TaxTMI 
TaxTMI 
2018 (12) TMI 845
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....appellants would not be entitled to avail credit on the same. Accordingly, proceedings had been initiated proposing recovery of credit availed vide show cause notices dated 29.2.1996 and 3.3.1997. These proceedings were dropped by the adjudicating authority vide adjudication orders No. 15/1997 dated 26.5.1997 and No. 19/97 dated 30.6.1997 respectively. The said adjudication orders were reviewed and appeals filed before the Tribunal namely Appeal No. E/1219/1998 and Appeal No. E/1379/1998, which were disposed of vide Final Order Nos. 301 & 302/2003 dated 2.5.2003, inter alia holding that the sugar plant being exported in CKD condition as such was never assembled; that the finding relates to manner of utilization of credit and not the eligibility to take MODVAT credit; that bought out items cannot be considered as eligible input or capital goods for availing MODVAT credit and sugar plant machinery installation has to be considered as immovable property and not goods. Based on these conclusions, the Tribunal set aside the impugned order and remanded the matter to the original authority with the following directions:- "8. In view of our above discussion, we are of the co....
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.... that the appellant-assessee did not pay any excise duty on the sugar plant set up by it in Vietnam and therefore, there cannot be any question of availing any MODVAT credit. 27. For the aforestated reasons as well as for the reasons stated by the Tribunal in the impugned order, we are of the view that the Tribunal had come to a correct conclusion and the conclusion so arrived at by the Tribunal does not require any interference. 28. The appeals are, therefore, dismissed with no order as to costs." 1.3 When the above proceedings were pending before the Hon'ble Supreme Court, twenty other periodical show cause notices were issued for succeeding periods and matters were kept in call book. Pursuant to the aforesaid decision of the Hon'ble Supreme Court, the cases were caused to be adjudicated denovo vide Order-in-Original Nos. 8 & 9/2014 dated 29.4.2014 inter alia confirming the demand in respect of two show cause notices which had been earlier remanded for recomputation by the Tribunal and appealed before the Hon'ble Supreme Court. In respect of the subsequent twenty show cause notices, the amounts proposed to be demanded as irregularly availed MODVAT / CENVAT cr....
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....n settled by Apex Court in the reported decision and both sides having adopted their argument as recorded herein before, our findings and directions on these appeals is same as aforesaid in the two appeals disposed as above. These twenty appeals are also remanded with the directions and observation as above." (Emphasis supplied) 1.5 In denovo adjudication, the Commissioner vide Order Nos. 1 to 22/2017 dated 29.3.2017, inter alia proceeded to examine the applicability of the judgment of the Hon'ble Supreme Court to the subsequent periods and also the argument of the appellant that the applicability of the judgment should be restricted only to the first two show cause notices namely SCN No. 24/1996 and Nil/1997. The adjudicating authority rejected the plea put forward by the appellant that there was substantial change in the statutory definition of input subsequent to the period covered in the judgment delivered by the Hon'ble Supreme Court. It was held that ―regardless of these changes in law or the facts of the case, subsequent to the period considered in the judgment of the Hon'ble Supreme Court, the ratio of the judgment continues to be applicable throughout the entir....
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.... 23,43,163/- 16. 2/008 dt. 4.1.2008 16/2017 dated 29.3.2017 Jan. 2007 to Sep. 2007 E/41449/2017 32,52,886/- 17. 7/2008 dt. 26.9.2008 17/2017 dated 29.3.2017 Oct. 2007 to Jun. 2008 E/41450/2017 1,03,88,552/- 18. 15/2009 dt. 27.7.2009 18/2017 dated 29.3.2017 July 2008 to March 2009 E/41451/2017 17,03,347/- 19. 12/2010 dt. 26.3.2010 19/2017 dated 29.3.2017 April 2009 to Dec. 2009 E/41452/2017 21,53,426/- 20. 3/2011 dt. 14.1.2011 20/2017 dated 29.3.2017 Jan. 2010 to Dec. 2010 E/41453/2017 16,67,800/- 21. 3/2012 dt. 2.2.2012 21/2017 dated 29.3.2017 Jan. 2010 to Dec. 2011 E/41454/2017 12,34,437/- 22. 3/2013 dt. 24.1.2013 22/2017 dated 29.3.2017 Jan. 2012 to Nov. 2012 E/41455/2017 12,21,717/- 1.6 Nine appeals No. E/41435 to 41443/2017 arising out of the same impugned order (Sl. No. 1 and 3 to 10 in above table) have already been disposed by common order dated 41661 to 41669/2018 dated 31.5.2018, by this Tribunal, inter alia, dismissing the appeals on the ground that the issue involved therein had been agitated right upto the Hon'ble Supreme Court and had attaine....
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.... "10 (iii) I also find that the Respondent (Department) has placed reliance on the decision of the Hon‟ble Apex Court in the Appellant‟s own case (2013 (295) ELT 353 (SC)), which has been vehemently objected to by the Appellant. In this regard, I find that the said decision rendered for the period prior to the amendment made in the definition of inputs effective from 01.03.2011 cannot help the department‟s side for the impugned period. The Apex Court therein examined the issue in the light of the requirement in the definition of inputs during the period prior to 01.03.2011 that the same be used inside the factory of manufacture to qualify for CENVAT credit. ...... However, the impugned period has witnessed substantial change in the definition of inputs and hence the said Apex Court‟s decision against the same Appellant cannot be cited in revenue‟s favour." (v) When the erstwhile Central Excise Rules were replaced with new set of Rules from 2000, a separate set of Rules were issued under CENVAT Credit scheme as CENVAT Credit Rules, 2000. Rule 16A of the new Rules provided for credit of duty paid on the goods brought into the factory not only for the ....
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....ctory for being re-made, refined, reconditioned or any other reason....3. Accordingly, the Board has decided that the word ―return" in Rule 16 referred above, need not be interpreted strictly. Receipt of duty paid goods in the factory of manufacturer for the purpose specified in said rule may be allowed even in respect of goods not manufactured by them..." The word returned was emphasized not to be strictly interpreted and receipt of duty paid goods paid may be allowed even in respect of goods not manufactured by them. 3 01.07.2001 Central Excise Rules, 2002 16.Credit of duty on goods brought to the factory. - (1) Where any goods on which duty had been paid at the time of removal thereof are brought to any factory for being re-made, refined, re-conditioned or for any other reason, the assesse shall state the particulars of such receipt in his records and shall be entitled to take CENVAT credit of the duty paid as if such goods are received as inputs under the CENVAT Credit Rules, 2002 and utilise this credit according to the said rules. (2) If the process to which the goods are subjected before being removed does not amount to manufacture, the manufacturer s....
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.... restricted its decision in their final order dated 21.9.2015 only to the cases which were covered by the Hon'ble Supreme Court's decision as the remaining cases which do not pertain to the same statutory and legal provisions. However, in these cases, there has definitely been a change of definition and scope of inputs and Rule 16. It is therefore submitted that the decision of the Tribunal in respect of the remaining present cases with the same directions as was done for proceedings pertaining to earlier periods is not in order which is per incuriam. 3.1 The ld. AR Shri A. Cletus appeared and argued on behalf of the Department. He submitted that the issue whether the appellants are eligible for CENVAT credit on the bought out items was already decided by the Hon'ble Supreme Court in the appellant's own case as reported in 2013 (295) ELT 353 (SC). In paras 24 and 25 of the said decision, the Hon'ble Supreme Court had observed that the finished products of the appellant is sugar plant. The sugar plant having been installed in Vietnam, the final products have not suffered duty and therefore the appellants are not eligible for CENVAT credit on the bought out items which are not use....
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..../ facts in the case before the Hon'ble Supreme Court is still in vogue in these appeals and therefore the credit is not eligible. He also adverted to the Tribunal's Final Order No. 41661 to 41669/2018 dated 31.5.2018, wherein the Tribunal had disposed nine appeals of the same appellant for the earlier periods and submitted that the Tribunal had therein observed that the facts being the same, the decision of the Hon'ble Supreme Court is applicable. He therefore prayed that the appeals may be dismissed. 4. Heard both sides and have gone through the case records. 5.1 The ld. AR has drawn attention to the fact that the identical dispute for earlier periods had been in litigation and had culminated in the judgment of the Hon'ble Supreme Court in the appellant's own case as reported in 2013 (295) ELT 353 (SC), wherein inter alia, the Hon'ble Apex Court had held that input credit would not be available on machinery bought out by the assessee which was not even unpacked or tested and exported in exact condition along with machinery manufactured by assessee. We first intend to examine this contention. The aforesaid decision of the Hon'ble Supreme Court reported in 2013 (295) ELT 353 (....
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....bunal in Final Order No. 301 and 302/2003 dated 2.5.2003 (as reported in 2003 (161) ELT 585 (Tri. Chennai). In the denovo proceedings, the adjudicating authority had not only caused denovo adjudication of the aforesaid two show cause notices that had been earlier remanded by the Tribunal for recomputation but also took up the original adjudication of subsequent 20 show cause notices on the same issue for subsequent periods which were kept in the call book. The combined adjudication orders No. 8 & 9/2014 dated 29.4.2014 was once again appealed and as discussed supra, the Tribunal vide Final Order No. 41389 to 41440/2015 dated 21.9.2015 remanded the matter relating to show cause notices dated 29.3.1996 and 3.3.1997 with certain directions and in respect of the remaining 20 notices also, the Tribunal remanded the matters for denovo adjudication. Out of these 22 impugned orders (Order-in-Original No. 1 to 22/2017 dated 29.3.2017), appeals relating to Order-in-Original Nos. 1, 2 and 4 to 10/2017, also dated 29.3.2017 were separately taken up for hearing and vide Final Order Nos. 41661 to 41669/2018 dated 31.5.2018 were disposed. The dispute covered in these final orders was for the peri....
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....again gone into this issue and inter alia held that the matter has reached finality by the decision of the Hon‟ble Supreme Court. Judicial propriety requires us to follow the Hon‟ble Apex Court view in the appellant‟s own case as reported in 2013 (295) ELT 353 (SC). Such conduct is enjoined on us by the principle of „stare decisis‟ namely, „to stand for things decided‟. Hence as a lower court, we are definitely required to follow the precedent on an issue, when it is already decided by Apex Court, as it has been in this case." 5.4 The present appeals which are pending decision herein, are Appeal Nos. E/41444 to 41455/2017 arising out of the remaining Orders in Original No. 11/2017 to 22/2017 dated 29.3.2017 covering the periods September 2002 to November 2012. 5.5 On a closer scrutiny, we find that the earlier Tribunal's Final Orders No. 301 & 302/2003 dated 2.5.2003 covered the appeals involving the two show cause notices dated 29.2.1996 and 3.3.1997 and which had gone right upto the Hon'ble Supreme Court involved the definition of inputs under Rule 57A of the erstwhile Central Excise Rules 1944, with effect from 31.3.1997. For immed....
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....ging materials is being availed of for packaging of any final products; (iii) Packaging materials the cost of which is not included or had not been included during the preceding financial year in the assessable value of the final products under section 4 of the Act; (iv) crates and bottles used for aerated waters; (2) Notwithstanding anything contained in sub-rule (1), the Central Government may, by notification in the official Gazette, declare the inputs on which declared duties of excise or additional duty (hereinafter referred to as „ declared duty‟) paid shall be deemed to have been paid at such rate or equivalent to such amount as may be specified in the said notification and allow the credit of such declared duty deemed to have been paid in such manner and subject to such condition as may be specified in the said notification even if the declared inputs are not used directly by the manufacturer of final products declared in the said notification, but are contained in the said final products. Explanation. - For the purposes of this sub0rule, it is clarified that even if the declared inputs are used directly by a manufacturer of f....
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.... products cleared along with the final product, goods used as paint or as packing material, or as fuel, or for generation of electricity or steam used for manufacture of final products or for any other purpose, within the factory of production, and also includes lubricating oils, greases, cutting oils and coolants. Explanation:- The high speed diesel oil or motor spirit, commonly known as petrol, shall not be treated as an input for any purpose whatsoever". (Emphasis added) We thus find that w.e.f. 31.3.2000, CENVAT scheme brought about a clear and distinct departure in the definition of inputs. Earlier, inter alia, inputs were required to be ―goods used in or in relation to the manufacture of the final products, whether directly or indirectly and whether contained in final product or not". However, the new definition w.e.f. 31.3.2000 included within the scope of inputs, accessories of final products cleared along with the final products. (b) With the introduction of CENVAT Credit Rules, 2001, w.e.f. 1.6.2001, the same definition of ‗inputs' which were brought about in 31.3.2000 above was incorporated under Rule 2(f) of CENVAT Credit Rules, 2001 ....
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....apital goods which are further used in the factory of the manufacturer [but shall not include cement, angles, channels, centrally twisted deform bar (CTD) or Thermo Mechanically Treated bar (TMT) and other items used for construction of factory shed, building or laying of foundation or making of structures for support of capital goods". The above wordings was inserted vide Notification No.16/2009-CE(NT) dated 7.7.2009. (Emphasis Supplied) As is evident, w.e.f. 10.9.2004, not just accessories, but even other consumables like greases, cutting oils, lubricating oil, coolants etc. of final products cleared along with the final products, and further goods used as paint or as packing material or as fuel etc. were also brought within the ambit of ‗inputs'. (e) The definition of ‗inputs' continued as above till its substitution with effect from 1.7.2011 when Rule 2(k) was further substituted as under:- "input" means - (i) all goods used in the factory by the manufacturer of the final product; or (ii) any goods including accessories, cleared along with the final product, the value of which is included in the value of the final p....
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....ra 5.5 supra underwent various evolutions. After introduction of CENVAT Credit Rules, 2001, ―capital goods" was defined as under:- (b) ―capital goods" means,- (i) all goods falling under Chapter 82, chapter 84, Chapter 85, Chapter 90, heading No.68.02 and sub-heading No.6801.10 of the First Schedule to the Tariff Act; (ii) components, spares and accessories of the goods specified at (i) above; (iii) moulds and dies; (iv) refractories and refractory materials ; (v) tubes and pipes and fittings thereof; (vi) pollution control equipment; and (vii) storage tank, used in the factory of the manufacturer of the final products, but does not include any equipment or appliance used in an office;" (g) So also, after the introduction of CENVAT Credit Rules, 2002 vide Notification No.5/2002-CE (NT) dated 01.03.2002, the definition of ―capital goods" tweaked as under:- (b) ―capital goods" means,- (i) all goods falling under Chapter 82, chapter 84, Chapter 85, Chapter 90, heading No.68.02 and sub-heading No.6801.10 of the First Schedule to the Tariff Act; (ii) pol....
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.... the definition under erstwhile Rule 57A as on 31.3.1997. 5.9 Further, in all these definitions, during the impugned period, post 1.6.2001, there is an inclusive part namely that the ―inputs ....... includes lubricating oil, grease, coolants etc. accessories of the final products cleared along with the final product". As we have found above, the evolving definitions of inputs with effect from 1.4.2001 became broad based enough to include not only all goods used in the factory but also any goods including accessories etc. provided the value thereof is included in the value of the final product. In our view, the word ‗includes' should be interpreted as being used to enlarge the meaning of preceding words. The examples of ‗inputs', like accessories, coolants, lubricating oil etc. given immediately after the word ‗includes' is only to give an idea of the genre and type of goods that could be brought within the ambit of such inclusivity. The maxim ‗ejusdem juris' - of the same kind or nature, will apply in its full force here. Where ever accessories of the final product are ‗included' within the said definition, it is but a natural corollary that p....
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....s well as an indirect significance depending on the context, see State Wakf Board v. Abdul Aziz (A.I.R. 1968 Madras 79, 81 paragraphs 8 and 10,following and approving Nitai Charan Bagchi v. Suresh Chandra Paul (66 C.W.N. 767), Shyam Lal v. M. Shayamlal (A.I.R. 1933 All. 649) and 76 Corpus Juris Secundum 621. Assuming that the investments in shares and in lands do not form part of the undertakings but are different subject matters, even then these would be brought within the purview of the vesting by reason of the above expressions. In this connection reference may be made to 76 Corpus Juris Secundum at pages 620 and 621 where it is stated that the term "relate"‟ is also defined as meaning to bring into association or connection with. It has been clearly mentioned that "relating to" has been held to be equivalent to or synonymous with as to "concerning with" and "pertaining to". The expression "pertaining to" is an expression of expansion and not of contraction. xxxx ....
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....other bought out duty paid items brought into the factory; thereafter both categories of goods cleared and agglomerated together for the purpose of export. There is also no allegation that the combined value of both manufactured as well as bought out items have not been included in the export price declared by the appellants. There also appears to be no dispute that the assemblage of goods at the point of export was an omnium gatherum gathered of both self-manufactured and bought out items, all duty paid by the respective manufacturers, which was intended to constitute a complete sugar plant in Vietnam. The show cause notice dated 29.3.1996 at para 2.0, also narrates that the disputed bought out goods were "used only for receipt and export, as such". 5.13 Obviously, the appellants have transported these machineries, both those manufactured by them and the other bought out inputs / goods removed as such, in various consignments for export purposes and eventual erection of a sugar plant in Vietnam. Having analyzed and understood the changed definitions of ―input" which were in force during the period impugned in the present appeals as also the settled interpretation of the w....
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.... (emphasis added). (b) BOARD‟S CLARIFICATION VIDE CIRCULAR NO. 607/44/2001-CX. DATED 13.12.2001 There were representations from the Trade that they are no longer allowed to bring in duty paid goods of other manufacturers, the Board clarified vide Circular No. 607/44/2001-CX. Dated 13.12.2001, that (para2 & 3), "2....The said Rule 16 provides for return of duty paid duty paid goods to the factory for being re-made, refined, reconditioned or any other reason. ..3. Accordingly, the Board has decided that the word "return" in Rule 16 referred above, need not be interpreted strictly. Receipt of duty paid goods in the factory of manufacturer for the purpose specified in said rule may be allowed even in respect of goods not manufactured by them ..." (c) RULE 16 OF CENTRAL EXCISE RULES, 2002 16. Credit of duty on goods brought to the factory. - (1) Where any goods on which duty had been paid at the time of removal thereof are brought to any factory for being re-made, refined, re-conditioned or for any other reason, the assessee shall state the particulars of such receipt in his records and shall be entitled to take CENVAT credit of t....
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....ons. We would like to examine some of these decisions as under:- (a) In the case of M/s. Jayaswal Neco Industries Ltd. Vs. Commissioner of Central Excise, Nagpur - 2016 (44) STR 116 (Tri. - Mum.), it had been observed as under:- "3. ......... He further submits that even assuming the activity of the appellant is not of manufacture, in such case clearance of the goods in question shall be treated as clearance of inputs as such. In that event whatever Cenvat credit was availed is required to be paid on the removal of input as such. In the present case on the quantum of domestic clearance the excise duty was paid to the tune of Rs. 58,24,273/- as against the Cenvat credit availed on the same goods amounting to Rs. 57,12,225/-. For this reason also whatever credit was availed stand paid back, hence no further recovery can be made. He submits that as regard the quantum of goods cleared for export, Cenvat credit involved is Rs. 87,53,287/. In this case even though activity does not amount to manufacture, no duty is required to be paid on the export of goods, hence, the Cenvat credit is admissible as goods have been exported...... xxxx &n....
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....turing process in terms of Section 2(F)Central Excise Act, assesse is required to pay duty on the transaction value, and in other case where the goods does not undergo process which amounts to manufacture, then excise duty equal to Cenvat credit availed on such goods should be paid. In terms of Rule 16, if the condition of payment as discussed above is complied with the duty paid finished goods shall be treated as deemed input and Cenvat credit is admissible. In the present case as per the claim of the appellant which was not disputed by the lower authorities that appellant have paid the excise duty at the time of sale of such imported plastic closure. It is found that appellant have paid duty equivalent to the Cenvat credit availed, no further demand would exist. However if there is any shortfall only that much amount shall be recoverable. Ld. Counsel submitted various statements to establish that excise duty on the bought out imported goods was paid at the time of sale of such goods. On going through various judgments relied upon by the Ld. Counsel, I find that it is consistently held that even though the credit was wrongly taken on any goods if the same was paid back at the time....
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....d 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. Explanation. - The amount paid under this sub-rule shall be allowed as Cenvat credit as if it was a duty paid by the manufacturer who removes the goods." 8. The above provision makes it clear that manufacturer can take credit of duty paid on the goods by treating them as inputs. It is seen from the above rule that if goods are brought for "any other reason" also, the manufacturer is entitled to take credit as if the goods are inputs. The learned counsel for appellant submitted that the appellant unit had railway sliding tracks and this is the reason that the cement was brought from Mattampally unit to the appellant unit and marked with ISI mark and dispatched to the buyer. The contention of Revenue is that the goods being cement/finished product, the credit is not admi....
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....pheld the view taken by the Tribunal that pressure and non-pressure parts removed in several consignments should be regarded as boiler in an incomplete form and classified as boiler. 8.2 Even more recently, the Apex Court on 7.2.2018, in the case of Commissioner of Central Excise Vs. BHEL - 2018 (10) GSTL 3 (SC) affirmed the view taken by the Tribunal in 2009 (247) ELT 263 (Tri.Chen.) that clearance of boilers in unassembled form had the essential characteristics of the boiler itself and should be classified as boiler cleared in an unassembled form. 8.3 The ratio laid down by the Hon'ble Supreme Court in their subsequent judgment in Thermax Babcock & Wilcox Ltd. (supra), has been followed by the Tribunal in Thermax Ltd. Vs. Commissioner of Central Excise, Pune - 2016 (337) E|LT 456 (Tri. Mum.) wherein it has been held that bought out items used in erection of boilers at customer's site are inputs and cannot be distinguished from inputs used in manufacture of components within the factory, as both have gone into manufacture of final product. The relevant portion of the order is as follows:- "5. On behalf of the appellant, it was also contended, that the appellant is, ....
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....ds manufactured or produced from input, or using input service‟ it was contended that applicability of Rule 3 of Cenvat Credit Rules, 2004 fails in the case of the appellant. Reliance was placed upon the judgment of the Hon‟ble Supreme Court in KCP Ltd. v. Commissioner of Central Excise [2013 (195) E.L.T. 353 (S.C.)] which held that the item under export not having been manufactured in the factory of assessee, the condition for availing Modvat credit does not arise. Similar judgments were also relied upon by the learned Authorised Representative. It was also pointed out to us that the Hon‟ble Supreme Court in Thermax Babcock & Wilcox Ltd. v. Commissioner of Central Excise, Pune cited by the appellant-assessee has no precedential value as that had been disposed off by noting that consideration of eligibility for Cenvat credit would have been merely an academic exercise in the absence of duty demand being invoked in the show cause notice. 8. The dispute relates to availing of Cenvat credit on „bought-out items‟ claimed to have been used in the erection of boilers at the site of the purchasers for the period between 1st July, 2006 and 4th January....
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....ation at Special Economic Zone or at the site of the purchasers abroad. In these circumstances there cannot be any conclusion other than that the manufacture of boiler in its final form is rendered at the factory of manufacturer and the clearance of boiler is, for all practical purposes, effected from the said factory gate. Since the boiler is the final product of the manufacturer, every component within it and every input that goes into the component manufactured in the factory would be an input in so far as Cenvat Credit Rules, 2004 is concerned. It is certainly not a tenable claim that Revenue can distinguish between an input of an input and an input itself when there is no dispute that the components manufactured from inputs and the components that are inputs have gone into the final products; nor can Revenue presume to enter the commercial arena and dictate the manufacturing policy of an industry. In the context of the decision of the Tribunal in the appellant‟s own case cited supra which we respectfully follow, we find that the „bought-out‟ items are also inputs for the purpose of taking credit in accordance with the definition in Rule 2(k)(i) as it stood th....
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....m part of the value of the final product should be eligible for Cenvat credit under Rule 2(l) of the Cenvat Credit Rules, 2004. This judgment also does not support the case of the department. In the instant case there is no dispute about the fact that the cost of the bought out parts have been included in the value of the machinery which has been ultimately exported and forms very much part of the machinery. Further, whatever credit has been taken, the duty liability has been discharged on a value inclusive of such bought out parts and on that ground also the demand for reversal of the Cenvat credit does not sustain. It should also be observed herein that the transaction in the instant case is that of exports and it is the avowed policy of the Government to promote export by relieving the burden of taxes on the products exported and also on the products consumed in the manufacture of the goods exported. Therefore, the rules whether they be Cenvat Credit Rules or Central Excise Rules have to be read harmoniously to give effect to this objective. Thus in the instant case apart from the fact that the appellant is rightly entitled to the Cenvat credit on the goods exported, even from a....