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M/s Garden Silk Mills Ltd (PFY Division) And Shri Deepak Prabhakar Marathe Versus Commissioner of Central Excise-Surat-I-

2016 (4) TMI 191 - CESTAT AHMEDABAD

CENVAT credit - inter unit transfer of credit - transferred by DT units, for clearance of the goods for home consumption - whether on 15.04.2004, three units would be considered as separate units and the transfer of credit from DT unit to the Assessee and utilisation of the said credit for clearance of the finished goods by the Assessee - Held that:- Rule 3 of the Cenvat Credit Rules 2004 provides a manufacturer of final product shall be allowed to take cenvat credit of the duty paid on any exci .....

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at Account on inter-unit transfer of credit from DT Division to the Assessee, by a common pool. In any event, substantial benefit of the Assessee of utilisation of Cenvat Credit by a common pool cannot be denied by a technical infraction of provision of law, if any. - In view of the above discussions, we hold that the assessee rightly utilized the Cenvat Credit transferred by DT units, for clearance of the goods for home consumption during the period April 2005 to Sept. 2009 as the Assessee .....

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9/2014 - Order No. A/10145-10146 / 2016 - Dated:- 3-2-2016 - MR. P.K. DAS, MEMBER (JUDICIAL) AND MR. P.M. SALEEM, MEMBER (TECHNICAL) For the Petitioner : Shri C.Harishankar, Sr. Advocate & Shri S Sunil, Advocate For the Respondent : Shri P R V Ramanan, Special Counsel ORDER PER : MR.P.K. DAS, These appeals are taken up for hearing as per judgement dtd 30.6.2015 of the Hon ble Gujarat High Court in Special Civil Application No 2153 of 2015 [Garden Silk Mills Ltd (PFY Division) Vs UOI and Othe .....

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ed to as the Company ), is engaged in the manufacture of Partially Oriented Polyester Yarn (POY) classifiable under CH 54 of the Schedule to the Central Excise Tariff Act 1985 through its three different divisions/ factories/units, namely: a) PFY Division: Central Excise Registration No AAACG 8932 CXM002 manufacturing Partially Oriented Polyester Yarn (POY). b) DT Division: Central Excise Registration No AAACG 8932 CXM003 manufacturing Draw Twisted Polyester Filament Yarn (DT), Draw Wound Polyes .....

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the Company requested to the Deputy Commissioner of Central Excise to issue a common Registration Certificate (in short R.C. ) for merging their PFY Division and DT division. By a letter/order dtd 25.9.2003, the Deputy Commissioner of Central Excise allotted a new R.C. for both the units, PFY unit and DT unit. (iv) The Company further filed fresh application on 14.7.2004 for including their Vareli unit for a single common R.C. for all their three units on the ground of having common management. .....

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essee filed appeal before the Commissioner (Appeals) against order dtd 24.1.2005 of the Deputy Commissioner, for withdrawal of the said facility. (vi) The Assessee by letter dtd 28.2.2005, again requested the Deputy Commissioner of Central Excise for separate registration for all their three units, as they wanted to avail the benefit of Notification No 30/2004-CE, dtd 9.7.2004 as amended. (vii) By order/letter dtd 11.3.2005, the Deputy Commissioner rejected the request of the appellant for separ .....

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the matter to the Adjudicating Authority to pass order after considering the earlier OIA dtd 12.4.2005. (ix) The Revenue filed appeal before the Tribunal against the OIA dtd 12.4.2005 of the Commissioner (Appeals), which was dismissed by Order dtd 2.5.2008. Again, the Revenue preferred appeal before the Hon ble Gujarat High Court, which was also turned down by order dtd 10.9.2009. Then, appeal was filed before the Hon ble Supreme Court and by order dtd 15.3.2010 the appeal of the Revenue was dis .....

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vailed Cenvat Credit. According to the Revenue, since 15.4.2005 as the Assessee applied for separate R.C. for the three units, it would be considered that these units are separate three units as on 15.4.2005. Hence, the transfer of cenvat credit from DT unit to the Assessee and utilisation by the Assessee is irregular. Accordingly, four show cause notices were issued proposing demand of cenvat credit related to transfer of cenvat credit from DT unit to the Assessee unit during the period from 15 .....

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, Authorised Signatory and Manager of the Assessee. Hence, the Assessee and Shri Deepak Prabhakar Marthe filed these appeals. 3. Shri C Harshanker, Ld Sr. Advocate, with Shri S Sunil, Ld Advocate, appearing on behalf of the appellants submits that the entire case was made out on an erroneous basis that on 15.4.2004 the three units are to be considered as three separate registered unit as the Assessee requested for three separate R.Cs. He drew the attention of the Bench to OIA dtd 12.4.2005 and O .....

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on 23.9.2009 granted separate R.C. for other two units. So, the Assessee rightly maintained a single consolidated Cenvat Account/PLA for the purpose of discharging duties for clearance of the goods for home consumption during the period 15.04.2005 to 22.09.2009, and therefore DT unit transferred the Cenvat Credit to the Assessee unit for discharging the duty as the Assessee only holding R.C. He submits that there is no dispute on availment of the Cenvat Credit by the Assessee. They discharged t .....

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the Ld. Sr Advocate is that the Adjudicating Authority proceeded on the basis that the Assessee requested for three separate R.Cs. to avail the benefit of Notification No 29/2004-CE and 30/2004-CE both dtd 9.7.2004 for its DT Division and Vareli division. He submits that separate proceedings were initiated for availing the benefit of exemption Notification, which has no relation with the present proceedings. The Ld Sr. Advocate also contested the demand of duty as barred by limitation. He submit .....

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lidated Cenvat account/PLA for the purpose of discharging the duties payable for the monthly clearance. Subsequently, by letter dtd 24.1.2005 withdrew the maintenance of common PLA and Cenvat Account, while continuing single registration for all the three units. It is submitted that the words Cenvat and Cenvat Credit do not convey the same meaning. Section 3 of Central Excise Act 1944, the duty of excise is called Cenvat and it refers to the duty in the nature of excise. On the other hand, Cenva .....

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d there is no mention of Cenvat Credit. So, the transfer of cenvat credit from DT unit to the Assessee was not permitted by letter dtd 28.7.2004. It is not correct to say that the said letter permitted the Assessee to maintain a consolidated Cenvat Credit account. 6. It is also submitted that with effect from 15.4.2005 till 23.9.2009, the Assessee paid Cenvat Credit on its clearance of goods to DT unit and the DT availed Cenvat Credit and recorded in Cenvat Credit account. Again, at the end of e .....

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the said Units were regarded by the Company as separate factories. This fact is acknowledged by the Company in its letter dated 28/2/2005. Here the facts relating to the setting up and working of the Units have not undergone any change. The provisions of law have also not undergone any change. The Company claimed and availed of duty exemption under Notification 30/2004 by declaring that the Assessee and DT Unit were independent and separate factories while at the same time, for the purpose of a .....

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the Ld Special Counsel, Shri P R V Ramanan on behalf of the Revenue argued the matter. The Ld Sr. Advocate submitted Written Submission on 28.1.2016 and additional written submission on 27.1.2016. The Ld Special Counsel submitted Written Submission on 28.1.2016 during the course of hearing and the order is being passed on 3.2.2016. 8. Heard both the sides and perused the records. 9. By the impugned Adjudication Order, the Adjudicating Authority disallowed and ordered recovery of cenvat credit of .....

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duced below:- 35. I find that the products manufactured by the assessee and their DT Division are different. Hence, it would not be out of context to say that it was possible to segregate the records and entries of the assessee and DT Division as soon as they received the Order of the Appellate Commissioner in their favour. Despite applying for a separate registration on 28.02.2005 and on 15.04.2005 after the receipt of the Appellate Order, they continued to keep a common record of the assessee .....

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e and the other units had been considered as separate units as on 15.4.2005 by the Department on the basis of the letter of the Company, it is alleged in the notice that their DT Division has wrongly transferred the Cenvat credit totally amounting to ₹ 25,36,49,274/- in the four SCNs during he period April-2005 to Sept-2009 without issuing any Central Excise invoices and without clearing the goods from their premises. In turn, the Assessee have availed the Cenvat credit of the entire amoun .....

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er on 15.4.2005 three divisions/units of the Company would be considered as three separate units requiring the maintenance of separate PLA/cenvat Account for discharging duties for clearance of goods as held by the Adjudicating Authority on the basis of Application dtd 15.4.2005of the Assessee OR on 23.9/2009 as claimed by the Assessee on the basis of separate R.Cs. were issued to the other units by the Deputy commissioner of Central Excise and whether the transfer credit from D.T. Unit to the A .....

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wed the merger of Vareli unit with Assessee unit. Thus, on 28.07.2004, these three units were clubbed and the Assessees R.C. was in operation and the R.C. of the other two units were cancelled. The Order dated 28.7.2004 reads as under: F. No. Div.-II/RC/GSM.Div/2002-03 Surat dated 28.07.2004 To, M/s Garden Silk Mills Ltd., Shara Gate, Surat Gentlemen, Sub: Clubbing of Central Excise registration certificate for two separate manufacturing premises under the provision of clause II of notification .....

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the production and clearance of the excisable goods at the respective plants i.e., factories but maintain a single consolidated Cenvat Account /PLA for the purpose of discharging the duties payable for the monthly clearances. Yours faithfully, (A.K. AGGARWAL) Deputy Commissioner Central Excise, Div-II, Surat-I. 13. Subsequently, by order dated 24.1.2005 the Deputy Commissioner of Central Excise, modified the earlier Order dated 28.7.2004 in so far as the facility of common PLA and cenvat account .....

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at account/PLA for the purpose of discharging the duties payable for the monthly clearances. However, on further scrutiny it is observed that the facility of common registration provided to the textile sector vide para 2 of the notification No. 35/2001-CE(NT) dtd. 26.06.2001 as amended issued under Rule 9 of Central Excise Rules, 2001 was for a limited purpose of granting a common registration and it nowhere provided that different factories of a manufacturer can maintain a single PLA and Cenvat .....

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n view of the above, I am directed to inform you the facility of common PLA and Cenvat Account provided to you is hereby withdrawn with immediate effect. However, the common registration will continue for both the Jolwa and Vareli units. The Assessee was aggrieved with the direction of the Deputy Commissioner of Central Excise vide order dated 24.01.2005 and filed appeal before the Commissioner (Appeals). 14. At this stage, the Assessee desired to avail the benefit of exemption notification No 3 .....

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r (Appeals) decided the appeal against the Order dated 11.3.2005 rejection of separate R.C. for three units. By the said order dated 12.4.005 the Commissioner (Appeals) set aside the impugned order dated 11.3.2005 and hold that the Assessee would be eligible to have separate registration for their three separate units. He has not expressed any view of the eligibility of benefit of exemption Notification, which will be decided in separate proceeding. So, the Assessee again by letter dated 15.4.20 .....

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the Commissioner (Appeals) decided the appeal against Order dated 24.1.2005, as stated above. As the Assessee already applied for separate R.C. for three units and by Order dated 12.4.2005, the Commissioner (Appeals) directed to issue separate R.C. for three units, in the present Order-in-appeal dated 31.8.2005, it was remanded the matter to the Adjudicating Authority for de-novo decision taking into consideration of earlier Order (Appeal) dated 21.4.2005. The relevant portions of Order (Appeal .....

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nal Deputy Commissioner for de-registering the factory permission to segregate, the two factories viz. GSML, PFY & DT Division as well as GSML, Vareli, from the purview of Central Excise registration issued for all the three common factories. This was denied by the Deputy Commissioner vide his letter F.No.Div-II/RG/GSM-Div/2002-03/Part dated 11.03.2005. Against this decision, an appeal was filed before the Commissioner (Appeals). This was decided vide OIA No. VP/181/SRT-I/2005 dated 12.04.20 .....

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der dated 2.5.2008, the Tribunal rejected the appeal filed by the Revenue and directed to issue separate R.Cs. to the three units. The Assessee filed application before the Tribunal directing the Revenue to implement Tribunal Order dated 2.5.2008. By order dated 19.6.2009 the Tribunal directed the Revenue to implement the Order dated 2.5.2008, Then, Revenue filed application before the Tribunal for rectification of mistake in Final Order dated 2.5.2008. By order dated 25.8.2009, the Tribunal dis .....

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19.06.2009. 2. It stands contended before us that the original order passed on 02.05.2008 was challenged by the Revenue before Hon ble High Court along with a stay application. As such, the prayer in the application is to extend the period for implementation of the Tribunal s order till the matter is decided by the Hon ble High Court. 3. We find no merits in the above contention of the Revenue. The order following the appeal was passed on 02.05.2008 and it is more than one year, which has passed .....

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e. after the expiry of the period of one month. As such, we do not appreciate the Revenue s inaction to implement the Tribunal s order. In the interest of justice, we extend the period by another one month from today and report compliance on 24.09.2009. Miscellaneous application is disposed off in above terms. 18. Revenue filed appeal before the Hon ble Gujarat High Court against the Order of the Tribunal. By Order dated 10.9,2009 in Tax Appeal No 1665 of 2009 (Commissioner of Central Excise and .....

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hat M/S GARDEN SILK MILLS LIMITED (DT DIVISION), A REGISTERED COMPANY (Registrant and its constitutions) is registered for operating as a MANUFACTURE OF EXCISABLE GOOODS at JOWVA, TAL. PALSANA, SURAT-394315 GUJARAT (address of the business premises) on the basis of the application dated 28.02.2005. Registration Number is : AAACG8932CXM007 As per CESTAT Order No. M/1057/WZB/AHD/09, dt. 25.08.2009. Date: 23.09.2009 Place: Division-II, Surat-I Sd/- Signature of the Deputy Commissioner of Central Ex .....

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tion dated 28.02.2005. Registration Number is : AAACG8932CXM008 As per CESTAT order No. M/1057/WZB/AHD/09 DATED 25.08.2009. Date: 23.09.2009 Place: Division-II, Surat-I Sd/- Signature of the Deputy Commissioner of Central Excise (With Name and Official Seal) Revenue filed appeal before the Hon ble Supreme Court against the order of the Hon ble High Court. The Hon ble Supreme Court, by order dated 15.3.2010 in Special Leave to Appeal (Civil) CC 3379/2010, dismissed the Leave Petition filed by the .....

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s and the said Order was set aside by the Commissioner (Appeals) by Order (Appeals) dated 12.4.2005 and directed the Deputy commissioner to issue separate R.C. for three units/divisions. Moreover, by Order dated 24.1.2005, the Deputy Commissioner of Central Excise directed the Assessee for maintenance of separate PLA/Cenvat account for the different factories and the common R.C. will continue. By Order dated 31.8.2005, the Commissioner (Appeals) set aside the said Order dated 24.1,.2005 and rema .....

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rder, it has been held that the appellant will be eligible to have separate registrations for their three factories. This decision, if implemented, would have already resulted in separate registrations for the three units and consequentially requiring the maintenance of separate PLA as well as Cenvat Credit Accounts for the different factories. (Emphasis supplied) Thus, it is clear that maintenance of separate PLA/Cenvat Account would arise only after implementation of the earlier Order (Appeal) .....

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y the Assessee for discharging duties for clearance of goods. The Order dated 12.4.2005 of Commissioner (Appeal) was implemented on 23.9.2009, when the other two R.Cs. were issued to DT Division and Vareli Division as quoted above. On close reading of the above R.Cs., it is clear that the said R.Cs. dt.23.09.2009 were issued as per application dt.28.02.2005. So, the finding of the Adjudicating authority that the Assessee applied for separate R.Cs. on 28.02.2005 and 15.04.2005 and from 15.04.2005 .....

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units would be considered as separate units. 20. Section 6 of the Central Excise Act 1944 provides any prescribed person, who is engaged in the production or manufacture or any process of production or manufacture of any specified goods included in the Schedule to the Central Excise Tariff Act 1985 shall get himself registered with the proper officer in such manner as may be prescribed. Rule 9 of the Central Excise Rules 2002 provides every person, who produces, manufactures, carries on trade et .....

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pecified cases. Para (2) of the Notification No 35/2001-CE (NT) (supra) provides if the person has more than one premises require registration, separate registration certificate shall be obtained for each of such premises. The first proviso to Para 2 of the said Notification provides that if such person manufactures the goods falling under CH 54 and other Chapters of the First schedule to Central Excise tariff Act 1985 as specified, and has more than one premises requiring registration; he may o .....

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Order dated 28.9.2003 and 28.7.2004, the Deputy Commissioner of Central Excise and Customs allowed a single R.C. for three units and extended the facility of common PLA and Cenvat account. In our considered view, such orders would be in force, till the order of the Commissioner (Appeals) was implemented and new R.Cs. were issued by the authority. The Assessee cannot discontinue the maintenance of common PLA/Cenvat Account on its own, unless three separate R.Cs. are issued as ordered by the Commi .....

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e contention of the Ld Special Counsel. The expressions separate registration certificate shall be obtained for each of such premises in Para 2 of Notification No. 35/2001-CE (NT) dtd 26.6.2001 as amended indicate that the registration certificate shall be obtained by the Assessee. By order dated 12.4.2005, the Commissioner (Appeals) directed that the three factories should be issued separate registration by Deputy Commissioner. Further, by Order dtd 31.8.2005, the Commissioner (Appeals) obser .....

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er, the Assessee continued to keep the common record of the assessee and their DT Division. It is obvious that as soon as the Appellate Commissioner held in their favour they should have segregated their records related to three units especially those of DT division and the assessee. The findings of the Adjudicating Authority are totally contrary to the facts and law of the case. It is observed that unless the Assessee obtains a separate registration certificate from the Department, they cannot .....

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tration certificate during the material period. It is revealed from the R.Cs. dated 23.09.2009 as quoted above that as per application dated 28.02.2005 the Deputy Commissioner issued R.Cs. on 23.09.2009. Hence, the Assessee should not be punished for delay of issuing R.Cs., which is against all cannons of natural justice and fair play. 23. The Ld Special Counsel submits that the appellants applied for separate registration for the purpose of availing exemption Notification. We agree with the sub .....

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