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2016 (4) TMI 191 - CESTAT AHMEDABAD

2016 (4) TMI 191 - CESTAT AHMEDABAD - 2016 (336) E.L.T. 160 (Tri. - Ahmd.) - 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 fina .....

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for clearance of the goods for home consumption by utilising credit from Cenvat 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 .....

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in favour of assessee - Appeal No. E/10295,10296/2013 & Appln No MA(Extn)15419/2014 - 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 Appl .....

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: (i) M/s Garden Silk Mills Ltd, a public Limited company (hereinafter referred 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 CXM0 .....

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ision (hereinafter referred to the Assessee ). (iii) By letter dtd 14.7.2003, 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 com .....

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of single consolidated PLA/Cenvat credit account for different units. The Assessee 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. .....

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ed earlier appeal filed by them against the Order dtd 24.1.2005 and remanded 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 b .....

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was paying duty on the basis of single R.C. as provided to the Assessee and availed 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 .....

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ty on the Assessee and a penalty was imposed on Shri Deepak Prabhakar Marathe, 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 .....

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he order of the Honble High Court, the Deputy Commissioner of Central Excise 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 .....

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peals) and various provisions of the Cenvat Scheme. 4. The other argument of 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. .....

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ioner of Central Excise had permitted the Assessee to maintain a single consolidated 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 Cenva .....

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by letter dtd 28.7.2004 directed to maintain a consolidated Cenvat Account and 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 availe .....

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fact that the Assessee paid duty on its clearances to the DT Unit showed that 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 in .....

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.2016. The Ld Sr. Advocate, Shri C Harishaker, on behalf of the Assessee and 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, t .....

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eparate different units. The findings of the Adjudicating Authority are reproduced 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 .....

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assessee and their DT Division, which is quite misleading. 10. As the Assessee 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 premi .....

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s, an on 15.04.05. 11. In the present appeal, it is to be decided as to whether 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 commissio .....

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ssee, the Deputy Commissioner of central Excise by Order dated 28.7.2004 allowed 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 sep .....

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932CXM002 dated 25/09/2003. you are directed to maintain separate records of 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 Ord .....

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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. 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 th .....

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olwa and Vareli plants is against the provisions of the Central Excise law. In 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 st .....

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15. By Order-in-Appeal No VP/181/SRT-I/2005 dated 12.4.2005, the Commissioner (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 d .....

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ccounts. 16. Further, by Order in Appeal No VP/440/SRT-I/2005 dated 31.8.2005 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 e .....

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heir letter F. No. GSM/EX/05 dated 28.02.2005, has applied to the jurisdictional 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 Commissio .....

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005 of the Commissioner (Appeals) and filed appeal before the Tribunal. By Order 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 mist .....

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assessee within a period of one month from the date of passing the order on 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 a .....

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pplication for extension of time stands filed by the Revenue on 28.07.2009 i.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 date .....

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ise Rules, 2002] This is to certify, subject to conditions specified below, that 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: .....

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394327 GUJARAT (address of the business premises) on the basis of the application 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 Le .....

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request of the Assessee for issue separate R.Cs. for the three divisions/units 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, .....

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is was decided vide OIA No. VP/181/SRT-I/2005 dated 12.04.2005. In the said order, 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/Cenva .....

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t account and prior to that only one PLA/cenvat account would be maintained by 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 Assesse .....

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s no need to discuss this issue, as it is observed that on 23.09.2009, three 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 Rule .....

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tration of a person under the said Rules and exemption from registration in specified 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 .....

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4 and has more than one premise and they applied for single registration. By 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 Accou .....

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tion for the two units would have to be 28.2.2005. We are unable to accept the 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 Co .....

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registration on 28.2.2005 and on 15.4.2005 and after receipt of appellate order, 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 .....

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earance of the excisable goods from their factory on the basis of singe registration 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 registrat .....

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itted the appeal filed by the Revenue. Hence, we would not like to pass any opinion on the admissibility of the Exemption Notification, which is a separate proceedings and pending before the Honble Supreme Court. 24. The present appeal is restricted to 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. Rule 3 of the Cenvat Credit R .....

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