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TMI Blog2013 (6) TMI 610X X X X Extracts X X X X X X X X Extracts X X X X ..... fund claim of Cenvat credit, attributable to supplies made to the said units in SEZ, by adjudicating authority vide Order-in-Original dated 31-3-2008, on the ground that the activities undertaken by the appellants did not amount to manufacture. Other four appeals are against separate Orders-in-Appeal upholding separate Orders-in-Original rejecting rebate of duty paid on the said goods supplied to the said Unit in SEZ on the same ground. 2. The facts, succinctly stated, are as under : 2.1 The appellants receive HR/CR coils falling under Tariff Item No. 7208 38 40 under the cover of duty paying documents and duty paid thereon is taken as credit of Cenvat. 2.2 The said coils are subjected to the process of de-coiling and cutting & Slitting as per the drawing and design supplied by the customer i.e. M/s. Twin Metal Products Pvt. Ltd., Madras Export Processing Zones, Special Economic Zones and thereafter, the same are subjected to the process of pickling and oiling before the same are supplied to the said SEZ Unit. Over and above, sheet metal parts are also manufactured. 2.3 By various show cause notices during the period from 2-3-2005 onwards, show cause notices were issued proposi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... availed." C.B.E. & C. vide its Circular No. 927/17/2010-CX., dated 24-6-2010, first time clarified that mere undertaking the process of oiling and pickling as preparatory steps do not amount to manufacture. Based on the said Circular dated 24-6-2010, Asst. Commissioner, vide its letter No. PVI/RC/49/Ajinkya/09-10, dated 24-6-2010 informed the appellants that "Vide Circular No. 911/01/2010-CX., dated 14-1-2010 issued by OSD (CX-8) under F.No. 267/116/2009-CXB it has been clarified that the process of cutting of HR/CR coils of iron or non-alloy steel into sheets or slitting into strips of lesser width; of slitting of sheets into strips will not amount to manufacture and therefore the products are not required to pay the C. Excise duty." In view of this, till 14-1-2010, the appellants' payment of duty and taking credit was proper and legal. The period involved in the present case is March, 2005 to August, 2007. (C) It was only on 24-6-2010, C.B.E. & C. had implemented Tribunal's judgment in the case of Resistance Alloys reported in 1996 (84) E.L.T. 507 (T) and Bothra Metal Industries [reported in 1998 (99) E.L.T. 120 (T)] wherein Tribunal had held that the process of pickling bein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rohibition from payment of duty contained under sub-section (1A) to Section 5A of Central Excise Act, 1944, brought on Statute Book from 13-5-2005, would apply only to cases where goods are exempted under Notification issued under Section 5A(1) and such exemption is granted absolutely. The said barring provision would not apply to the dispute of excisability or otherwise. (F) In support of the appellant's claim that activity undertaken by them amounts to manufacture, the appellants submit as under : (i) Note 6 to Section XVI and XVII under which Chapters 84 to 89 are covered would support the activity as amounting to manufacture. As per the said note, even an incomplete or unfinished blank, that is an article, not ready for direct use, having the approximate shape or outline of the finished article or part, and which can only be used, other than in exceptional cases, for completion into a finished article or a part, into complete or finished article would amount to manufacture. (ii) HR/CR coils were classified under Tariff Item No. 7208 38 40, while the final product has been classified under Tariff Item No. 7208 26 90 and hence, when inputs and final products are classified und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said Circular, it was further clarified that the Circular No. 29/2006-Cus., dated 27-12-2006 reported in 2007 (207) E.L.T. T35 was issued after considering all the relevant points and it was clarified that rebate under Rule 18 is admissible when the supplies are made from DTA to SEZ. The Circular also lays down the procedure and the documentation for effecting supply of goods from DTA to SEZ, by modifying the procedure for normal export. Clearance of duty free material for authorized operation in the SEZ is admissible under Section 26 of the SEZ Act, 2005 and procedure under Rule 18 or Rule 19 of the Central Excise Rules is made applicable mutatis mutandis to give effect to this provision of the SEZ Act, as envisaged under Rule 30 of the SEZ Rules, 2006. (K) Disputed goods are further subjected to various processes to make them parts of vehicles by unit situated in SEZ and then exported by them. The supplies to unit to SEZ are at par with physical exports outside India and as clarified by the Board the export procedure under Rules 18 and 19 and Notifications issued thereunder would apply. (L) As per Rules 18 and 19 of CER, 2002, even if the process is not amounting to manufactur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lex (I) Pvt. Ltd. reported in 2004 (165) E.L.T. 129 (S.C.) in para 9 has held that "But merely because a party mistakenly files a Classification List does not mean that he has to pay duty, if in law, he is not bound to pay duty. If there is no manufacture then the mere fact that a Classification List has been filed would not make them liable to pay duty." (vi) That the Rule of equity can be applied only by High Court/Supreme Court and cannot be exercised by Tribunal. (vii) That the judgments relied upon by the appellants would not apply, in view of Hon'ble Bombay High Court judgment in the case of CCE v. Nicholas Piramal (India) Ltd. reported in 2009 (244) E.L.T. 321 (Bom.), wherein it has been held that law has to be strictly followed. (viii) That the judgment in Crompton Greaves (supra) relied upon by the appellants, has been distinguished by Tribunal in Velere Power India Pvt. Ltd. reported in 2011 (265) E.L.T. 156 (T). (ix) Ld. SDR also prayed for decision on merits, in spite of representation for issuance of Section 5B Notification. 5. In rejoinder, ld. Advocate submitted as under : (a) That the issue in Velere Power India Pvt. Ltd. (supra) was whether duty equal to Cenv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter the process of de-coiling, cutting and slitting into specific sizes and thereafter carrying out pickling and oiling is required to be reversed or not. 7. The learned SDR submits that as per law, the appellants were required not to take CENVAT credit on these goods i.e. HR/CR coils as their activity does not amount to manufacture. Therefore, the CENVAT credit taken by them is wrong and in that event, they are required to reverse the CENVAT credit. He further submitted that the duty was paid without any authority of law. Therefore, the question of allowing the credit on input does not arise. He relies on the decision of Velere Power India Pvt. Ltd. (supra), wherein it was held by this Tribunal that CENVAT credit was taken wrongly and duty equal to CENVAT credit is required to be paid under Rule 3(5) of Cenvat Credit Rules when the activity does not amount to manufacture. In that case the assessee took the credit on the inputs and after processing of inputs, the final products were cleared on lower value. The activity did not amount to manufacture but the duty was paid less at the time of clearance of the goods at lower value although the CENVAT credit was taken more than the dut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 8%/10% of the amount of exempted goods. In that scenario, the Hon'ble High Court held that the assessee is required to reverse 8%/10% of the amount. Therefore, the facts of that case are not relevant to the facts of this case. 9. We have seen from the facts of this case where as per Circular dated 7-9-2001, the activity of slitting of HR/CR coils into strip was amounted to manufacture. It is admitted fact that the said Circular was withdrawn on 2-3-2005. Thereafter, the appellants sought clarification through various letters to the department to clarify whether the composite activity of de-coiling of HR/CR coils, cutting and slitting into specific sizes and thereafter pickling and oiling amounting to manufacture or not. That was clarified only on 24-6-2010. In the case of Resistance Alloys (supra) and P.V. Sanghvi (supra), wherein it was held that process of pickling and oiling would not amount to manufacture, but in the case in hand before us, the appellants were undertaking composite activity of de-coiling of HR/CR coils thereafter cutting and slitting into specific sizes and after that pickling and oiling taken place, which was clarified by the department only on 24-6-2010 sa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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