TaxTMI 
TaxTMI 
2025 (11) TMI 1540
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....e with the Central Excise statute, they are registered with the jurisdictional Central Excise authorities holding Central Excise Registration No. AAACE6641EXM005. 2.3 The appellants clear the final product electric storage batteries on payment of Central Excise duty and avail CENVAT Credit of excise duty paid on capital goods and inputs as well as service tax paid on input services used in or in relation to manufacture of said batteries. The batteries are manufactured by assembly of various parts such as positive plate, negative plat terminals, safety valve, electrolyte, etc. All the said parts are housed in a plastic container with lid. 2.4 In the manufacture of the battery, the appellants use Polypropylene Co-Polymer (PPCP) as one of the inputs, since it is the raw material used for making the container, lids, and plugs for the battery. During the disputed period, the appellants imported as well as locally purchased PPCP on payment of duty. On receipt of PPCP in its factory, the appellants took CENVAT credit of duty paid as they are admittedly inputs. As they did not have injection molding facility in their factory, they supplied PPCP to molding manufacturers/Moulders on sa....
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....the appellants on payment of Excise Duty. The sale value of PPCP forms parts of the sale price of containers, lids, etc., sold by the Moulders to the appellants. The container, lids and other parts sold back by the moulders are further used by the appellants in the manufacture of batteries, which is cleared on payment of Central Excise Duty. Therefore, there is no non-compliance with the CCR of 2004 by the appellants. 3.2 However, the impugned order had interpreted that the appellants are engaged in trading of PPCP as such inputs were supplied to Moulders on sale basis. Further, it is held that since no separate records have been maintained for inputs/ input services used in trading activity, the appellants are required to either reverse the proportionate credit or pay an amount of 6% of the value of trading activity. 3.3 Learned Advocate submitted, that inputs cleared as such under Rule 3(5) of CCR cannot be treated as trading activity. He submitted that the issue is no longer res integra and has been settled in the appellant's own case by the Tribunal. In this regard, he placed reliance on the Order-in-Original No. 21-22/2013-14 dated 28.06.2013 passed for the same unit of ....
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....rtaken reversal of CENVAT credit under Rule 3(5) of CCR of 2004. It is not the case with the department that PPCP were not used in the manufacture of the final products. In the above factual matrix of the case, we do not find that there is a requirement under CCR of 2004, for reversal of credit taken on input services used in relation to those inputs, which are subsequently removed as such by treating the same as 'trading' activity in terms of Rule 6(3)(i) of CCR of 2004. 7. In this regard, we find that the Co-ordinate Bench of the Tribunal in the case of self-same appellants i.e., Exide Industries Vs. Commissioner of Central Excise - 2018 (362) E.L.T. 898 (T) have held that the proposal of department for confirmation of the adjudged demands under Rule 6(3)(i) of CCR of 2004 is not sustainable. The relevant paragraph of the said order is extracted and given below: "5. I find that the first appellate authority has totally misdirected his findings on the main plea raised by appellant. Appellant had contended before the first appellate authority that PPCP which is received by them, imported as well as indigenously procured, were inputs as per the findings of the adjudicati....
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....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 is couched on an inferential basis based on a reply made by the appellant to an enquiry in which reply too the appellant has never stated that it is engaged in trading and on the contrary has stated the sequence of transactions that detail how the input is used for the manufacture of the containers which is further used in the manufacture of batteries. Thus, the show cause notice itself is woefully lacking in any evidence to show that the appellant is known in the market as a trader of PPCP or that the appellant sells PPCP to any other customers with a profit motive. The adjudicati....