2019 (2) TMI 75 – CESTAT CHENNAI – TMI – Reversal of credit – re-transfer of goods from the warehouse to the factory under Goods Delivery Note (GDN) – only allegation of the department is that at each retransfer, the appellant ought to have reversed the credit – Held that:- It is brought out from evidence that the appellants have availed credit only when the entire quantity of inputs as per the invoice were used for manufacture. Even though part of inputs were returned, they did not avail credit on such inputs. Thus, though they have retransferred the unused inputs to their warehouse, there is no excess credit availed than that is relatable to the invoice corresponding to the procurement of inputs. When the inputs are brought to the factory since credit is not availed, there is no requirement of reversal of credit as under 3(5) of CENVAT Credit Rules, 2004. The credit is availed only when entire quantity of inputs as per an invoice is used for manufacture – demand do not sustain.
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inished product was cleared. However, this requires verification – matter on remand.
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An amount of ₹ 4,42,938/- is the demand of excise duty in respect of components supplied to customers and which are returned to appellant for repair work under RDC as per Rule 4(5)(a) of CENVAT Credit Rules – Held that:- It is brought out from the facts that the appellants are carrying out repair work and such process of repair work does not amount to manufacture. The facts discussed in the orders passed by authorities below does not throw much light as to the activity of repair/testing undertaken would amount to manufacture or not – the issue requires reconsideration – matter on remand.
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An amount of ₹ 17,84,883/- is seen to be a demand of excise duty raised when the appellant has sent inputs / capital goods for further processing or for tool grinding purposes to job workers under RDC – Held that:- Interestingly, the demand of excise duty is not on job worked goods and instead t
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r Bench The appellants are engaged in manufacture of break assembly and shock assembly and are registered with the Central Excise Department. Based on intelligence that the appellants are clearing CENVAT availed inputs without reversing the credit, cleared goods without paying excise duty etc., investigation was conducted. After such investigation, show cause notice was issued inter alia alleging that:- The assessee have cleared certain CENVAT availed inputs under delivery challans without reversing the CENVAT credit to the tune of ₹ 92,64,820/- during the period from 1.4.2007 to 28.2.2010 as per Annexure A2 to the Notice The assessees have cleared certain excisable goods like break assembly, shock assembly to their customers viz. M/s. Hyundai Motors, M/s. Hyundai Plaza, M/s. Ford India, M/s. Mobis India etc. without payment of central excise duty to the tune of ₹ 41,15,705/- during the period from 1.4.2006 to 28.2.2010 under delivery challans as per Annexure A3 to the Noti
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bmissions: 3.1 Owing to space constraints, the appellants used a portion of Panelpina Warehouse for storing goods / inputs. This was done after obtaining permission from department. The inputs were brought from warehouse as per manufacturing requirements, under GDN and as per Goods Receipt Note (GRN) credit was availed. When the entire quantity brought was not consumed, the same was returned to factory on Returnable Delivery Challan. When required they were retransferred to factory under GDN. The credit was availed only when the entire quantity pertaining to a specific invoice was received within the factory. The demand is raised alleging that appellant ought to have reversed the credit each time the inputs are returned to the warehouse. Reversal under Rule 3(5) of the Credit Rules is not warranted for the inputs stored at Panelpina Warehouse and brought to factory as per manufacturing requirements. 3.2 The Appellant submits that Rule 3(5) of the Credit Rules is not even attracted in t
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mselves, they cannot now turn around and seek reversal of credit. 3.5 In any case, the Appellant submits that the instant case is not one of Revenue Leakage. The present case is one where, had the Appellant reversed the credit under Rule 3(5), the same amount would have been available to them again at the time when the returned inputs are brought back from Panelpina Warehouse to the factory for use in manufacture. This credit would have been eligible and would have been utilised towards excise duty payments. To have followed the process as demanded by the Department in the instant case would have only resulted in more scriptory work to the assessee as well as to the Department, with no revenue leakage as even a distant consequence. 3.6 The Appellant submits that the decision of the Tribunal in Commissioner of C. Ex., Rajkot vs. Reliance Industries Ltd. reported at 2008 (224) E.L.T. 117 (Tri. – Ahmd.) wherein the Tribunal noted that as the demand was available as credit to the Appellant
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ects can be rectified, the Appellant repairs the goods, clears the same back to the customer and reverses credit availed, thereby complying with Rule 16. Where goods are not capable of repair, the Appellant disposes them as scrap without executing any process on such goods. In such cases, duty is paid on the value of scrap sold. The Appellant submits that differential duty is not liable to be paid, as duty has been accurately paid on the transaction value of the scrap. 3.8 The second limb of Rule 16(2) prescribes payment of duty at the rate applicable on the date of removal on the value determined under section 4 in any other case, which covers situations where no process that amounts to manufacture is done. The Appellant has correctly paid duty on the scrap sales at transaction value, as stipulated under the second limb of Rule 16(2). 3.9 The Appellant submits that issue is no longer res integra and has been settled vide the following case laws in favour of the appellant: a. M/S Tube
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hat the customer may test the said final products, and then place Purchase Orders on the Appellant on the basis of parameters as satisfied by the samples provided by the Appellant. As there is no allegation that the said finished goods were not received back by the Appellant, or that even a part of them escaped duty at the time of clearance for sale, the Appellant submits that the demand is wholly misplaced and must be set aside. 3.11 The demand for excise duty on repair work done for customers is not sustainable as the said repairs do not amount to manufacture. The Appellant submits that finished goods are received from customers for carrying out repair work. These are sent back to the customers after executing repairs. Such repairs do not amount to manufacture, and therefore, no excise duty is liable to be paid. The Appellant submits that Excise Duty is liable to be paid only where manufacturing activity is undertaken on the goods. It is well-settled that onus of proving that manufac
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voices under which inputs are cleared to the Job workers for carrying out job work, and the return documents under which the Job worker returns the jobbed inputs to the Appellant. Merely because the said documents are addressed as RDC the transaction does not become a clearance liable to excise duty payment. The demand on this count merits to be set aside in entirety. 3.13 The demand for excise duty on goods cleared under RDC during system failure is not tenable. The Appellant submits that the demand for excise duty on goods cleared under RDC on account of unforeseen system failures is incorrect because the said clearances are co-related against an Excise Invoice at the earliest instance that the system failure is rectified. Therefore, the present demand is not one where certain clearances have escaped assessment to excise duty, but only one where the said invoices are raised subsequently. The Appellant submits that the duty paid clearances cannot be subjected to excise duty twice for
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ention on part of the appellant. It is settled law that for invocation of extended period, there ought to be positive act on the part of the appellant. In this regard, reliance is placed on Continental Foundation Jt. Venture v. CCE [2007 (216) E.L.T. 177 (S.C.)]. In the present case, the department having failed to establish the same, extended period is not invokable. Therefore, if at all, the demand ought to be restricted to the normal period, i.e., from 01.02.2010 to 28.02.2010. 4. On behalf of Revenue, ld. AR Shri B. Balamurugan supported the findings in the impugned order. He submitted that the inputs were received in the factory, the appellant have availed credit and thereafter have returned it to the warehouse. They have repeatedly done so. Whenever the inputs are removed as such, the appellant ought to have reversed the credit. They have thus violated the provisions of law and the demand raised to the tune of ₹ 92,64,820/- is right and proper. With regard to the demand of
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per the requirement in the factory, they had removed the inputs from the warehouse to the factory. However, the practice followed by the appellant was that the unused inputs were returned to the warehouse due to space constraints on Returnable Delivery Challan (RDC). Thereafter, whenever the inputs were again required, they are retransferred from the warehouse to the factory under Goods Delivery Note (GDN). Thus, all the retransfer / removal of goods were being done under documents. The only allegation of the department is that at each retransfer, the appellant ought to have reversed the credit. It is brought out from evidence that the appellants have availed credit only when the entire quantity of inputs as per the invoice were used for manufacture. Even though part of inputs were returned, they did not avail credit on such inputs. Thus, though they have retransferred the unused inputs to their warehouse, there is no excess credit availed than that is relatable to the invoice correspo
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the discussions made above, we hold that the demand on this score to the tune of ₹ 92,64,820/- requires to be set aside, which we hereby do. 6.2 The differential duty of ₹ 11,90,475/- has been demanded under Rule 16. The appellant undertake repair of rejected goods which are returned by customers. They avail credit in terms of Rule 16 on such rejected goods. Whenever the rejected goods were repaired and sent to customers, such credit was reversed under Rule 16. Whenever the rejected goods were incapable of being repaired, they cleared the same as scrap by discharging central excise duty on scrap value. The department has demanded the difference of the credit availed on such unrepaired goods and the duty paid on the value of the scrap. The said issue has been decided in the case of Tube Investments of India Ltd. Vs. Commissioner of Central Excise, Chennai – 2018-TIOL-710-CESTAT-MAD and the relevant portion is as under:- As seen from the above, we find that the sub-rule (1)
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cal and the duty paid goods are rejected and returned to the factory of the assessee and without doing any processes the said goods were sold by auction to third party as is where is basis and cleared on payment of excise duty on the transaction value as per Section 4 of the Central Excise Act. xxxx xxx xxxxx xxxxx In view of the foregoing discussions and by maintaining this Tribunal s decision in the case of Craftsman Automation (P) Ltd. case, which relied M/s. Apollo Tyres (P) Ltd. case, we hold that in the present case, the second leg of sub-rule (2) of Rule 16 i.e. in any other case is applicable and they had correctly discharged excise duty on the returned goods cleared as such. The appellants are not liable to pay the amount equal to cenvat availed on the returned goods. Accordingly, the demand is set aside in the assessee s appeal. Consequently, they are not liable for any penalty and the same is also set aside. Following the above decision, we hold that the demand cannot sustai
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r for tool grinding purposes to job workers and RDC 17,84,883/- Invoices issued belatedly due to system failure In some circumstances, there is a system failure while supplying components due to which invoice could not be raised at the time of clearance. In such situations, the appellant clears the goods under RDC and then subsequently raises excise invoice on payment of ED 18,06,561/- Total 40,85,299/- 6.4 From the above Table, the first demand to the tune of ₹ 50,917/- is in respect of central excise duty when the goods have been supplied by appellant to customers for periodical sample testing. The appellants are duty bound to discharge the duty when the goods are cleared from the factory for testing. The appellant contends that they have discharged duty whenever finished product was cleared. However, this requires verification. For this reason, we find the issue is to be remanded to adjudicating authority. In case, the appellants have not discharged the central excise duty, wh
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has sent inputs / capital goods for further processing or for tool grinding purposes to job workers under RDC. It is submitted by ld. counsel that the said goods were sent under Rule 4(5)(a) of CENVAT Credit Rules and received within 180 days. The department also has admitted that such goods are cleared under the said provision of law. Interestingly, the demand of excise duty is not on job worked goods and instead the demand of excise duty is on inputs / capital goods which are sent for job work which, in our view, is incorrect and cannot sustain and is liable to be set aside, which we hereby do. 6.7 An amount of ₹ 18,06,561/- is raised alleging that there is delay in issuing invoices. From the facts brought out before us, it is seen that in certain circumstances when there was failure in the system, the appellant had delayed raising the invoices, though the goods were cleared. In such situation, they have cleared goods under RDC and then subsequently raised the central excise i
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