Pradeep Jain - Chartered Accountant

PJ/Case Laws/2009-10/09

Case Laws

Excise Section

Case: - C.C.E., C. &S.T. (A-III), Hyderabad v/s IVRCL Infrastructures & Projects Ltd.

Citation: - 2009(240) E.L.T. 606 (Tri.-Bang.)

Issue: - Whether the benefit of Exemption Notification no. 6/2002 –C.E for drinking water be restricted for pipes up to the first storage point only?

Brief Facts: - The Respondents were engaged in contract for manufacture and supply of pipes for water project. They claimed exemption from payment of duty under Notification no. 6/2002 –C.E. dated 1.3.2002. The Revenue restricted the exemption notification upto first storage point and demand of duty amounting to Rs.1, 35, 61,265/- & Rs. 4, 77, 83,964/- was raised.

Appellant’s Contention: - They were of view that the exemption under Notification was available upto first stage of storage only, not to the subsequent storage point. They stated that the amended notification clearly limits the exemption only upto to the first storage point, in case of pipes of outer diameter not exceeding 20cm. The certificate issued by The District Collector has certain technical flaws.

Respondent’s Contention: - They contended that in the Notification, storage facility has nowhere been defined. It is unfair to restrict exemption only upto first storage point as in Notification, first or second storage point has not been mentioned anywhere. They stated that storage facility comprises of number of storage points where the treated water is stored before it enters into distribution mode and hence benefit should be available to pipes up to that storage point beyond which treated water enters into distribution system. It was also stated that narrow interpretation would defeat the very purpose of the exemption.

Reasoning of Judgment: - The respondent’s contention has been supported i.e. Notification only states about storage facilities and there is no restriction that water should be delivered only to the first storage point. The amended notification also allows exemption to pipes which are used beyond the first storage point in respect of higher dimension. They had relied upon the decision of the Kolkata Bench in the case of CCE, Kolkata Versus M/s. Electro Steel Castings Ltd.

Decision: - There were no merits in Revenue’s appeal therefore appeal had been dismissed.

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Case: - Vinny Overseas Pvt Ltd v/s CCE, Ahmedabad

Citation: - 2009 (93) RLT 373 (CESTAT-Ahmd.)

Issue: - The valuation of goods processed on job work for related person is to be done as per Valuation Rules for related person or as per job work valuation decisions.

Brief Facts: - Appellants were engaged in processing fabrics on jobwork basis. M/s M which is one of the principles are directors in appellant-company. Appellant were also doing jobwork for M/s M. Appellants claimed that appellant (job worker) and M/s M are related persons and therefore the value has to be arrived at on the basis of export price of M/s M, for the purpose of Section 4 of Central Excise Act, 1944. The Commissioner (A) held that M/s M is not a related person and therefore, value has to be arrived at on the basis of Valuation Rules. Appellant have come in appeal before the Tribunal against this order.

Appellant’s Contentions: - Appellants contended that they and M/s M are related person and the decisions of the Apex Court in cases of Ujagar Prints v/s Union of India [1989 (39) ELT 493 (SC)] and Pawan Biscuits Co. Pvt. Ltd [2000 (39) RLT 891 (SC)] are not applicable to them. They have not acted as independent jobworkers but had processed grey fabrics received from related persons. Therefore, the decision of Ujagar Prints would not be applicable to a related processor as held in S. Kumar Ltd v/s CCE, Indore [2005 (71) RLT 613 (SC)].

Respondent’s Contentions: - Revenue contended that as pointed out by the Commissioner (A) no evidence has been put forth by the appellants to show that the appellants and M/s M had interest directly or indirectly in the business of each other and they have mutual interest. It is submitted that valuation of goods manufactured on jobwork basis was to be done based on decision of Ujagar Prints.

Reasoning of Judgment: - The Tribunal has considered the order of Commissioner (A) in which it was held that “merely because partners of M/s M are also directors of the appellant-company is not sufficient to prove that they are having the interest directly or indirectly in the business of each other. Also, the appellant has not proved by documentary evidence that these two entities are having mutual interest in business of each other. Reliance has also been placed on Board Circular No. 619/10/2002-CX dated 19.02.02 which has clarified that in respect of goods manufactured on job work basis, assessable value would be the job charges (including the profit of the jobworker if not already included in the job charges) plus the cost of materials used in the manufacture of item (including the cost of the materials supplied free of cost to the job worker). It is also stated therein that the assessable value in such cases will not include the profit or the expenses, where the dealing between the two are on principal to principal basis. The Circular also clarifies that under the new valuation provisions, introduced w.e.f. 01.07.00, there is no departure from the principles laid down by the Apex Court in Ujagar Prints and Pawan Biscuits Co. Pvt. Ltd. It has also been held in the case of Tara Industries Ltd v/s CCE [2003 (161) ELT 758 (T)] and Dolphin Laboratories Ltd [2005 (185) ELT 206 (Tri.-Del)] that goods produced on jobwork basis are required to be valued according to the rule laid down by Apex Court in the afore-mentioned judgments.”

The Tribunal held that even after the amendment of Section 4, merely because two units are considered as interconnected undertakings, they do not become related persons and for the purpose of valuation, the mutuality of interest and direct or indirect interest in the business of each other is essential. Except for the fact that partners of M/s M are directors of Appellant-company, there is no other evidence to show that both the companies function under the same management, there is mutuality of interest in the business of each other, one company has control over the other etc. Both the parties in question satisfy the requirements of Rules 9 & 10 of Central Excise Valuation (Determination of Excisable Goods) Rules, 2000, they cannot be treated as related persons.

Decision: - Appeal rejected.

Comment: - The dispute arose due to the fact that the assessable value as per Ujjgar Singh case is more than the valuation applicable as related person. But this does not hold good now. The Valuation Rule has been changed and Rule 10A will be applicable on job work also. As per this Rule, the sale price of related person will be taken as transaction value which is also value in case of related person. As such, this dispute will not arise in future.

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Case: - Alok Industries Ltd v/s Commissioner of Central Excise, Mumbai-IV

Citation: - 2009 (240) ELT 552 (Tri.-Mumbai)

Issue: - Whether cost of raw material is to be taken as declared by supplier of goods for valuation of goods on job work basis? Whether penalty can be imposed on job work manufacturer in case of mis-declaration of value of raw material by supplier?

Brief Facts: - Appellants are engaged in the processing of fabrics on jobwork basis. The duty was paid on the basis of value of raw material plus job charges as per Apex Court decision in case of Ujagar Prints [1989 (39) ELT 493 (SC)]. The cost of Raw material was taken on the basis of invoice-bills raised by the merchant-manufacturer. Revenue contended that the said invoices of the merchant-manufacturer were not correct and resulted in under-valuation of goods and thus evasion of duty. Demand of duty and interest alongwith imposition of penalty was proposed. Appellant accepted and paid the differential duty. However they contended that no evidence on record showed that they were also guilty party in such undervaluation. It was further contended that the demand was barred by limitation. Interest under Section 11AB should not be confirmed against them and penalty should not be imposed on them.

Reasoning of Judgment: - The Tribunal found that the period involved was from 1999 to March 2000 and the show cause notice was issued on 03.09.01 which was beyond normal period of limitation. The appellants have strictly adhered to the procedure laid down by the Bombay Commissionerate in Instruction No. 10/94 dated 02.05.94.

The Tribunal relied upon the case of Nikharka Dyg. & Ptg v/s Commissioner of Central Excise, Surat [2006 (193) ELT 307] in which it was held that the processors going by signed declaration of trader who supplied raw material, which was as per commercial practice of trade, processor cannot be held guilty of any suppression. Such undervaluation was detected by the Revenue authorities subsequently on investigation. In such case benefit of doubt has to be extended to the processor and demand has to be held as barred by limitation. Reliance has also been placed on Vishnu Dyeing & Printing Works v/s Commissioner of Central Excise, Mumbai [2008 (221) ELT 369] in which it was held that in the absence of any evidence of collusion between job worker and trader /merchant-manufacturer extended period is not invokable. The case of Commissioner of Central Excise, Jaipur-II v/s Suzuki Processors [2000 (122) ELT 638] has also been referred.

Accordingly, it was held that demand of duty raised beyond the period of limitation is barred. Duty is confirmed as admitted by the appellant. However, confirmation of interest and imposition of penalty is set aside on limitation.

Decision: - Appeal disposed of accordingly.

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Case: - Hitesh Plastic Pvt Ltd v/s CCE & C, Vapi

Citation: - 2009 (93) RLT 852 (CESTAT-Ahmd)

Issue: - Whether Cenvat credit would be available on the assessee’s own invoice in case of return of rejected goods?

Brief Facts: - Appellants cleared their final products to the customers but rejected the same. The goods were returned to the factory. Appellant availed the credit of duty originally paid at the time of clearance of the goods on the basis of their own invoices.

Appellant’s Contentions: - Appellant have taken the stand that since their buyers are SSI units and are not registered with Central Excise Authorities, it is not possible for them to return the goods under the cover of Central Excise invoices.

Respondent’s Contentions: - Revenue is contending that as per provisions of Rule 16 of the Central Excise Rules, 2002 an assessee is allowed to avail Cenvat credit on duty paid on such goods by treating them as inputs. However, the sole ground for denying credit is that the appellant’s own invoices cannot be considered as duty paying documents, in terms of Rule 7 of the Cenvat Credit Rules.

Reasoning of Judgment: - The Tribunal held that the provisions of Rule 16 are in the nature of deemed provisions where the final products returned by the buyer are deemed to be input by the assessee. The provisions of Rule 7 of the Cenvat Credit Rules, which specify the documents for the purposes of availment of credit in respect of inputs, would not apply to the provisions of Rule 16. This is a special provision enacted for receiving back the final product originally cleared and by giving them a deemed status of inputs, in which case, the invoices originally issued by the manufacturer are also required to be considered as fit for availment of credit. This has also been established by decisions in cases of BAPL Industries Ltd [2006 (72) RLT 691 (CESTAT-Che.). Also, the Board’s Circular issued vide F.No. 354/66/2001-TRU dated 21.06.01 also clarifies that Rule 16 provides availment of Cenvat credit by the manufacturer equivalent to the duty paid by him.

Accordingly, the appellant is entitled to take credit.

Decision: - Appeal allowed with consequential relief.

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Case: - CCE & C, Raigad v/s Fibre Foils Ltd

Citation: - 2009 (93) RLT 825 (Bom.)

Issue: - Whether the mandatory penalty imposable under Rule 57 (I) (4) can be reduced by the Hon’ble CESTAT?

Brief Facts: - Show Cause notice was issued to the respondent for denying the Cenvat credit on the ground that they had not maintained proper accounts of raw materials and finished goods in statutory records. One of the penalties was sought to be imposed on the respondent under Rule 57-I (4) of the Central Excise Rules, 1944. The Adjudicating Authority confirmed the duty demanded and imposed penalty under Rule 57-I (4). In appeal, the Commissioner (A) upheld the order of the adjudicating authority. In further appeal before the CESTAT, it was held that monetary penalty under Rule 57-I(4) equivalent to duty made cannot be upheld since no reasons to maintain the same at the level of mandatory 100% have been arrived by the authorities. Penalty was reduced. Against the reduction of penalty, Revenue has filed this appeal.

Reasoning of Judgment: - The Tribunal held that a perusal of Rule 57-I(4) brought to the light that the language used therein is mandatory and there is no discretion to authorities in the manner of imposition of penalty. Reliance has been placed on the judgment of Union of India v/s Dharmendra Textile Processors [2008 (89) RLT 103 (SC)] in which it has been held that there is no scope for discretion under Section 11AC and the levy of penalty was mandatory in terms of the Section itself. The ld. Tribunal misdirected itself in law in reducing the penalty. Also, the test applied by the Tribunal is a misdirection. The Tribunal further held that the penalty has to be imposed by the AO based on the material available and not on the defence which the assessee may have taken. The amount of penalty could never have been proportionate to what defence is available and/or that the mandatory penalty of 100% can be reduced depending upon the reasons given.

The Tribunal has further referred the judgment in Union of India v/s M/e Rajasthan Spinning & Weaving Mills [2009 (92) RLT 691 (SC)] in which it was held that before penalty can be imposed, it is incumbent that the AO, must record a finding, as to the ingredients of satisfaction of Section 11AC. In other words, if the ingredients of Section 11AC are not satisfied then no penalty can be imposed. The Rule 57-I(4) is to be construed in the same manner.

Accordingly, the case was examined and it was found that only reason given for demanding duty and penalty is that the respondent had not maintained proper accounts of raw materials and finished goods in statutory records. In the orders of the lower authorities, it was not found that there was fraud, willful misstatement, collusion or suppression of facts or contravention of ant other provisions of the Acts or Rules by the Respondents. The requirements of Rule 57-I (4) were not satisfied. Accordingly, it was held that the penalty imposed was without jurisdiction. Consequently impugned orders are set aside to the extent they relate to penalty imposed under Rule 57-I (4).

Decision: - Appeal disposed off accordingly.

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Customs Section

Case: - Classic Marble v/s CC (Import), Mumbai

Citation: - 2009 (93) RLT 449 (CESTAT-Mum.)

Issue: - Whether the department liability of communication of order comes to an end when the order is sent through speed post?

Brief Facts: - In the matter of appellant before the Adjudicating Authority order-in-original was passed on 17.08.07. Appellant filed appeal after the expiry of statutory period for filing such appeal with the Commissioner (A) by claiming that they have received the said order on 07.01.08 and therefore, appeal was within prescribed period of limitation. The Commissioner (A) found that a copy of order-in-original was dispatched by speed post to the appellant on 24.08.07 and that another copy was directly served on their CHA on 24.08.07 itself. Accordingly, the Commissioner (A) dismissed the appeal as time-barred. Appellant has filed this appeal against the said order.

Appellant’s Contentions: - Appellant contended that the copy of the order-in-original was received by then on 07.01.09 only under cover of letter dated 31.12.07 of the Assistant Commissioner of Customs. Service of the said order should be held to be 07.01.09 in the absence of proof of earlier delivery of order. Appellants relied upon the decision given in Marga Industries Ltd. v/s Commissioner [2006 (76) RLT 433 (CESTAT-LB)] wherein it was held that despatch of order/decision/summons/notice by registered post to the person concerned not sufficient proof of service and that there must be proof of delivery of the postal article to the addressee for compliance with Section 37C of the Central Excise Act/Section 153 of the Customs Act.

Respondent’s Contentions: - Revenue contended that a copy of order-in-original was dispatched by speed post to the appellant on 24.08.07 and the same was not returned undelivered. Also, another copy was directly served on their CHA on 24.08.07 itself. Relevant register of the postal authorities was also reproduced. It was contended that from these facts, the requirements of Section 153 of the Customs Act should be held to have been complied with. They placed reliance on P. Bhoormal Tirupati v/s Additional Collector [2000 (126) ELT 65 (Mad.)], Jai Enterprises v/s Commissioner [2006 (206) ELT 41 (Mad.)] and S.A. Plywood Industries v/s CCE, Siliguri [2008 (230) ELT 329 (Tri.-Kolkata)].

Reasoning of Judgment: - The Tribunal held that the facts pointed out by the Revenue were not successfully contested before them. Therefore, the subsequent receipt of copy of order-in-original by appellant from any officer of Customs is of no consequence. With the dispatch of the order-in-original, the department had complied with the requirements of Section 153 of the Customs Act. This is also established through the case laws cited by the Revenue in which it was held that where a notice under the Customs Act was sent to the party by registered post and the same was returned with the endorsement ‘left’, it was held that notice should be deemed to have been served on the party. The said case law is squarely applicable to the facts of the present case.

Further, the Tribunal held that case of Marga Industries Ltd. was distinguished by the Tribunal in the case of S.A. Plywood Industries v/s CCE, Siliguri. Therefore, the contrary view in Marga Industries Ltd. cannot be followed. This has been found in Sakshi Creations v/s CC, Chennai [2007 (83) RLT 705 (CESTAT-Che.)]. Order of the Commissioner (A) upheld.

Decision: - Appeal dismissed.

Comment: - Take care in taking the delivery of post. Always make friendship with postman otherwise the order will not be served on you and appeal will be time barred.

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Case: - Hero Cycles Ltd v/s Union of India

Citation: - 2009 (240) ELT 490 (Bom.)

Issue: - Custom Duty paid inadvertently then also the assessment order is to be challenged in appeal or it can be refunded by way of refund application?

Brief Facts: - Petitioners imported goods which were fully exempt from payment of Central Excise duty. Consequently, no additional duty of customs under Section 3 of the Customs Tariff Act, 1975 was payable on the said goods. However, Petitioners have inadvertently and under a bona fide mistake paid CVD. The Bills of Entries were assessed without extending benefit of exemption notification. Thereafter, Petitioners realizing there mistake, filed for refund of CVD erroneously paid by them. They have submitted proof that they have neither availed Cenvat credit nor they have passed on the duty burden to their customers. The refund claim was rejected on the ground that the petitioner had not challenged the final assessment orders. Petitioner filed appeal, which was also dismissed by holding that petitioners did not challenge the assessment orders in appeal within the time prescribed and instead they have prayed for refund. Against that order, petitioners have preferred this petition before the High Court.

Petitioner’s Contentions: - Petitioners have sought relief by way of manadamus to direct the respondent-authorities to rectify the assessment made on the said bill of entries to the extent it purports to make assessment on the imported goods to additional duty under Section 3 of the Customs Tariff Act and sanction and grant to the Petitioners refund claims with applicable interest.

Respondent’s Contentions: - Respondents have contended that the petitioners did not challenge the assessment order therefore the application for refund was not maintainable. They have relied upon the judgment in the case of Priya Blue Industries Ltd v/s Commissioner of Customs (Preventive) [2004 (172) ELT 145 (SC)], Collector of Central Excise v/s Flock (India) Pvt Ltd [2000 (120) ELT 145 (SC)] and Steel City Beverages Pvt Ltd v/s Union of India [2003 (159) ELT 14 (Del.)]. It has also been contended that as the Petitioners did not claim benefit of Notification, Section 154 of the Customs Act, 1962, would not be attracted.

Reasoning of Judgment: - On the issue of exercise of extraordinary jurisdiction by the High Court in case of non-availing of alternative remedy, the High Court held that mere existence of the alternative remedy by itself is no bar for this court to exercise its extraordinary jurisdiction. It will depend upon the circumstances of the case. Reliance was placed on the judgments in cases of State of UP v/s Mohammad Nooh [AIR 1958 SC 86], Champalal Binani v/s Commissioner of Income Tax, West Bengal & Others [76 ITR 692 (SC)], Wasp Pump Private Limited v/s Union of India [2008 (230) ELT 405 (Bom)].

On the question that whether this is a fit case for exercising its extraordinary jurisdiction, the High Court held that this is not a case of violation of principles of natural justice or fair play and or violation of any fundamental rights. The petitioner is only seeking refund of money on the ground that additional duty was not chargeable in view of the exemption notification. However, statutory notification was in existence and the Assessing Officer ought to have noted it. The Apex Court has held that a Statutory notification issued under Section 5A of the Central Excise Act had statutory force, as if it were contained in the Act itself. The observations in Parle Exports (Private) Limited [1988 (38) ELT 741] have been referred.

In the Petitioner’s case, the benefit of exemption notification was being given previous to the imports in issue and also subsequent to imports in question. A duty is cast on the authority to assess the goods and impose duty according to law which includes a statutory notification, if duty cannot be demanded if otherwise not payable. Once there be a power to assess there is a corresponding duty to assess according to law. The fact that petitioner has paid duty under mistake of law and or in the instant case by oversight, cannot result in being assessed to duty which was otherwise not payable. Therefore, this is a case of manifest injustice and on the face of it erroneous. This is a fit case for exercise of extra ordinary jurisdiction of the High Court.

Accordingly, directions issued to Revenue to modify bills of entry and it is open to the petitioner to file an application for refund which is to be decided according to law.

Decision: - Petition disposed off.

Comment: - It is rightly said that once you pay the money to the department, it is very difficult to take the money back from them. They raise the number of technical objections. Once department officer said to the assessee when he went to claim refund “NEKI KAR DARIYA ME DAL”

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Case: - Commissioner of Customs & Central Excise, Goa v/s M/s Kodak India Ltd

Citation: - 2009-TIOL-1378-CESTAT-MUM

Issue: - Free shipping bill cannot be converted into drawback shipping bill later on as they were not inspected.

Brief Facts: - Respondent-assessee imported second hand machine on loan and cleared the same on payment of customs duty under a bill of entry dated 30.10.02. It was expressly specified in the said bill of entry that the machine was on loan and was to be returned to the supplier after use. The said machine was presented for export under a free shipping bill on 22.05.03 and it was expressly said therein that the machine was returned to the supplier. The examination report of the shipping bill established the identity of the goods. Later on 01.07.03, respondent applied to Dy. Commissioner of Customs (Appg) for conversion of free shipping bill to a drawback shipping bill. The Dy. Commissioner rejected the request on the ground that the mandatory condition of establishing the identity of the goods in terms of Section 74 of the Customs Act was not fulfilled to the satisfaction of the Asst. /Dy. Commissioner of Customs. Respondent filed appeal against this order to the Commissioner (A), who allowed the appeal directing conversion of free shipping bill to drawback shipping bill. The Department has come in appeal against the said order in the Tribunal.

Appellant’s Contentions: - It was contended that as the goods were exported without establishing its identity to the satisfaction of the Asst. /Dy. Commissioner of Customs, the respondent could not validly claim drawback under Section 74 of the Customs Act. There was no provision for conversion of a free shipping bill to drawback bill and therefore such conversion was not permissible in this case. The Department has also referred to Board’s Circular no. 4/04-Cus dated 16.01.04 and to Notification No. 19/65-Cus, dated 06.02.65. Reference has also made to Section 76 of the Customs Act and it was submitted that conversion of free shipping bill to drawback shipping bill is not permissible in any situation in which the market price of the goods as on the date of export was not ascertained.

Respondent’s Contentions: - It was contended that as no plea with reference to Section 76 was raised in the memorandum of appeal, the Department could not rely on the same. Reference has been made to Board’s Circular no. 4/04-Cus dated 16.01.04 and has been submitted that Board permitted grant of drawback even under a free shipping bill subject to satisfaction of the Commissioner and therefore, conversion of free shipping bill to drawback shipping bill was only incidental. It was submitted further that respondent satisfied the requirements for amendment of the shipping bill in terms of Section 149. The examination report of the shipping bill clearly established the identity of the goods. Respondent has also relied upon various decisions in support of conversion of shipping bill from one scheme to another scheme.

Reasoning of Judgment: - The Tribunal held that from the facts it was clear that the shipping bill filed by the respondent did not contain a claim for drawback. The examination of goods was for the limited purpose of free export. The examination was aimed at identification of the goods. There was no examination from the valuation angle. The request for conversion of bill was presented long after the consignment had left the country.

The Tribunal further held that provisions of Section 76 prohibited grant of drawback to an exporter where the market value of the goods exported by him is less than the amount of drawback due thereon. This means that the competent authority has to first and foremost ascertain the market price of the goods as on the date of export so as to rule out the prohibition. Even if amendment of shipping bill is allowed under Section 149 on the strength of available documents, the claim for drawback cannot be examined under Section 74 on account of the mischief of Section 76. It is a trite law that any relief that is incapable of being realised cannot be granted. The order of Commissioner (A) was passed regardless of provisions of Section 76.

For the preliminary objection raised regarding invoking Section 76 when it was not mentioned in the appeal, the Tribunal held that the Department was raising a purely legal plea which cannot be brushed aside on the ground that it was not raised in the appeal.

The conversion of free shipping bill to drawback shipping bill in this case will be repugnant to the provisions of Section 76 (1) and consequently, benefit of drawback under Section 74 cannot be granted. The order of the Commissioner (A) is set aside.

Decision: - Appeal allowed.

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Service Tax Section

Case: - M/s Jyoti Overseas Pvt Ltd v/s CCE, Jaipur-II

Citation: - 2009-TIOL-1383-CESTAT-DEL

Issue: - Whether the refund of unutilized Cenvat credit on export of exempted goods is available?

Brief Facts: - Appellant are manufacturing Psyllium Seed Husk and exporting the entire product. They sought refund of service tax and Cess paid on services used in the manufacture of exported goods cleared under bond. The Adjudicating Authority rejected the refund claim. Commissioner (A) also upheld the said order on the ground that the goods were exempted from duty and therefore, refund was not sustainable. Appellants have come in appeal before the Tribunal.

Appellant’s Contentions: - Appellants have placed reliance on Rule 5 which provides that when any input or input service is used in the manufacture of final product which is cleared for export under bond and for any reason cannot be utilised by the manufacturer, the manufacturer shall be allowed refund of such amount. The appellant has relied upon the judgments given in the case of Repro India Ltd v/s UOI & Anr [2008 (88) RLT 481 (Bom.)], CCE, Bangalore v/s ANZ International [2009 (90) RLT 586 (Kar.)], CCE, Chandigarh v/s Drish Shoes Ltd. [2009 (90) RLT 686 (CESTAT-Del.) and CCE, Rohtak v/s Sunny Exports [2008 (85) RLT 190 (CESTAT-Del.)]. It was contended that findings of the Commissioner (A) were contrary to these judgments.

Respondent’s Contentions: - Respondent reiterated the findings of the Commissioner (A). It was contended that admittedly the exported goods are exempted from duty and, therefore, there is no requirement for furnishing bond. Therefore, rebate claim was not permitted under Rule 6 (1) of the Cenvat Credit Rules.

Reasoning of Judgment: - The Tribunal held that Rule 6 (1) provides for inadmissibility of Cenvat credit on inputs or input services used in manufacture of exempted goods. However, Rule 6 (6) provides that proviso to Rule 6 (1) shall not apply in case of exported goods removed without payment of duty cleared for export under bond in terms of Central Excise Rules, 2002. In the present case, the appellants having cleared the goods under bond, Rule 6 (6) would be applicable. The issue about non-requirement of furnishing bond has already been settled by the Bombay High Court in Repro India Ltd v/s UOI & Anr. It was held therein that the clauses of Rule 6 (6) are enacted only to deal with the situation when the final products are exempt from payment o f duty.

Also, the use of the words “excisable goods” instead of the term ‘exempted goods’ in Rule 6 (6) is to widen and cover both dutiable and exempted goods exported under bond.

Accordingly, refund is allowable to appellants. Impugned order set aside.

Decision: - Appeals allowed with consequential refund.

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Case: - CCE, Raipur v/s M/s BeeKay Engg & Castings Ltd

Citation: - 2009-TIOL-1376-CESTAT-DEL

Issue: - Whether Cenvat credit is available on mobile/landline phones, Rent-a-cab service, General Insurance premium on fire, machinery breakdown, group gratuity, group accident policy etc, Courier (inward freight), C & F services?

Brief Facts: - Assessee claimed Cenvat credit on the said services. Credit was denied by the Adjudicating Authority. However, the Commissioner (Appeals) allowed the Cenvat credit on the said input services. Revenue has come in appeal against the said order.

Reasoning of Judgment: - The Tribunal held that Cenvat credit was admissible on the following grounds: -

For Mobile/landline phones, reliance was placed on the judgment of CCE v/s Excel Crop Care Ltd [2008 (12) STR 436 (Guj.)] in which it was held that phone while installed in the factory premises, credit cannot be denied. In the instant case, there is no material suggesting that phones installed were used in relation to the business activities. Also, there is no specific provision in Cenvat Credit Rules that mobile phones would be used exclusively in relation to the manufacturing process in business activities.

For Rent-a-cab Service, the judgment in case of CCE, Nasik v/s Cable Corporation of India Ltd [2008 (12) STR 598 (Tri.-Mumbai)] was relied upon in which it has been held that input credit is available on Rent-a-cab service. In the instant case, there was no material to show that the said service was utilised otherwise. Therefore, the contention of the Appellant cannot be accepted that this service was not exclusively used for business purposes.

For Insurance Premium, The Tribunal relied upon the case of Stanzen Toyotetsu India Pvt Ltd v/s CCE, Bangalore-III [2009 (14) STR 316 (Tri.-Bang.)] in which it was held that input service credit is eligible on Group Insurance Health policy for employees/workers of the assessee. In the instant case, the Commissioner (Appeals) rightly allowed the Cenvat credit on Insurance Premium.

For Courier (Inward Freight), Reliance has been placed on CCE, Hyderabad v/s Deloitte Tax Services India Pvt Ltd [2008 (11) STR 266 (Tri-Bang.)] in which it was held that courier service for inward freight is eligible to input credit. The Tribunal held that credit facility was extended on this service as it related to business activity. In the instant case, the Commissioner (Appeals) was justified to allow the Cenvat credit on this service.

For C&F Services, the judgment in the case of Rawmin Mining and Indus Ltd v/s CCE, Bahvnagar-I[2009 (13) STR 269 (Tri.-Ahmd)] has been relied upon in which credit on the said service was held to be eligible in view of the fact that place of removal in the case of FOB export has to be treated as port of export and, therefore, credit was allowed. the Commissioner (Appeals) rightly allowed the Cenvat credit on C&F Services.

For Air Travel, Pager, Maintenance & Repair services, the Commissioner (A) after verifying the documents had allowed the credit partly. The Documents produced by the assessee were verified by the Supt. of Central Excise (Appeals), Raipur. The Revenue had not disputed the verification of documents in grounds of appeal. Accordingly, there is no reason to interfere with the order of the Commissioner (A).

Decision: - Appeal rejected.

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