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TMI Blog2019 (2) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... red and supplied by their Unit-I, Hosur, they were cleared on payment of duty under Section 4A ibid. It appeared that such packed and MRP marked goods received from Unit-I were cleared as such by the appellant to the spares market; that retail packing by affixing the brand name "M/s.LUK India" and MRP etc. was carried out by the appellant only on those goods that were supplied by other vendors. However, cenvat credit was taken by appellants on goods received from both from other suppliers as well as from Unit-I. Department took the view that goods received from Unit-I was merely for logistics purpose and did not qualify as an "input" for the appellant since they did not undergo any deeming manufacturing activities such as packing / re-packing, labelling/ re-labelling, affixing of new MRP labels; that the activity carried out by appellant on such goods did not fall within the ambit of "manufacture" as defined in Section 2(f) of the Act. Accordingly, a show cause notice dt. 31.01.2012 was issued to appellants inter alia, recovery of cenvat credit availed on goods received by them from Unit-I, demand of such cenvat credit taken by the appellants for the period September 2010 to March ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... September 2010 to March 2012, the appellant has changed the entire packing and removed the MRP labels of goods received from Unit - I, which were then cleared for export. Goods worth Rs. 2,12,49,809/- were exported. In terms of Rule 16(1) of the Central Excise Rules, 2002, the appellant is eligible to take credit of such goods by treating them as inputs. Reliance is placed on a decision of the Hon'ble Tribunal in the case of NCL Industries Ltd Vs CCE, Guntur - 2016 (337) ELT 438 (Tri.- Hyd.) & S.Kumars Nationwide Ltd Vs CCE - 2014 (312) ELT 725 (Tri.Del.) b) Cenvat Credit taken on goods cleared on upward revision of prices: Goods worth Rs. 79,10,915/- were removed after upward revision of prices. Therefore, new labels with MRP were fixed and duty was paid on the revised MRP. Hence, the goods received from their Unit I clearly fall within the definition of 'inputs'. Reliance is placed on the decisions of the Hon'ble Tribunal in the case of Crompton Greaves Ltd. v. Commissioner - 2008 (230) E.L.T.488 (Tribunal) and Vickers Systems International Ltd. v. Commissioner - 2008 (229) ELT 298. c) Cenvat credit availed on inputs removed as such : Gods on which no processes were done wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, Hosur, vide letter dt. 21.11.2012 had requested the appellant to furnish certain details for the period from September 2010 to March 2012, including details of manufacturing activity undertaken by appellants on goods received from Unit-I, percentage of quantum of inputs used in the manufacturing activity, percentage of quantum of inputs cleared as such and reversal of credit and percentage of quantum of export and credit availed. In response, appellants vide a letter dt. 30.11.2012 had referred to their reply to the Commissioner dt.27.09.2012 and submitted the duty payment details in an enclosed sheet. x) In view of the above, the Cenvat credit of Rs. 11,54,59,277/- availed on goods received from Unit-I is entirely in order. Therefore, the consequential demand of Rs. 90,85,559/-, being the Cenvat credit utilised for payment of duty, is liable to be set aside as the credit availed is eligible. xi) It is also submitted that the entire demand is hit by limitation. All the transactions are covered by invoices and reflected in the ER-1 returns. There is no allegation of evasion of duty in as much as all the goods were cleared from the factory on payment of duty as required. The imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t-I to processes which amounted to "deemed manufacture". 4. Heard both sides and have gone through the facts of the case. 5.1 The main allegation of the department is that clutch assemblies received from their Unit-I did not undergo any manufacturing activities such as packing / repacking, labelling / relabeling, affixing of new M.R.P rates. Hence no manufacturing activity has been carried out, and in consequence, the input credit in respect of duty paid on such goods by Unit-I cannot be availed by appellants. 5.2 In this regard, it would be useful to reproduce the definition of "manufacture" as was applicable during the period of dispute in Section 2(f) of the Central Excise Act, 1944 as under : (f) "manufacture" includes any process, - (i) incidental or ancillary to the completion of a manufactured product; ii) which is specified in relation to any goods in the Section or Chapter notes of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as amounting to manufacture; or iii) which, in relation to the goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or lebelling or relabeling of containers including th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter the personal hearing, the Range Superintendent of Central Excise vide letter dt.21.11.2012 has sought the following details : (i) The details of manufacturing activity undertaken at M/s.Luk India Private Ltd., Unit-II Hosur on the goods received from M/s.Luk India Private Ltd., Unit-I Hosur. (ii) In respect of the goods received at Unit-II from Unit-I (iii) The percentage of quantum of inputs used in the manufacturing activity, credit availed on such inputs and details of duty paid (b) The percentage of quantum of inputs cleared as such as and reversal of credit. (c) The percentage of quantum of export and credit availed. In response, vide their letter dt. 30.11.2012, reiterated the data / information supplied to the adjudicating authority by them earlier. 5.7 From the impugned order, we however find that the adjudicating authority has not addressed or analysed the data supplied by the appellants. The adjudicating authority has also not addressed the claim of the appellants that wherever there has been no "deemed manufacture" as per Section 2f (3) of the Act, they have reversed the credit in terms of Rule 3 (5) of CCR and that for export clearances they are not required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to be exported under bond without any reversal of the credit. 5.10 Coming to penalty, we find that entire dispute pertains to interpretation of the provisions relating to "deemed manufacture" and in particular, the eligibility to avail cenvat credit on goods. We also find that appellants have consistently provided all the necessary details to the department as and when called for including reply dt. 13.10.2011 in response to audit party's queries dt. 6.9.2011. In the circumstances, we find that penalty of Rs. 11,54,59,277/- and Rs. 90,85,559/- imposed under Rule 15 of CCR 2004 / Section 11AC of the Central Excise are uncalled for and required to be set aside, which we hereby do. 5.11 We also find that the demand of Rs. 90,85,559/- has been made only on the grounds that the amount pertains to duty discharged on clearances of goods by adjusting from allegedly ineligible cenvat credit of Rs. 11,54,59,277/-. Since the latter amount had already been proposed to be recovered in para 11 (ii) of the SCN, it is obvious that further demand of part of that amount namely Rs. 90,85,559/- proposed para 11 (v) of the SCN will only amount to double jeopardy. Hence the demand of Rs. 90,85,559/ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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