TaxTMI 
TaxTMI 
2019 (1) TMI 1381
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.... 1,03,52,230/- 1,03,52,230/- Shri J M Singhvi 2,15,22,915/- Shri D.N. Patel 61,27,643/- Shri Ashok Patel 1,28,07,215/- Order-in-Original No. AHM-CEX-003-commr-038-13 dated 28.11.2013: Cenvat Credit disallowed Duty demand Penalty Indrad/Mehsana SSTP Plant NA NA 26,40,000/- Chhatral SP NA NA 33,34,000/- Jamnagar NA 5,79,34,667/- 5,79,34,667/- Kutch 6,71,230/- 2,32,22,735/- 2,38,93,965/- Dehgam NA NA 25,89,000/- Shri J M Singhvi 2,05,50,000/- Shri D.N. Patel 33,34,000/- 2. The brief facts of the case are that Appellant M/s Ratnamani Metals & Tubes Ltd are engaged in manufacture of MS/ CS Saw Pipes, Spiral SAW Pipes etc. and SS Seamless/Welded Pipes & Tubes falling under chapter 73 of the CETA, 1985. They are having central excise registered manufacturing facilities as under: 1. Chattral - Saw Pipes (SP) Divison 2. Inrad/ Mehsana - Stainless Steel Tubes & Pipe (SSTP) Division 3. Bhimasar, Kutch - All types of Pipes and Gunniting 4. Jamnagar Mobile Plant - M....
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....pes were manufactured by Jamnagar Division on Job work basis for and cleared by Jamnagar Mobile Plant to GWSSB. The said plant was established temporarily to execute three purchase orders of GWSSB regarding supply of Gunnetted pipes under Asian Development Project. Since the final products were exempted from payment of duty under Notification No. 108/95 - CE dated 28.08.1995, they made an application before the Assistant Commissioner for procurement of raw material without payment of duty which was rejected. Since the Jamnagar Unit was not in a position to utilize the credit of raw materials, the Indrad SSTP Division and Chhatral SP Division were allotted the work orders and the said two divisions made application to the jurisdictional Commissioner to clear gunetted pipes from Jamnagar Mobile Plant to GWSSB without disclosing that earlier they had informed to AC, Jamangar having jurisdiction over Jamnagar Plant for procurement of goods without payment of duty and to fit into the scheme, the movement of raw material was shown from these two divisions to Jamnagar Mobile Plant, even if the raw material had not been received by them and was directly consigned to Jamnagar Mobile Plant. ....
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....rther penalty was also proposed under Rule 25 and Section 11AC. It was also proposed to impose penalty upon Director Shri J.M.Singhvi, GM (Operations) Shri D.N. Patel and Deputy Manager Shri Ashok Patel. The adjudicating authority confirmed the demands as proposed and also imposed penalty as stated in foregoing Para. 4. One more Show Cause Notice No. V.73/AR-Gnd/Commr/115/2010 dated 28.04.2010 came to be issued to the aforesaid divisions proposing demand of cenvat of Rs. 6,71,230/- against Kutch Division on the ground that the credit has been wrongly taken as the raw material was used at SP division and Kutch Division did not undertake any activity. Central Excise duty of Rs. 2,32,22,735/- was demanded from Kutch Division on the ground that the goods covered by Work Order No. 465 Lot 5 was manufactured by Kutch Division but the same were cleared under invoices of SP Division. Further that Export goods covered under Work Order No. 210,216 and 207 were though manufactured by Kutch Division but were cleared on invoices of SSTP Division; Central Excise duty of Rs. 5,79,34,667/- was demanded from Kutch division on the ground that the pipes covered under Work Order no. 465 (Lot 8) wer....
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....wherefrom the final products would be supplied directly to GWSSB against invoice to be issued by Chhatral and Indrad Units. It was also informed the manners in which Job work challans would be raised by Indrad and Chhatral Units as well as the point in time by the said two units on the basis of challans, the manner of accounting of finished goods in Daily Stock account. That the Assistant Commissioner (Technical) initially objected to this procedure on the ground that the entire processing will be done by the another unit of the company since the units at Chhatral was neither receiving raw material nor the finished goods. That in response to same they furnished all the information as required under trade Notice No. 36/2003 and the permission was granted to them on 27.05.2005 for Chhatral unit and on 20.05.2005 for Indrad unit. In accordance with these permissions, the job work was got done. He submits that in case of job work of Chhatral Unit in relation to Work order No. 465 (Lot 5) from Kutch and Dehgam Units, the pipes manufactured by them on jobwork basis were received back by them and were cleared for gunniting to another job worker namely Shreeji Constructions, Kalawadas as p....
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.... Vadodara 2015 (327) ELT 531 (TRI), CCE, Pondicherry Vs. Catterpillar India Pvt. Ltd. 2013 (297) ELT 8 (Mad.) as affirmed by the Apex Court reported in 2016 (335) ELT A27 (SC) and CCE, Alwar Vs. Kamdhenu Ispat Ltd. 2017 (348) ELT 64 (RAJ) which holds that the benefit of exemption has to be allowed even if the certificates are issued after clearance from factory. He submits that the certificates were filed with the jurisdictional excise authority of Indrad and Chhatral who got the job work done and the same is compliance of the exemption notification. 6. As regard other supplies other than GWSSB, he submits that such supplies were of two types viz. Pipes that were exported and Pipes manufactured for domestic sale. In case of Pipes manufactured for exports under Work Order No. EXP-207, EXP-201, EXP - 216 and EXP 246, he submits that in case of EXP-207 and EXP 210 the raw material were imported under Advance licence and no cenvat credit was availed, In case of Exp-216 and EXP- 246, the credit of Rs. 5,56,372/- and Rs. 2,87,093/- was availed by Indrad unit and the goods were manufactured by Kutch Unit on job work. The adjudicating authority has denied cenvat to M/s Indrad Unit and h....
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....d 6 (2) of Cenvat Credit Rules. The Ld. Counsel submits that they could maintain separate record only of input HR Plate and for other input and input services, they could not maintain the separate record, hence an amount equal to 10% of value has been rightly reversed as per Rule 6 of CCR. In respect of Chhatral unit a credit of Rs. 28,92,922/- pertaining to Work Order No. 456 has been denied on the ground that the raw material was delivered at Kutch plant and the Pipes were also manufactured there, hence the credit availed by Chhatral Unit and since no activity was undertaken by them, the credit is not admissible. He submits that the inputs initially were wrongly sent to Kutch Plant by Essar Steel, however were subsequently delivered at Chhatral and the invoices were rectified. The Kutch Plant started doing Commercial production only in 2005 and there is no manipulation of record and therefore there is no reason to deny the credit. 9. He submits that the adjudicating authority has demanded full duty on goods supplied to GWSSB as well as denying credit to the inputs used in the goods involved which is contrary to the object of the Notification No. 108/95 - CE dated 28.08.1995. H....
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....s of trade notice cannot be considered as continuation of their letter dt. 29.04.2005 and the condition of the Trade Notice was not relaxed. Further SP Division vide their letter dated 04.08.2005 addressed to Assistant Commissioner had sought permission under rule 4 (6) for removal of their final product namely gunnited pipes from job worker premises i.e. M/s Shreeji Construction. That if the department would have known that the inputs shall be sent directly from supplier to job worker, they would not have given permission under rule 4 (6). Therefore the demand of duty from job worker and disallowance of cenvat credit to the so called principal manufacturer namely SP & SSTP Division is not in contradiction to the permission granted under rule 4 (6). In their application filed under rule 4 (6) there was no mention that the inputs shall be directly sent to the job worker. The SP and SSTP Division thus cannot be called as manufacturer. He relies upon CESTAT Order in case of M/s Safelex International Ltd 2014 (302) ELT 65 (TRI). He submits that SP Division and SSTP Division are not entitled for the credit as in terms of Rule 4 (5) (a) the inputs, semi finished goods or the finished goo....
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....vision could not have sent pipes to Kutch without payment of duty. Further at relevant point of time whatever duty would have been paid by Kutch Division would have refunded to them Under Notf. No. 39/2001. As regard demand of cenvat of Rs. 6,71,230/- on same work order No. 9246 from Kutch division he submits that since the Kutch Division have not received the said quantity but the goods were sent directly to SSTP Division, hence cenvat credit of Rs. 1,65,955/- is not available to Kutch. In case of Work Order No. 454 and Work order No. 468 where the credit of Rs. 7,55,570/- and Rs. 80,61,828/- has been denied to SP and SSTP Division respectively he submits that the credit is not admissible as they had maintained separate account of the final product cleared under Nil Rate of duty and hence the 10% reversal under Rule 6 of CCR is not applicable. In case of Work Order No. 456 related to SP Division wherein cenvat of Rs. 28,92,922/- has been denied, he submits that the raw material was delivered at Kutch Division and therefore the credit is not available to Kutch Division. 12. In reference to demand of duty of Rs. 5,16,47,075/- from Jamnagar Mobile Plant in reference to work Order ....
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....agar Mobile Plant for gunniting or to ultimate buyer M/s GWSSB by showing the transportation through GWSSB. He submits that since the Rule 4 (5) (a) was not followed and the inputs, Semi finished goods and final products were not received by SP Division, hence credit is not available. 15. As regard demand of duty of Rs. 1,03,52,230/- form Dehgam Mobile Plant he submits that since the jobwork procedure was not adopted by the SP Division the jobworker i.e the Dehgam Mobile Plant is liable for duty to goods cleared to GWSSB. He submits that similarly cenvat creit of Rs. 70,30,870/- availed by SP Division on raw materials directly cleared to Dehgam Mobile Plant is not available to them since the procedure under Notf. No. 214/86 -CE was not followed by them. 16. In respect of Pipes manufactured for Exports and domestic supplies other than Clearances made under Notf. No. 108/95, the Ld. Special Counsel for the revenue submits as under: "As regard pipes manufactured for purpose of Export under Work order No. EXP-207 and which were cleared for export by SSTP Division the duty of Rs. 29,33,719/- stands demanded from Kutch Division. He submits that the manufacturing took place at Ku....
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....upply contract had allotted work Order No. 465 (Lot5), 465 (Lot 8). The duty on such supplies has been demanded from Jamnagar Mobile Plant of Rs. 5,16,47,075/- cleared under invoice of SSTP Division and Rs. 62,87,591/- on pipes cleared under invoice of SP Division. Further the credit availed by SSTP Division of Rs. 3,98,52,681/- and credit of Rs. 48,83,919/- by SP Division on raw materials used in manufacture of finished goods cleared to GWSSB has been denied. A demand of Rs. 1,33,36,095/- against Kutch Division on similar nature of supplies made to GWSSB under Notf. No. 108/95 - CE dated 28.08.1995 has been made. Also credit of Rs. 89,47,290/- availed by SP Division on inputs used in manufacture of such finished has been denied. Similarly a demand of Rs. 1,03,52,230/- from Dehgam Plant has been made on the goods which was cleared by them under invoices of SP Division to GWSSB. The reason to make duty demand is mainly that the raw material was directly sent from the manufacturer to the factory of the job worker and after manufacture of goods the same without being brought back to the factory of the Principal manufacturer was cleared directly to GWSSB. It has been contended by the r....
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....at the raw material on account of principal manufacturer reached to the job worker and was used for the manufacture of final product on their account. The demand of cenvat on the one hand from the principal manufacturer on raw material which reached to the job worker and demand of duty from the job worker on the finished goods manufactured from such raw material itself proves that the raw material was used for the intended purpose only. Thus in such case the cenvat credit to the principal manufacturer i.e SP and SSTP Division cannot be denied. We also find that one of the reason for demanding duty from the job worker unit is that the certificates issued under Notification No. 108/95 - CE dated 28.08.1995 did not contain its name. In this context we find that it is not disputed that the job workers had manufactured finished goods on job work basis on behalf of principal who has cleared the goods to the intended recipient. In such case we do not find any reason to demand duty from the job worker. Moreover it is also a fact that the goods were eligible for the exemption. It has been held by the Tribunal that the exemption is available even if the job worker name is not stated in the c....
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....rant exemption to certain life saving and sight saving articles manufactured in the country and once this intention is clear from the subsequent notifications issued under Section 5A of the Act in 1995, we do not see any reason why we should take a narrow view to confine the two items produced by the appellants to Entry 3005.90 rather than place them in the wider connotation of surgical appliances in Entry 90.18 of Chapter 90." 9. The Commissioner (Appeals) has observed as under : "10. In view of above discussion, I observe that in the said notification there is no specific requirement that the certificate issued by the competent authority should be issued in the name of the appellant/assessee. The act of importing additional condition, which is not mentioned in the notification, by way of interpreting the notification is not tenable. I also find that the Adjudicating Authority has erred in importing additional conditions which were not present in the notification. 11. I also find that, the appellant has submitted a certificate from executive head of the Project Implementing Authority and countersigned by Principal Secretary or the Secretary (Finance) in the concerned Stat....
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.... our view, there is no error committed by the authority or Tribunal. No substantial question of law arises for consideration by this Court. The appeal deserves to be and is dismissed. The Hon'ble High Court while delivering the aforesaid judgment has relied upon the judgment of Hon'ble High Court of Madras in case of COMMISSIONER OF C. EX., PONDICHERRY Vs. CATERPILLAR INDIA PVT. LTD. 2013 (297) E.L.T. 8 (Mad.) held that when it is not in dispute that the goods has gone for the intended purpose the exemption under notification No. 108/95- CE cannot be denied. The operative portion of the order is as under: 8. We do not find any justifiable ground to interfere with the order of the CESTAT based on a factual finding and there was no material placed by the Revenue on the allegations of the possible misuse of the goods for unintended purposes by the sub-contractors. Secondly, being the beneficial Notification issued in public interest and the project itself being executed fully by the Contractors as per the directions of the Project Implementing Authority, the fact that the machineries were not given directly to the project implementing authority but given to the agency executing ....
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....tured goods as job worker and the fact of goods being cleared to GWSSB is not in dispute. As far as demand of cenvat credit against SSTP plant and SP plant is concerned we find that it is not in dispute that the goods were manufactured on their behalf by Jamnagar Mobile Plant who is job worker. Thus for all purposes it is SSTP and SP Plant who are the principal manufacturer and the credit has been rightly availed by them. Further once both the plants were given permission to clear the job work goods directly from the premises of the job worker, it itself shows that both the divisions were considered as principal manufacturer and eligible for credit of the raw material so used by the job worker. The order of Tribunal relied upon by the revenue in case of M/s Safelex International Ltd is not applicable to the present set of facts as in the said case no factory was in existence of Principal manufacturer who was supposed to get the goods manufactured under Notification No. 214/86 and it was a small shop with no machinery whereas in the present case the Principal manufacturer is itself a big plant and existence of factory is not in question. Further the larger Bench judgment in case of ....
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....by the Kutch Unit has not been disputed. The duty cannot be paid on same goods twice. Therefore it cannot be said that the clearance from Kutch unit was shown to claim benefit of exemption notification 39/2001. In case of Work Order No. 9246 the demand of duty Rs. 2,20,021/- has been made from STP Division that the goods were cleared under invoice of Kutch Division. We find that the SSTP Division has acted as job worker and the duty on said goods has been paid by Kutch Plant which has not been disputed. Hence now the duty demand cannot be made from SSTP Division. Further in case of same work order demand of credit of Rs. 6,71,230/- has been made from Kutch Division on the ground that an amount of credit of Rs. 1,65,944/- was used in pipe manufactured at SSTP Division from coil sent by Kutch Division. However it also remains a fact that the pipes so manufactured were cleared by Kutch Division on payment of duty, hence there is no reason to deny cenvat to Kutch Division. Similarly in case of remaining amount of Credit of Rs. 5,05,275/- the duty on pipes stands paid by the Kutch Division. The SS Plates were used at SSTP Division to manufacture such pipes. When the manufacture of pipes....