CX - Expression 'or for any other reason' used in Rule 16 of CER, 2002 is of wider connotation and cannot be governed by principle of ejusdem generis : CESTAT
By TIOL News Service
MUMBAI, OCT 13, 2017: THE appellants are engaged in the manufacture of biscuits and availing CENVAT credit facility.
The appellant brought duty paid biscuits of various brands such as Krack Jack, Hide & Seek Choco, Parle G from different vendors of Parle products under Central Excise invoices on which they have availed CENVAT Credit to the tune of Rs.90,75,836/- and utilized this credit for clearance of goods for export under the scheme of rebate. The said duty paid goods, i.e. finished products brought in packed condition were stuffed in the container and cleared for export.
The case of the department is that since the appellants availed the CENVAT Credit on finished products, i.e., biscuits and while exporting no manufacturing activity was undertaken, the CENVATCredit is not admissible. Inasmuch as it is the view of the department that credit is admissible only on the inputs used or in relation to the manufacture of final products within the factory of production.
The duty demand was confirmed and in the matter of Stay application filed before the CESTAT, it was held thus –
| CENVAT credit on biscuits received into factory - Commissioner denying credit by holding that the words "or for any other reason" in rule 16 would mean a process similar to the processes of refining, remaking, reconditioning, etc. by applying principle of ejusdem generis. Held - the expression "or for any other reason" used in Rule 16 of CER, 2002 is of wider connotation than the expression "any other similar process" which was used in the erstwhile Rule 173L - prima facie appellants have made out a case for waiver of pre-deposit - Stay granted: CESTAT [para 4] |
We reported this order as 2008-TIOL-516-CESTAT-MUM.
The appeal was heard recently.
The appellant submitted that they have availed CENVAT Credit in terms of Rule 16(1) of CER, 2002 where under it is provided that CENVAT Credit can be availed on duty paid finished goods also if the same is received in the factory of the assessee for being re-made, refined, re-conditioned or for any other reason. Further, sub-rule (2) of Rule 16 of CER provides that if the process to which the said goods are subjected before being removed does not amount to manufacture, the manufacturer shall pay an amount equal to the CENVAT credit taken under sub-rule (1) and in any other case the manufacturer shall pay duty on goods received under sub-rule (1) at the rate applicable on the date of removal and on the value determined under sub-section (2) of section 3 or section 4 or section 4A of the Act, as the case may be.
Inasmuch as in the present case, the appellant carried out re-packing of biscuits for the purpose of export which is covered under the term "for any other reason" and since there is a special provision under rule 16 for allowing credit of the duty paid on finished goods received in the factory of the assessee, the Revenue cannot resort to general provisions of CCR for dis-allowing the credit. Reliance is placed on the decision in Bala Handlooms Exports – 2008-TIOL-422-CESTAT-MAD and CBEC Circular No. 283/117/96-CX dated 31/12/1996.
The AR, while reiterating the findings of the original authority, submitted that the term "for any other reason" in rule 16 of CER is akin to the processes such as, re-made, refined and re-conditioned and since none of the processes were undertaken,the credit is not admissible.
The Bench extracted rule 16 of the CER and observed –
"4.1 .., it is seen that the assessee shall be allowed the Cenvat Credit in respect of duty paid on the goods received in the factory for the purpose of re-made, refined, re-conditioned or for any other reasons. As per sub-rule (2) of Rule 16, it is provided that when such duty paid goods is cleared by the assessee under two situations (i) the activity undertaken by the appellant does not amount to manufacture (ii) the activity undertaken by the appellant is amounting to manufacture. In both the above situation, the appellant can take Cenvat Credit on the duty paid goods. The only condition is that if the activity does not amounts to manufacture, the appellant is required to pay duty which should be equivalent to Cenvat Credit availed and if the activity amounts to manufacture the excise duty to be paid in accordance with the valuation provisions under Central Excise Act applicable to the manufacture of goods. As regards the contention of the lower authorities that the process even though it is not manufactured, the same should be re-made, refined, reconditioned or similar process. We do not agree with this contention for the reason that firstly in the sub-rule (1) of Rule 16, it is provided that not only for the process or re-made, refined, reconditioned but the duty paid goods can be brought into the factory for any other reason. In the facts of the present case, the appellants have brought the duty paid goods from various vendors and the same were repacked as per the requirements of export and goods were exported, even though the activity was not amount to manufacture, they have discharged excise duty. Therefore, in our view, the appellants have complied with the provisions of Rule 16(1) and (2)."
Holding that the appellants have rightly availed CENVATCredit, the impugned order was set aside and the appeal was allowed.
(See 2017-TIOL-3686-CESTAT-MUM)
