M/s Hindustan Coca Cola Beverages Pvt. Ltd. Vs Commissioner of Central Excise (CESTAT Hyderabad)
The facts of the case in dispute are that the appellant availed on common input services and goods and obtained to the services reversed under Rule 6(3A). The only questions to be decided are
a) whether the value of the goods which they procured from the sister units and sold in the market should be reckoned as exempted services for calculating the CENVAT credit to be reversed or not; and
b) whether the credit to be reversed should be taken as the proportion of “the total credit availed” or only proportion of “the common input service credit” availed.
It is the assertion of the appellant that procuring goods from the sister units and selling them to the customers does not amount to trading. Only when the goods are procured from other bottlers and sold, it amounts to trading. The Department, on the other hand, asserts that even procuring goods from their sister units and selling should be taken as trading activity for the purpose of CENVAT Credit Rules and the amount of credit to be reversed should be worked out accordingly. I find this issue has been settled by the Hon’ble High Court of Gujarat in the case of Sintex Industries Ltd., (supra) that as far as the CENVAT credit is concerned, what is relevant is not whether assesses are a single legal entity or not and whether they have a common PAN or not even whether the two units share a common area. What is relevant is whether they are separate registrants under the Central Excise. The case of Rushil Decor Limited (supra) relied upon by the Learned Counsel is different inasmuch as they were not selling any goods in that case but only importing and transferring the goods. Hence, there was no trade. In the present case, an appellant is procuring bottlers from their sister units on excise invoices issued in their name along with the stock transfer challans. Thereafter, the assessee is selling the goods to their customers. When specifically asked by the Bench, the Learned Counsel said that he is not sure how the money got transferred to the sister units and said that it will probably be through account adjustment by their head office; otherwise the sister units will keep spending money to produce bottles and the appellant keeps earning selling them. There must be a mechanism of transfer of the sell products or some part of it back to the manufacturing in sister units. These being from the same legal entity, it is possible that this transfer gets done through book adjustments by their accounts Department. Thus, I find no element of trading is missing when the appellant procures bottlers from their sister units and sells them. It is at par with the procurement of bottles from bottlers and selling except from the fact that they are not directly paying their suppliers for the bottles supplied. As far as CENVAT credit rules is concerned, this can be considered as no different from selling bottles procured from other units. I, therefore, find that this amounts to trading activity.
