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TMI Blog2019 (1) TMI 1381X X X X Extracts X X X X X X X X Extracts X X X X ..... t is only a case where one division allotted the work to another. The demand of cenvat on the one hand from the principal manufacturer on raw material which reached to the job worker and demand of duty from the job worker on the finished goods manufactured from such raw material itself proves that the raw material was used for the intended purpose only. Thus in such case the cenvat credit to the principal manufacturer i.e SP and SSTP Division cannot be denied. We also find that one of the reason for demanding duty from the job worker unit is that the certificates issued under Notification No. 108/95 – CE dated 28.08.1995 did not contain its name. In this context we find that it is not disputed that the job workers had manufactured finished goods on job work basis on behalf of principal who has cleared the goods to the intended recipient. In such case we do not find any reason to demand duty from the job worker. As far as demand of cenvat credit against SSTP plant and SP plant is concerned we find that it is not in dispute that the goods were manufactured on their behalf by Jamnagar Mobile Plant who is job worker. Thus for all purposes it is SSTP and SP Plant who are the principal m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,000/- Shri J M Singhvi 2,05,50,000/- Shri D.N. Patel 33,34,000/- 2. The brief facts of the case are that Appellant M/s Ratnamani Metals & Tubes Ltd are engaged in manufacture of MS/ CS Saw Pipes, Spiral SAW Pipes etc. and SS Seamless/Welded Pipes & Tubes falling under chapter 73 of the CETA, 1985. They are having central excise registered manufacturing facilities as under: 1. Chattral - Saw Pipes (SP) Divison 2. Inrad/ Mehsana - Stainless Steel Tubes & Pipe (SSTP) Division 3. Bhimasar, Kutch - All types of Pipes and Gunniting 4. Jamnagar Mobile Plant - M.S. Bare Pipe and gunniting 5. Dehgam Mobile Plant - M.S Bare Pipes During the impugned period the aforesaid divisions undertook manufacturing activities of Pipes which were numbered by them as Work Order No. 465 (Lot 8 and Lot 5), Work Order No. EXP - 210, Work Order No. EXP - 216, Work Order No. EXP - 207, Work Order No. EXP - 246, Work Order No. 7156, Work Order No. 9246, Work Order No. 454, Work Order No. 456 and Work Order No. 468. However looking to operational and technical necessities the above work orders were got completed by one division from other Division as job work. The revenue objected to the same and aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l SP Division were allotted the work orders and the said two divisions made application to the jurisdictional Commissioner to clear gunetted pipes from Jamnagar Mobile Plant to GWSSB without disclosing that earlier they had informed to AC, Jamangar having jurisdiction over Jamnagar Plant for procurement of goods without payment of duty and to fit into the scheme, the movement of raw material was shown from these two divisions to Jamnagar Mobile Plant, even if the raw material had not been received by them and was directly consigned to Jamnagar Mobile Plant. The finished goods were also dispatched to GWSSB directly from Jamnagar Mobile Unit, but the dispatch was shown under the invoice of SSTP Division and SP Division. That no undertaking under Notification No. 214/86 -CE dated 25.03.1986 was filed with the said division before jurisdictional authorities and therefore the Jamnagar Mobile Plant cannot be considered as job worker. Even the permission given by the Commissioner was subject to fulfilment of condition of Trade Notice No.36/2003 that the original and duplicate copies of challan shall accompany the inputs or partially processed an input which was not followed. The Jamnagar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion and Kutch Division did not undertake any activity. Central Excise duty of ₹ 2,32,22,735/- was demanded from Kutch Division on the ground that the goods covered by Work Order No. 465 Lot 5 was manufactured by Kutch Division but the same were cleared under invoices of SP Division. Further that Export goods covered under Work Order No. 210,216 and 207 were though manufactured by Kutch Division but were cleared on invoices of SSTP Division; Central Excise duty of ₹ 5,79,34,667/- was demanded from Kutch division on the ground that the pipes covered under Work Order no. 465 (Lot 8) were manufactured by Jamnagar mobile Plant but were cleared under the cover of invoice of SSTP Division Or SP Division. It was also proposed to confiscate the raw material used in finished goods on the ground that the wrong credit has been availed by Kutch Division. Similarly the finished goods were proposed to be confiscated on the ground of having been cleared without payment of duty. It was also proposed to impose penalty under rule 25 and section 11AC upon Kutch and Jamnagar Mobile Plant. Penalty under rule 26 was also proposed on SP Division, SSTP Division and Dehgam mobile Plant and Kutch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erial nor the finished goods. That in response to same they furnished all the information as required under trade Notice No. 36/2003 and the permission was granted to them on 27.05.2005 for Chhatral unit and on 20.05.2005 for Indrad unit. In accordance with these permissions, the job work was got done. He submits that in case of job work of Chhatral Unit in relation to Work order No. 465 (Lot 5) from Kutch and Dehgam Units, the pipes manufactured by them on jobwork basis were received back by them and were cleared for gunniting to another job worker namely Shreeji Constructions, Kalawadas as per the specific permission granted to them under Rule 4 (6) of CCR. He also submits that the department has relied upon the statement of Partner of Minaxi handling Service and some employees to the effect that the pipes manufactured at Kutch Division on job work were not returned to Chhatral unit is incorrect assertion as it did not concern these movements. The statements of employees of the company about LR being issued without movement of the goods does not relate to transaction of job work between Chhatral-Kutch - Shreeji construction or Chhatral-Dehgam-Shreeji constructions. The statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SB, he submits that such supplies were of two types viz. Pipes that were exported and Pipes manufactured for domestic sale. In case of Pipes manufactured for exports under Work Order No. EXP-207, EXP-201, EXP - 216 and EXP 246, he submits that in case of EXP-207 and EXP 210 the raw material were imported under Advance licence and no cenvat credit was availed, In case of Exp-216 and EXP- 246, the credit of ₹ 5,56,372/- and ₹ 2,87,093/- was availed by Indrad unit and the goods were manufactured by Kutch Unit on job work. The adjudicating authority has denied cenvat to M/s Indrad Unit and has demanded duty of ₹ 98,88,639/-. The demand has been confirmed on the ground that entire manufacturing process was carried out at Kutch Division which is job worker. He submits that the jobwork process was carried out under Rule 4 (5) (a) which permits a job worker to carry out all operations relating to manufacture of goods. He relies upon the definition of Job work and judgments rendered in this context Aries Dyechem Industries Vs. CCE, Ahmedabad 201 (257) ELT 113 (TR) as affirmed by Gujarat High Court reported in Commissioner Vs. Aries Dyechem Industries 2014 (299) ELT A88 (Gu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndertaken by them, the credit is not admissible. He submits that the inputs initially were wrongly sent to Kutch Plant by Essar Steel, however were subsequently delivered at Chhatral and the invoices were rectified. The Kutch Plant started doing Commercial production only in 2005 and there is no manipulation of record and therefore there is no reason to deny the credit. 9. He submits that the adjudicating authority has demanded full duty on goods supplied to GWSSB as well as denying credit to the inputs used in the goods involved which is contrary to the object of the Notification No. 108/95 - CE dated 28.08.1995. He submits that both the mobile plants at Dehgam and Jamnagar were extension of the main plants of Chhatral and Indrad and it is an undisputed fact that both mobile plants were set up only to cater requirement of pipes to be supplied to GWSSB. Therefore all the plants of the Appellant ought to be considered as one unit. He relies upon on Apex Court judgment in case of M/s Vikram Cement Vs. Commissioner 2006 (194) ELT 3 (SC). He further submits that the demands are barred by limitation as the full disclosures of facts were made in the applications filed by the Appellants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om job worker and disallowance of cenvat credit to the so called principal manufacturer namely SP & SSTP Division is not in contradiction to the permission granted under rule 4 (6). In their application filed under rule 4 (6) there was no mention that the inputs shall be directly sent to the job worker. The SP and SSTP Division thus cannot be called as manufacturer. He relies upon CESTAT Order in case of M/s Safelex International Ltd 2014 (302) ELT 65 (TRI). He submits that SP Division and SSTP Division are not entitled for the credit as in terms of Rule 4 (5) (a) the inputs, semi finished goods or the finished goods were not received within 180 days. In respect of duty demand on goods cleared to GWSSB he submits that since the certificates under 108/95- CE did not have their name appearing in the certificates therefore the demand is sustainable. He relies upon the judgment in case of DEE Development Engineers Ltd. 2010 9254) ELT 412 (P & H). The job worker is not exempted from payment of duty because the said rule 4 (5) of CCR is facility to the principal manufacturer to send the inputs on which cenvat credit has been availed and nothing to do with payment of duty as held in case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 7,55,570/- and ₹ 80,61,828/- has been denied to SP and SSTP Division respectively he submits that the credit is not admissible as they had maintained separate account of the final product cleared under Nil Rate of duty and hence the 10% reversal under Rule 6 of CCR is not applicable. In case of Work Order No. 456 related to SP Division wherein cenvat of ₹ 28,92,922/- has been denied, he submits that the raw material was delivered at Kutch Division and therefore the credit is not available to Kutch Division. 12. In reference to demand of duty of ₹ 5,16,47,075/- from Jamnagar Mobile Plant in reference to work Order No. 465 (Lot 8) which were cleared under invoice of SSTP Division he submits that SSTP division did not claim benefit of Notification No. 214/86 -CE, hence Jamnagar Mobile Plant is liable for duty. He relies upon Tribunal order in case of Federal Mogul Goetze India Ltd. 2015 (318) ELT 340 (TRI) and International Engg. & Mfg. Serv. P. Ltd. 2001 (135) ELT 551 (TRI) as upheld by Apex Court in 2002 (139) ELT A88. In respect of demand of duty of ₹ 62,87,591/- from Jamnagar Mobile Plant which were cleared under invoice of SP Division he submits tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmits that similarly cenvat creit of ₹ 70,30,870/- availed by SP Division on raw materials directly cleared to Dehgam Mobile Plant is not available to them since the procedure under Notf. No. 214/86 -CE was not followed by them. 16. In respect of Pipes manufactured for Exports and domestic supplies other than Clearances made under Notf. No. 108/95, the Ld. Special Counsel for the revenue submits as under: "As regard pipes manufactured for purpose of Export under Work order No. EXP-207 and which were cleared for export by SSTP Division the duty of ₹ 29,33,719/- stands demanded from Kutch Division. He submits that the manufacturing took place at Kutch Division and therefore the duty is to be paid by them. Further he submits that for the same reason duty of ₹ 47,68,608/- is to be paid by Kutch Division in respect of Work Order No. EXP -210 in which the export goods were exported under invoice of SSTP Division. In respect of 138 pipes valued at ₹ 8,05,673/- under export order no. 210 which were sent to SSTP Division but were not exported, he submits that the duty of ₹ 1,31,486/- is payable. In case of Work Order No. EXP -216 wherein the goods were export ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst Kutch Division on similar nature of supplies made to GWSSB under Notf. No. 108/95 - CE dated 28.08.1995 has been made. Also credit of ₹ 89,47,290/- availed by SP Division on inputs used in manufacture of such finished has been denied. Similarly a demand of ₹ 1,03,52,230/- from Dehgam Plant has been made on the goods which was cleared by them under invoices of SP Division to GWSSB. The reason to make duty demand is mainly that the raw material was directly sent from the manufacturer to the factory of the job worker and after manufacture of goods the same without being brought back to the factory of the Principal manufacturer was cleared directly to GWSSB. It has been contended by the revenue that the Principal manufacturer did not follow the job work provisions under Notification no. 214/86 - CE and hence the job worker M/s Jamnagar Mobile Plant being manufacturer is liable for duty. For the same reason that the Principal manufacturer did not bring either the raw material or intermediate goods or the finished goods to their factory and the clearance of finished goods did not take place from their factory, the cenvat credit has been denied to them. We find that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipal manufacturer i.e SP and SSTP Division cannot be denied. We also find that one of the reason for demanding duty from the job worker unit is that the certificates issued under Notification No. 108/95 - CE dated 28.08.1995 did not contain its name. In this context we find that it is not disputed that the job workers had manufactured finished goods on job work basis on behalf of principal who has cleared the goods to the intended recipient. In such case we do not find any reason to demand duty from the job worker. Moreover it is also a fact that the goods were eligible for the exemption. It has been held by the Tribunal that the exemption is available even if the job worker name is not stated in the certificate as the fact of clearance is not disputed. We find that the Hon'ble Rajasthan High Court in case of COMMISSIONER OF CENTRAL EXCISE, ALWAR Vs. KAMDHENU ISPAT LTD. 2017 (348) E.L.T. 64 (Raj.) while dealing with the similar issue dropped the demand holding as under: 7. We have heard learned counsel for both the parties. 8. Taking into account the reasoning adopted by the Commissioner (Appeals), particularly, at Page 46 wherein it has relied various decisions of Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n view of above discussion, I observe that in the said notification there is no specific requirement that the certificate issued by the competent authority should be issued in the name of the appellant/assessee. The act of importing additional condition, which is not mentioned in the notification, by way of interpreting the notification is not tenable. I also find that the Adjudicating Authority has erred in importing additional conditions which were not present in the notification. 11. I also find that, the appellant has submitted a certificate from executive head of the Project Implementing Authority and countersigned by Principal Secretary or the Secretary (Finance) in the concerned State Govt., that the said goods are required for the execution of the said project. This is not a case where the goods have not been supplied to the specified project or diverted. There is no allegation on the appellant about non-supply of the goods for the specified project. Thus, I find that, the appellant has submitted a clarification later on by their letter dated 2-5-2005, and they supplied the goods to the specified projects, which has not been denied, therefore, the benefit of Notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he exemption under notification No. 108/95- CE cannot be denied. The operative portion of the order is as under: 8. We do not find any justifiable ground to interfere with the order of the CESTAT based on a factual finding and there was no material placed by the Revenue on the allegations of the possible misuse of the goods for unintended purposes by the sub-contractors. Secondly, being the beneficial Notification issued in public interest and the project itself being executed fully by the Contractors as per the directions of the Project Implementing Authority, the fact that the machineries were not given directly to the project implementing authority but given to the agency executing the work in fact cannot go against the assessee's claim. Thus ultimately, as the machineries had been put in use by the sub-contractors, who were given the job of execution the claim for exemption cannot be denied. The use of the phrase 'supplied to the projects financed by the said United Nations or an International Organisation and approved by the Government of India' clearly shows that the condition for grant of exemption is supply of the goods towards the project and nothing beyond. The extract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly from the premises of the job worker, it itself shows that both the divisions were considered as principal manufacturer and eligible for credit of the raw material so used by the job worker. The order of Tribunal relied upon by the revenue in case of M/s Safelex International Ltd is not applicable to the present set of facts as in the said case no factory was in existence of Principal manufacturer who was supposed to get the goods manufactured under Notification No. 214/86 and it was a small shop with no machinery whereas in the present case the Principal manufacturer is itself a big plant and existence of factory is not in question. Further the larger Bench judgment in case of Thermax Babcock & Wilcox Ltd. Vs, CCE, Pune - I 2017 (12) TMI 266 - CESTAT - LB is not applicable in the present set of facts as principal manufacturer did not absolve themselves from payment of duty wherever payable. 19. As regard demand of cenvat from the principal manufacturers and job worker in case of pipes manufactured for exports or domestic customers we find that in case of Work Order No. EXP-207, EXP- 210 and EXP-216, the duty of ₹ 29,33,719/-, ₹ 47,68,608/- and of ₹ 21,84,312/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een disputed. Hence now the duty demand cannot be made from SSTP Division. Further in case of same work order demand of credit of ₹ 6,71,230/- has been made from Kutch Division on the ground that an amount of credit of ₹ 1,65,944/- was used in pipe manufactured at SSTP Division from coil sent by Kutch Division. However it also remains a fact that the pipes so manufactured were cleared by Kutch Division on payment of duty, hence there is no reason to deny cenvat to Kutch Division. Similarly in case of remaining amount of Credit of ₹ 5,05,275/- the duty on pipes stands paid by the Kutch Division. The SS Plates were used at SSTP Division to manufacture such pipes. When the manufacture of pipes and clearance of same on duty payment by Kutch Division is not in dispute, there is no reason to demand cenvat on SS Plates so used. Thus the demand is not sustainable. The tribunal in case of M/s Maschmeijer Aromatics (I) Ltd. vs. CCE 1980 (46) ELT 395 (TRI) held that modvat is available even in case of inputs sent out of factory for further processing but necessary permission not taken from Collector, if inputs after reprocessing utilised for end-product for which MODVAT conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... barred, we find that the issue involved is interpretation of job work rules and procedure and not of causing intentional loss of revenue. Whatever goods were cleared were either exempted from duty under Notification No. 108/95- CE dated 28.08.1995 or were cleared for exports or were cleared into domestic market on payment of applicable duty. All the receipts of raw material and the clearance of finished goods stands recorded in statutory books. Moreover it is also a fact that all the division which availed credit or from which the finished goods were cleared belong to the same company and the duty if payable by one division was availed as credit to other division or was refundable. In our view in such scenario there is no reason to hold that the Appellant had any intention to evade duty. We thus hold that the demands are not sustainable being barred by limitation. 24. For the above reasons and findings we hold that the demands and penalties against the Appellant M/s Ratnamani Metals & Tube Ltd. are not sustainable. Consequentially the penalties imposed upon all the other remaining appellants are also not sustainable. We therefore set aside both the impugned orders dated 26.11.2013 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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