M/S. Process Pumps (India) Pvt. Ltd vs Commissioner Of Central Excise, ...

[Arising out of Order-in-Appeal No. 117/2004-CE dated 30/06/2004 passed by Commissioner of Central Excise, BANGALORE-I (Appeal).]

For approval and signature:

HON'BLE SMT. ARCHANA WADHWA, JUDICIAL MEMBER HON'BLE SHRI ASHOK KUMAR ARYA, TECHNICAL MEMBER

1 Whether Press Reporters 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 the 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

M/s. Process Pumps (India) Pvt. Ltd Plot No.86, III Phase, Peenya Industrial Area, BANGALORE - 560058 KARNATAKA Appellant(s)

Versus

Commissioner of Central Excise, Service Tax And Customs Bangalore-II PB 5400 CR BUIDING, QUEENS ROAD, BANGALORE, - 560001 KARNATAKA Respondent(s)

Appearance:

Mr. K. S. Naveen Kumar, Advocate K.S. RAVI SHANKAR # 152, RACE COURSE ROAD, BANGALORE  560001. KARNATAKA For the Appellant

Mr. N. Jagadish, Superintendent (AR) For the Respondent

Date of Hearing: 27/07/2015

Date of Decision: 27/07/2015

CORAM:

HON'BLE SMT. ARCHANA WADHWA, JUDICIAL MEMBER HON'BLE SHRI ASHOK KUMAR ARYA, TECHNICAL MEMBER

Final Order No. 21694 / 2015

Per : ARCHANA WADHWA

The appellant is engaged in the manufacture of PD pumps and its spare parts. Till September 2002, the appellant was working under SSI Notification. After crossing the exemption limit, the appellant came under excise net. During the period October 2002 to February 2003 the appellant availed the CENVAT credit of duty paid on the inputs which were being used by them in the manufacture of PD pumps as also in the manufacture of spares. In respect of PD pumps, the appellants availed the benefit of Notification No.10/2002-CE dated 1.3.2002, as amended. The spare parts manufactured by them were being cleared on payment of duty by utilizing the CENVAT credit so availed by them.

2. One of the conditions of Notification No.10/2002-CE was that no credit of duty paid on the inputs should be availed by the assessee. As the appellant was maintaining a common cenvatable register in respect of the inputs used in the manufacture of PD pumps as also in the manufacture of spare parts, Revenue entertained a view that benefit of Notification No.10/2002-CE would not be available to them. When an audit objection was raised by the Revenue, the appellant reversed the CENVAT credit of around Rs.40,000/- relatable to the inputs used in the manufacture of PD pumps in April 2003. Not satisfied with the said reversal, Revenue initiated proceedings against the appellant for denial of the benefit of Notification No.10/2002-CE and proposing confirmation of duty to the extent of Rs.8,95,959/-.

2.1 During the adjudication, the appellant took a stand before the lower authorities that inasmuch as they have reversed the credit relatable to PD pumps, it would amount to as if no credit was taken by them, in which case the benefit of Notification No.10/2002-CE would be applicable. The said plea of the appellant was not accepted by the lower authorities, who confirmed the demand. On appeal, Commissioner (A) upheld the order of the original adjudicating authority but set aside the penalty imposed upon them.

3. The submission of the learned advocate is that during the relevant period they had taken the total CENVAT credit to the extent of Rs.91,363/-, in respect of inputs which were used in the manufacture of PD pumps as also in the manufacture of spares parts. Subsequently, the entire credit stands reversed by them. By relying upon various decisions of the Honble Courts, he submits that the reversal of the entire credit made by them leads to a conclusion that no credit was ever availed by them. He makes it clear that even the credit which they were entitled to, for utilization for payment of duty in respect of spares also stands revered so as to not to leave any scope for any confusion. He also submits that the appellant has agreed to pay interest in respect of such credit which stands reversed for the period during which the same was utilized by them.

4. Learned DR appearing for the Revenue reiterates the stand of the lower authorities and submits that the benefit of the Notification in question was subject to fulfillment of conditions enumerated therein. As per one of the condition, the assessee could not have taken the credit. Inasmuch as admittedly the appellant had taken the credit, the benefit of Notification stands rightly denied to them.

5. At this stage, we note that there is no dispute on the factual position. Admittedly during the period in question the appellant availed the credit in respect of common inputs used in the manufacture of dutiable as also exempted final product. They initially reversed the CENVAT credit relatable to the inputs used in the manufacture of the exempted final product but subsequently they reversed the entire credit, even the one which was relatable to the inputs used in the manufacture of spare parts. The Honble Supreme Court in the case of Chandrapur Magnet Wires P. Ltd. vs. CCE: 1996 (81) E.L.T. 3 (S.C.) has held that such reversal of credit amounts to a situation as if no credit was availed. The said decision stand followed by various courts. One such reference can be made to Allahabad High Courts decision in the case of Hello Minerals Water P. Ltd. vs. UOI: 2004 (174) E.L.T. 422 (All.) as also to another decision of the Honble Gujarat High Court in the case of CCE vs. Ashima Dyecot Ltd.: 2008 (232) E.L.T. 580 (Guj.), vide which the Tribunals order was upheld and Revenues appeal was rejected. Further appeal of the Revenue before the Honble Supreme Court stands dismissed reported as 2009 (240) E.L.T. A41 (SC). Another reference can be made to Gujarat High Courts decision in the case of CCE vs. Maize Products: 2009 (234) E.L.T. 431 (Guj.).

5.1 Inasmuch as the issue is decided by catena of decisions, we, by following the same, set aside the impugned orders of the lower authorities and allow the appellants appeal. However, the appellant would be liable to pay interest in respect of the credit so availed and utilized by them till the period the same was reversed. Such interest would be quantified by the original adjudicating authority and would be accordingly paid by the appellant, as undertaken by them.

(Order pronounced in open court)

ASHOK KUMAR ARYA TECHNICAL MEMBER ARCHANA WADHWA JUDICIAL MEMBER

rv

4