Pricol Ltd vs Cce, Delhi-I

[Arising out of Order-in-Appeal No.147/CE/DLH/2014 dated 08/07/2014 passed by the Commissioner, Central Excise (Appeals), Delhi- I, New Delhi].

For approval and signature:

HONBLE MR. S.K. MOHANTY, MEMBER (JUDICIAL)

1 Whether Press Reporters may be allowed to see 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 of the Order?

4 Whether Order is to be circulated to the Departmental authorities?

Pricol Ltd. Appellant

Vs.

CCE, Delhi-I  Respondent

Present for the Appellant : Ms. Sukriti Das, Advocate

Present for the Respondent: Mr. G.R. Singh, D.R.

Coram: HONBLE MR. S.K. MOHANTY, MEMBER (JUDICIAL)

Date of Hearing/Decision: 18.09.2015

FINAL ORDER NO. 54058/2015

PER: S.K. MOHANTY

This appeal is directed against the impugned order dated 08.07.2014 passed by the Commissioner (Appeals), Central Excise, Delhi wherein cenvat credit amounting to Rs.1,80,250/- and equal amount of penalty imposed in the adjudication order dated 25th April, 2013 have been upheld.

2. Brief facts of the case are that the appellant is engaged in the manufacture of Speedometer, Oil Pumps falling under Chapter 90 of the Central Excise Tariff Act, 1985. The appellant avails cenvat credit on duties and tax, paid on inputs, input services and capital goods received in the factory for use in or in relation to manufacture of the said final product. The appellant took cenvat credit on the basis of invoice issued by M/s. Adsorbtech Engineers Pvt. Ltd. (M/s. AEPL) for installation of the nitrogen gas plant in the factory premises of the appellant. The invoices issued by M/s. AEPL describe the services as supply of tangible goods service. The classification of the service was disputed by the Jurisdictional Central Excise Authorities at the appellants end to contend that the activities provided by M/s.AEPL amounts to manufacture and since the service tax has been wrongly paid by the contractor M/s.AEPL, the same is not available as cenvat benefit to the appellant. The proceedings initiated by the Central Excise Department for confirmation of the cenvat demand and for imposition of penalty culminated in the impugned order, against which the appellant has preferred appeal before this Tribunal.

3. Ms.Sukriti Das, the ld. Counsel for the appellant submits that Rule 3 entitles a manufacturer to take cenvat credit of service tax paid on any input service received by the manufacturer. According to the ld. Advocate, since the services have been received in the factory of the appellant under the cover of service tax invoice, the requirement of the Cenvat Credit Rules have been duly complied with for taking of cenvat credit and the same cannot be denied on the ground of classification as to whether the activities amount to manufacture or it is a service at some other end. She further submits that the activities whether amounts to manufacture or not, is for the consideration of the Jurisdictional Central Excise Authorities at the contractors end. No dispute have been raised at that end and payment of service tax by M/s.AEPL has been accepted by those authorities, denial of cenvat credit at the recipients unit is highly improper and contrary to the statutory mandates. To substantiate above stand, the ld. Advocate has relied on the judgement of Honble Supreme Court in the case of CCE vs. MDS Switchgear Ltd. reported in 2008 (229) ELT 485 (SC).

4. Per contra, Shri G.R. Singh, the ld. DR appearing for the Revenue reiterates the findings recorded in the impugned order and submits that denial of cenvat benefit by the authorities below are in conformity with the cenvat statute.

5. Heard the ld. Counsels for both sides and perused the records.

6. There is no dispute regarding the receipt of the input service in the factory of the appellant and its tax paid character. Since the tax paid character of the service and its receipt is not in dispute, I am of the view that cenvat credit cannot be denied to the appellant in absence of any specific/ stipulations contained in the cenvat statute. Further, the jurisdictional authorities at the recipients end are not competent to question the activities provided by the supplier of the tangible goods i.e. M/s. AEPL whether amounts to manufacture or it is a service. Since the service tax paid by the contractor M/s. AEPL has been accepted by the Jurisdictional Central Excise Authorities of the supplier. The tax so paid is eligible for cenvat benefit to the appellant. In this contest, the issue has been well settled in the case of MDS Switchgear Ltd. (supra) The relevant paragraphs of the Supreme Court judgement is extracted herein below:-

7.?The Tribunal has come to the conclusion that in fact there was no loss of revenue. It accepted the appeal by recording the following reasons :

Reasons given by the appellants for the alleged inflation of the value of the intermediate goods are logical. What was required of the Commissioner was to examine the quantum of the loading of the assessable value by the Modvat credit on the earlier inputs. That exercise has nowhere been done. If the department was of the opinion that the value of the final product was depressed, then they could have charged the Jalgaon unit with under-invoicing of their product. That has also not been done. The valuation as given by the Sinnar unit was duly approved by the department and the payment of duty was also duly accepted. We find absolutely no substance in the attempt of the learned Commissioner to convert a part of the duty so paid into deposit of duty. There is no legal basis for such presumption. The rules entitled the receipt manufacturer to avail of the benefit of the duty paid by the supplier manufacturer. A quantum of duty already determined by the jurisdictional officers of the supplier unit cannot be contested or challenged by the officers in charge of recipient unit [2000 (38) RLT 179].

9.?That being the position, we agree with the view taken by the Tribunal and find no merit in these appeals which are dismissed leaving the parties to bear their own costs.

7. In view of the above settled position of law, I am of the considered opinion that the credit cannot be denied to the appellant, and thus, the impugned order is set aside. The appeal is allowed in favour of the appellant.

(Dictated and pronounced in the open Court)

(S.K. MOHANTY)

MEMBER (JUDICIAL)

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