CENTRAL EXCISE ACT

6. Whether Inverter, storage battery, used only as extra stand by device in case of failure of electricity and control transformers, used to set-up or step-down voltage can be termed as Input eligible for Cenvat credit?

Held ... No.

The revenue filed the appeal against the order of the Commissioner granting cenvat credit on Inverter, storage battery, used as extra stand-by device.

The revenue’s contention was, that inverter storage battery and control transforms cannot be held to be inputs as the dealer is a manufacturer of high pressure jet pumps as well as hydraulic lifts. The inputs are those items, which are used as raw material for the manufacture of final product.

The Tribunal agreed with the contention of revenue and held that since the items were used, as stand-by, the same cannot be treated as Inputs eligible for cenvat credit.

[CCE vs. U.T. Ltd. 190 ELT 391 (Tri-Del)]

7. (a) Whether cenvat credit is allowable on block steel tubes utilized for pipeline connecting factory premises to the river situated 12 kms from factory premises as per rule 57Q Central Excise Rules and 2(a) of the cenvat Credit Rules 2004

Held ... Yes.

(b) When credit available by the company is reversed on its own, on account of wrong availment, whether penalty for wrong availment can be levied?

Held ... No.

The factory of the dealer was situated at Wada, Dist. Thane. It availed cenvat credit on capital goods being block steel tubes utilized outside the factory premises. The tubes connected the factory of the dealer to river vaitarna for drawing water from the river to the factory. The department disallowed the credit on the ground that goods to be allowed credit should be within the factory premises.

However, the appeal of the dealer was allowed by the Tribunal following the decision in M/s. PepsiCo Holding Ltd. vs. CCE 130 ELT 193 on the ground that drawing water from a river situated 12 km from factory was only an extension of the pipelines inside the factory to be used within the factory premises.

(c) The dealer had wrongly availed cenvat credit on certain items, which were used outside the factory premises penalty was levied on such wrong availment for suppression of facts.

The dealer argued that, if reversed the credit taken, prior to the issue of show cause notice with full knowledge of the department and hence there could be no question of suppression of facts from department, as there was no short levy or incorrect availment of credit.

The Tribunal allowed dealer's contention following a larger Bench decision in case of M/s. Piaggio Greaves Ltd. vs. CCE 127 ELT 614.

[Hindustan Coco-Cola Beverages Pvt. Ltd. vs. CCE, Thane 190 ELT 287 (Tri-Mumbai)].

8. (a) Whether clear-ance of other unit can be clubbed with appellant dealer without show cause notice being issued to other unit?

Held ... No.

(b) Whether demand can be said to be barred by limitation, in view of the fact that department had visited the factory and hence knew the type of product manufactured?

Held ... No.

The appellant contended that revenue cannot proceed to club the clearance of M/s. Shri Bhavani Minerals with that of the dealer without issuing any show cause notice to M/s. Shri Bhavani Minerals. They relied on the following decisions.

1. Dawa Fireworks Factory & Others vs. CCE 31 RLT 104

2. Juicy Beverages P. Ltd. vs. CCE 139 ELT 136

3. East India Cotton Mfg. Co. vs. CCE 160 ELT 1165

4. CCE vs. Sethia Foods 156 ELT 395

5. CCE vs. Sompura Ceramics 130 ELT 195

The dealer further contended that they were separate units having their own machinery, sales tax registration and wherewithal for producing the goods. They also argued that there was no evidence of financial flowback between the two firms.

The Tribunal accepted the contention of the dealer following various authorities cited and set aside the finding of the lower authority and held that it was not justified and not correct in law to hold that M/s. Shri Bhavani Metals is a dummy unit of the appellant dealer.

The next point the appellant raised was that the department had visited the factory and seized the records and thus were aware of the fact that the appellants manufactured "Activated Bleaching Earth" on which excise duty was payable and hence the demand is barred by time.

The Tribunal held that there was no evidence in support of the contention that department was aware of the production of "Activated Bleaching Earth". The appellants were required to pay duty on clearance of these manufactured goods. Relief was granted to them in the form of recomputation of demand by treating the clearances as cum duty clearance following the decision of SC in the case of Srichakra Tyres Ltd. vs. CCE 142 ELT A 279 (SC).

Shree Krishna Minerals vs. CCE Hyd 190 ELT 251 (Tri-Bang).