AGRO PACK Vs. COMMISSIONER OF CENTRAL EXCISE, SURAT

JUDGEMENT

(1.) APPELLANT purchased corrugated boxes from M/s. Corru Cartons (I) Pvt. Limited and the corrugated boxes were directly sent to M/s. Pearl Polymers Limited who utilised the corrugated boxes for packing pet bottles and sent the same to the appellant for using in their manufacturing process. The corrugated boxes were not received by the appellant but directly sent to M/s. Pearl Polymers Limited. However, appellant took credit of duty paid on corrugated boxes manufactured by M/s. Corru Cartons (I) Pvt. Ltd. and sent directly to M/s. Pearl Polymers Ltd. for using the same to pack pet bottles. While clearing the goods, M/s. Pearl Polymers paid duty on the pet bottles manufactured by them and in the invoice showed the value of corrugated boxes and added the cost of bottles to arrive at the assessable value, since corrugated boxes had been supplied free of cost by the appellant. On the ground that appellant has taken credit of duty paid on corrugated boxes twice, proceedings were initiated which culminated into demand of cenvat credit of Rs. 89,572/ -, being the cenvat credit availed on corrugated boxes with interest and penalty equal to amount demanded has been imposed.

(2.) LEARNED counsel on behalf of the appellant submitted that the supplier of pearl bottles had added the value of corrugated boxes to arrive at the assessable value of pearl pet bottles and when revenue seeks to deny the cenvat credit on the value of corrugated boxes forming part of value of pet bottles, the department is proposing to reassess the goods at the receivers end, which is not permissible in view of the several Tribunal decisions in this regard. Further, he also submits that the Honble Supreme Court also upheld the view taken by the Tribunal and he cited the decision of MDS Switchgear Limited v. CCE and Cus., Aurangabad - 2008 (229) E.L.T. 485 (S.C.). Further, he also relied upon the decision of Honble High Court of Punjab and Haryana in the case of V.G. Steel Industry v. CCE - 2011 -TIOL -338 -HC -P&H -C.X. = 2011 (271) E.L.T. 508 (P and H). Further, he also submits that credit was taken in the month of Feb. 2002 and the show cause notice was issued in the year 2006 and in view of the fact that there was no intention to suppress any fact or resort to any mis -declaration and no evidence to this effect has been produced by the department, on the ground of limitation also the demand cannot be sustained. Learned AR on behalf of the Revenue submitted that the assessee has taken credit of duty paid on corrugated boxes twice, since by adding the value of corrugated boxes at the job workers end, duty was paid on corrugated boxes by the pet bottle manufacturers, and the credit had already been taken by the appellant when corrugated boxes were supplied by the pet bottle manufacturers and therefore, according to him, this amounts to double benefit which is not admissible.

(3.) I have considered the submissions made by both sides. On going through the invoices issued by pearl pet bottle manufacturer and corrugated boxes manufacturer, I find that corrugated boxes manufacturer had paid duty on corrugated boxes and the pearl pet bottle manufacturer had paid duty on the pet bottles. Value of corrugated boxes was shown separately to make it clear that value of goods supplied by the buyer free has been added. In any case, according to law also, the value on corrugated boxes supplied by the buyer is required to be included for arriving at the assessable value of the goods in which such packing material was used. In my opinion, this would not result in payment of duty on corrugated boxes by the pet bottle manufacturer. The duty paid by the bottle manufacturer cannot be said to have been paid on corrugated boxes at all. Therefore, the contention of the Revenue that credit on duty has been taken twice on the corrugated boxes, cannot be sustained. Further, in the case of MDS Switchgear Limited as well as in V.G. Steel Industry case, it was held that goods cannot be assessed at the end of receiver of the goods. In this case, when Revenue proposes to deny the credit on duty paid on corrugated boxes, on the ground that the value of corrugated boxes included in the value of pet bottles thereby the appellant can be said to have availed credit twice on corrugated boxes, in reality what is being done is to reassess the goods at the end of receiver, by proposing to reduce the value of pet bottles to the extent of value of corrugated boxes. This is not permissible in the light of the decisions cited by the learned counsel, which I find are squarely applicable to the facts of this case. In the case of V.G. Steel Industry, Honble High Court of Punjab and Haryana took the view that when duty paid is in excess of what was payable, cenvat credit can not be denied unless the excess duty paid has been refunded. In this case, that is not the position. In the case of MDS Switchgear, Honble Supreme Court upheld the view that rules entitle the recipient manufacturer to avail of the benefit of the duty paid by the supplier manufacturer. In any case, appellants have taken credit of duty paid by them to the suppliers. There is no finding that the credit of duty taken by the appellant was not paid by them to the suppliers or suppliers had not paid duty, which was shown as duty in their invoice. If the credit has been taken twice, first time on the corrugated boxes themselves and second time as part of pet bottles being the packing materials, it cannot be said that appellants have benefited in any manner and further, as already stated, it cannot be said that credit has been taken twice. When the appellant has actually taken credit of duty paid by them, it cannot be said that there was an intention to resort to suppression of facts/mis -declaration/fraud or collusion attracting the extended period of limitation for demanding cenvat credit, even if it has been wrongly availed. Therefore, on the ground of limitation also, Revenue has not been able to make out a case. Since during hearing of the stay petition itself all these pints were raised and after considering all these submissions, I find that not only pre -deposit is required to be waived but the appeal itself can be disposed of in favour of the appellant. Learned AR has no objection for disposal of the appeal itself. I find that there is nothing left in this case to be decided. Accordingly, after waiving the pre -deposit, in view of the observations above, appeal is allowed with consequential relief to the appellants. (Dictated and pronounced in the Court)