Appeal dismissed against CESTAT order denying Cenvat Credit on inputs used for exempt CJKs. Supreme Court precedent distinguished; no question of law found.
The appeal was dismissed; the impugned order dated 1.7.2011 was upheld.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
CEA No.2 of 2012
1
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
CEA No.2 of 2012
Date of decision: 19.01.2012
M/s Yamuna Gases and Chemicals Limited
-----Appellant
Vs.
The Commissioner of Central Excise, Panchkula
----Respondent
CORAM:HON'BLE MR JUSTICE M.M.KUMAR HON’BLE MR. JUSTICE AJAY KUMAR MITTAL
Present:Mr. M.P.Devnath, Advocate for the appellant.
Ajay Kumar Mittal,J .
i) Whether in facts and circumstances of present case impugned order passed by Hon’ble CESTAT dated 1.7.2011 is erroneous, unjust, incorrect and unsustainable in law and fact?
ii) Whether in facts and circumstances of present case the Hon’ble Tribunal is correct to hold that adjustment of Cenvat Credit of the bought-out items supplied with the ‘CJK’ is wrong, especially when the law laid down has specifically stated that credit is available?
CEA No.2 of 2012
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CEA No.2 of 2012
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from April 2003 to October 2003 alongwith interest and penalty was proposed. The appellant filed a reply to the said notice. After considering the matter, the Additional Commissioner of Central Excise vide order dated 27.1.2005, Annexure A-5 issued a direction for denial of Cenvat Credit of Rs.20,50,911/- on the bought out items under Rule 12 of Cenvat Credit Rules, 2002 (in short, “the Rules”) read with Section 11A of the Act and recovery of interest under Section 11AB of the Act and penalty of Rs.50,000/- under Rule 25 of Central Excise Rules, 2002. The appellant filed an appeal before the Commissioner (Appeals) against the said order. Vide order dated 21.11.2005, the Commissioner (Appeals) upheld the disallowance of the Cenvat Credit of Rs.20,50,911/- on the duty inputs used in the packing of CJK but allowed adjustment of Cenvat Credit from the amount of central excise duty paid on the CJK and set aside the interest and penalty imposed on the appellant. Aggrieved by the order, the revenue filed an appeal before the Tribunal. The appellant also filed cross-objections. Vide order dated 1.7.2011, Annexure A-9, both the members of the Tribunal allowed the appeal and disposed of the cross objections and held that adjustment of Cenvat Credit on the bought-out items supplied with the CJK was wrong and a wrong cannot be remedied by another wrong. Hence this appeal by the assessee.
CEA No.2 of 2012
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eligible to claim modvat credit on bought out items as long as manufacturer is discharging excise duty on consolidated value of manufactured items as well as bought out items. He cited various judgments of the Tribunal and relying upon Apex Court decision in Sidhartha Tubes Limnited v. Collector of Central Excise, 2000(115) ELT 32 (SC) submitted that though CJK was not exigible to excise duty but on the components which formed part of CJK, excise duty was payable. According to the learned counsel, in such circumstances, the appellant was entitled to the benefit of adjustment of Cenvat credit in respect of the amount of bought out items supplied with the CJK on which excise duty had been paid.
CEA No.2 of 2012
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maintain separate accounts for receipt, consumption and inventory of inputs meant for use in the manufacture of dutiable final products and the quantity of inputs meant for use in the manufacture of exempted goods and take Cenvat Credit only on that quantity of inputs which is intended for use in the manufacture of dutiable goods.
(Ajay Kumar Mittal) Judge January 19, 2012 (M.M.Kumar) ‘gs’ Judge
3 issues framed by the court
Whether adjustment of Cenvat Credit on bought-out items supplied with the Cable Jointing Kit (CJK) was correctly disallowed by the Tribunal?
Whether Sidhartha Tubes Limited v. Collector of Central Excise allows Cenvat Credit adjustment when the final product is an exempt item?
Whether the Tribunal correctly held that Cenvat Credit cannot be wrongly utilized for exempted goods even if duties are paid on input components?
Colour shows how this judgement treated each authority
Sidhartha Tubes Limited v. Collector of Central ExciseDistinguished¶5
Sidhartha Tubes Limnited v. Collector of Central Excise, 2000(115) ELT 32 (SC)
6 provisions across 3 enactments
M/s Yamuna Gases and Chemicals Limited
The Commissioner of Central Excise, Panchkula
M.M. Kumar
Ajay Kumar Mittal
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
