Primo Pick N Pack Ltd vs Cce & St, Bhopal

(Arising out of OIA No.BPL-EXCUS-000-APP-262-13-14 24.2.2014 passed by CCE(A), Bhopal)

Date of Hearing/Decision 03.08.2015

For approval & Signature:

Honble Smt.Sulekha Beevi C.S., 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

Primo Pick N Pack Ltd. Appellant

Vs.

CCE & ST, Bhopal Respondent

Appearance:

Present for the Appellant: Shri Aushutosh Upadhyay, Advocate

Present for the Respondent: Shri G.R.Singh, DR

Coram: Honble Smt.Sulekha Beevi C.S., Member (Judicial)

Final Order No.52528/2015

Per: Sulekha Beevi C.S.

The appeal has been filed challenging denial of cenvat credit on capital goods.

2. The appellant are engaged in the manufacture of HDPE woven bags and also availed cenvat credit. The appellant purchased hydraulic bale press machine and availed cenvat credit on the same. A show cause notice was issued alleging that appellant wrongly availed cenvat credit on capital goods i.e. hydraulic bale press machine as the same was used by the appellant in another premises for short time besides being used in the factory. The notice finalized in the Order-in-Original which denied the cenvat credit. In appeal, the Commissioner (Appeals) upheld the same. Hence this appeal.

3. According to the appellant the hydraulic bale press machine was used in the factory for carrying out manufacture of packing bags. Appellant paid excise duty of Rs.86,520/- on the machine, and availed credit of 50% in the same financial year and 50% in the next financial year. It is the case of appellant that due to shortage of space in factory, another premises near the factory was taken on rent. This premises was used for stitching of HDPE bags out of semi finished material received from the factory. After stitching of bags, the bundle of HDPE bags are pressed in the Hydraulic bale press machine to reduce the size of the bundle. The goods are returned to the factory for clearance. The movement of goods is covered by challan and the same is returned within 180 days. The learned Counsel for the appellant submitted that the machine was used in a premises near to the factory only because of shortage of space in the factory. The movement was done under challans and the department has no allegation of any fraud or suppression. That the appellants are eligible for the credit. He placed reliance upon the decisions in C.C.E.,Coimbatore Vs. vs Habasit Iakoka (P) Ltd.-2014 (306) ELT 455 (Mad.) and Pooja Forge Ltd. Vs. CCE, Faridabad-2006 (196) ELT 18 (Tri.)

4. The learned DR assailed the impugned order and contended that credit has been rightly denied. According to him if the appellant was doing job work from another premises such premises of the appellant should also be registered.

5. Heard both sides.

6. The appellant shifted the machine to another premises near to the factory and returned the same within 180 days. The movement of machine as well as semi finished material from the factory and finished material from the rented premises are by challans. According to the appellant, the shifting was done only due to paucity of space, and that no job work was done. The Counsel for appellant submitted that the movement of goods on challans were done as for job work though no job work was done. The Commissioner (Appeals) in para 11 has discussed that the appellant has taken semi finished goods outside their factory premises for completion of manufacturing process due to shortage of space in the factory, and the finishing work of stitching and packing is being done by the appellant without hiring or engaging another person for doing the said work. That as no job worker is involved the provisions of Rule (5) of Cenvat Credit Rules do not apply.

7. The machine was removed from the factory to a nearby premises for finishing of the manufacturing process. Department does not have a case, that the movement of machine or that of semi finished goods or finished goods were suppressed. According to the appellant they described it as job work as there was no other procedure prescribed. But that everything was done under challans. I do find some force in these arguments. The fact that machine was used in a premises near to the factory is not disputed. So also it was used for connected process of manufacture. The process in these premises was carried out by the appellant themselves. The machine was used by appellants for the production of final products. Thus the activity of appellants in using the machine (capital goods) can be said to be part of its manufacturing activities of final products in its registered factory premises. There is no justification for denying credit. In C.C.E.,Coimbatore Vs. vs Habasit Iakoka (P) Ltd.-2014 (306) ELT 455 (Mad.) the assessee had two units, one registered factory and another unit called Mother Roll Plant which was not registered. They shifted their machinery to their unit viz. Mother Roll Plant situated 500 Mts away, and at the time of removal did not obtain permission, nor reversed the credit taken on said capital goods. The Honble High Court observed as under:-

7.?There is no dispute that the capital goods involved hereunder is one of the capital goods falling within the schedule to the Central Excise Tariff Act and used for the manufacture of the final products. Therefore, the only other question to be examined is whether the respondent has satisfactorily established the condition namely that the said capital goods were used in the factory for the manufacture of final products. The salient points noted in the report establishes beyond doubt that except the fact that the capital goods were used in the respondents own premises situated just 500 mts away from the place of manufacture and that after carrying out necessary connected processes in that premises which is called as Mother Roll Plant, the same is brought to the place of manufacture where the final products is rolled out. Therefore, the activity of the respondent in the usage of the capital goods can be said to be part of its manufacturing activities of final product in its registered factory. It is also not the case of the appellant that by usage of the capital goods in the Mother Roll Plant, the same was in any way alienated to any one, other than the respondent factory.

8. In Pooja Forge Ltd. Vs. CCE, Faridabad-2006 (196) ELT 18 (Tri.) it is held that as the capital goods are moved only between the appellants own units, and that too for use in the manufacture of the same final products, the credit cannot be denied. The facts of the instant case being similar to the decisions cited upon the ratio laid down in the above decisions are applicable to the present case.

9. Applying the ratio of the above judgements and also taking into account the fact that there is no suppression of facts on the part of the appellant as he intimated the department about removal of machine by proper documents, I am of the view that the cenvat credit cannot be denied to the appellant.

10. In view of foregoing discussion, the appeal is allowed.

(pronounced & dictated in the open court)

(Sulekha Beevi C.S.)

Member (Judicial)

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