TMI Blog2019 (1) TMI 1381X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 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 wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ders were not manufactured/ cleared from respective division or material receipt memos did not tally with the consignee factory, indent no. W.O No. It was alleged that in case of Work order No. 465 (Lot 8) and (Lot 5) the Work Order was allotted to mobile Jamnagar Plant and the clearance of goods was exempted from duty in terms of Notification No. 108/95 CE dated 28.08.1995. The pipes 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ₹ 1,03,52,230/- was demanded from Dehgam mobile plant on the ground that the activity undertaken by them on account of SP Division cannot be considered as Job wok and they being manufacturer are liable for duty. It was also proposed to confiscate the raw material on which cenvat credit has been availed and the finished goods on which duty has been demanded; to demand interest on cenvat and duty demand. Further 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 ₹ 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 ₹ 2,32,22,735/- was demanded from Kutch Division on the ground that the goods covered by W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les which permits those units to pay duty on the finished goods cleared directly from the premises of Job worker s premises even when such inputs were received directly by the job worker. The applications made for obtaining such permission clearly mentioned the procedure adopted by them. They had also stated that the goods manufactured from job worker shall also be sent to another job worker M/s Shreeji Construction kalawad 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... correct as there is no dispute about clearance of goods to GWSSB and there is no stipulation that exemption is available only if the certificate are issued to the unit where the actual manufacturing has been conducted. That the exemption notification has to be construed liberally. He relies upon the judgments in case of Sterlite Technologies Ltd. Vs. CCE CUS, Vapi 2009 (240) ELT 415 (TRI), HY-TUF Steels Pvt. Ltd. Vs. CCE, 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 unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the Kutch Plant can avail the refund of duty as per Notification No. 39/2001 CE dt. 31.07.2001. He submits that since the Kutch Plant is Principal manufacturer, hence rightly availed the credit. 8. A credit of ₹ 7,55,573/- to Chhatral Unit pertaining to Work Order No. 454 and of ₹ 80,61,828/- to Indrad Unit pertaining to Work order No. 468 has been denied on the ground that they have availed credit in violation of Rules 6 (1) and 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 ₹ 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 deliv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b worker Jamnagar mobile Plant subject to fulfilment of condition of the Trade Notice 36/2003 dt. 27.03.2003. The Condition of the Trade Notice prescribes the procedure to be followed for removal of inputs from the principal manufacturer to the job worker which clearly shows that the permission was granted only in respect of those inputs which were first received by the principal manufacturer and then sent to Job worker. The Appellant s application in terms 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 grante ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o Kutch division for supply to Doshion Co. The coils were purchased on account of Kutch division and dispatched directly to SSTP Division for slitting. The STP division manufactured 28 SS Welded pipes and returned the remaining coils after cutting to Kutch division and hence it is admitted fact that SSTP manufactured 28 pipes. In such situation SSTP Division was liable to pay duty. The fact that duty has been paid by Kutch division is not relevant as the SSTP Division 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 ₹ 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 ₹ 1,65,955/- is not available to Kutch. In case of Work Order No. 454 and Work order No. 468 where the credit of ₹ 7,55,570/- and ₹ 80,61,828/- has been denied to SP and SSTP Division respectively he submits that the credit is not admissible as they had maint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be paid by Kutch Division. Moreover if the exemption is available it shall not be available to gunneted pipes and not bare pipes which were cleared by Kutch division for gunneting. 14. In respect of denial of cenvat credit of ₹ 89,47,290/- availed by SP Division and for which the material was directly sent to Kutch Division pertaining to work Order No. 465 (Lot 5), he submits that HR Plate and Wire flux were sent directly from suppliers. Thereafter the bare and gunnited pipes were sent to Jamnagar 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 ₹ 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 ₹ 70,30,870/- availed by SP Division on raw materials directly cleared to Dehgam Mobile Plant is not avai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h was providing the code to each order and was allotting the order to the respective plant. In the backdrop of the above facts, the Appellant received various orders for clearing of goods for Gujarat Water Supply and Sewerage Board (GWSSB), Export Orders and few domestic supply order. The GWSSB Order was in respect to supply pipes to the project financed by the Asian Development Board and thus the goods were to be supplied without payment of duty in terms of Exemption Notification No. 108/95 CE dated 28.08.1995. The Appellant to such supply contract had allotted work Order No. 465 (Lot5), 465 (Lot 8). The duty on such supplies has been demanded from Jamnagar Mobile Plant of ₹ 5,16,47,075/- cleared under invoice of SSTP Division and ₹ 62,87,591/- on pipes cleared under invoice of SP Division. Further the credit availed by SSTP Division of ₹ 3,98,52,681/- and credit of ₹ 48,83,919/- by SP Division on raw materials used in manufacture of finished goods cleared to GWSSB has been denied. A demand of ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of RTML. It is only a case where one division allotted the work to another. The contention of the revenue that it seemed to be paper transaction would have been correct, if no manufacturing activity would have been taken place at the job worker s end or one party out of the principal manufacturer or job worker would have been for the namesake without any existence of factory or there would have been no manufacture of goods. However in the present case both the Principal manufacturer and the job worker owned complete manufacturing set up. It is also not disputed that 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their own terms ambivalent and do not manifest that intention of the legislature. (g) In the case of Johnson Johnson Ltd. v. CCE, Aurangabad reported in 1997 (92) E.L.T. 23 (S.C.) Hon ble Apex Court, has held that Interpretation of taxing statute - Exemption - In interpreting an earlier notification, when the question is whether a narrow view or a broader view would be more appropriate, intention of the authorities could be gathered from the subsequent notification - Section 5A(1) of Central Excise Act, 1944. We are of the opinion that the intention of the authorities was to grant 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the cross-objection also stands disposed of. 11. In our view, the decision of Madras High Court which has been confirmed by the Supreme Court, is required to be followed. Apart from that, the letter dated 2-5-2005 has been clarified by Commissioner (Appeals) that the goods were supplied by the assessee. In that view of the matter, while construing the provisions, the authorities have rightly considered the documents. However, a contention has been raised that a certificate ought to have been issued in favour of the assessee. In view of the letter dated 2-5-2005, things are clarified, therefore, in 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 po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stification to introduce any condition or read in a restrictive manner. Consequently, the Revenue s appeal fails and hence, the same is dismissed. No costs. The above judgment of the Hon ble High Court stands maintained by the Hon ble Apex Court as reported in Commissioner v. Caterpillar India Pvt. Ltd. - 2016 (335) E.L.T. A27 (S.C.). 18. In view of above judgments and facts of the case we are thus of the view that there is no reason to demand duty from the Jamnagar Mobile Plant or Dehgam mobile plant on the ground that there name is not appearing on the certificate and hence liable to pay duty since they have manufactured 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 show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount of SSTP Division were used by the Kutch Division in manufacture of such export goods. Since the Kutch Division has acted as job worker and the export of goods on account of SSTP Division is not in dispute, the SSTP Division is eligible for cenvat of raw material used in such goods. 20. In case of domestic supply the demand of duty in respect of Work Order No. 7156 has been made from SSTP Division that it should have paid duty while removing the goods to Kutch Division. We find that the SSTP Division is only a job worker and the goods came to Kutch Plant being the principal manufacturer under rule 4 (5) (a). Further the duty payment made 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 ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8,92,922/- has been denied to SP Division on the ground that the goods were manufactured on job work basis by SP division for M/s Modern Construction. It has been contended that since the goods were directly delivered to Kutch Division hence the credit to SP Division is not available. We find that though the inputs were directly consigned to Kutch Division but later on came back to SP Division. Further it is also a fact that Kutch Division had not commercial production in August 2005 whereas the period of receipt of inputs pertained to April/ May 2005. Also the fact of sending of pipes to Modern construction is not in dispute. There is no other evidence with the revenue to show that the raw material was used elsewhere. In such case we do not find any reason to uphold the demand. We are also of the view that only for the reason that the condition of Rule 4 (5) (a) was not followed the cenvat cannot be demanded from the job worker, if it is found that the finished goods were either cleared on payment of duty by the principal manufacturer or were exported as the case may be. 23. As regard contention of the Appellant that the demands are time barred, we find that the issue involved ..... X X X X Extracts X X X X X X X X Extracts X X X X
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