M/S. Gsp Crop Science Pvt. Limited vs Commissioner Of Central Excise & S.T., ...

(Arising out of OIA-72-74/2009-AHD-II-CE/ID/COMMR-A-/AHD dated 27.02.2009, passed by Commissioner (Appeals) Central Excise & Customs, Ahmedabad.)

1. M/s. GSP Crop Science Pvt. Limited : Appellant (s) 2. Shri Mukesh M. Patel 3. Shri Shri Kenal Shah

VERSUS

Commissioner of Central Excise & S.T., Ahmedabad : Respondent (s)

Represented by :

For Appellant (s) : Shri H.D. Dave, Advocate For Respondent (s) : Shri J. Nair, Authorised Representative

For approval and signature :

Mr. P.K. Das, Honble 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, Honble Member (Judicial)

Date of Hearing / Decision : 05.01.2015

ORDER No. A/10014-10016/2015 Dated 05.01.2015

Per : Mr. P.K. Das;

These appeals are arising out of a common order and therefore, all are taken up together for disposal.

2. The relevant facts of the case, in brief are that M/s. GSP Crop Science Pvt. Limited (Appellant No. 1) is engaged in the manufacture of Pesticides classifiable under Chapter 38 of the Central Excise Tariff Act, 1985, through their two unit namely Unit-1 and Unit-2. On 17.09.2007, Central Excise officers of preventive unit visited Unit-1 of the appellants factory and found that the Unit-1 transferred the Pesticides to Unit-2 on payment of duty at tariff rate. According to the Revenue, Unit-1 should pay the duty on the basis of CAS-4. Accordingly, Unit-1 paid the duty on the basis of CAS-4 and issued the supplementary invoices to Unit-2, who availed CENVAT credit on the basis of supplementary invoices issued by Unit-1. In the present case, the adjudicating authority denied the CENVAT credit availed by Unit -2 on the basis of supplementary invoices as in violation of Rule 9(1)(b) of the Cenvat Credit Rules, 2004. The adjudicating authority denied the CENVAT credit and confirmed the demand for erroneously availed credit by Unit-2 along with interest and imposed penalty of equal amount upon the Appellant No.1. Penalties were also imposed upon Appellant No. 2 and 3, Shri Kenal V. Shah, Director and Shri Mukesh M. Patel, Excise Officer of the appellant No.1. Commissioner (Appeals) upheld adjudication order.

3. Learned Advocate on behalf of the appellants submits that there is no dispute that it is a case of inter-unit transfer of stock of the same Company. Therefore, allegation of suppression, fraud or mis-declaration etc. under the provisions of Rule 9(1) of the said Rules can not be sustained. He relied upon various decisions of the Hon'ble High Courts and Tribunals as under:-

(a) CCE, Hyderabad vs. Jairaj Ispat Limited  2009 (245) ELT 118 (AP)

(b) Ispat Industries Limited vs. CCE, Raigad  2008 (221) ELT 540 (Tri. Mumbai)

(c) Mahindra & Mahindra Limited (T.D.) vs. CCE, Mumbai  2006 (202) ELT 509 (Tri. Mumbai)

(d) Essar Oil Limited vs. CCE, Rajkot  2014 (303) ELT 255 (Tri. Ahmd.)

4. On the other hand, the learned Authorised Representative for the revenue reiterates the findings of the Commissioner (Appeals). He submits that the issue is no more res-integra in favour of Revenue, in view of the Larger Bench decision of the Tribunal in the case of Bosh Chassis Systems India Limited vs. CCE, Delhi-III  2008 (232) ELT 622 (Tri. LB). He also relied upon the decision of the Tribunal in the case of CCE, Daman vs. Manglam Drugs & Organics Limited  2007 (208) ELT 95 (Tri. Mumbai). He submits that both the cases are related to denial of CENVAT credit availed on the basis of supplementary invoices issued on the allegation of fraud, misstatement etc.

5. After hearing both the sides and on perusal of the record, I find that the Preventive Officers during their visit detected the transfer of goods from Unit-1 to Unit-2 on the payment of duty on tariff rate. According to the department, the Unit-1 should have paid duty on CAS-4. The appellant immediately paid the differential duty and issued supplementary invoices and Unit-2 availed the cenvat credit on the basis of supplementary invoices.

6. The contention of the learned advocate that even if fraud/ suppression is involved, CENVAT credit is available on the supplementary invoices to Unit-2 as per Rule 9 of the said Rules. The relevant portion of the Rule 9(1) of the said Rules, is reproduced below:-

The CENVAT credit shall be taken by the manufacturer or the provider of output service or input service distributor, as the case may be, on the basis of any of the following documents, namely:-

(a) .

(b) a supplementary invoice, issued by a manufacturer or importer of inputs or capital goods n terms of the provisions of Central Excise Rules, 2002 from his factory or depot or from the premises of the consignment agent of the said manufacturer or importer or from any other premises from where the goods are sold by, or on behalf of, the said manufacturer or importer, in case of additional amount of excise duties or additional duty leviable under Section 3 of the Customs Tariff Act, has been paid, except where the additional amount of duty became recoverable from the manufacturer or importer of inputs or capital goods on account of any non-levy or short-levy by reason of fraud, collusion or any wilful misstatement or suppression of facts or contravention of any provisions of the Excise Act, or of the Customs Act, 1962 (52 of 1962) or the rules made there under with intent to evade payment of duty.

7. On perusal of the said rules, it is clear that there is restriction imposed for availing CENVAT credit on the basis of supplementary invoices issued by manufacturer factory from where the goods are sold by, or on behalf of the said manufacturer. In the present case, admittedly, there is no sale of goods but it is inter unit transfer of stock. It is seen that Unit-1 transferred the goods to their Unit-2. I find that this issue is settled by the decision of the Hon'ble Andhra Pradesh High Court in the case of Jairaj Ispat (supra). Relevant portion of the said decision is reproduced below:-

5.?On a perusal of the material available on record and the order impugned, it is apparent that one unit of the respondent-company manufacturers ingots and sends them to rerolling division for further conversion to re-rolled products of various sizes and the DGCI authorities having found the undervaluation of the goods which are sent from the first unit to the second unit, recovered differential duty and subsequently, the revenue proceeded against the assessee on the ground that an amount of Rs. 3,37,989/- being the credit was wrongly taken in violation of the provisions of Rule 7(b) of Cenvat Credit Rules, 2002 r/w Section 11AC of the Central Excise Act. In this regard, the Tribunal relied upon the ratio in the above citation, wherein it was held that in the case of stock transfer, prohibition under Rule 7(1)(b) of Cenvat Credit Rules is not applicable even if additional amount of duty becomes recoverable from one unit on account of fraud, suppression of fact etc. Having regard to the observations by the tribunal and the facts and circumstances of the case and in the absence of any substantial question of law raised in this appeal and in view of the failure to show that the respondent-company has involved in any fraud or suppression of facts, we have no hesitation to hold that the order of the Tribunal does not suffer from any illegality or infirmity and hence, the appeal is liable to be dismissed.

8. The decision of the Larger Bench of the Tribunal in the case of Bosch Chassis Systems India Limited (supra) relied upon by learned AR, it is held that whether in the particular case, the benefit of cenvat credit has rightly been disallowed should be left to the appellate forum to consider. The decision of the Tribunal in the case of Mangalam Drugs & Organics Limited (supra), as relied upon by the learned AR is Single Member decision and there is no merit to discuss herein.

9. In view of the above discussion and respectfully following the decision of the Honble Andhra Pradesh High Court in the case of Jairaj Inspat Limited (supra), I set-aside the impugned orders. Appeals filed by the appellants are allowed with consequential relief.

(Dictated and pronounced in the Court)

(P.K. Das) Member (Judicial) ..KL

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