these process without which manufacturing activity cannot be completed smoothly and properly as such these tote boxes are capital gods in the nature of material handling equipment to bring about any change in any substance for manufacturing of final products and which are manufactured in the factory itself from the M.S. Bars resultantly M.S. bars is the inputs for such capital goods. In view of the above and various citations given by the party, I find that M.S. Bars are the input for manufacture of the capital goods i.e. note boxes manufactured in the factory which are used as material handling equipment, I therefore pass the following order.

It can be seen from the above findings that original authority has applied his mind and legally extended Cenvat credit to the appellant. On-going through the judgments cited by the appellant in their appeal memo and also before the Commissioner (Appeals), I find that in all those judgments Cenvat credit in respect of material handing equipment has been allowed and the ratio of the these judgments are applicable in the present case also. In view of the above, settled legal position, my discussion and also considering the findings of the original authority, I am of the view that appellant is legally entitle for the Cenvat credit in respect of M.S. Rod, therefore impugned order is not sustainable, hence the same is set aside, and appeal is allowed.

(Dictated in court)

Ramesh Nair Member (Judicial) sk

7 APPEAL NO. E/501/10-MUM