M/S. Unichem Laboratories Ltd vs Commissioner Of Central Excise, Raigad

[Arising out of Order-in-Appeal No. US/212/RGD/2011 dtd. 24/8/2011 passed by the Commissioner of Central Excise (Appeals)-II, Mumbai]

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. Unichem Laboratories Ltd. : Appellant

VS

Commissioner of Central Excise, Raigad : Respondent

Appearance

Shri Vinay Sejpal, Advocate for the Appellant Shri V.K. Shastri, Asstt. Commissioner (A.R.) for the Respondent

CORAM:

Honble Mr. Ramesh Nair, Member (Judicial)

Date of hearing: 29/6/2015 Date of decision: 29/6/2015

ORDER NO.

Per : Ramesh Nair

This appeal is directed against Order-in- Appeal No. US/212/RGD/2011 dtd. 24/8/2011 passed by the Commissioner of Central Excise (Appeals)-II, Mumbai, wherein Ld. Commissioner (Appeals) upholding the order-in-original rejected the appeal of the appellant.

2. The fact of the case is that appellant availed Cenvat credit in respect of Channels, Beams and Angles falling under Chapter 72/73. Revenue issued show cause notice on the ground that these Channels, Beams and Angles since it is falling under Chapter 72/73 it does not qualify as capital goods as per the definition under Rule 2(a) of Cenvat Credit Rules, 2004, hence proposed to deny Cenvat credit.

3. Shri Vinay Sejpal, Ld. Counsel for the appellant submits that before the adjudicating authority appellant have submitted all the details alongwith consultants certificate showing the use of steel material in the their factory and accordingly they have filed detailed reply to the adjudicating authority. He submits that surprisingly adjudicating authority in his order recorded that assesee did not file reply to the said show cause cum demand notice, whereas in discussion and findings in para 6 he stated that he has carefully gone through written and oral submissions made by assessee, which itself is contrary. In any case appellant indeed submitted the detailed reply alongwith details of use of the material which has not been considered. Whole proceedings were carried out only on the basis of steel material falling under Chapter 72/73. Ld. Commissioner also have not gone through or considered the actual use of the material in their factory. He only decided the case mainly relying on the Larger Bench judgment in case of Vandana Global Vs. Commissioner [2010 (253) E.L.T. 44 (Tri.- LB)].

It is his submission that Honble Kolkata High Court in case of Surya Alloy Industries Ltd. Vs. Union of India [2014 (305) ELT 47 (Cal.)] held that Vandana Global Ltd. case does not hold the field because of the subsequent judgment rendered by the Supreme Court in the case of Commr. of C. Ex., Jaipur Vs. Rajasthan Spinning & Weaving Mills Ltd [2010 (255) E.L.T. 481 (S.C.)], the impugned order in that case was held to be not sustainable, accordingly the matter was remanded back to the Tribunal for reconsideration. He further submits that period of availment of Cenvat credit is of 2007 and 2008, the amendment in Rule 2(k) was made vide Notification No. 16/2009 dated 7/7/2009. He submits that in case of Mundra Ports and Special Economic Zone Ltd. Vs. Commissioner of Central Excise and Customs [2015-TIOL-1288-HC-AHM-ST], the Honble High Court has held that exclusion of steel items is effective from the date of amendment, therefore it is not applicable in the case pertaining to the period prior to the date of amendment. He submits that in the case of Vandana Global Ltd., Larger Bench held that said amendment is clarifically and same is applicable retrospectively.

In view of the Honble Gujarat High Court Judgment Vandana Global Ltd. is not applicable in the present case as the period of the present case is prior to the amendment of definition of input provided under Rule 2k of Cenvat Credit Rules, 2004.

4. On the other hand, Shri V.K. Shastri, Ld. Asstt. Commissioner (A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order. On query from the bench that the matter needs to be remanded to the original adjudicating authority, he fairly agreed for that.

5. I have carefully considered the submissions made by both sides and perused the record.

6. I find that though the adjudicating authority has stated contrary that in one hand, no reply to the show cause notice was filed and at the same time, he has stated that he has considered the written and oral submissions. However, it is undisputed that the appellant replied to the show cause notice. They filed details alongwith consultant certificate regarding the use of steel material in their factory. Accordingly he prays that he is eligible for taking credit on such material. I find that these facts have not been considered by the original authority or even by the Commissioner (Appeals). The adjudicating authority mainly decided the matter only on the ground that since steel items are falling under Chapter 72/73 it is not covered by the definition of capital goods. The same reasoning has been applied by the Ld. Commissioner (Appeals). On going through the judgments relied upon by the Ld. Counsel, I observed that Honble Kolkata High Court in the Surya Alloy case (supra), has categorically held that on the face of Honble Supreme Court judgment in case of Rajasthan Spinning & Weaving Mills Ltd. (supra), Vandana Global Ltd. (supra) judgment is not sustainable. The ratio laid down in Vandana Global Ltd. judgment is not sustainable. In the judgment of Mundra Ports and Special Economic Zone Ltd. (supra) High Court of Gujarat also held that exclusion of the identical steel items from purview of the definition of the input by amendment notification is applicable prospectively whereas in case of Vandana Global Ltd. the amendment held to be effective retrospectively. In view of the these judgments of Honble Kolkata and also Gujarat High Court, ratio of the Vandana Global Ltd. is not applicable. In view of my above discussion, I am of the considered view that matter needs to be remanded to the original authority. The original authority shall pass denovo adjudication order after considering facts regarding the use of the material as submitted by the appellant and also as per the ratio laid down under the judgments of Rajasthan Spinning & Weaving Mills Ltd. (supra) by the Supreme court and Mundra Ports and Special Economic Zone Ltd. (supra) by the Honble High Court of Gujarat. Appeal is allowed by way of remand.

(Operative part pronounced in court)

Ramesh Nair Member (Judicial)

sk

6 APPEAL NO. E/1619/11