Common Registration of two premises of assessee separated by Road

PJ/Case Laws/2011-12/1372

Common Registration of two premises of assessee separated by Road - permissibility of

Case: RAJHANS PRESSINGS PVT. LTD. v/s COMMISSIONER OF C.EX, DELHI-IV

Citation: 2011 (271) E.L.T. 283 (Tri.-Del.)

Issue:- Registration-Whether the common registration of two premises separated by road can be denied by holding that the manufacturing processes on both of the premises were not interconnected?

Brief Facts:- Appellant is engaged in manufacturing sheet metal components at Premises-I and manufacturing of tools and dies, needed for manufacturing activity at Premises-I is done in their factory at Premises-II. Both the premises were separated by a single road. Appellant applied for single registration of both the premises. The Department refused to grant the permission.

The second issue involved is that appellant sought permission for removal of capital goods from one premises of the appellant registered as his factory to another premises across the road. Permission was also denied.

The Adjudicating Authority noted that the goods manufactured at Premises-II are in the nature of capital goods and cannot become part of interconnected manufacturing process of final products at Premises-I. The Adjudicating Authority also noted the decision of the Tribunal in Amforge Industries v. CCE, Pune-I [2004 (176) E.L.T. 702] to the effect that tools and dies are final products themselves and came to the conclusion that the processes at the two premises were not interconnected.

Aggrieved by this order, Appellant is before the Tribunal.

Appellant’s Contention:- Appellant contended that their case falls within the guideline given by C.B.E.C. for granting common registration for two premises separated by a public road. It is submitted that the Commissioner cannot refuse such permission when the appellant falls within the norm prescribed by C.B.E.C. in this regard.

Appellant further assailed the finding of the Adjudicating Authority that making tools and dies is not a process interlinked to manufacture of final products because such final product cannot be made without tools and dies so manufactured. Appellant also argued that if a separate registration is taken and if they pay duty on tools and dies manufactured in Premises-II and clear it to the factory at Premises-I they can take Cenvat credit of duty so paid and the whole exercise will be revenue neutral.

With regard to removal of goods from one premises to another, appellant argued that with expansion of business, availability of space at Premises-I became a problem and the appellant shifted the process of manufacture of tools dies to Premises-II belonging to the appellant. It was submitted since equipment was shifted to their own premises for their own manufacturing activities the appellant was under the impression that there was no requirement to reverse credit taken on such goods. There was undue advantage accruing to them and they had no intention to evade any duty. It was submitted that the entire exercise was revenue neutral as the credit reversed on capital goods being cleared was available to the second premises. It is a procedural irregularity and for that substantive right of the appellant cannot be denied. It was further submitted that the capital goods could have been removed to the premises of a job worker under Rule 4 (5) (a) of CCR without reversal of credit, though subject to certain conditions regarding the return of goods in 180 days. When the rules allow such latitude, removal of the capital goods to another premises adjacent to the factory of the appellant cannot result in any substantive offence. There was no intent to evade duty.

Respondent’s Contention:- Revenue argued that the products manufactured at Premises-II are final products themselves and there is no reason to give common registration.

With regard to removal of goods from one premises to another, Revenue contended that under Rule 3(5) of the Cenvat Credit Rules when any capital goods are removed from any registered premises, an assessee who has availed credit is required to reverse such credit which was not done in this case. The application for including the Premises-II was given much after the removal of the goods from the registered premises and only when the matter was pointed out by the departmental officers. Even if such registration is granted later on, there was a violation of Cenvat Credit Rules and penal consequence will follow. So the finding of the lower authority is proper.

Reasoning of Judgment:- The Tribunal referred to the provisions of Para 3.2 of Chapter 2 of CBEC’s Excise Manual for supplementary Instructions. It was held that mould and dies manufactured at Premises-II is required for manufacturing activity at Premises-I and such goods are being used in premises-I and not for sale to any independent buyers. It was wrongly observed by the Adjudicating Authority that the manufacturing processes that both the premises were not inter-connected. It was held that there is no condition that such registration can be given only if the products manufactured in one of the factories is not final products but only intermediate products. It was observed that if permission is given then it does not save any incidence of taxation but only saves some work of maintaining separate records and filing separate returns.

On facts, it was held that the two premises satisfied the parameters laid down by CBEC for granting common registration for two premises separated by a public road. No merit in impugned order and therefore, set aside. Request for common registration is to be granted.

With regard to removal of goods from one premises to another, the Tribunal held that there is an infraction of Rule 3(5) of CCR, 2004 as the capital goods on which credit was taken were removed from the registered premises without reversing the credit taken. It was noted that this infraction was caused due to non-grant of permission for common registration and there was no intention to evade payment of duty. In view of decision given for appeal for common registration, there is no case for demand of duty with penalty under Rule 15 (2) of CCR. Impugned order of demand set aside.

Decision:- Appeals allowed.

Comment:- This is far reaching decision as the common registration to units separated by road denied invariably by the department. But they have to see that there is no additional revenue in such cases. The assessee is applying only for duplication of records and other formalities. Even the assessee is not permitted then also he can follow the job work procedure. But by allowing the same, time and energy of assessee is saved and there is no revenue leakage also. Hence, this analogy is very good.

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PJ/Case Laws/2011-12/1372

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