2011 (9) TMI 878 - AT - Central Excise

Respondent manufactured tools and dies for a customer and used the same in their own factory for manufacture of components for the same customer - Respondent recovered the price of such tools and dies from the customer by raising a commercial invoice - Respondent was availing the benefit of service tax paid on GTA services for outward transportation of their finished goods - Commissioner (Appeals) in the impugned order has held that respondent need not pay duty on tools, dies and fixtures and Cenvat credit is admissible - Held that - As regards duty, liability on tools, dies and fixtures, Notification No. 67/95-C.E., dated 16-3-1995 exempts capital goods as defined in Cenvat Credit Rules, 2004 manufactured in a factory and used within the factory of production. The notification does not speak of any ownership. It is an unconditional exemption which provides exemption to capital goods manufactured in a factory and used within the factory - Once goods are manufactured and used in the same factory, the notification squarely applies - Following the decisions of the Tribunal in the case of BPL Electronics Ltd. v. CCE, Bangalore reported in 1994 (3) TMI 190 - CEGAT, NEW DELHI , Elcon Clipsal India Ltd. v. CCE, Ahmedabad reported in 2002 (9) TMI 140 - CEGAT, COURT NO. II, NEW DELHI - Decided against Revenue.

Summary

Issues:
1. Liability to pay duty on tools and dies sold to customers.
2. Availing Cenvat credit on GTA services for outward transportation.
3. Interpretation of Notification No. 67/95 for exemption on capital goods.

Analysis:

1. Liability to pay duty on tools and dies sold to customers:
The case involved a dispute regarding the liability of the respondent to pay duty on tools and dies sold to customers. The Revenue contended that duty should have been paid on these items as they were deemed removed to the customer and then received back for use in manufacturing components. The Revenue argued that duty should have been paid when the commercial invoice was raised. However, the respondent argued that duty was not payable as the goods were used within the same factory and did not leave the premises. The Tribunal analyzed Notification No. 67/95, which exempts capital goods used within the factory of production, without any mention of ownership. The Tribunal referred to previous decisions where it was held that the use of capital goods need not be on account of the manufacturer, and raising an invoice does not automatically create a duty liability. Ultimately, the Tribunal found in favor of the respondent, stating that the appeal by the Revenue had no merits, and the respondent was not liable to pay duty on the tools and dies sold to customers.

2. Availing Cenvat credit on GTA services for outward transportation:
The issue of availing Cenvat credit on GTA services for outward transportation of finished goods was also raised. The Revenue initially disputed the availability of credit, arguing that the input service was only covered up to the place of removal, which was the factory in this case. However, the learned DR admitted that after a decision by the Hon'ble High Court of Karnataka, the issue was settled, and the Tribunal was bound by that decision. The Tribunal, therefore, upheld the decision regarding the availability of Cenvat credit on GTA services, as per the settled position post the High Court decision.

3. Interpretation of Notification No. 67/95 for exemption on capital goods:
The Tribunal extensively analyzed Notification No. 67/95, which provides an exemption for capital goods manufactured in a factory and used within the same factory. The Tribunal emphasized that the notification does not impose any restrictions based on ownership and applies when goods are manufactured and used within the same premises. Referring to past Tribunal decisions, the Tribunal reiterated that the use of capital goods need not be on account of the manufacturer for the exemption to apply. The Tribunal found that the decisions of the Tribunal in previous cases were applicable to the current scenario, and since the notification had no restrictions, the appeal by the Revenue had no merits. Consequently, the Tribunal rejected the appeal and disposed of the cross-objections filed by the respondents.

In conclusion, the judgment clarified the liability to pay duty on tools and dies sold to customers, affirmed the availability of Cenvat credit on GTA services, and interpreted Notification No. 67/95 for exemption on capital goods, providing a comprehensive analysis of each issue involved.