Pvt. Ltd vs Cce-Jaipur

[Arising out of Order-in-Appeal No. 472(HKS)CE/JPR-II/2006, dated 31.08.2006 passed by Commissioner  (Appeals-II) Office of the Commissioner-II Customs & Central Excise Jaipur]

1. Whether Press Reporter may be allowed to see the Order for Publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it would 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 Department Authorities?

M/s. Arihant Tile & Marbles

Pvt. Ltd. Appellant

Vs.

CCE-Jaipur Respondent

Appearance: Shri B.L. Narsimhan, Advocate for the appellant

Shri R.K. Grover, DR for the respondent.

Coram: Honble Shri Ashok Jindal, Member (Judicial)

Honble Shri B.Ravichandran, Member (Technical)

Final Order No. 52250/2015

Per: Ashok Jindal

The appellant is in appeal against the impugned order denying CENVAT Credit on the capital goods procured by the appellant. Consequently, demanding the duty along with interest.

2. The facts of this case are that the appellant during the impugned period, i.e., from 2002 to 2003, was engaged in the activity of cutting, dressing, polishing of granite and marbles clearing the same on payment of duty and also exporting the same on payment of duty. For the activity of cutting, dressing and polishing the appellant procured the capital goods on payment of duty and took CENVAT Credit thereon. By the judgment of the Apex Court in the case of Aman Marbles Industries reported in 2003 (157) ELT 293 SC dated 18/9/2003, the activity of cutting, dressing and polishing was held by the Honble Apex Court does not amount to manufacture. After the said judgment, the show cause notice was issued to the appellant to deny the CENVAT Credit on the capital goods on the premise that the activity undertaken by the appellant does not amount to manufacture. Consequently, the final product is not excisable as the appellant is manufacturing exempted final product. Therefore, they are not entitled to avail CENVAT Credit on the capital goods The Adjudicating Authority dropped the proceedings. Revenue filed an appeal before the ld. Commissioner (appeal) to deny the CENVAT Credit to the appellant on capital goods. Consequently, demanded duty along with interest and also imposed penalty. Aggrieved from the said order the appellant is before us.

Ld. counsel for the appellant submits that at the time of availment of CENVAT Credit it was not disputed by the Revenue that their activity does not amount to manufacture. Moreover, the appellant cleared their final product on payment of duty and same has been accepted by the department. By the judgment of the Honble Apex Court in the case of Aman Marble Industries (Supra), it was held by the Honble Apex Court that the activity taken by the appellant does not amount to manufacture. In these circumstances, Revenue is seeking to denying CENVAT Credit on capital goods which is not correct as at the time of availment of CENVAT Credit on capital goods on their procurement, the understanding of both the Revenue as well as the appellant is that the activity undertaken by the appellant amounts to manufacture and the final product cleared by the appellant is dutiable. Therefore, the provision of Rule 6 (4) of CENVAT Credit Rules, 2004 are not applicable to the facts of this case.

3. In these circumstances, they are entitled to take CENVAT Credit on capital goods. He further submits that in the case of Income Tax Officer, Udaipur Vs. Arihant Tiles and Marbles (P) Ltd.reported in 2010 (249) ELT 161 (S.C) the Honble Apex Court further held that the activity undertaken by the appellant amounts to manufacture. Therefore, appellant is correctly taken the CENVAT Credit.

4. On the other hand, ld. AR reiterated the finding of the impugned order.

5. Heard both the parties and considered the submissions.

6. In this case, at the time of procurement of capital goods, the appellant was clearing their final product on payment of duty on the understanding that their final product is dutiable and activity undertaken by the appellant amounts to manufacture. Same understanding was of the department. The only problem arose after the decision of the Honble Apex Court in the case of Aman Marble Industries (Supra) when Revenue has accepted the duty demand on the final product, the duty paid on final product shall amount to reversal of CENVAT Credit on capital goods. Moreover, when the final product has become not liable to duty in this circumstances whatever CENVAT Credit remain in their CENVAT Credit account shall not be any use of the appellant. Therefore, we hold that at the time of procurement of capital goods, the appellant has taken CENVAT Credit correctly. In these circumstances, impugned order is set aside and the appeal is allowed with consequential relief, if any.

(Ashok Jindal)

Member (Judicial)

(B. Ravichandran)

Member (Technical)

Ritu