P.K.Choudhary

1. The present appeal has been filed by the Appellant, M/s Kiswok Industries Pvt. Ltd., against Order-in-Original dated 15.09.2010 whereby the Ld. Commissioner, Central Excise, Haldia Commissionerate, has confirmed demand of central excise duty of Rs.2,71,12,041/- consequent to disallowance of CENVAT Credit on inputs for the period May 2006-October 2008. Equivalent penalty and applicable interest have also been confirmed by the Ld. Commissioner vide the aforesaid Order.

2.1 Briefly stated, the facts of the case are that the Appellant is engaged in the manufacture of excisable goods viz castings and cast articles of iron, pipe fittings etc. falling under Central Excise Tariff 7325 and 7307 on which applicable central excise duty is being paid. The Appellant availed CENVAT Credit on M.S. rod cuttings supplied by M/s.Indo Thai Flexible Tubes Ltd (supplier). The Department entertained a view that the supplier i.e., the consignor of the said goods did not undertake any manufacturing activity and hence was not liable to charge and pay central excise duty. On the basis of said contentions, proceedings were initiated by issuance of Show Cause Notice dated 05.05.2010 (SCN) to deny the CENVAT Credit availed by the appellant on the strength of invoices issued by the aforesaid supplier.

2.2 After following the due process of law, the Ld.Commissioner vide the impugned Order dated 15.09.2010 adjudicated the said showcause notice against which the instant appeal filed by the recipient of goods i.e., the Appellant.

3. Sri N. K Chowdhury, Advocate, appeared for the appellant and Sri J. Chattopadhyay, Ld. Authorised Representative appeared for the Revenue.

4.1 The Ld. Advocate for the Appellant submitted that the proceedings initiated against the supplier i.e., M/s. Indo Thai Flexible Tubes Ltd. has already been dropped by the Ld. Commissioner which has been subsequently upheld by this Tribunal vide Final Order No. 76449/2018 dated 19.07.2018. The appeal filed by Department against the said Order of Tribunal has been further dismissed by the Hon’ble Calcutta High Court vide Order dated 03.03.2020. He submitted that since the issue already stands settled in favor of the supplier of excisable goods, the assessee appellant, who is the recipient of goods, cannot be deprived of the benefit of CENVAT Credit. He also submitted that in the facts of the case the receipt of excisable goods and duty paid nature of said goods are not in dispute.

4.2 He also relied on the following judgements wherein it has been held that even if the activity undertaken by the assessee does not amount to manufacture, CENVAT Credit availed on inputs cannot be denied when output duty has been paid on final product: -

• Commissioner of C. Ex & Cus., Surat v. Creative Enterprises 2009 (235) Commissioner 785 (Guj)
• Commissioner of C. Ex. V Ajinkya Enterprises 2013 (294) Commissioner 203 (Bom)
• R.B. Steel Services v Commissioner of C. Ex. & S. Tax, Rohtak 2015 (318) Commissioner 139 (Tri. Del)
• Uttam Galva Steel Limited v. Commissioner of C. Ex. Raigad 2016 (336) Commissioner 81 (Tri. Mum.)
• APS Steel Limited v. Commissioner of C. Ex, Raipur 2017 (347) Commissioner 642 (Tri. Del)
• Commissioner, C. Ex. & S. Tax, Jammu & Kashmir v. Gravita Metals 2020 (372) Commissioner 172 (Tri. Chen.)
• Himadri Chemical & Industries Ltd. v. Commissioner, C. Ex., Kolkata-IV- Final Order No. 76342/2019 dated 06.08.2019
• C.C.E. Bangalore-V v. Vishal Precision Steel Tubes & Stripes Pvt. Ltd. 2017 (349) E.L.T. 686 (kar)

5. The Ld. Authorized Representative appearing for the Revenue reiterated the finding made by the Ld. Commissioner and prayed that appeal filed by the assessee be rejected being devoid of any merit.

6. We have elaborately heard both sides and have perused the appeal records.

7. We find that the Ld. Commissioner in the impugned Order in Paragraph 4.3 has observed that the goods removed by the consigner is not a manufactured product and therefore, the assessee appellant is not entitled to credit. He has also observed that the assessee availing the credit was under obligation to examine the fact as to whether the goods received by him are a manufacture product and whether duty was rightly charged by the supplier i.e., M/s. Indo Thai Flexible Tubes Ltd.

8. In the present case, we find that the jurisdictional Commissioner of the said vendor has dropped the entire proceedings which has been duly upheld by the Tribunal as well as the Hon’ble High Court. We therefore, find no reason to deny the claim of CENVAT Credit in the hands of the Appellant who is the recipient of the impugned goods from the said manufacturer. Further, the legal position already stands decided in favor of the Appellant that CENVAT Credit cannot be denied on input on the ground that the activity undertaken by the assessee does not amount to manufacture when the assessee has admittedly deposited output duty on final product.

9. In view of the above findings, the impugned Order passed by the Ld. Commissioner cannot be legally sustained and is hence set aside. The appeal is therefore allowed with consequential relief as per law.