Shree Shyam Filaments vs Cce & St, Jaipur-I

[Arising out of Order-in-Appeal No.87(SLM)CE/JPR-I/2014 dated 22.10.2014 passed by the Commissioner (Appeals-I), Customs & Central Excise, Jaipur]

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?

Shree Shyam Filaments Appellant

Vs.

CCE & ST, Jaipur-I  Respondent

Present for the Appellant : Ms.Sukriti Das, Advocate Present for the Respondent : Shri Vaibhav Bhatnagar, D.R.

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

Date of Hearing/Decision: 28.10.2015

FINAL ORDER NO. _54257/2015___

PER: S.K. MOHANTY

Brief facts of the case are that the appellant is engaged in manufacture of Polypropylene Multi Filament Yarn, falling under Chapter 54 of the First Schedule to the Central Excise Tariff Act, 1985. During the disputed period, the appellant had purchased the goods from M/s. Reliance Industries Ltd., Jamnagar, Gujarat, which is a 100% export oriented Undertaking (EOU). The excise duty paid by the supplier was taken as cenvat credit by the appellant, which was disputed by the Department on the ground that taking of such credit is not in conformity with Rule 3 (7)(a) of the Cenvat Credit Rules, 2004. The cenvat demand confirmed in the adjudication order was upheld in the impugned order passed by the Commissioner (Appeals), Central Excise, Jaipur. Hence, the present appeal is before this Tribunal.

2. Mrs. Sukriti Das, the ld. Advocate appearing for the appellant submits that the manufacturers under the EOU Scheme are permitted to pay full Central Excise Duty on removal of the excisable goods to the units falling under the Domestic Tariff Area (DTA) and can also opt for payment of additional duty of customs leviable under Section 3 of the Customs Tariff Act, 1975 on removal of goods to DTA Unit. In the present case, the EOU M/s. Reliance Industries Ltd. had availed the benefit of Notification dated 31.02.2003. With regard to applicability of Rule 3 (7) (a) of the Cenvat Credit Rules, 2004, the submissions of the ld. Advocate are that if the goods fall under Sl.No.1 of the Notification dated 31.02.2003, then the formula prescribed under the said Rules shall not be applicable and the appellant shall be entitled for the full credit of duty paid by the supplier indicated in the invoices. To support the said stand, the ld. Advocate has relied on the decision of this Tribunal in the case of CCE vs. Jumbo Bags Ltd. reported in 2013 (296) ELT 142 (Tri. - Chennai).

3. Per contra, the ld. D.R. Shri Vaibhav Bhatnagar appearing for the respondent submits that the condition No.1 enumerated in Notification dated 31.02.2003 have not been complied with by the supplier M/s. Reliance Industries Ltd., and as such, in absence of non-observance of the conditions, present case will not fall under Sl.No.1 of the said Notification. Therefore, the appellant was under the statutory obligation to comply with the requirements of Rule 3 (7)(a) of the Cenvat Credit Rules, 2004.

4. I have heard the ld. Counsel for both sides and perused the records.

5. Notification No.23/2003-CE dated 31.02.2003 permits the EOU Units for payment of Central Excise Duty equivalent to the special additional duty leviable under Section 3 (5) of the Customs Tariff Act, 1975. The payment of duty under the prescribed rate is subject to fulfilment of condition that the goods supplied to the units in DTA are not exempt from payment of tax levied by the State Government. In the present case, it is a fact on record that the goods were supplied by M/s. Reliance Industries Ltd. a 100% EOU Unit to the appellant on payment of Central Sales Tax (CST) levied and collected under the Sales Tax Statute. Since, supply of goods from M/s. RIL to the appellant has suffered payment of CST, in my opinion, the appellant falls under the purview of Sl.No.1 of Notification dated 31.02.2003. Thus, the formula prescribed in Rule 3 (7) (a) of the Cenvat Credit Rules, containing the stipulation for taking of cenvat credit will have no application and the appellant will be entitled for the full cenvat credit of Central Excise duty paid and reflected by the EOU unit in its invoices. I also find that condition No.2 itemized in the Notification dated 31.02.2003 is subject to observance of the procedures laid down in Clause (a), (d), (e) and (g) of paragraph 6.8 in the Foreign Trade Policy- 2004-09. However, in the present case, since the supplier M/s. Reliance Industries Ltd. has opted for payment of duty under the conditions itemized in clause (h) in the FTP (supra), the case squarely falls under Sl.No.1 in the said Notification, for which the embargo/restriction created in the Rule 3 (7) (a) of the cenvat credit rule will have no application. I find that the case of the appellant is squarely covered by the decision of this Tribunal in the case of Jumbo Bags (supra).

6. In view of above, I am of the considered opinion that the impugned order is not legally sustainable. Therefore, the same is set aside and the appeal is allowed in favour of the appellant.

(Dictated and pronounced in the open Court)

(S.K. MOHANTY) MEMBER (JUDICIAL)

Anita

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