2018 (12) TMI 845 – CESTAT CHENNAI – TMI – CENVAT/MODVAT Credit – inputs/capital goods – bought-out components – Department took the view that as the bought-out components are not used or intended for use in the manufacture but merely exported in the same form in which they were procured, the appellants would not be entitled to avail credit on the same.
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Held that:- In view of the changed definitions and provisions of law during the period of dispute in these appeals, appellant are very much eligible to avail CENVAT credit of duty paid in respect of the input / goods which have been bought out by the appellants and have been removed / cleared as such from their factory in various consignments for export under bond for eventual purposes of setting up of sugar plant in Indonesia.
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Hon‘ble Supreme Court‘s decisions in the appellant‘s own case for earlier period in M/S. KCP LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, CHENNAI [2013 (9) TMI 98 – SUPREME COURT] need not be applied
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rder Nos. 42890-42901/2018 – Dated:- 16-11-2018 – Ms. Sulekha Beevi C.S., Member (Judicial) AND Shri Madhu Mohan Damodhar, Member (Technical) For the Appellant : Shri C. Manickam, Advocate For the Respondent : Shri A. Cletus, Addl. Commissioner (AR) ORDER Per Bench 1.1 The facts of the case are that M/s. KCP Ltd., the appellants herein, are manufacturers of machinery and parts, inter alia, for sugar industry. They were also involved in fulfilling orders for installation of sugar plants located in Vietnam for which they export machinery and components of the plant manufactured in their factory, along with bought-out machinery, components and assemblies. The appellants had availed MODVAT / CENVAT credit on the bought-out components / assemblies. Department took the view that as the bought-out components are not used or intended for use in the manufacture but merely exported in the same form in which they were procured, the appellants would not be entitled to avail credit on the same. Acc
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d the matter to the original authority with the following directions:- 8. In view of our above discussion, we are of the considered opinion that the bought out items, both inputs and capital goods in question, cannot be considered as eligible inputs/capital goods for availing Modvat credit and the sugar plant machinery on erection has to be considered as an immovable property and it cannot be considered as goods on erection. We, therefore, hold that the order of the Commissioner dropping the proceedings against the respondents is not legal and proper. Accordingly we set aside the impugned orders and remand the matter to the original authority for computing and confirming the amount of irregularly availed Modvat credit including imposition of appropriate penalty, after giving an effective opportunity of hearing to the appellants, in accordance with law. The appeals are thus allowed by remand. The cross-objections stand disposed of accordingly. 1.2 Against this Tribunal s order, the appe
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appellant. In case of such an admitted fact, it cannot be said that the machinery so purchased from others was used by the appellant in the manufacture of the sugar plant. 25. In the instant case, the appellant had only acted as a trader or as an exporter in relation to the machinery purchased by it, which had been exported and used for setting up a sugar plant in a foreign country. In any case, it cannot be said to have manufactured that plant in its factory. 26. Moreover, it is also clear that the appellant-assessee did not pay any excise duty on the sugar plant set up by it in Vietnam and therefore, there cannot be any question of availing any MODVAT credit. 27. For the aforestated reasons as well as for the reasons stated by the Tribunal in the impugned order, we are of the view that the Tribunal had come to a correct conclusion and the conclusion so arrived at by the Tribunal does not require any interference. 28. The appeals are, therefore, dismissed with no order as to costs. 1.
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d the matter relating to show cause notices No. 24/96 dated 29.3.1996 and Nil/97 dated 3.3.1997, inter alia with following directions / observations:- The quantum of credit availed as inputs and capital goods to be segregated and correct provisions of law applied to each category of credit. The applicability of interest provisions considering the plea made by M/s. KCP that the credit was not utilized Penalty provisions under Rules 57I and 57U were incorporated only with effect from 23.7.1996 (wrongly mentioned as 23.6.1996) and no penalty under these rules can be imposed for the period prior to this date. If any other penal provision is attracted M/s. KCP are to be given a reasonable opportunity of defense before imposition of such penalty The plea on reopening the question of time bar was rejected as the order of the Tribunal had merged in the order of the Apex Court The plea for consideration of rebate was rejected as no such claim existed in the preceding proceedings The aspect of d
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ttled by Apex Court in the reported decision and both sides having adopted their argument as recorded herein before, our findings and directions on these appeals is same as aforesaid in the two appeals disposed as above. These twenty appeals are also remanded with the directions and observation as above. (Emphasis supplied) 1.5 In denovo adjudication, the Commissioner vide Order Nos. 1 to 22/2017 dated 29.3.2017, inter alia proceeded to examine the applicability of the judgment of the Hon ble Supreme Court to the subsequent periods and also the argument of the appellant that the applicability of the judgment should be restricted only to the first two show cause notices namely SCN No. 24/1996 and Nil/1997. The adjudicating authority rejected the plea put forward by the appellant that there was substantial change in the statutory definition of input subsequent to the period covered in the judgment delivered by the Hon ble Supreme Court. It was held that ―regardless of these changes
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d 29.3.2017 Aug. 1996 to Jan. 1997 E/41436/2017 18,81,113/- 3. 598/95 dated 30.5.1995 3/2017 dated 29.3.2017 Nov. 1994 & Dec. 1994 No appeal 1,31,519/DROPPED 4. 146/96 dated 2.9.1996 4/2017 dated 29.3.2017 Feb. 1996 to July 1996 E/41437/2017 1,36,203/- 5. 3/98 dated 19.2.1998 5/2017 dated 29.3.2017 Sep. 1997 E/41438/2017 4,16,000/- 6. 1007/98 dated 28.9.1998 6/2017 dated 29.3.2017 April 1998 to August 1998 E/41439/2017 27,89,277/- 7. 265/99 dated 17.2.1999 75/2017 dated 29.3.2017 Sep. 1998 to Jan. 1999 E/41440/2017 1,25,65,486/- 8. 936/99 dated 11.8.1999 8/2017 dated 29.3.2017 Feb. 1999 to July 1999 E/41441/2017 37,76,861/- 9. 118/2000 dated 3.2.2000 9/2017 dated 29.3.2017 Aug. 1999 to Jan. 2000 E/41442/2017 1,68,226/- 10. 565/2001 dated 8.11.2001 10/2017 dated 29.3.2017 Nov. 2000 to Aug. 2001 E/41443/2017 1,54,575/- 11. 278/2003 dated 8.9.2003 11/2017 dated 29.3.2017 Sep. 2002 to Aug. 2003 E/41444/2017 3,44,446/- 12. 18/2004 dated 2.9.2004 12/2017 dated 29.3.2017 Sep. 2003to July
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7/- 1.6 Nine appeals No. E/41435 to 41443/2017 arising out of the same impugned order (Sl. No. 1 and 3 to 10 in above table) have already been disposed by common order dated 41661 to 41669/2018 dated 31.5.2018, by this Tribunal, inter alia, dismissing the appeals on the ground that the issue involved therein had been agitated right upto the Hon ble Supreme Court and had attained finality by the judgment of the highest court as reported in 2013 (294) ELT 353 (SC), wherein the appeals of the appellant had been rejected.. For these reasons, the Tribunal in the aforesaid order did not find any grounds to interfere in the impugned orders and dismissed the appeals. 2.1 The present batch of twelve appeals before us are those listed in Sl. No. 9 to Sl. No. 20 of the Table in para 1.4 supra. 2.2 When these matters came up for hearing, on behalf of the appellant, ld. counsel Shri C. Manickam appeared and put forth a number of submissions, arguments and contentions, which can be broadly summarize
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ntral Excise Rules, 2002. (iii) Not only the said Rules had undergone a sea change but also the definitions of ―inputs and ―Capital Goods , periodically underwent changes due to continued liberalization in Policy, which resulted in the broader definition of ―inputs and ―capital goods . Therefore, it is submitted that the Adjudicating Authority ought to have discussed the merits of the case particularly, in the context of the changed provisions of Central Excise and MODVAT/CENVAT law, which the authority had failed to do. (iv) Commissioner (Appeals), Chennai in the case of the Appellant itself and on an issue relating to the impugned case held in paragraph 10 (iii) of the Orders-in-Appeal No.245 & 246/2016, as below :- 10 (iii) I also find that the Respondent (Department) has placed reliance on the decision of the Hon‟ble Apex Court in the Appellant‟s own case (2013 (295) ELT 353 (SC)), which has been vehemently objected to by the Appellant. In th
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ning etc., but also for other purposes by virtue of the wordings ―any other reason . Initially, this was interpreted by the Department in a manner that only goods which were brought into the factory on return (meaning the final products manufactured, which otherwise would not qualify as inputs/capital goods). But the judicial forums had time and again clarified that the said rule applies to all duty paid goods brought into the factory provided the duty paid nature is satisfied. The Board had also issued a clarification in this regard and to avoid further mis-interpretations, amended the Rules itself in 2002. (vi) The sequence of law and its amendments are tabulated are as under:- SL.NO. PERIOD AND PROVISION OF LAW CHANGES MADE REMARKS & DETAILS OF NOTFNS 1 01.07.2001 Central Excise [No.2] Rules, 2001 16. Credit of duty on goods returned to the factory [1) Where any goods on which duty has been paid at the time of removal thereof are subsequently returned to the factory for be
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#8213;for any other reason , there were representations from the Trade that they are no longer allowed to bring in duty paid goods of other manufacturers, the Board clarified vide Circular No.607/44/2001-CX. Dated 13.12.2001, that [para 2&3], 2….The said Rule 16 provides for return of duty paid goods to the factory for being re-made, refined, reconditioned or any other reason….3. Accordingly, the Board has decided that the word ―return in Rule 16 referred above, need not be interpreted strictly. Receipt of duty paid goods in the factory of manufacturer for the purpose specified in said rule may be allowed even in respect of goods not manufactured by them… The word returned was emphasized not to be strictly interpreted and receipt of duty paid goods paid may be allowed even in respect of goods not manufactured by them. 3 01.07.2001 Central Excise Rules, 2002 16.Credit of duty on goods brought to the factory. – (1) Where any goods on which duty had been pai
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e is any difficulty in following the provisions of sub-rule (1) and sub-rule (2), the assesse may receive the goods for being re-made, refined, re-conditioned or for any other reason and may remove the goods subsequently subject to such conditions as may be specified by the [Principal Commissioner or Commissioner, as the case may be]*-(this amendment was made in 2014) (1) The words ―subsequently returned to the factory was changed to ―brought to any factory thus bringing the contents of clarification issued in December 2001 into effect in a proper manner. (2) If the process does not amount to manufacture, the manufacturer shall pay an amount equal to the credit taken. (3)This explanation qualifies the duty paid goods as if it is inputs under CENVAT Credit Rules and when the duty amounts are paid when it is removed, it qualifies as final products. (vii) The period of dispute involved in all these appeals is from September 2002 to November 2012. Hence the earlier Supreme Cour
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urt s decision as the remaining cases which do not pertain to the same statutory and legal provisions. However, in these cases, there has definitely been a change of definition and scope of inputs and Rule 16. It is therefore submitted that the decision of the Tribunal in respect of the remaining present cases with the same directions as was done for proceedings pertaining to earlier periods is not in order which is per incuriam. 3.1 The ld. AR Shri A. Cletus appeared and argued on behalf of the Department. He submitted that the issue whether the appellants are eligible for CENVAT credit on the bought out items was already decided by the Hon ble Supreme Court in the appellant s own case as reported in 2013 (295) ELT 353 (SC). In paras 24 and 25 of the said decision, the Hon ble Supreme Court had observed that the finished products of the appellant is sugar plant. The sugar plant having been installed in Vietnam, the final products have not suffered duty and therefore the appellants are
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e submitted that the argument of the ld. counsel that for the impugned period, in these appeals, the law has changed is without any basis. The adjudicating authority in para 4.3 of the impugned order had considered this plea of the appellant with regard to applicability of the amendment to the definition of inputs. The said amendments brought does not cause any substantial change in the statutory definition of ‗input and therefore the judgment delivered by the Hon ble Supreme Court is squarely applicable. 3.3 With regard to the contention of the appellant as to the applicability of Rule 16, the ld. AR argued that the appellants have not raised the said plea before the adjudicating authority and therefore the same cannot be considered at the stage of the Tribunal. It is also emphasized by him that the Tribunal in its final order had remanded with specific directions and only because the adjudicating authority had reconsidered the issue on merits, it cannot be said that the appella
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e gone through the case records. 5.1 The ld. AR has drawn attention to the fact that the identical dispute for earlier periods had been in litigation and had culminated in the judgment of the Hon ble Supreme Court in the appellant s own case as reported in 2013 (295) ELT 353 (SC), wherein inter alia, the Hon ble Apex Court had held that input credit would not be available on machinery bought out by the assessee which was not even unpacked or tested and exported in exact condition along with machinery manufactured by assessee. We first intend to examine this contention. The aforesaid decision of the Hon ble Supreme Court reported in 2013 (295) ELT 353 (SC) was confined to two show cause notices dated 29.3.1996 and 3.3.1997, covering the period July 1994 to January 1997. The Hon ble Supreme Court in para 21 of the judgment had gone into the conditions covering eligibility of MODVAT credit to inputs and had referred to its own earlier judgment in the case of Madras Cements Ltd. – 2015 (25
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sed machinery in its premises or in its factory and therefore, necessary condition incorporated in the Rules for availing credit of the MODVAT had not been complied with. To avail the MODVAT credit, the input on which excise duty is paid must be used in the manufacture of the final product in the factory of the assessee. The machinery purchased by the appellant had not even been tested or was not even unwrapped in the factory of the appellant. In case of such an admitted fact, it cannot be said that the machinery so purchased from others was used by the appellant in the manufacture of the sugar plant. 25. In the instant case, the appellant had only acted as a trader or as an exporter in relation to the machinery purchased by it, which had been exported and used for setting up a sugar plant in a foreign country. In any case, it cannot be said to have manufactured that plant in its factory. 5.3 In doing so, the Hon ble Supreme Court had upheld the order of remand with certain directions,
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Nos. 1, 2 and 4 to 10/2017, also dated 29.3.2017 were separately taken up for hearing and vide Final Order Nos. 41661 to 41669/2018 dated 31.5.2018 were disposed. The dispute covered in these final orders was for the period from July 1994 to August 2001. In the said final order, the Tribunal had inter alia held as under:- 6.7 We also have no quarrel with the contention of the ld. counsel that taxes cannot be exported; that it is not the intention or policy of the Government otherwise; that in such cases where the manufacturer procures some of the parts from other manufacturers and removes them along with the remaining self-manufactured goods, the clearances for all practical purposes has to be treated as effected from factory gate. We do take cognizance of the Ld. Advocate‟s submission that in response to a representation from these appellants, the CBEC vide Circular dated 31.12.1996, allowed inputs to be cleared as such either under bond or under claim for rebate for duty as in
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, that bought out items both inputs and capital goods in question cannot be considered as eligible capital goods for availing MODVAT credit ….. . The remand directions given by the Tribunal in that order dated 2.5.2003 was only for computing and confirming the amount of irregularly availed MODVAT credit …. etc. based on the above conclusion reached by them. This decision has been upheld by the Hon‟ble Supreme Court reported in 2013 (295) ELT 353 (SC). On the subsequent occasion, when the same matter came up to this Tribunal, vide Final Order dated 21.9.2015, the Tribunal had once again gone into this issue and inter alia held that the matter has reached finality by the decision of the Hon‟ble Supreme Court. Judicial propriety requires us to follow the Hon‟ble Apex Court view in the appellant‟s own case as reported in 2013 (295) ELT 353 (SC). Such conduct is enjoined on us by the principle of stare decisis‟ namely, to stand for things decided&
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ter, in this section, referred to as the final products) as the Central Government may, by notification in the Official Gazette, specify in this behalf for the purpose of allowing credit of any duty of excise or the additional duty under section 3 of the Customs Tariff Act, 1975 (51 of 1975), as may be specified in the said notification (hereafter, in this section, referred to as the specified duty) paid on the goods used in or in relation to the manufacture of the said final products where directly or indirectly and whether contained in the final product or not hereafter, in this section, referred to as the inputs)‟ and for utilizing the credit so allowed towards payment of duty of excise leviable on the final products, whether under the Act or under any other Act, as may be specified in the said notification, subject to the provisions of this section and the conditions and restrictions that may be specified in the notification: Provided that the Central Government may specify t
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any exemption to the extent of the duty of excise payable on the value of the packaging materials is being availed of for packaging of any final products; (iii) Packaging materials the cost of which is not included or had not been included during the preceding financial year in the assessable value of the final products under section 4 of the Act; (iv) crates and bottles used for aerated waters; (2) Notwithstanding anything contained in sub-rule (1), the Central Government may, by notification in the official Gazette, declare the inputs on which declared duties of excise or additional duty (hereinafter referred to as declared duty‟) paid shall be deemed to have been paid at such rate or equivalent to such amount as may be specified in the said notification and allow the credit of such declared duty deemed to have been paid in such manner and subject to such condition as may be specified in the said notification even if the declared inputs are not used directly by the manufacturer
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ries of the aforesaid machines, machinery, plant, equipment, apparatus, tools or appliances used for aforesaid purpose; and (c) moulds and dies, generating sets and weighbridges used in the factory of the manufacturer." 5.6 It was on these erstwhile prevalent definitions of ‗inputs and ‗capital goods and the then prevalent conditionalities for availing MODVAT credit on bought out items, both inputs and capital goods, had been dwelt into by the Tribunal in its Final Order No.301-302/2003 dated 02.05.2003 (para 1.1 supra) and by the Hon ble Supreme Court in paras 24 to 28 of their judgment dated 03.09.2013 [para 1.2 supra], in the appellant s own case. 5.7 However, in the present batch of appeals before us, as found above, the period of dispute involved is from September 2002 to November 2012. We find that the erstwhile definition of ‗inputs under Rule 57A had been replaced / amended during this disputed period as under:- (a) MODVAT scheme was replaced with CENVAT
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n input for any purpose whatsoever . (Emphasis added) We thus find that w.e.f. 31.3.2000, CENVAT scheme brought about a clear and distinct departure in the definition of inputs. Earlier, inter alia, inputs were required to be ―goods used in or in relation to the manufacture of the final products, whether directly or indirectly and whether contained in final product or not . However, the new definition w.e.f. 31.3.2000 included within the scope of inputs, accessories of final products cleared along with the final products. (b) With the introduction of CENVAT Credit Rules, 2001, w.e.f. 1.6.2001, the same definition of ‗inputs which were brought about in 31.3.2000 above was incorporated under Rule 2(f) of CENVAT Credit Rules, 2001 and later under Rule 2(g) of CENVAT Credit Rules, 2002. (c) With the introduction of CENVAT Credit Rules, 2002 brought about by Notification No.5/2002-CE (NT) dated 1.3.2002, the definition of ―inputs was amended as under:- ―(g) ―in
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rther tweaked and incorporated under Rule 2(k) as under:- input means:- (i) all goods, except light diesel oil, high speed diesel oil and motor spirit, commonly known as petrol, used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not and includes lubricating oils, greases, cutting oils, coolants, accessories of the final products cleared along with the final product, goods used as paint, or as packing material, or as fuel, or for generation of electricity or steam used in or in relation to manufacture of final products or for any other purpose, within the factory of production; (ii) all goods, except light diesel oil, high speed diesel oil, motor spirit, commonly known as petrol and motor vehicles, used for providing any output service; Explanation 1. – The light diesel oil, high speed diesel oil or motor spirit, commonly known as petrol, shall not be treated as an input for any purpose whatsoever; Exp
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ll goods used in the factory by the manufacturer of the final product; or (ii) any goods including accessories, cleared along with the final product, the value of which is included in the value of the final product and goods used for providing free warranty for final products; or (iii) all goods used for generation of electricity or steam [or pumping of water] for captive use; or (iv) all goods used for providing any output service, or; (v) all capital goods which have a value upto ten thousand rupees per piece.] but excludes – (A) light diesel oil, high speed diesel oil or motor spirit, commonly known as petrol; (B) any goods used for – (a) construction or execution of works contract of a building or a civil structure or a part thereof; or (b) laying of foundation or making of structures for support of capital goods, except for the provision of service portion in the execution of a works contract or construction service as listed under clause (b) of section 66E of the Act;] (C) capita
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was done away with and instead the scope of inputs amplified to include even goods merely used in the factory by the manufacturer and / or any goods including accessories cleared along with the final product, the only requirement being the value of such goods should be included in the value of the final product and so on. (f) So also, the definition of ―capital goods under erstwhile Rule 57Q of Central Excise Rules, 1944 reproduced in para 5.5 supra underwent various evolutions. After introduction of CENVAT Credit Rules, 2001, ―capital goods was defined as under:- (b) ―capital goods means,- (i) all goods falling under Chapter 82, chapter 84, Chapter 85, Chapter 90, heading No.68.02 and sub-heading No.6801.10 of the First Schedule to the Tariff Act; (ii) components, spares and accessories of the goods specified at (i) above; (iii) moulds and dies; (iv) refractories and refractory materials ; (v) tubes and pipes and fittings thereof; (vi) pollution control equipment; an
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09.2004, the definition of ―capital goods was defined as under:- (b) ―capital goods means,- (A) the following goods, namely:- (i) all goods falling under Chapter 82, chapter 84, Chapter 85, Chapter 90, heading No.68.02 and sub-heading No.6801.10 of the First Schedule to the Tariff Act; (ii) pollution control equipment (iii) components, spares and accessories of the goods specified at (i) and (ii) above; (iv) moulds and dies, jigs and fixtures; (v) refractories and refractory materials ; (vi) tubes and pipes and fittings thereof; and (vii) storage tank, used (1) in the factory of the manufacturer of the final products, but does not include any equipment or appliance used in an office or (2) for providing output service; (B) motor vehicle registered in the name of provider of output service for providing taxable service as specified in sub-clauses (f), (n), (o), (zr), (zzp), (zzt) and (zzw) of clause (105) of section 65 of the Finance Act; (i) So also, the definition of ̵
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ccessories of the final products cleared along with the final product . As we have found above, the evolving definitions of inputs with effect from 1.4.2001 became broad based enough to include not only all goods used in the factory but also any goods including accessories etc. provided the value thereof is included in the value of the final product. In our view, the word ‗includes should be interpreted as being used to enlarge the meaning of preceding words. The examples of ‗inputs , like accessories, coolants, lubricating oil etc. given immediately after the word ‗includes is only to give an idea of the genre and type of goods that could be brought within the ambit of such inclusivity. The maxim ‗ejusdem juris – of the same kind or nature, will apply in its full force here. Where ever accessories of the final product are ‗included within the said definition, it is but a natural corollary that parts or components or even sub-assemblies of the sugar plant
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r alia, to a three Judge Bench decision of this Court in Regional Director, Employees‟ State Insurance Corporation v. High Land Coffee Works of P.F.X. Saldanha and Sons & Anr. [(1991) 3 SCC 617]. There are other decisions of this Court by Coordinate Benches (three judge) on the issue which need not be adverted to specifically inasmuch as it has been clearly held in Regional Director, Employees‟ State Insurance Corporation (supra) that the word include in the statutory definition is generally used to enlarge the meaning of the preceding words and it is by way of extension, and not with restriction. We answer the question referred to us in the above manner leaving it for the appropriate bench of this Court to decide on the factual parameters of the case(s) and the entitlement of the assessee(s) to Cenvat credit in the facts of each case. 5.11 We also find that the Apex Court in the case of Doypacks Systems P. Ltd. Vs. Union of India reported in 1988 (36) ELT 201 (SC) have
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s meaning to bring into association or connection with. It has been clearly mentioned that relating to has been held to be equivalent to or synonymous with as to concerning with and pertaining to . The expression pertaining to is an expression of expansion and not of contraction. xxxx xxxxxx xxxxx xxxxxx xxxx 64. On the construction of Sections 3 and 4 we have come to the conclusion that the shares vest in the Central Government even if we read Sections 3 and 4 in conjunction with Sections 7 and 8 of the Act on the well settled principles which we have reiterated before. The expression in relation to has been interpreted to be the words of widest amplitude. See National Textile Corporation Ltd. and Others v. Sitaram Mills Ltd. (supra). Section 4 appears to us to be an expanding section. It introduces a deeming provision. Deeming provision is intended to enlarge the meaning of a particular word or to include matters which otherwise may or may not fall within the main provisions. It is w
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he appellant along with other bought out duty paid items brought into the factory; thereafter both categories of goods cleared and agglomerated together for the purpose of export. There is also no allegation that the combined value of both manufactured as well as bought out items have not been included in the export price declared by the appellants. There also appears to be no dispute that the assemblage of goods at the point of export was an omnium gatherum gathered of both self-manufactured and bought out items, all duty paid by the respective manufacturers, which was intended to constitute a complete sugar plant in Vietnam. The show cause notice dated 29.3.1996 at para 2.0, also narrates that the disputed bought out goods were used only for receipt and export, as such . 5.13 Obviously, the appellants have transported these machineries, both those manufactured by them and the other bought out inputs / goods removed as such, in various consignments for export purposes and eventual ere
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g, reconditioning etc. but also for other purposes by virtue of the wordings ―any other reason . 6.2 Ld. counsel has also drawn our attention to Board s clarification No. 607/44/2001-CX dated 13.12.2001, clarifying the scope of the said Rule 16. Ld. counsel has also pointed out that the said Rules was further amended vide Central Excise Rules, 2002, which made the scope of Rule 16 even wider. 6.3 To understand these arguments and contentions, it would be useful to examine the sequence of said Rule 16 of Central Excise Rules, 2001, the Board s clarification dated 13.12.2001 and the amended Rule 16 of Central Excise Rules, 2002 as under:- (a) ―RULE 16 OF CENTRAL EXCISE (NO.2) RULES , 2001 The Central Excise (No.2) Rules, 2001 was introduced with effect from 01.07.2001 vide Notification No. 9/2001-CE(NT) dated 01.03.2001, wherein the Rule 16 of Central Excise Rules, 2001 stated that :- 16. Credit of duty on goods returned to the factory.- (1) Where any goods on which duty has
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reconditioned or any other reason. ..3. Accordingly, the Board has decided that the word return in Rule 16 referred above, need not be interpreted strictly. Receipt of duty paid goods in the factory of manufacturer for the purpose specified in said rule may be allowed even in respect of goods not manufactured by them … (c) RULE 16 OF CENTRAL EXCISE RULES, 2002 16. Credit of duty on goods brought to the factory. – (1) Where any goods on which duty had been paid at the time of removal thereof are brought to any factory for being re-made, refined, re-conditioned or for any other reason, the assessee shall state the particulars of such receipt in his records and shall be entitled to take CENVAT credit of the duty paid as if such goods are received as inputs under the CENVAT Credit Rules, 2002 and utilise this credit according to the said rules. (2) If the process to which the goods are subjected before being removed does not amount to manufacture, the manufacturer shall pay an amoun
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urer could only bring his own goods back under Rule 16, post-amendment of the Rule even goods not manufactured by a manufacturer was allowed to be brought into his factory, not just for repair etc. but also ‗for any other reason , and the manufacturer could take credit on such goods as if they were inputs. If these ‗inputs were not subjected to manufacture, their removal ‗as such would only require payment of an amount equal to credit taken, of course, if the goods are exported under bond, in our view, there will be no requirement to reverse credit taken. The 2001 clarification given by the CBEC as also the amended provisions of Rule 16 of Central Excise Rules, 2002 will definitely support the contention of the ld. counsel that appellants are entitled to CENVAT credit on the bought out items even under Rule 16 since the same have been received in the factory and have been exported as such, of course, with the remaining machineries manufactured by the appellants themse
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export, Cenvat credit involved is ₹ 87,53,287/. In this case even though activity does not amount to manufacture, no duty is required to be paid on the export of goods, hence, the Cenvat credit is admissible as goods have been exported…… xxxx xxxxxx xxxxx xxxxxx xxxx 6. We find that the ld. counsel made various alternative submissions. We find that activity of the appellant, i.e., receipt of duty paid goods, i.e., Oil Slump Body, Cylinder Head & Rover Cylinder, availment of Cenvat credit thereon and reissue the same on payment of duty or for export is squarely covered by Rule 16 of the CER, 2002……. From the above rule, it is clear that the assessee is entitled to avail Cenvat credit on the duty paid goods even though the said duty paid goods does not undergo manufacturing process. The only condition is that if the duty paid goods is cleared after process which amounts to manufacture, the assessee is required to pay duty on the transaction value and if
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here the goods does not undergo process which amounts to manufacture, then excise duty equal to Cenvat credit availed on such goods should be paid. In terms of Rule 16, if the condition of payment as discussed above is complied with the duty paid finished goods shall be treated as deemed input and Cenvat credit is admissible. In the present case as per the claim of the appellant which was not disputed by the lower authorities that appellant have paid the excise duty at the time of sale of such imported plastic closure. It is found that appellant have paid duty equivalent to the Cenvat credit availed, no further demand would exist. However if there is any shortfall only that much amount shall be recoverable. Ld. Counsel submitted various statements to establish that excise duty on the bought out imported goods was paid at the time of sale of such goods. On going through various judgments relied upon by the Ld. Counsel, I find that it is consistently held that even though the credit was
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he activity does not amount to manufacture it is removal of input as such. The removal of input either can be on the payment of duty which is equal to the Cenvat amount or can be cleared without payment of duty for export under bond. Therefore, the Cenvat credit availed by the respondents either before 1-7-2001 or thereafter and the processed goods have been cleared for export, the Cenvat credit is legally admissible. It is not the case of the Revenue that the respondent has cleared the goods in the domestic market without payment of duty. The dispute is only related to the availment of credit. (d) In the case of M/s. NCL Industries Ltd. Vs. Commissioner of Central Excise, Guntur – 2016 (337) ELT 438 (Tri. Hyd.), it has been held as under:- 7. I have heard the rival submissions. For better appreciation Rule 16 of Central Excise Rules, 2002 is reproduced as under:- RULE 16 – Credit of duty on goods brought to the factory. – (1) Where any goods on which duty had been paid at the time of
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makes it clear that manufacturer can take credit of duty paid on the goods by treating them as inputs. It is seen from the above rule that if goods are brought for any other reason also, the manufacturer is entitled to take credit as if the goods are inputs. The learned counsel for appellant submitted that the appellant unit had railway sliding tracks and this is the reason that the cement was brought from Mattampally unit to the appellant unit and marked with ISI mark and dispatched to the buyer. The contention of Revenue is that the goods being cement/finished product, the credit is not admissible. Rule 16 does not require remanufacturing of goods or that goods should undergo any process after being brought to the factory and before being removed. The goods if brought for being re-made, refined, reconditioned or for any other reason , the rule would apply. Thus, I do not find that there is contravention of any of the provisions of Cenvat Credit Rules, 2004. The activity falls within
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by the said judgment of the Hon ble Supreme Court pertained to a narrower definition of inputs which was analyzed and examined by the Apex Court. However, in these twelve appeals before us, as discussed supra, the period of dispute is after the amendment and enlargement of the definition of ‗inputs w.e.f. 1.6.2001 and further amplification to that definition caused about by the subsequent amendments of 21.6.2001, 1.3.2002, 10.9.2004, 7.7.2009 and 1.4.2011 etc. We, therefore, have to conclude that the decision of the Hon ble Supreme Court reported in 2013 (295) ELT 353 (SC) would not be applicable for the impugned period in these appeals. 8.1 Discernibly, after the judgment of the Hon ble Supreme Court in the appellant s own case reported in 2013 (295) ELT 353 (SC) decided on 3.9.2013, the Hon ble Supreme Court in a subsequent decision dated 8.5.2015 in the case of Thermax Babcock & Wilcox Ltd. Vs. Commissioner of Central Excise, Pune – 2015 (320) ELT 32 (SC) upheld the view t
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have gone into manufacture of final product. The relevant portion of the order is as follows:- 5. On behalf of the appellant, it was also contended, that the appellant is, indisputably, eligible for rebate of duty on inputs bought-out‟ and supplied as exports. It was claimed that it is a well-settled principle of law that what is available as rebate can also be availed as credit. Further, the appellant-assessee, even if regarded as merchant exporter, was entitled to such rebate and hence denial to them as a manufacturer would be grossly inequitable; that the principle and policy of non-exportability‟ of taxes is jeopardized if the contention of the Revenue is accepted. 6. The appellant-assessee cited Flat Products Equipments (I) Ltd. v. Commissioner of Central Excise [2011 (272) E.L.T. 104], Dicitex Dicor Pvt. Ltd. v. Commissioner of Central Excise [2012 (286) E.L.T. 626] and Finolex Cables Ltd. v. Commissioner of Central Excise [2007 (210) E.L.T. 76 (Tri.-Mumbai) = 2007 (5
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used as auxiliary equipment to the goods manufactured by the appellant and that as these are not required for manufacture of the pressure parts and since, as a matter of practice, these are not brought within the factory of manufacture which is an essential requirement to qualify as an input‟, Cenvat credit could not have been availed of. Drawing attention to Rule 2k(i) of Cenvat Credit Rules, 2004 that defines inputs‟ and to Rule 2(h) defining final product‟ as excisable goods manufactured or produced from input, or using input service‟ it was contended that applicability of Rule 3 of Cenvat Credit Rules, 2004 fails in the case of the appellant. Reliance was placed upon the judgment of the Hon‟ble Supreme Court in KCP Ltd. v. Commissioner of Central Excise [2013 (195) E.L.T. 353 (S.C.)] which held that the item under export not having been manufactured in the factory of assessee, the condition for availing Modvat credit does not arise. Similar judgments w
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ures pressure parts of boilers in the factory and such other parts as required for the complete installation of the boiler in its functional form is procured from outside. In executing the contracts entered into with the domestic purchasers, the pressure parts are cleared from the factory and the other components are sourced directly for delivery at the erection site. 9. Identical matter had come up for decision before this Tribunal to determine whether the duty liability arises only on the pressure parts or on the boiler, as such, including the bought-out parts‟. The Tribunal in Commissioner of Central Excise, Pune-I v. Thermax Bobcock & Wilcox Ltd. [2005 (182) E.L.T. 336 (Tri-Mumbai)] decided that, in view of the sub-heading 8402.10 of the schedule to the Central Excise Tariff Act, 1985 and Rule 2(a) of the Interpretative Rules, it is the boiler which is the final product of the manufacturer which, being physically impossible to remove from the factory in assembled form, is
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he premises as boiler for erection and installation at Special Economic Zone or at the site of the purchasers abroad. In these circumstances there cannot be any conclusion other than that the manufacture of boiler in its final form is rendered at the factory of manufacturer and the clearance of boiler is, for all practical purposes, effected from the said factory gate. Since the boiler is the final product of the manufacturer, every component within it and every input that goes into the component manufactured in the factory would be an input in so far as Cenvat Credit Rules, 2004 is concerned. It is certainly not a tenable claim that Revenue can distinguish between an input of an input and an input itself when there is no dispute that the components manufactured from inputs and the components that are inputs have gone into the final products; nor can Revenue presume to enter the commercial arena and dictate the manufacturing policy of an industry. In the context of the decision of the
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parts thereof. What was cleared by the appellant was the complete machine. Further, the Board‟s circular dated 3-12-2006 makes it abundantly clear that even if inputs are removed as such they could be exported either under bond or under claim for rebate of duty and the Cenvat credit on the parts would be available. In the case of Narmada Chematur Pharmaceuticals Ltd. (referred to supra) the Hon‟ble Apex Court has clearly held that when the amount of Cenvat credit wrongly availed is exactly equivalent to the amount of excise duty paid by not availing the exemption the consequences is revenue neutral and hence the demand for such wrong availment of credit is not sustainable in law. 7. … … … … … … … Although no manufacturing activity was involved in such goods, the Tribunal came to the conclusion that the activity carried in such spares involves only repacking and does not amount to manufacture. It was further held that, if duty
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ately exported and forms very much part of the machinery. Further, whatever credit has been taken, the duty liability has been discharged on a value inclusive of such bought out parts and on that ground also the demand for reversal of the Cenvat credit does not sustain. It should also be observed herein that the transaction in the instant case is that of exports and it is the avowed policy of the Government to promote export by relieving the burden of taxes on the products exported and also on the products consumed in the manufacture of the goods exported. Therefore, the rules whether they be Cenvat Credit Rules or Central Excise Rules have to be read harmoniously to give effect to this objective. Thus in the instant case apart from the fact that the appellant is rightly entitled to the Cenvat credit on the goods exported, even from a policy perspective, such credit is permissible. 11. Considering the decision of the Tribunal supra, the appellant is entitled to take Cenvat credit on th
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in respect of SCNs No. 24/1996 and Nil / 1997 disposed of on 03.09.2013 as reported in 2013 (295) ELT 353 (SC) need not be applied to the subsequent periods covered by these 12 appeals, not only on account of aforesaid change of definition of ―inputs / ―capital goods as also on account of subsequent decisions of the Hon ble Supreme Court. (ii) In view of the changed definitions and provisions of law during the period of dispute in these appeals, appellant are very much eligible to avail CENVAT credit of duty paid in respect of the input / goods which have been bought out by the appellants and have been removed / cleared as such from their factory in various consignments for export under bond for eventual purposes of setting up of sugar plant in Indonesia. (iii) In consequence, the impugned orders which have held to the contrary confirming demand of such CENVAT credit availed on the impugned bought out goods / inputs, with interest, and also imposing penalties under various
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