M/S. Laxmi Rikshaw Body Pvt. Ltd vs Commissioner Of Central Excise & ...

[Arising out of Order-in- Appeal No. AGS(250) 104/09 dtd. 4/12/2009 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. Laxmi Rikshaw Body Pvt. Ltd. : Appellants

VS

Commissioner of Central Excise & Customs, Aurangabad : Respondent

Appearance

None for the Appellants Shri. H.M. Dixit, Asstt. Commissioner(A.R.) for the Respondent

CORAM:

Honble Mr. Ramesh Nair, Member (Judicial)

Date of hearing: 2/6/2015 Date of decision: /2015

ORDER NO.

Per : Ramesh Nair

This appeal is directed against order in Order-in- Appeal No. AGS(250) 104/09 dtd. 4/12/2009 passed by the Commissioner (Appeals) of Central Excise & Customs, Aurangabad, wherein Ld. Commissioner(Appeals) has modified Order-in-Original No. 01/DMD/2008 dated 26/3/2008 by upholding the demand of Cenvat credit amounting Rs. 42,934/- and set aside the penalty of equal amount.

2. The fact of the case is that the appellant had availed modvat credit on spot welding electrodes under capital goods from 10/12/1998 to 12/11/2001 and 13/11/2001 to Aug 2002 amounting to Rs. 29,354/- and 13,580/- respectively. The department issued show cause notice F. No. V. Ch(15) 82/Laxmi/Adj/2002/21 dated 5/1/2004 alleging that the spot welding electrodes is a consumable product and this item was not specified as capital goods in terms of either erstwhile Rule 57 Q or Rule 2(a) of the Cenvat Credit Rules, 2001. The show cause notice further alleged that the credit under Rule 57 Q and Rule 3 of the Cenvat Credit Rules, 2001 was not admissible. The show cause was adjudicated by the Assistant Commissioner, Central Excise and Customs, Aurangabad-II Division vide OIO No. 50/DMD/2005 dated 30.11.2005 wherein the show cause notice dated 5.1.2004 demanding central excise duty of Rs. 42,934/- in respect of Spot Welding Electrodes was withdrawn. Being aggrieved by the said OIO dated 30.11.2005; the department filed an appeal with the Commissioner(Appeals), Aurangabad who vide OIA No. AKD(21)29/07 dated 13.2.2007 decided the matter thereby upholding the OIO No. 50/DMD/2005 dated 30.11.2005 and the departmental appeal was dismissed.

Being aggrieved with the OIA dated 13.2.2007, the department filed appeal with CESTAT and Honble CESTAT vide order No. A/1634/C-IV/SMB/2007 dated 14/11/2007 allowed the appeal filed by the revenue, but remanded the case back to the adjudicating authority to reconsider the issue in the light of the decisions of larger bench of the Tribunal in the case of M/s. Jaypee Rewa Plant Vs. Commissioner of Central Excise, Raipur[2003(159)ELT 553(Tri. LB)] and in the case of M/s. Triveni Engineering and Industries Limited Vs. Commissioner of Central Excise, Merrut[2005(186)ELT 158(Tri. LB)]. The denovo adjudication of the above case was done by the Assistant Commissioner, Central Excise and Customs, Aurangabad-II division vide OIO No. 01/DMD/2008 dated 26.3.2008, who observed that the Welding electrodes are not eligible for modvat/Cenvat credit i.e. they are not called as inputs as the same are not used for manufacturing of the final products and also they are not entitled for benefit of modvat/Cenvat credit as Capital Goods since not specified under Rule, 57Q. He also held that both the decisions mentioned in Honble Tribunals said order dted 14/11/2007 are squarely applicable in the present case.

Therefore, the appellant vide OIO dated 26.3.2008 disallowed the modvat/Cenvat credit of Rs. 42,934/- availed on Spot Welding Electrodes and ordered for recovery of the same under provisions of Rule 57 U(8), Rule 57 AH(1) of Central Excise Rues, 1944 and Rule 12 of Cenvat Credit Rules, 2001 read with Section 11A of Central Excise Act, 1944. The Asstt. Commissioner also imposed penalty of Rs. 42,934/- under Rule 173Q of Central Excise Rules, 1944 and Rule13 of Cenvat Credit Rules, 2001 read with Section 11AC of Central Excise Act, 1944. Recovery of interest at appropriate rate under Rule 13 of Cenvat Credit Rules, 2001 read with section 11AA of Central Excise Act 1944 was also ordered vide said OIO dated 26.3.2008. Being aggrieved by the said OIO dated 26.3.2008, the appellants have filed the present appeal on the grounds that the Assistant Commissioner has not properly appreciated the ratio of larger bench decisions of Tribunal in the case of M/s. Jaypee Rewa Plant Vs. Commissioner of Central Excise, Raipur[2003(159)ELT 553(Tri. LB)] and in the case of M/s. Triveni Engineering and Industries Limited Vs. Commissioner of Central Excise, Merrut[2005(186)ELT 158(Tri.

LB)]. Further, that the welding electrodes are used by the appellant for welding in processing the inputs for manufacturing of dutiable final products. The welding electrodes are not used by the appellant for maintenance or repairs in their factory. The appellants also stated that the respondent had exceeded the jurisdiction because the Honble Tribunal has remanded the matter for limited purpose of re-considering the issue in the light of decision of larger bench of the Tribunal. The adjudicating authority had no jurisdiction to impose penalty. The Commissioner(Appeals) though upheld confirmation of demand but dropped penalty. Ld. Commissioner has mainly found that the original authority have correctly examined as per the direction given by the CESTAT considering the issue in light of the Larger Bench decision of this Tribunal in the cases of M/s. Triveni Engineering and Industries Limited and M/s. Jaypee Rewa Plant engineering. He also held that case laws quoted by the appellant could not be examined at this stage since adjudicating authority was directed by Honble Tribunal to examine case in light of two case laws stated earlier.

Aggrieved by the said order of the Commissioner(Appeals), the appellant is before me.

3. None appeared on behalf of the appellant however written submission found on record according to which they submitted that it has not been appreciated by the authorities below that the most prominent fact of the present case is that the spot welding electrodes are used by the appellant for welding of rikshaw body and hence used in processing its inputs for manufacturing dutiable final products. The welding electrodes are not used by the appellant for maintenance or repairs in their factory.

4. Shri. H.M. Dixit, Ld. Asstt. Commissioner(A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order. He further submits that as per the Tribunals earlier order the lower authority was supposed to decide matter only reconsidering matter in the light of larger bench judgment in the case of M/s. Triveni Engineering and Industries Limited and M/s. Jaypee Rewa Plant therefore lower authority had no option except to follow those judgments and accordingly they passed the correct order which does not require any interference. Accordingly, he prayed for dismiss the appeal of the appellant.

5. I have carefully considered the submission made by Ld. A.R. and written submission made by the appellant and also ground of appeal.

6. I find that in the present case the fact involved that appellant has availed the modvat credit in respect of spot welding electrodes which has been used in the production of motor vehicle by the appellant. Though the coordinate bench of this Tribunal while remanding the matter directed to adjudicating authority to decide the matter a fresh in the light of larger bench judgments of M/s. Triveni Engineering and Industries Limited and M/s. Jaypee Rewa Plant but on perusal of the facts, it is observed that both the judgments are in respect of welding electrodes used for repair and maintenance of plant and machinery whereas in the present case spot welding electrodes are used in manufacturing of final product therefore in my considered view the lower authority should not have brushed aside the fact that there is difference in use of welding electrodes in the M/s. Jaypee Rewa Plant case and in the present case. It is settled law that ratio of any judgment cannot be applied without appreciating the facts of particular case therefore even though this Tribunal has directed to re-consider case in the light of larger bench decisions, it was obligation on the part of the adjudicating authority to appreciate the fact of the present case and thereafter if it is found that the fact of the case is different from the judgments of M/s. Triveni Engineering and Industries Limited and M/s. Jaypee Rewa Plant the adjudicating authority can take the independent view without following judgments of M/s. Triveni Engineering and Industries Limited and M/s. Jaypee Rewa Plant. I found that in the present case since spot welding electrodes used in the manufacture of final product i.e. motor vehicle, it is qualified as input and therefore credit is otherwise admissible as input. Though the appellant has availed Cenvat Credit under capital goods that alone cannot disentitled appellant from availing the credit under input. As regard admissibility of modvat credit in respect of spot welding electrodes used in the manufacture of final product this Tribunal in the following cases allowed the credit.:-

(Tri-2002 (150) E.L.T. 969 (Tri. - Del.) MARUTI UDYOG LTD.

Versus COMMISSIONER OF C. EX., NEW DELHI

23.In so far as? the disallowance of Modvat credit on spot welding electrodes is concerned, we find that exactly similar issue came up before the Tribunal in the case of M/s. TELCO cited and relied upon by the Appellants. No doubt, the ld. DR drew our attention to the case of M/s. Bajaj Tempo Limited wherein this Tribunal held that Modvat credit will not be available on spot welding electrodes. However, we find that this is a decision by a Single Member Bench. The same Bench subsequently reviewed its thinking, whereas the decision cited and relied upon by the ld. Counsel for the Appellant is that of a Division Bench. We hold that the Division Bench decision shall prevail over the Single Member Bench decision. We follow the ratio of this Tribunal in the Case of M/s. TELCO (supra) and hold that Modvat credit is available on Spot Welding Electrodes.

2001 (130) E.L.T. 776 (Tri. - Del.) COMMISSIONER OF CENTRAL EXCISE, NEW DELHI Versus MARUTI UDYOG LTD.

3. On the other hand, learned DR Shri Sanjiv Srivastava for the Revenue submits that Division Bench judgment in the case of M/s. Telco (supra) has not correctly distinguished the Single Member's judgment supra. The said Division Bench has drawn a wrong analogy from the Tribunals judgment in the case of M/s. Gujarat Alkalies case reported in 1989 (41) E.L.T. 424 inasmuch as electrodes mentioned in M/s. Gujarat Alkalies is in the sense of cathodes and anodes and which are not involved herein. We observe that apart from this analogy drawn from Gujarat Alkalies, there are other arguments given by the Division Bench in Telco for holding that spot welding electrodes are covered by the Explanation to Rule 57A defining the expression input and these are not hit by the exclusion clause. We have gone through the judgment of West Regional Bench in M/s. Telco as also the judgment of Division Bench in the case of Maruti Udyog Ltd. relied upon by the learned advocate for the respondents. We do not agree with the contention of the ld. JDR that this issue is fit for referring to the Larger Bench in view of the conflicting judgments of the Single Member Bench in the case of M/s. Bajaj Tempo and the Division Bench judgment in the case of Maruti Udyog Ltd. and Telco.

4. Following respectfully the ratio of the aforesaid Division Bench judgments, we dismiss this appeal of revenue.

In view of the above judgments, it is settled that spot welding electrodes used in the manufacture of final product is admissible input and credit is allowable. The facts of the present case and facts in the case of M/s. Triveni Engineering and Industries Limited and M/s. Jaypee Rewa Plant are not similar. In view of the above and the various judgments, I am of the view that the appellant is entitled for modvat credit in respect of spot welding electrodes used for manufacture of final product i.e. motor vehicle therefore impugned order is set aside and appeal is allowed.

(Order pronounced in court on __________________)

Ramesh Nair Member (Judicial)

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