CX - Respondent was manufacturing goods on job work basis which were not exempt but dutiable and duty was paid by customer and, therefore, it cannot be said that capital goods were exclusively used in manufacture of exempted goods - Credit correctly taken: CESTAT
By TIOL News Service
MUMBAI, DEC 02, 2015: THIS is a Revenue appeal filed in the year 2005.
The facts are that the respondent-assessee imported capital goods under EPCG scheme for their Bangalore plant. Due to some practical difficulty, after taking permission from DGFT, they cleared the capital goods and brought the same to their Aurangabad unit. They availed CENVAT credit of the CVD paid on such capital goods. The said capital goods were initially used in the manufacture of stators and motors which were being manufactured by the respondent on job work basis for some other customers and no duty was being paid by them as the duty was being paid by their customer on their final products. Later on, they reversed the entire CENVAT credit taken on the capital goods and shifted the capital goods to their Bangalore plant.
A demand notice was issued to the Aurangabad unit on two counts. The first count is that the respondent has failed to produce the triplicate copy of the bill of entry and in the absence of the said document they are not entitled to take CENVAT credit. The second ground was that the respondent did not pay any duty on the goods produced from the said capital goods as they were doing only job work and as per the condition prevalent at that time if the capital goods are used exclusively in the manufacture of exempted goods, credit on the capital goods cannot be availed.
The Commissioner, CE, Aurangabad did not find any merit in the allegations levelled and, therefore, dropped the proceedings initiated under the SCN.
He inter alia held that there is no evidence to show that assessee was not having triplicate copy of Bill of Entry when they have taken the credit;that the documents were verified by Range officer & installation certificate has been issued and assessments for the relevant period have also been finalised, therefore, allegations to invoke extended period are also not sustainable.
Not happy with this order, the Revenue is before the CESTAT.
After considering the submissions, the Bench noted that the main grounds of appeal are that the adjudicating authority was incorrect in holding that extended period under the proviso to Section 11A(1) is not applicable in this case.
Thereafter, the Bench observed -
++ We find that on merits itself the demands are not sustainable. It is not under dispute that the goods were imported and CVD was paid. The respondent-assessee has produced the triplicate copy of the bill of entry at the time of taking the credit. It is only after the audit was done that the said copy was not available. We also note that installation certificate was issued by the Superintendent after visiting the factory and seeing the bill of entry etc. Under the circumstances, the view taken by the Commissioner is correct.
++ Similarly, no case has been made by the Revenue that the respondent has used the machine exclusively for the manufacture of exempted goods. The respondent was manufacturing the goods on job work basis which were not exempt but were dutiable and duty was paid by their customer.
++ In any case, the said machines were removed from their Aurangabad plant on reversal of the entire amount of the CENVAT credit taken on the capital goods and in view of this fact nothing survives in the matter.
The Revenue appeal was dismissed.
In passing: Ten years and no for an answer. Hope the Revenue accepts this and doesn't try their luck again!
(See 2015-TIOL-2556-CESTAT-MUM)
