TaxTMI 
TaxTMI 
2007 (3) TMI 86
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....uent investigations, the department found that they had availed Cenvat credit on the components procured from vendors and exported in the above manner from KDP Plant during the period 7-6-2000 to 31-10-2002. It appeared to the department that the entire activity carried out at KDP Plant was merely a trading activity and, therefore, the components received there from vendors and subsequently exported did not qualify to be 'inputs' for the purpose of Cenvat credit. On this basis, three show-cause notices were issued covering the periods 7-6-2000 to 31-3-2001, 1-4-2001 to 31-12-2001 and 1-1-2002 to 31-10-2002 for recovering from the appellants duty amounts equivalent to the Cenvat credits taken on the components procured from vendors and exported from KDP Plant during the respective periods. These notices invoked the relevant rules relating to Cenvat credit, which were in force during the respective periods. They also invoked the relevant provisions for levy of interest on the duty demanded as also for imposition of penalty. The proposals in the SCNs were contested by the party. In adjudication of the dispute, the original authority passed three separate orders confirming the demands ....
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....489/55/99-CX dated 13-10-99. Components received into KDP Plant directly from vendors were also capable of being used in the local manufacture of cars in the factory. Similarly, components brought into the factory for local manufacture of cars were capable of being used in KDP Plant for exports. In other words, the two categories of components were interchangeable. For this reason also, the components directly procured from vendors for export purpose should be considered to have been used in or in relation to manufacture of cars. In this connection, learned counsel referred to certain statements prepared by the appellant, contained in Vol. I of their Paper Book. These included statements of "material transferred from KDP Plant to Main Plant (factory)" during the periods 7-6-2000 to 31-3-2001 and 1-4-2001 to 31-12- 2001 and "lists of parts received at the Main Plant" during the said periods. The endeavour of learned counsel was to show that some of the auto components received in KDP Plant from the market were diverted therefrom to the factory and vice versa. Ld. Counsel also sought to demonstrate that the activity under taken by his clients at KDP Plant was a part of manufacture, b....
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....n CIT Madras v. Urmila Ramesh - AIR 1998 SC 2640, ld. counsel urged that the legal fiction should be given full effect to. In other words, the auto components procured into KDP Plant and removed as such for export should be "deemed to have been manufactured" at the said "plant" and, accordingly, reversal of Cenvat credit taken on such components should be dispensed with. In this connection, it was also pointed out by learned counsel that KDP Plant was a part of the registered factory premises during most part of the period of dispute. He submitted that any activity undertaken in such premises was liable to be considered as part of manufacture of the final product. 5. Ld. SDR, on the other hand, referred to Order-in-Original No.12/2002 passed by the Asst. Commissioner and restated the facts of the case as spelt out therein. The case of the Revenue, as made out by her, is that only trading activity was undertaken at KDP Plant and, therefore, the auto components received there from vendors could, by no stretch of imagination, be considered to have been used in the manufacture of cars. Such components were removed as such from KDP Plant for export to South Africa and Mexico. Even th....
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...., in this case, there was no such removal as KDP Plant was not 'factory'. SDR also referred to the Tribunal's Larger Bench decision in the case of Eicher Tractors v. CCE, Jaipur, 2005 (189) E.L.T. 131 (Tri.-LB), wherein it had been held that, where inputs on which Cenvat credit had been availed were cleared as such from factory, the credit should be reversed. 6. In his rejoinder, learned counsel pointed out that the Tribunal's decision in the case of K.C.P. Ltd. had been stayed by the Supreme Court in Civil Appeal No. 5509-5510 of 2003 vide 2004 (163) E.L.T. A41 (S.C.) and 2004 (168) E.L.T. A121 (S.C.). 7.1 After giving careful consideration to the submissions, we find that there are certain crucial facts which are not in dispute. The appellants were main tai what was called "KDP Plant" for the purpose of receiving bought-out auto components (coated with rust-proof oil) and random-testing, sequencing and packing/palleting the same for the purpose of export under Rule 13 of the erstwhile Central Excise Rules, 1944 during the period of currency of these rules and under equivalent provisions for subsequent periods. These components were procured from vendors against specific pur....
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....", it should also be shown that manufacture of any excisable goods or any process connected with such manufacture is carried on in such premises or in any part thereof vide Section 2(e) of the Central Excise Act which defines "factory" as under: "factory" means any premises, including the precincts thereof, wherein or in any part of which excisable goods other than salt are manufactured, or wherein or in any part of which any manufacturing process connected with the production of these goods is being carried or is ordinarily carried on As per Section 2(f) of the Act, "manufacture" also include "any process incidental or ancillary to the completion of a manufactured product". The appellants manufactured cars in their factory. They have not shown that the activity under taken at KDP Plant was a process connected with or incidental or ancillary to the production of cars in the factory. The quality-checking, sequencing, packing/palleting etc. of bought-out components, done at KDP Plant, might have been preparatory or ancillary to, or otherwise connected with, manufacture of cars abroad by the appellants and the cars so manufactured abroad might have been of a model identical to t....
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....bought-out components exported from KDP Plant. For the same reason, the Board's circulars relied on by ld. counsel would also not be of any support to the appellants. 7.5 It appears from the records that, in reply to a representation from the appellants, the Board in a letter dated 30-1-2002 clarified that, when the goods procured solely for the purpose of export and were not intended for use in the manufacture of final products, Cenvat credit was not available The view taken by the Board, not challenged by the appellants, is binding on them 7.6 Any input for Cenvat credit should be brought into factory for being used in, or in relation to, manufacture of final product. If, for any reason, it cannot be so used after having been brought into factory, it may be removed as such for home consumption on payment of duty or may be removed for export under bond without payment of duty. On the other hand, if any goods, usable as input in the manufacture of final product in factory, is purchased and exported as such by the manufacturer of final product without bringing it into the factory, it is only a commodity of trade and not an "input" at all for purposes of Cenvat scheme and there....