M/S Honda Motorcycle & Scooter India ... vs Cce, Delhi Iii

[Arising out of the Order-in-Original No. 10/PP/CE/2007 dated 25.04.2007 passed by The Commissioner of Central Excise, Delhi  III, Gurgaon.]

For Approval and signature :

Honble Shri Rakesh Kumar, Member (Technical)

Honble Shri Ashok Jindal, Member (Judicial)

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 would 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 :

Department Authorities?

M/s Honda Motorcycle & Scooter India Pvt. Ltd. Appellant

Versus

CCE, Delhi  III Respondent

Appearance

Shri B.L. Narasimhan, Advocate  for the Appellant.

Shri Pramod Kumar, Authorized Representative (Jt. CDR)  for the Respondent.

CORAM : Honble Shri Rakesh Kumar, Member (Technical)

Honble Shri Ashok Jindal, Member (Judicial)

Final Order No. 50486/2015 Dated : 20/02/2015

Per. Ashok Jindal :-

The appellant is in appeal against the impugned order for denying Cenvat credit on the following items :-

Sl.

No. Particulars

1. Credit on materials and capital goods used by for the erection and commissioning of the paint shop for scooters division ;

2. Credit on the materials and capital goods used for the erection and commissioning of the paint shop for motorcycles division ;

3. Credit on the air conditioners installed and used in the office premises within the factory ;

4. Credit on account of inputs sent to job workers but not received back within the stipulated time ;

5.

Credit on the mould and dies without possession and use

Consequently, a show cause notice was issued to deny Cenvat credit and on adjudication the demand proposed in the show cause notice was confirmed alongwith the interest and penalty of Rs. 2,05,76,849/- to the same is confirmed. Aggrieved from the said order, appellant before us.

2. Brief facts of the case are that the appellants are manufacturer of motorcycle and scooters. For painting of these motorcycle and scooters, they installed a paint shop and taken Cenvat credit on the items mentioned herein at Sl. No. 1 and 2 of the table hereinabove. The Cenvat credit sought to be denied on the premise that these items are embedded to earth, therefore, has become immovable goods consequently the appellant is not entitled to take Cenvat credit. For items mentioned at Sl. No. 3 of the table, the Cenvat credit sought to be denied on the premise that the Cenvat credit on air conditioner installed in the office premises is no nexus with manufacture activity of the appellant. For Sl. No. 4 of the table, Cenvat credit sought to be denied on the premise that the input which has sent to the job worker have not received back by the appellant within the stipulated period of time and at Sl. No. 5 of the table Cenvat credit sought to be denied on mould and dies which were not in the possession of the appellant for use.

3. The learned Counsel for the appellant submits that for items mentioned at Sl. No. 1 and 2 in the case of M/s Omax Auto Ltd. vs. CCE, Delhi  III vide final order No. A/56592-56594 of 2013  SM (BR) dated 15/5/13, in similar set of facts this Tribunal has held that Cenvat credit is available. Therefore, he prayed that following the said decision, they may be allowed to take Cenvat credit. He also drew our attention in their own case, wherein the learned Commissioner for subsequent period vide order-in-original No. 82-83/SA/CCE/12 dated 18/9/12 allowed the Cenvat credit on these items therefore he prayed Cenvat credit on the items be allowed. For items mentioned at Sl. No. 3 and 4 of the table, he is not contesting and given up the issue and also submitted that as they already reversed the Cenvat credit and sufficient balance was lying in their Cenvat credit account, therefore, following the decision of Honble High Court of Karnataka in the case of CCE & ST, LTU, Bangalore vs. Bill Forge Pvt. Ltd. reported in 2012 (279) E.L.T. 209 (Kar.) interest is not payable. He further submits that as they reversed the Cenvat credit on these items, therefore, as per the provision of Section 11A (2) (b) of the Act, interest is not payable and Commissioner is given the benefit of Section 11A (2) (b) and for item No. 5 he submits that these moulds and dies were purchased by the appellant and sent to the job worker for manufacturing of intermediate product and as per Rule 4 (5) (b) of the Cenvat Credit Rules, 2004, the appellant is entitled to take Cenvat credit on mould and dies which were sent to the job worker for manufacturing intermediate product, therefore, he prayed that impugned order be set aside. Appeal be allowed except disallowance of Cenvat credit of Rs. 11,56,087/-.

4. On the other hand learned AR reiterated the findings of the impugned order.

5. Heard the parties and considered the submission.

6. We find that for disallowance of item No. 1 and 2 of the table, there is a direct judgment of this Tribunal in the case of Omax Auto Ltd. vs. CCE, Delhi  III (surpa), wherein this Tribunal has examine and hold as under :-

6. The dispute in this case is about availability of capital goods Cenvat credit taken under 14 invoices issued by M/s Kamal Envirotech Pvt. Ltd. who under those invoices had supplied various items falling under Chapter 85 required for fabrication and erection of paint shop/spray paint machinery. It is not the departments contention that the goods received under these invoices are not the goods falling under Chapter 84 or 85. The departments objection is that these items were used in the factory for fabrication and erection of paint shop, which being fixed to the earth structure, is not excisable and hence these items are not eligible for Cenvat credit. In my view, this objection by the department is absurd, as for permitting capital goods Cenvat credit, what has to be seen is as to whether the goods fall in the Chapters specified in the definition of capital goods or are the items specifically mentioned in the definition of capital goods and secondly whether those goods were used in the factory. The purpose for which the goods were used and whether after use the goods became part of plant and machinery fixed to/embedded to the earth is not relevant. If Revenues contention is accepted, the provisions regarding capital goods Cenvat credit would became redundant, as most of the Chapter 84 and Chapter 85 items and pipes and tubes have to be installed and after installation the same become fixed to earth. Since, in this case, there is no dispute about the fact that the items falling under Chapter 85 which are covered by the definition of capital goods were received in the factory and there is also no dispute that those items were used in the factory, the Cenvat credit cannot be denied. The ground on which the department seeks to deny the Cenvat credit is not relevant to the issue. In view of this, the impugned order is not sustainable. The same is set aside. The appeals are allowed.

and same view has been taken by learned Commissioner for subsequent period in appellants own case, therefore, we hold that the appellant were entitled to take Cenvat credit on these two items.

7. As the appellant has given up their claim of Cenvat credit for the item Nos. 3 and 4 and also reversed the Cenvat credit, therefore, we confirmed the demand of Cenvat credit alongwith interest.

8. For item No. 5, we find that some is covered by Rule 4 (5) (b) of the Cenvat Credit Rules, 2004, wherein the mould and dies are sent to the job workers for manufacturing intermediate product, the appellant is entitled to take Cenvat credit. In these circumstances, the Cenvat credit on the item Nos. 1,2, and 5 are allowed and item No. 3 & 4 are denied. Consequently demand of Rs. 11,56,087/- alongwith interest is confirmed. As the demand confirmed has already reversed by the appellant, therefore, the appellant are required to pay interest thereon within a period of 30 days from the issuance of this order. No penalty is imposable on the appellant in the facts and circumstances of the case.

9. With these terms, the appeal is disposed of.

(Dictated and pronounced in open court.)

(Rakesh Kumar)

Member (Technical)

(Ashok Jindal)

Member (Judicial)

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