TaxTMI 
TaxTMI 
2011 (12) TMI 503
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....d at the time of import and the CENVAT credit on the said Additional Duty (CBD) is availed and utilized by them later in the clearance of the finished excisable goods. 2. After importing the said raw materials namely, logs and timbers which are of 35 ft. to 40 ft. in length, are stored at their log-yard at Dostipur, which is located about 12 kms. away from their factory. At this log-yard, the imported wooden logs and timbers are immersed in water for a period ranging from 15 days to 2 months and thereafter, cut into the required sizes of around 6 ft. to 8 ft. in length so as to make it suitable for peeling in machines installed in their factory to be used in or in relation to the manufacture of the finished goods. It is the case of the Department that the appellant had wrongly availed the CENVAT credit on the Additional Duty of Customs (CVD) before receipt of the said inputs namely, wooden logs and timbers, in the factory, and had accordingly contravened the provisions of Rules 4(1) and 3(4) of the CENVAT Credit Rules, 2004. Consequently, the CENVAT credit of Rs. 1,72,88,203.00 on the CVD paid as reflected in the Bills of Entry during the period from April, 2006 to Septembe....
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....erefore, the entire requirement had to be fulfilled only by way of importation. He has submitted that the imported logs are provided with an identification number on each log, its size etc., are mentioned in the packing list of foreign supplier. After the goods are unloaded from the ship, the same are surveyed by the independent surveyors and during such survey, they put their own log number on each log, and the said numbers are reflected in the Survey Reports. The Survey Report mentioned both the log numbers given by the surveyor and the corresponding log numbers provided by the foreign supplier. Each of the imported logs is normally of a length of about 35 ft. to 40 ft. and the weight of each of the logs varied from 2000 Kgs. to 10000 Kgs. approximately. 6. The ld. Sr. Advocate further submits that the factory premises of the appellant is situated in an area of merely 3.95 acres, which is almost fully equipped by various plants, machinery and equipments for its manufacturing activities carried on at the factory and there is hardly any space at the factory for storage and handling of such large sized imported logs and any such large quantities. Besides, the factory is not ....
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.... log-yard, serial number and date on the Gate Register are endorsed so as to maintain proper correlation. The said blocks are later used in the manufacture of final products namely, veneers and plywood. 8. Learned Advocate contends that there is a systematic procedure of keeping account of each of the logs, and when it is converted into blocks, the same are also duly accounted for in the relevant registers maintained with the log-yard and also on the date of receipt at the factory premises. The only discrepancy that has been pointed out by the Department is that the CENVAT credit on the respective bills of entry ought to have been availed in the books of accounts, after receipt of the inputs in the form of blocks in their factory, but not on the date of receipt of the bills of entry without receiving inputs in their registered factory. 9. Learned Senior Advocate for the appellant has advanced a three-fold argument. At the first instance, he has submitted that the log-yard which is situated at about 12 Kms. away from the factory premises, could be treated as a factory for the purpose of CENVAT credit, inasmuch as certain pre-manufacturing processes were carried out i....
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....e learned Counsel for the appellant submits that since in their case, the inputs were sent directly from the place of importation to the log-yard for the process of cutting and curing, there was no irregularity in availing the CENVAT credit on the said inputs at their factory. Further, he has submitted that the whole process from the stage of importing the raw logs in their log-yard upto its receipt in the factory, had been duly accounted for and there is not a single whisper or allegation that all these inputs were cleared without payment of duty by the appellant. Hence, availing of CENVAT credit on the bill of entry at the factory at the same time when the inputs were received at their log-yard, cannot be considered as irregular and violative of the provisions of Rules 4(1) and 3(4) of the Cenvat Credit Rules. In support of his contention on the applicability of Rule 4(5), the learned Counsel has relied on the following judgments :- (a) 2007 (220) E.L.T. 471 (Tri.-Mum.) (Indorama Textiles Ltd. v. CCE) This judgment of the Hon'ble Tribunal was approved by the Hon'ble Bombay High Court in 2010 (260....
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.... partly processed logs from the log-yard to the factory, and they did not maintain the bill of entry-wise accounts in their registered factory premises. Also he has submitted that the Gate Register maintained at the factory premises fraudulently shows the receipt of inputs in the factory on the dates of receipt of the log-yard. Further, he has contended that proper accounts were not maintained at the log-yard relating to the said inputs. 14. Learned A.R. has submitted that in view of the specific provisions contained at Rule 4(1) of the CENVAT Credit Rules, 2004, the credit in respect of the inputs may be taken immediately on receipt of the inputs in the factory and the said provisions should be read in its context and literal interpretation of the said Rule is warranted in view of the ratio of the Hon'ble Supreme Court in the case of Trutuf Safety Glass Industries v. Commissioner of Sales Tax, UP [2007 (215) E.L.T. 14 (S.C.)] and in the case of Baidyanath Ayurved Bhawan (P) Ltd. v. Excise Commissioner, UP [1999 (110) E.L.T. 363 (S.C.)]. It is also his submission that CENVAT credit availed in contravention of the provisions of the CENVAT Credit Rules leads to penal conseque....
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....reated as premises of a job worker under Rule 4(5) of the CENVAT Credit Rules, 2004, as the appellant cannot be treated as a job worker to themselves. Besides, the prescribed procedure for job work had neither been followed in their case, nor the processed inputs were received in the factory within the stipulated period of 180 days. Since the CENVAT credit on the inputs were not admissible to them, the offences under Rule 8 of the Central Excise Rules were automatic. Also he has submitted that the element of suppression and contravention of the Rules with intent to evade duty had been established being dealt with at length by the adjudicating authority. 15. In his rejoinder, learned Senior Advocate for the appellant has submitted that this is not correct to say that the inputs were first received by them in the log-yard and later, transferred after carrying out the process of curing and cutting, and they had not been duly accounted in both these places. He has categorically submitted that the receipt of inputs in the log-yard are duly accounted for and after carrying out the processes of curing and cutting, necessary identification marks as mentioned by him earlier, are pro....
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....he premises of the provider of output service." 17. A plain reading of the said Rule reveals that CENVAT credit in respect of inputs may be taken immediately on receipt of the inputs in the factory of the manufacturer, whereas in the present case, the credit was taken by the appellant on the date of receipt of Bills of entry in their registered factory premises. It is the contention of the appellant that the log-yard where the inputs are initially received though situated at a distance of 12 Km. away from the registered factory premises, ought to be considered as an extension of their factory, since the log-yard belongs to them and is exclusively meant for storage of the inputs and also used in carrying out certain manufacturing processes. Advancing reasons for the necessity of such additional premises (log-yard), the appellant has submitted that the existing registered factory premises become inadequate for storage of large quantity of inputs, and also in carrying out the process of curing and cutting which are part of manufacturing process. We find that there is no dispute on these facts. In this scenario, reading the definition of 'factory' laid down at Section 2(e) of t....
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....factory premises i.e. in mines for manufacture of intermediate products, which in turn, are used in or in relation to the manufacture of the finished goods in the factory premises. The implication of these judgements more or less are that the mines which are situated outside the Registered factory are considered as an extension of factory. Otherwise the inputs used outside the Registered factory premises could not have been said to be eligible to Cenvat credit if the definition of 'factory' as argued by the Revenue is accepted. 19. In the present case, we find that the log wood imported by the appellant are initially subjected to the process of curing and cutting in their own premises, i.e. at the log-yard, dedicated only for the said purpose, later the processed inputs are transferred to the registered factory premises for use in or in relation to the manufacture of the finished goods. In the extreme case accepting for a while the plea of the Revenue that the factory referred in the rules is only a registered factory even then, in the facts and circumstances of the present case, at best it could be a procedural aberration of not getting the log-yard registered as factory u....