M/S. Nasik Strips Pvt. Ltd vs Commissioner Of Central Excise & ...

[Arising out of Order-in- Appeal No. CEX. XI/JMJ/ 414/ 916/ NSK/ APL/2004 dtd. 18/10/2004 passed by the Commissioner of Central Excise & Customs(Appeals), Nashik]

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. Nasik Strips Pvt. Ltd. : Appellants

VS

Commissioner of Central Excise & Customs, Nashik : Respondent

Appearance

None for the Appellants Shri. Sanjay Hasija, Superintendent (A.R.) for the Respondent

CORAM:

Honble Mr. Ramesh Nair, Member (Judicial)

Date of hearing: 13/5/2015 Date of decision: 13/5/2015

ORDER NO.

Per : Ramesh Nair

This appeal is directed against Order-in- Appeal No. CEX. XI/JMJ/ 414/ 916/ NSK/ APL/2004 dtd. 18/10/2004 passed by the Commissioner of Central Excise & Customs(Appeals), Nashik, wherein Ld. Commissioner(Appeals) upheld the order-in-original dated 16/12/2003 and dismissed the appeal filed by the appellant. The fact of the case is that appellant has availed 50% Cenvat credit under capital goods on C.I. Moulds at the time of receipt and subsequent 50% was availed in the subsequent financial year. At the time of taking remaining 50% credits on moulds during use in the manufacture got defective and become waste and the same was cleared from the factory as waste and scrap. Revenues contention that in terms of Rule 4(2)(b) of Cenvat Credit Rules, 2002 the balance of 50% of the credit can only be taken when the capital goods on which the credit is taken remains in possession and use with the appellant. Since capital goods i.e. C.I. Moulds were neither available with the appellant nor was in use therefore appellant was not entitled for balance 50% credit in the subsequent financial year. Show cause notice bearing F. NO. V(72)15-14/Adj/Nsk-IV/03 dated 24/8/2003 was issued and culminated into adjudication order wherein demand of Cenvat credit amounting Rs. 1,57,008/- was confirmed and penalty of Rs. 20,000/- was imposed under Rule 13 of Cenvat Credit Rules, 2002 and interest under Rule 12 of Cenvat Credit Rules, 2002 read with Section 11AB of Central Excise Act, 1944 was also ordered to be recovered.

2. When the matter was called for, none appeared on behalf of the appellant and no request for adjournment has been made by the appellant therefore I am taking up the matter to dispose on merit.

3. Shri. Sanjay Hasija, Ld. Superintendent(A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order. He submits that on the same issue Board has issued a Circular No. 747/63/2003-CX dated 22/9/2003 wherein Board has clarified that in respect of credit on moulds and dies credit should be allowed as per the existing provisions prior to the amendment in the rules by Notification No. 70/2003-C.E.(N.T.) dated 15/9/2003. It is his submission that prior to this amendment in terms of Rule 4(2)(b) of Cenvat Credit Rules, 2002 50% balance credit in respect of capital goods i.e. moulds and dies were allowable only if the capital goods is in possession and use with the manufacturer. As in the present case, the C.I. moulds were admittedly not in possession of the appellant and it was not in use as the same become waste and scrap and cleared out of the factory credit of balance 50 % is not admissible. He placed reliance on the judgments of this Tribunal in the case of Silver Ispat(P) Ltd. Vs. Commissioner of Central Excise, Nashik [2008-TIOL-1467-CESTAT-MUM] and Sri Krishna Alloys Vs. Commissioner of Central Excise, Salem[2006(200)E.L.T. 158(Tri- Chennai)].

4. On careful consideration of submission made by Ld. A.R. and perusal of record, I find that there is no dispute in the fact that appellant has availed Cenvat Credit in respect of C.I. Moulds to the extent of 50% at the time of receipt thereof and balance 50% was availed in the subsequent financial year. At the time of taking balance 50% credit in the subsequent financial year, the mould is neither in the possession of the appellant nor the same was in use as same were consumed or become waste after use and said waste have been cleared from the factory. Under these set of undisputed facts in term of Rule 4(2)(b) the balance of 50% credit is not admissible to the appellant. for ease of reference Rule 4(2)(b) is reproduced below:-

Rule 4. Conditions for allowing CENVAT credit.- (1) The CENVAT credit in respect of inputs may be taken immediately on receipt of the inputs in the factory of the manufacturer:

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(2) (a) ----------

(b) The balance of CENVAT credit may be taken in any financial year subsequent to the financial year in which the capital goods were received in the factory of the manufacturer, if the capital goods, other than components, spares and accessories, refractories and refractory materials and goods falling under heading No. 68.02 and sub-heading No. 6801.10 of the First Schedule to the Tariff Act, are in the possession and use of the manufacturer of final products in such subsequent years.

From the above rules it is clear that balance 50% credit can be taken only in case where such capital goods is in possession of the assessee and also in use. In the present case since at the time of taking remaining 50% credit, moulds were not available with the appellant Cenvat credit of remaining 50% was correctly disallowed. This position has been made clear in the judgments of Silver Ispat(P) Ltd. and Sri Krishna Alloys(Supra) as cited by Ld. A.R. In view of this settled legal position and Board clarification the appellant is not entitled for Cenvat Credit to the extent of remaining 50% therefore impugned order is upheld and. The appeal of the appellant is dismissed.

(Dictated in court)

Ramesh Nair Member (Judicial)

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