Commissioner of Central Excise & ST Vs Gujarat Heavy Chemicals Limited (CESTAT Ahmedabad)
CESTAT find that appeal can be disposed of only on threshold point that whether the entire case involves the Revenue neutrality or otherwise. There is no dispute that all the goods on which the duty was demanded have been imported duly paid including CVD/SAD. In such case, if at all there is any duty liability of repacked goods or alleged clandestine removal or sales under dealer invoice or repacking job work, in all these cases, the appellant were entitled for the Cenvat credit in respect of the goods imported/ purchased by them. If on reconciliation it is found that duty is payable on the goods being deemed manufactured in terms of Chapter note 9 to note 28, in all such cases it prima-facie appears that the appellant is entitled for Cenvat credit on the goods procured and if such Cenvat credit is sufficient to adjust against the demand of output then the entire case is Revenue neutral and in such case, no further demand can be raised. However, this reconciliation exercise has not been conducted therefore in our considered view the matter needs to be reconsidered on this issue. After reconciliation the entire duty payable and availability of Cenvat credit no differential demand arises, the entire case being Revenue neutrality, the demand will not sustain. For this purpose, the respondent is required to submit reconciliation showing co-relation between the procurement and Cenvat involved therein and the sale of the goods involving duty payable thereon. After verifying these details, the Adjudicating Authority shall pass a fresh order keeping in mind our above observation.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
The present appeals have been filed by the Commissioner of CGST & Central Excise, Bhavnagar against impugned order-in-original No. BVR-EXCUS-000-COM-24-18-19 dated 27.02.2019 passed by the learned Commissioner of CGST & Central Excise Bhavnagar whereby he has set aside the proceedings initiated by the department against the respondents vide show cause notice dated 31.10.2014 by which the total excise duty demand of Rs.2,41,02,864/- was proposed along with proposal for imposition of penalty and interest.
2. Facts in brief are that Respondents are engaged in import of Sodium Trio Poly Phosphate (hereinafter referred to as “STTP” for the sake of brevity) in 1000/1500 kgs. FIBC (Flexible Intermediate Bulk Containers) from Pipavav Port and subsequently selling the same in domestic market after carrying out process of re-packing of bulk packages of imported STPP into retail pack of 40/50 Kg. The Respondents are also engaged in trading of imported STTP. Since as per Chapter Note 9 to Chapter 28, “labeling or re-labeling of containers or repacking from bulk packs to retail packs or the adoption of any other treatment to render the product marketable to the consumer, shall amount to manufacture”, the repacking of bulk packages of imported STPP into retail pack of 40/50 Kgs. in HDPP bags, amounts to manufacture and, hence, the same are excisable under Chapter sub-heading No. 28353100 of Central Excise Tariff Act, 1985. Respondents have therefore obtained Central Excise Registration on 08.12.2010 and are paying excise duty on retail packs of STPP cleared for home consumption. The Respondents for their trading activity are also registered as Dealer as per the provisions of Central Excise Act, 1944.
3. The DGCEI after detailed investigation, recording of statements of various persons, issued show cause notice dated 31.10.2014 by invoking extended period of limitation. In the show cause notice demand on different count was proposed, the summary of which is as under:-
