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TMI Blog2018 (12) TMI 1087X X X X Extracts X X X X X X X X Extracts X X X X ..... f sending the said capital goods from their first job worker to their second job worker. As per the Cenvat Credit Rules, 2004, if the capital goods were not received back within two years from the job worker, the manufacturer had to pay an amount equivalent to the CENVAT credit attributable to the capital goods by debiting the CENVAT credit account - In this case, the capital goods have not been received back from the first job worker even after three years and it is felt that the first principal manufacturer has not paid the Central Excise duty or debit the CENVAT account. Since, the duty has not been paid, the applicant is liable to pay GST while transferring the capital goods from the first job worker to the second job-worker namely M/s. Vasanth Tools Crafts Pvt. Ltd. The provisions of Rule 117 (Transitional Provisions) of the CGST Rules, 2017 provide for tax or duty to be carried forward under any existing law or on goods held in stock on the appointed day. The applicant has not brought on record any details to show that either the first Principal manufacturer or the applicant has submitted the declaration electronically in FORM GST TRAN-I and included the said capital goods in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... HE RELEVANT FACTS HAVING A BEARING ON THE QUESTIONS: That originally machines & moulds were transferred to M/s. Shaily Engineering Plastics limited directly by the supplier of the principal manufacturer namely M/s. MWV India Pvt. Ltd. That further in August 2017 M/S. MWV India Pvt. Ltd. sold part of business under Slump Sale vide BTA dt. 31.08.2016 to Aphrodite Packaging Solutions Pvt. Ltd including subject item of capital goods. Thereafter, the name of the company was changed to M/s. Silgan Dispensing Systems India Pvt. Ltd. form Aphrodite Packaging Solution Pvt. Ltd. Your reference kindly find attached herewith the Name Change Certificate dated. 13.11.2017 marked as ANNEXURE-I. That accordingly, the present application is being filed by M/s. Silgan Dispensing Systems India Private Limited (hereinafter referred to as Appellant). That as informed above the principal manufacturer M/s. MWV India Pvt. Ltd. during the period 2012 had sent machines/ moulds for job work to M/s. Shaily Engineering Plastics Limited (hereinafter referred to as "job-worker"). Brief description the goods sent is attached herewith marked as ANN-II. That subsequently, the Appellant now propose to transfer s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been changed from APHRODITE PACKAGING SOLUTIONS PRIVATE LIMITED to SILGAN DISPENSING SYSTEMS INDIA PRIVATE LIMITED with effect from the date of this certificate and that the company is limited by shares. Company was originally incorporated with the name APHRODITE PACKAGING SOLUTIONS PRIVATE LIMITED. Given under my hand at Mumbai this Thirteenth day of November two thousand seventeen. Registrar of Companies, Mumbai STATEMENT CONTAINING APPLICANTS INTERPRETATION OF LAW IN RESPECT OF THE QUESTIONS RAISED Legal Grounds: i. That prima facie the machines & moulds were originally transferred by M/s. MWV India Pvt. Ltd. to the job-worker under erstwhile Central Excise Act, 1944. That further due to change in the constitution as detailed in annexure A to this application, M/S. Silgan Dispensing Systems India Private Limited is intending to transfer the machines/ moulds to M/s. Vasanth Tools Crafts Pvt. Ltd. ii. That in light of the said factual background, we draw reference to section 141 of the CGST Act, 2017 which provides for transitional provisions relating to job work. That sub-section 1 of section 141 deals with goods removed to job worker. For your reference the extracts o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Mad.)- Nirma Limited = 2012 (10) TMI 832 - MADRAS HIGH COURT Held: The law is not a brooding omnipotence in the sky' but a pragmatic instrument of social order, as was opined by the Larger Bench of the Apex Court in Carew & Co. Ltd. v. Union of India, (1975) 2 SCC 791 = 1975 (8) TMI 91 - SUPREME COURT OF INDIA. It was further held in that case that if the language of the statute does not admit of the construction sought, wishful thinking is no substitute for that, thereby holding that purposive interpretation is always progressive in nature. 2010(262) ELT 50(SC)- Balwant Singh = 2010 (7) TMI 556 - SUPREME COURT OF INDIA Held: Interpretation of statutes - Legislative intention - Provisions of statute including every word to be given full effect keeping legislative intent in mind to ensure achieving projected object - No provision treatable as enacted purposelessly - Court not to give interpretation to provisions to render them ineffective or odious. iv. That accordingly when the statue fails to provide any mechanism then intention of the legislature cannot be assumed. Implying thereby that when the legislature fails to provide for an enactment the subordinate legislation cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l goods/moulds were transferred by M/s. Meadwestvaco India Pvt. Ltd. (hereinafter referred to as "MWV") to M/s. Shaily Engineering Plastics Ltd. (hereinafter referred to as "Shaily" for sake of brevity), and Shaily had availed credit on the said capital goods/ moulds. That subsequently the business of Meadwestvaco was transferred as a going concern to M/S. Aphrodite Packing Solutions Pvt. Ltd. with effect from 31.08.2016. Thereafter the name of the company was changed to M/s. Silgan Dispensing Systems India Pvt. Ltd (hereinafter referred to as "SiIgan") vide name change certificate dt-13.11.2017 That Sec 143 of the CGST Act, 2017 provides that any inputs or capital goods can be sent to a job worker for job-work & from there subsequently to another job worker without payment of tax. Accordingly when the capital goods/ moulds Will be transferred from Shaily (1st Job worker) to Vaganth Tools Crafts Pvt. Ltd (2nd Job worker), hence in light of the said provision of law & factual matrix no GST shall be leviable on such transfer of capital goods/ moulds. That further section 141 of the CGST Act, 2017 provides for transitional provisions in respect of inputs specifically, whereby it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nth Tools Crafts Pvt. Ltd (hereinafter referred to "M/s. Vasanth for sake of brevity). That for your reference kindly find attached herewith copy of Challan and E-way bill duly marked as ANNEXURE-C. That accordingly, the present application is being filed by M/s. Silgan in order to seek clarity in respect of the legal position that whether transfer of capital goods/moulds by the 1st Job worker to 2nd job worker will constitute as "'Supply" under CGST Act, 2017 or not. Legal Submissions: i. That in light of the above factual position, we prima facie crave leave to refer and rely upon section 143 of the CGST Act, 2017 which provides as below: A registered person (hereinafter in this section referred to as the "principal l') may under intimation and subject to such conditions as may be prescribed, send any inputs or capital goods, without paymen t of tax, to job workerfor job-work andfrom there subsequently to another job worker and likewise: ii. That accordingly capital goods/ moulds transferred from M/s. Shaily (i.e.) 1st Job worker to M/s. Vasanth Tools Crafts Pvt. Ltd (2nd Job worker) are squarely covered by provisions of Section 143 of CGST Act & GST on such transfer of cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) where the principal is engaged in the supply of such goods as may be notified by the Commissioner. v. That under the present application, the capital goods/ moulds were originally transferred by M/s. MWV, principal manufacture to M/s. Shaily, 1st Job worker, and Cenvat Credit on such transfer of capital goods/ mould was availed by M/S. Shaily as consignee/ recipient of goods as provided/ permitted under erstwhile Cenvat Credit Rules. It is most humbly submitted that when Capital Goods/ Moulds belonging to principal manufacturer are transferred from the premises of supplier of principal manufacturer directly to job worker of principal manufacturer as "Consignee & Cenvat credit on such transfer is availed by job worker of principal supplier, provisions of Rule 4(5)(b) of erstwhile Cenvat Credit Rules,2004 for receipt back Of such capital goods/ moulds by principal manufacturer within stipulated time lime of two years are not applicable as provided in light of Circular No. 637/28/2002-CX., dt. 08.05.2002. Accordingly in appreciation of the Circular dt. 08.05.2002, the stipulated time of two years as provided under rule 4(5)(b) is admittedly not applicable in case where cenvat Cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods by principal manufacturer after completion of job work cannot be extended retrospectively to a transaction which was principally & originally undertaken under the erstwhile Central Excise Act, 1944 as the CGST Act, 2017 neither can receive anything which was not in force at the time of repeal nor affect any privilege accrued under repealed act and especially in absence of any transitional provisions which governed the transition of the erstwhile law to the present law. viii. That moreover, Hon'ble Mumbai Bench in the case of Balmer Lawrie & Co. Ltd. as reported in 2014(301) ELT 573 = 2014 (2) TMI 545 - CESTAT MUMBAI has held that Every statutory provision is prospective unless explicitly provided to be retrospective by legislature - Interest liability upheld - Rule 14 of Cenvat Credit Rules, 2004 read with Section 11AB of Central Excise Act, 1944. ix. That similarly, the Hon'ble Gujarat High Court in the case of Goyal Traders as reported in 2014(302) ELT 529 = 2011 (8) TMI 720 - GUJARAT HIGH COURT has explained that Amendments, either creating fresh liability hitherto not existing, or extinguishing accrued rights would be considered prospective unless the statute either speci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. In the alternative, the challan issued by the principal may be endorsed by the job worker sending the goods to another job worker, indicating therein the quantity and description of goods being sent. xv. On bare perusal of the above detailed clarification a clear understanding can be attained that if the job worker intends to move goods to another job worker the same can be done by issuing a Challan either by the principal or the job-worker on endorsement of the challan by the principal, Implying thereby that the goods can be transferred by the principal manufacturer from one job-worker to another job-worker without any GST. xvi. Accordingly, in absence of any transitional provisions for receipt of capital goods by job worker under erstwhile Central Excise Act, 1944, the transactions of subsequent transfer of capital goods/ moulds from 1st job worker to 2nd job worker upon request of principal manufacturer under "job work process" would not constitute as" Supply" & accordingly GST is not payable on such transfer. Additional Submissions on 26.07.2018 This is reference to above subject matter. That in light of the hearing dt.26.07.2018, Your Honour had insisted upon clarificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d understanding can be attained that the transitional provisions solely covered inputs and their removal as such and further there exist no provision of law under CGST Act, 2017 providing for any ITC reversal mechanism in respect of removal of capital goods as such or after use hence in the scenario when the said provision failed to provide any explanation in respect of capital goods then no reversal on as such removal can be Subjected to capital goods and molds and tools in light and appreciation of the Section 141 dealing with transitional provisions and section 174 being the repeal and savings clause emphasizing that once the act is repealed no right, privilege, obligation or liability acquired can be made applicable to the present Act. That in light of the said submission we make a humble request before your Honour to kindly appreciate the factual as well as legal position as involved under the present application and pass an appropriate order. 03. CONTENTION - AS PER THE CONCERNED OFFICER The submission, as reproduced verbatim, could be seen thus- It is submitted that, Issue on which advance ruling is required: M/s. Silgan Dispensing Systems India Pvt. Ltd., 37/1966, Omkar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eas goods under consideration are capital goods in the nature of machines and moulds and in absence of any specific provision under the transitional provisions in respect of receipt of capital goods by job-worker under erstwhile Central Excise Law & lying with him as on appointed date of GST, present transfer of capital goods will not entail any GST liability. In support of the above said contention, the applicant relied upon the following judgements. a. 2014 (299) ELT 3 (Mad.) = 2013 (11) TMI 240 - MADRAS HIGH COURT - Metal Weld Electrodes. b. 2012 (283) ELT 188 (A.P.) = 2012 (10) TMI 873 - ANDHRA PRADESH HIGH COURT - IDBI Ltd. c. 2012 (281) ELT 321 (Mad.) = 2012 (10) TMI 832 - MADRAS HIGH COURT - Nirma Ltd. d. 2010 (262) ELT 50 (SC) = 2010 (7) TMI 556 - SUPREME COURT OF INDIA - Balwant Singh. 4. Further, the applicant relied upon Para 8.4 of the CGST Circular No.38/12/2018 dated 26.03.2018, which provides that where goods are sent from one job worker to another job worker, the goods may move under challan issued either by the principal or the job worker. In the alternative, the challan issued by the principal may be endorsed by the job worker sending the goods to another job ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arding Job work under the Central Excise is as under: Rule 4(5)(b)(ii) & (iii) of Cenvat Credit Rules, 2004 (ii) As per the above Rule, the Cenvat Credit on capital goods shall be allowed even if any capital goods as such are sent to a job worker for further processing, testing, repair, reconditioning etc., for the manufacture of final products or any other purpose, and it is established that the capital goods are received back by the manufacturer or the provider of output service, as the case may be, within two years of their being so sent: (iii) If the capital goods are not received back within the time specified (i.e. two years) by the manufacturer, the manufacturer shall pay an amount equivalent to the CENVAT credit attributable to the capital goods by debiting the CENVAT credit. In this case, M/s. MWV India Pvt. Ltd., (ie. first principal manufacturer) sent capital goods for job work to M/s. Shaily Engineering Plastics Limited (job worker) during the period 2012-13 & 2013-14. The applicant has taken over the business (including the capital goods) of first principal manufacturer in August, 2017. Till such time the capital goods was there with the Job worker viz. M/s. Shai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No.3 of the above Circular, it is mentioned that if the time frame of three years for bring back capital goods is not adhered to the activity of sending the goods for job work shall be deemed to be a supply by the principal on the day when the said capital goods were sent out by him. PRAYER In this case the following information is not available: a) The Cenvat Credit on the said Capital Goods have been availed/ taken by the Principal Manufacturer(M/s. MWV India Pvt. Ltd.,) or by the Job Worker (M/s. Shaily Engineering Plastics Limited) in 2012-13 and 2013-14. b) The Job Worker had been paying Central Excise Duty while clearing the finished goods/semi finished goods to the Principal Manufacturer (M/s. MWV India Pvt. Ltd.,) or otherwise. c) the first principal manufacturer has submitted the declaration electronically in FORM GST TRAN 1 and included the said capital goods in his TRAN-I (as on 30.06.2017) or otherwise; d) When the applicant took over the business of first principal manufacturer in August, 2017, it has to be seen whether the said capital goods are shown in his books of accounts i.e. shown the capital goods as his assets or otherwise; e) the applicant after takeov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b-worker namely M/s. Vasanth Tools Crafts Pvt. Ltd. The said capital goods were transferred to their earlier job worker in the year 2012, under the Erstwhile Central Excise Rules and prior to the introduction of GST. They have also submitted that when the capital goods/ moulds were originally transferred by them to the first job worker, on such transfer of capital goods/mould cenvat credit was availed by the first job worker as provided/ permitted under provisions of Rule 4(5)(b) of erstwhile Cenvat Credit Rules,2004, provisions of Rule 4(5)(b) of erstwhile Cenvat Credit Rules,2004 for receipt back of such capital goods/ moulds by principal manufacturer within stipulated time lime of two years are not applicable as provided in light of Circular No. 637/28/2002-CX., dt. 08.05.2002. Hence in terms the Circular dt. 08.05.2002, the stipulated time of two years as provided under rule 4(5)(b) was not applicable in case where cenvat Credit was availed by the first job worker as consignee/ recipient of goods on behalf of principal manufacturer. We reproduce the said Circular No. 637/28/2002-CX., dt. 08.05.2002 which is as below:- Circular No.637/28/2002-CX 8th May, 2002 F.No. 267/12/200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransitional Provisions and have submitted that on bare reading it can be construed that the said provisions are confined only to inputs, whereas goods under consideration are capital goods. Hence they have come to a conclusion that when the transitional provisions have not detailed any provision in respect of capital goods/moulds then admittedly the same deserved to be cleared without payment of duty since essentially the duty was paid at the time of receipt of the said goods under the erstwhile Central Excise Act, 1944. Here they seem to have slipped on the fact that the cenvat credit of the said capital goods had been availed by the first job worker, as stated by them earlier in their submissions. They have also relied upon the CGST Circular no: 38/12/2018 dated 26.03.2018 and have submitted that para. 8.4 of Circular dated 26.03.2018 provides that where goods are sent from one job worker to another job worker, the goods may move under Challan issued either by the principal or the job worker. In the alternative, the challan issued by the principal may be endorsed by the job worker sending the goods to another job worker, indicating therein the quantity and description of goods b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provider of output service taking the CENVAT credit that the capital goods are received back by the manufacturer or the provider of output service, as the case may be, within two years of their being so sent: Provided that credit shall be allowed even if any capital goods are directly sent to a job worker without their being first brought to the premises of the manufacturer or the provider of output service, as the case may be, and in such a case, the period of two years shall be counted from the date of receipt of the capital goods by the job worker; (iii) if the inputs or capital goods, as the case may be, are not received back within the time specified under sub-clause (i) or (ii), as the case may be, by the manufacturer or the provider of output service, the manufacturer or the provider of output service shall pay an amount equivalent to the CENVAT credit attributable to the inputs or capital goods, as the case may be, by debiting the CENVAT credit or otherwise, but the manufacturer or the provider of output service may take the CENVAT credit again when the inputs or capital goods, as the case may be, are received back in the factory or in the premises of the provider of out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he purposes of this Act, the expression "supply" includes-- (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; (b) …………………………………..; (c) the activities specified in Schedule I, made or agreed to be made without a consideration; and (d) the activities to be treated as supply of goods or supply of services as referred to in Schedule II. (2) Notwithstanding anything contained in sub-section (1),-- (a) activities or transactions specified in Schedule III; or (b)……………………………………. (3) Subject to the provisions of sub-sections (1), and (2), the Government may, on the recommendations of the Council, specify, by notification, the transactions that are to be treated as- (a) a supply of goods and not as a supply of services; or (b) a supply of services and not as a supply of goods. From the submissions made by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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