M/S. Sharda Forging & Stamping Pvt.Ltd vs Cce, Ghaziabad

[Arising out of the Order-in-Appeal No.96/CE/GZB/2012 dt.24.6.13 passed by the CCE(Appeals), Ghaziabad)

Date of Hearing/Decision: 05.2.2015

For Approval & signature:

Honble Mr.Ashok Jindal, 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 would 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 Department Authorities? Yes

M/s. Sharda Forging & Stamping Pvt.Ltd. Appellant

Vs.

CCE, Ghaziabad Respondent

Appearance

Shri Prabhat Kumar, Advocate- for the appellant

Shri Devender Singh, A.R. - for the respondent

CORAM: Honble Mr.Ashok Jindal, Member (Judicial)

FINAL ORDER NO.50335/2015

Per Ashok Jindal :

The appellant is in appeal against the impugned order wherein the demand of duty alnogwith interest has been confirmed.

2. The brief facts of the case are that the appellant is engaged in the manufacture of Articles of Iron and Steel (Forged or Stamped) and Agricultural Implements. The Articles of Iron and Steel (Forged or Stamped) are dutiable and Agricultural Implements are exempted from duty. But the appellant is not maintaining separate accounts for furnace oil which was used by the appellant in both final products. Therefore, show cause notice was issued to the appellant to demand duty equal to the 10% sale price of the exempted final products as they are not maintaining separate accounts for furnace oil as required under Rule 6(3) (i) of Cenvat Credit Rules, 2004. The adjudication took place, the demand was confirmed alongwith interest and penalty was imposed. But on appeal, the Commissioner (Appeals) confirmed the demand alongwith interest and dropped the penalty. Aggrieved with the said order, the appellant is before.

3. Learned Counsel appearing for the appellant submits that as the appellant is using furnace oil for both final products dutiable as well as exempted, they are reversing proportionate cenvat credit attributable to exempted final products periodically and they are informing the department from time to time. As they have reversed the proportionate cenvat credit, therefore, the demand is not sustainable as held by the Apex Court in the case of Chandrapur Magnet Wires (P) Ltd. vs. CCE, Nagpur-1996 (81) ELT 3 (SC) and in the case of Rituraj Holdings Pvt.Ltd.-2014 (305) ELT 459 (Guj.).

5. On the other hand, learned AR submits that in this case the appellants is not maintain separate accounts for furnace oil used for dutiable as well as exempted final products as required under Rule 6(3) of Cenvat Credit Rules, 2004. Therefore, they are required to pay duty equal to the 10% sale price of the exempted final products which they have failed to do so. Further, he draws my attention to the impugned order and submits that the contention of the appellant is not acceptable as they have not reversed cenvat credit as per formula laid down in Rule 6(3) (c) (i) of the said Rules. Therefore, the Commissioner (Appeals) has rightly demanded duty alongwith interest.

6. Heard the party and considered the submissions.

7. In this case, a short issue is to be decided by me is whether proportionate reversal of cenvat credit attributable to furnace oil is sufficient in compliance of Rule 6(3) of the said Rules or the appellant is required to pay duty equal to the 10% sale price of the exempted final products or not. Both lower authorities have not disputed that the appellant has reversed the cenvat credit attributable to furnace oil used in the manufacture of exempted final products. Therefore relying on the decision of Honble Gujarat High Court in the case of Rituraj Holdings Pvt.Ltd. (supra) wherein it has been held that if the assessee reversed proportionate cenvat credit attributable to final exempted product in this case the assessee has complied with Rule 6(3) of the Rules, is not required to pay duty equal to 10% sale price of the exempted final products.

8. During the course of argument, learned AR raised objection that the Commissioner (Appeals) has observed that while reversal of cenvat credit, the appellant has taken the sale percentage of exempted goods i.e. agricultural implements as basis of calculation of proportionate credit, which is not correct and thereafter he denied the whole credit. The contention of the learned AR is not acceptable at all as in the show cause notice only charge against the appellant that they have contravened the provisions of Rule 6(3) and in their defence the appellant has stated that they are reversing proportionate cenvat credit. If at all there is difference, the Commissioner (Appeals) could quantify the demand which he failed to do so demanding duty from the appellant. It is not correct. Therefore, I set aside the impugned order and allow the appeal of the appellant with consequential relief.

(pronounced in the open court)

(Ashok Jindal)

Member (Judicial)

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