SWASTIK ENGINEERING Vs. COMMISSIONER OF C. EX., BANGALORE

JUDGEMENT

(1.) M /s. Swastik Engineering, Bangalore are engaged in the manufacture of brass strips, phosphor bronze strips and copper strips falling under chapter sub -heading 7409 21 00, 7409 11 00 and 7409 31 00 respectively of the Central Excise Tariff. During the period from December 2005 to December 2007, the appellants, M/s. Swastik Engineering received brass strips, phosphor bronze strips and copper plate sheets in coil form and took credit of duty paid on them. The appellants undertook the process of decoiling and cutting/slitting of brass, phosphor bronze and copper coils into strips of lesser width. They cleared such strips of brass, phosphor bronze and copper on payment of applicable duty of Central Excise. The assessee had taken a total credit of Rs. 3,50,33,094/ - during the material period. After due process of law, vide the impugned order, the Commissioner of Central Excise, Bangalore -II Commissionerate, confirmed demand of Rs. 3,50,33,094/ - under Rule 14 of the Cenvat Credit Rules, 2004 (the CCR) read with proviso to Section 11A of the Central Excise Act, 1944 (the Act), as irregular credit availed by it. Applicable interest on the above amount was also demanded under Rule 14 of the CCR read with Section 11AB of the Act. He imposed equal amount of penalty under Rule 15(2) of the CCR read with Section 11AC.

(2.) IN the appeal before us, the impugned order has been challenged on various grounds. The appellants have claimed that conversion of brass, phosphor bronze and copper coils into strips of narrower width constituted a process of manufacture, in their case, contrary to the finding of the Commissioner. The appellants argued that they do not just cut/slit brass, phosphor bronze and copper sheets into strips but produced tailor made goods of specified dimensions, tolerance and metallurgy required for select customers. These were not for general use. This process constituted a process of manufacture. The Commissioner had erred in holding that the assessee was not entitled to Cenvat credit of duty paid on the various inputs received by it.

(3.) A major ground taken by the appellants concerns limitation. The plea taken by the assessee in this regard is reproduced below : - From the facts of the case, it is plainly visible that the Appellants were convinced that the activity undertaken by them was not mere cutting or slitting of duty -paid coils but much more than that. Hence, they approached the Central Excise department for registration giving full details in their application (Annexure -D) about the major inputs and final products. Subsequent to the issuance of the Central Excise Registration Certificate, the appellants factory premises was visited and verified by the Central Excise officers. After obtaining the registration, the appellants filed the monthly ER -1 returns without any break during the entire period in question i.e. December 2005 to December 2007. The ER -1 returns (Volume -II of the Appeal Book), duly acknowledged month after month by the Range Office, clearly show the complete details like availment of Cenvat credit on the inputs, quantity and value of goods manufactured by the appellants and payment of duty made on such manufactured goods. Thus, it is self -evident that the appellants have not withheld any information from the department and there was nothing that could have remained concealed until the Internal Audit Party visited the unit.