Sanjay Casting Vs C.C.E. (CESTAT Ahmedabad)
Successful appeal by Sanjay Castings against excise duty demand. CESTAT Ahmedabad rules in favor, rejecting allegations on old molds, coal credit denial.
As regard the denial of Cenvat credit and the ground that the same was lying outside the factory, as per the facts of the case firstly, the appellant had not taken the cenvat credit when the goods were lying stored outside, the credit was taken only after taking the coal into the factory therefore, there is no violation of any Cenvat Credit Rules. Secondly, the coal was lying outside the factory but it was lying within the premises which is owned by the appellant only. As discussed above, the appellant had applied for inclusion of the said premises in the factory premises even before storing the goods and subsequently, the permission was granted and the said premises deemed to have been part and parcel of the registered premises of the appellant. For this reason also the Cenvat credit on coal cannot be denied. Since the demand itself is not sustainable, penalty on the main appellant as well as co-appellant is also not sustainable.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
M/s Sanjay Castings and its partner Shri Dipak Rathod, have filed present appeals against Order-In-Original No. BVR-EXCUS-000-COM-17 TO 019 -15-16 dated 16.09.2015 passed by the Commissioner of Central Excise, Bhavnagar, wherein demand of excise duty Rs. 8,09,39,585/- and cenvat credit demand of Rs. 49,825/- was confirmed with interest and penalty and also a separate penalty of Rs.2,00,00,000/- was imposed on Shri Dipak Rathod.
1.1 The brief facts of the case are that appellant was engaged in manufacturing of C.I. Castings Moulds and are availing the Cenvat Credit of duty paid on the input used in or on relation to manufacture of the final products and are also manufacturing of C.I. Moulds on Job Work basis. The Factory premises of Appellant searched by the department and noticed that the Appellant is manufacturing C.I. Moulds out of the material purchased as also old and used Moulds supplied by some other manufacturers under intimation to the Central Excise Department and by following the procedure prescribed under Notification No. 214/86 dated 25.03.1986. The officers recorded the statement of employee and partner of Appellant and various suppliers of old and used mould supplied as raw material. Such investigation culminated into show cause notices proposing demands on the grounds that Rule 4(5)(a) does not allow removal of old and used C.I.Moulds. Department also issued separate show cause notice dated 13.07.2012 proposing confiscation of the goods seized on the date of visit.
1.2 In Adjudication, Learned Adjudicating Authority confirmed the entire demand vide impugned order. Therefore, the present appeal filed by the appellants
02. Shri Paresh Sheth, Learned counsel appearing on behalf of the appellant submits that Appellant are manufacturing CI Moulds out of old and used moulds or scrap moulds supplied by the customers by following the procedure prescribed under Rule 4(5)(a) read with Notification No. 214/86. Clearance of such Job Work goods manufactured is also disclosed in respective ER-1 return filed. The basis for demanding duty is that the Appellant received scrap of old and used moulds in the guise of moulds from customers not for intended purpose like testing, repair, re-conditioning or the manufacture of intermediate products but for removing fresh moulds as replacement against recoverable metal from the scrap of old and used moulds. During the course of investigation department recorded the statements of various supplier of used/scrap CI Ingot Moulds and all the suppliers have accepted that they have supplied scrap/ Used CI Moulds to the Appellant for conversion into fresh Moulds and admittedly all the suppliers have filed declaration for availment of exemption under Notification No. 214/86. Department accepted the fact that suppliers have filed relevant declaration as required under Notification No. 214/86. Department has also issued show cause notices to suppliers of material. He submitted the copies of two show cause notices issued to supplier by the department. He also submits that in case of suppliers the Hon’ble tribunal has held that old and used moulds /scrap can be removed under Rule 4(5)(a) of Cenvat Credit Rules, 2004.
2.1 He also submits that Learned Commissioner of Central Excise has erred in confirming the demand ignoring the facts that the clearances made under Notification No. 214/86 is not only supported by the Job Work challan but is also supported by the invoices and therefore, in view of the decision of Hon’ble CESTAT Mumbai in the case of M/s Bharat Industries Vs. CCE reported in 2008(227) ELT 281, it can not be said that the goods were clandestinely cleared and hence, no duty can be demanded from the Job Worker.
2.2 He further submits that the Learned Commissioner has erred in confirming the demand of Rs. 4,32,019/- on the goods seized by the department. The goods seized includes the material supplied by various supplier for conversion into moulds on which neither the duty stands paid by the supplier nor any credit is availed by the Appellant. For storage of non-cenvatable material, outside the factory premises, neither any permission is required nor is there any Rule whereby the duty can be demanded by the department. The duty demanded on coal, stored outside the factory premises but in premises just opposite to the factory premises and in the premises owned by the Appellant, due to shortage of space, is also not liable to be confirmed in as much as the said material was duly accounted for and is proved to have been used in manufacturing of final product. The duty confirmed is liable to be set aside.
2.3 He also submits that Learned Commissioner has erred in disallowing the Cenvat Credit of Rs. 49,825/- as much as, the said goods are proved to have been used in manufacturing of final products and the premises stand approved as part of factory premises vide order dated 03.10.2012 issued by the Jurisdictional Assistant Commissioner.
2.4 He also placed reliance on the following decisions in support of his arguments.
