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TMI Blog2023 (11) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessable value but also upon the fact that the transformer oil is used in the process of manufacture for inspection and testing of transformers and not cleared as such . The transformer oil purchased by the respondent was used inside the factory in the process of manufacture and only for convenience has been transported in barrels along with finished product. The transformer oil is not cleared as such - there are no grounds to interfere with the impugned order. The same is sustained. The appeal filed by the Department is dismissed. - HON BLE MS. SULEKHA BEEVI C. S., MEMBER ( JUDICIAL ) And HON BLE MR. VASA SESHAGIRI RAO , MEMBER ( TECHNICAL ) Sri Rudra Pratap Singh , Additional Commissioner ( A. R. ) For the Appellant Sri T. R. Ramesh , Advocate For the Respondent ORDER ORDER : Per Ms. SULEKHA BEEVI C.S. Brief facts are that the respondent is engaged in the manufacture of transformer and their parts falling under Chapter Heading 8504 of the Central Excise Tariff Act 1985. They are registered with the Central Excise department and are availing cenvat credit on various inputs including transformer oil. 2. On perusal of the input invoic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not undergone any change during the process of manufacture and is cleared as such in barrels along with the transformer. The transformer oil is dispatched along with the transformers depending upon the capacity of the transformer and the remaining quantity is transported in barrels after dispatch of transformer for logistics purpose. This would clearly indicate that the respondent has cleared the transformer oil as such . 2.3 It is further submitted by the Ld. A.R that in the respondent s own case for their other unit situated at Thirumazisai unit, a show cause notice was issued on the very same grounds of clearing the transformer oil as such after availing credit. The adjudicating authority vie Order-in-Original No.13/2007 dated 28.09.2007 held that the respondent has to reverse the credit and confirmed the demand. Against this decision, the respondent filed appeal before Commissioner (Appeals) who upheld the decision of the adjudicating authority. A further appeal was filed before the Tribunal and vide Final Order No.718/2010 dt. 30.06.2010 in Appeal E/557/2009, the Tribunal held against the assessee by upholding the demand. It is thus prayed that this decision of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d testing. Certain quantity of transformer oil is filled in the transformer when it is cleared from the factory and the remaining required quantity is cleared in barrels for use at the site of the inspection of transformer. Accordingly, the transformer oil has undergone necessary inspection and testing and it cannot be said that the transformer oil is cleared as such by the respondent. It is asserted by the learned counsel that testing is also part and parcel of manufacture of the final product. The process of use of the transformer oil was explained by the respondent in their reply to the show cause notice. Further, the Ld. counsel produced a flow chart of the manufacturing process to substantiate their contentions. The said flow chart gives the procedure for use of the oil in the transformers for testing. It also shows how the oil is cleared along with the transformers as a final product. The said flow chart and details of manufacturing process is reproduced as under : 3.2 The process of Hot Oil Circulation (HOC) is as under : Purpose of HOC Process In transformer manufacturing. the Hot Oil Circulation (HOC) process plays a Vital role in enhancing the Break ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s own case vide Final order No.718/2010 dt. 30.6.2010 [2010 (262) ELT 561 (Tri.-Chennai) was countered by the learned counsel by submitting that in the said appeal, the plea that the transformer oil was used for inspection and testing and was not removed as such was not put forward. In the present case, the respondent has substantiated the plea with purchase order and invoices as recorded in the impugned order. The manufacturing process, inspection and testing has also been considered by the adjudicating authority whereas in the said final order these aspects were not brought to the notice of the different forums by the assessee therein. 3.6 Ld. Counsel adverted to the definition of inputs in Rule 2 (k) of Cenvat Credit Rules, 2004 to submit that coolants are eligible for credit and would fall within the definition of inputs . The Hon ble High Court of Madras in the case of Nilkamal Ltd. reported in 2016 (335) ELT 220 (Mad.) had occasion to consider the issue whether assessee is liable to reverse the credit on packing material when cleared along with the final product. The Tribunal held the issue against the assessee. The Hon ble High Court reversed the Tribunal decision af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent has included the value of the transformer oil in the assessable value for payment of excise duty. The Ld.A.R has vehemently argued that the adjudicating authority has erred in holding that as the value of the transformer oil has been included in the assessable value, it cannot be said that the credit availed on transformer oil cleared 'as such' need not be reversed. On perusal of the impugned order, we find that the reason for holding that the credit need not be reversed is not merely because the value of inputs (transformer oil) has been included in the assessable value but also upon the fact that the transformer oil is used in the process of manufacture for inspection and testing of transformers and not cleared as such . 7. The Ld. A.R is right in asserting that in the assessee's own case in respect of Thirumazisai unit the very same issue was held by Tribunal against the assessee. On perusal of the said decision reported in 2010 (262) ELT 561 (Tri.-Chennai), we find that it is passed by a Single Member and further the fact that the transformer oil was used in inspection and testing was not at all discussed or adverted to in the said order. The said deci ..... X X X X Extracts X X X X X X X X Extracts X X X X
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