TaxTMI 
TaxTMI 
2025 (6) TMI 1960
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....is a registered manufacturer of Electric Storage Batteries and its parts falling under chapter 85 of the Central Excise Tariff Act. The appellant clears its goods on payment of central excise duty and avails cenvat credit of excise duty paid on inputs and capital goods as well as service tax paid on input service by them. In the course of their business, the appellant was taking Cenvat credit of Central Excise duty/Additional duty paid on Polypropylene Co-Polymer (PPCP) classified under CETH 39023000. On being enquired, the appellant informed the department that the entire quantity of the PPCP is sold by them to independent buyers by paying or reversing duty, under Rule 3 (5) of CCR, 2004. The appellant vide their letter dated 20.07.2025, stated that "We are receiving Polypropylene Co-Polymer (PPCP) falling under heading 39021000 in our factory premises for the purpose of manufacture of Electronics Storage Batteries and this is recognised to be an input under the SION input duty paid norms C-1058. This is procured by us both from indigenous buyers as well as imported. The duty paid thereon is availed as Cenvat credit by us, as it is an input used ....
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....nvokable for the instant case. 4. The appellant was issued Show Cause Notice No.37/2015-CE dated 29.05.2015, directing to Show Cause Notice as to why an amount of Rs.2,25,37,460 should not be demanded and recovered under Rule 14 of CCR read with Section 11 (A) (4) and erstwhile proviso of Section 11 A (1) of CEA as amended by Finance Act 2015, along with interest at appropriate rates as well as proposing imposition of penalty under Rule 15 (1) and/or 15 (2) of CCR read with Section 11AC of CEA. The due process of law followed thereafter culminated in the Adjudicating Authority passing the impugned Order in Original No.44/2016-CE dated 09.06.2016 confirming the demand as proposed along with appropriate interest and imposing an equivalent penalty. Aggrieved by the same the appellant has preferred this appeal and is before the Tribunal. 5. Ms. Manasa Srinivasan, Ld. Advocate, entered appearance on behalf of the appellant. The Ld. Counsel submitted as under: i. Admittedly, PPCP is an input/ raw material for manufacture of batteries. In this regard, reliance is placed on OIO No. 43/2016 (CE) dated 08.06.2016 passed ....
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....evant for reversal of credit under Rule 6 of CCR is incorrect and contrary to law. Once it is determined that PPCP is an input for the Appellant, removal thereof will only attract Rule 3 of CCR and not Rule 6 of CCR. The term 'inputs' under Rule 3 of CCR are those which are covered under Rule 2(k) of CCR. Hence, it is legally incorrect to conclude that Rule 6 and not Rule 3 will apply to the present case. (vi) In light of the above, no reversal of Cenvat credit on common input service under Rule 6 of CCR is warranted. 6. The Ld. Counsel further contended that there is no provision in Cenvat Credit Rules for reversal of credit taken on input services used in relation to those inputs which are subsequently removed as such and therefore, there is no requirement to reverse the credit taken on common services to the extent attributable to purchase and sale of PPCP. Reliance was placed on the decision of Hon'ble Punjab High Court in CCE Vs. Punjab Steels - 2010 (260) ELT 521 (P&H) and Finolex Industries Ltd. v. Commissioner of CGST, Kolhapur - 2023 (3) TMI 1478-CESTAT Mumbai. 7. It was submitted that alternatively, the Appellant could have ....
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.... invokable and since the SCN has been issued for period from September 2010 to May 2015 on 29.09 2015, the period up to October 2014 is barred by limitation. That suppression cannot be alleged when information is taken from the books of accounts of the Appellant and the demand is based on records maintained by the Appellant. Reliance was also placed on the following decisions. • Order-in-Appeal No. 77/2017-CE dated 20.12.2017 for Exide Industries Limited. • Final Order No. 41096-41130/2019 dated 24.09.2019 • Exide Industries v. Commissioner of C.Ex & S.T., Raigad -2018 (362) E.L.T. 898 (Tri.-Mumbai) • Order-in-Original No. 43/2016(CE) dated 08.06.2016 for Exide Industries Limited • Final Order No. 41120/2020 dated 28.10.2020 • Order in Original No.Belarpur/21-22/Taloja/RVI/COMMR/KA/2013-14 dated 28.06.2013 • Finolex Industries Ltd Vs Commissioner of CGST. Kolhapur 2023(3) TMI 1478-CESTAT Mumbai. • Finolex Industries Ltd. Versus Commissioner of Central Tax. Pune 1-2024 (4) TMI 1009-CESTAT Mumbai • Shanthi Gears L....
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....te vide an order in original dated 28-06-2013. Again vide yet another order in original dated 02.02.2015, the demand raised for the subsequent period in respect of the same factory also was dropped. It is also recorded that the order in original dated 28-06-2013 has been accepted by the Department. 14. It is also seen that the adjudicating authority who has passed the impugned Order in Original No.44/2016, CE dated 09.06.2016 in respect of the present appellant also has, on the just previous day, vide an Order in Original No.43/2016CE dated 08.06.2016 found that PPCP is an input raw material for the present appellant. In the OIO No.43/2016 the adjudicating authority has rendered a finding as under: "18. I find that PPCP received by the assessee are used in the manufacture of containers and lids by the moulders, which are in turn used in the storage batteries manufactured by the assessee. As per Rule 2(k) of CCR "input" means, all goods used in the factory by the manufacturer of final products. The PPCP received by the assessee are used in the manufacture of the containers and lids, which in turn are used in the manufacture of the batteries. Hence, I find that....
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....he appellant after rightly paying the amount in terms of Rule 3(5) of CCR on removal of inputs as such from the factory; yet gone on to treat the very same transaction of removal of inputs as such as trading and thus an exempted service!. Moreover, it is also pertinent that the adjudicating authority has not controverted the appellant's contention that the entire quantity of PPCP supplied by the appellant is only to make the parts meant for the appellant and thus no quantity of the PPCP is used by the moulders for any other use and the entire PPCP gets converted and supplied back in the form of battery parts and which was evidenced by the certificate of the moulders produced. The adjudicating authority also has failed to controvert the contention of the appellant that the price at which PPCP is sold to the moulders will ultimately become a cost to the Appellant and the Appellant does not stand to gain any profit, as the price at which PPCP is sold to moulders is built into the price of the containers and lids sold back by the moulders to the Appellant. We also note that the SCN itself does not categorically state that the Appellant is engaged in the business of trading in PPCP and ....
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....authority in the proceedings initiated against the appellant. I find that the Order-in-original No. 22/Taloja/RVI/COMMR/KA/2013-14, dated 28-6-2013 proceedings were initiated against the appellant to deny them Cenvat credit on PPCP being not an input for the manufacturing activity and by the said order the adjudicating authority has dropped the proceedings initiated. It is informed that the order-in-original, dated 28-6-2013 has been accepted by Revenue and no appeal was filed. If that be the case, claim of the appellant that they had cleared PPCP, the inputs to their vendors on reversal of Cenvat credit correct is and cannot be disputed. If an input is cleared from the factory of the appellant on reversal of Cenvat credit availed on such inputs, the question of invoking the provisions of Rule 6(3A) of the Cenvat Credit Rules, 2004 does not arise as per the ratio laid down by the Tribunal in the case of Commissioner of Central Excise, Ghaziabad v. U P Telelinks [2015 (329) E.L.T. 888 (Tri. - Del.)]. I reproduce the ratio which is in paragraph 7 and covers the issue in the case in hand in favour of appellant. "7. I have gone through the records. Considering the submissions ....
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....r the subsequent period in the appellant's favour, though the appeal against the said decision preferred before this Tribunal has been withdrawn by the Revenue only on monetary grounds. 20. The Ld. AR has relied on the decision of the Honourable Madras High Court in Gannon Dunkerly to contend that the sale activity is over when the appellant has admittedly paid VAT while clearing PPCP and is thus to be considered as trading of goods. Reliance has also been placed on the decision in Mercedes Benz to contend that the quantification done for the demand is correct. Given our discussions supra that the appellant is not engaged in trading of PPCP the reliance placed on these decisions are misconceived and they are found to be inapplicable in the facts and circumstances of this case. 21. That apart, we also find considerable merit in the appellant's contention that extended period of limitation cannot be invoked in this case. From the appeal records it is evident that the appellant has clearly indicated the clearance of PPCP as such in the relevant columns in the ER-1 returns including the credit utilized when input goods are removed as such. In such circumstances it was for t....