The Commissioner of Central Excise, Pondicherry Commissionerate, 1, Goubert Avenue, Beach Road Pondicherry 605 001. .. Appellant.
/versus/
1. M/s.Mohan Breweries & Distilleries Ltd., Glass Division (MBDL), Pondicherry.
2. Customs, Excise and Service Tax Appellate Tribunal, South Zone Beach, Chennai 600 006. .. Respondents.
C.M.A. filed under Section 35-G of the Central Excise Act, 1944 against the final order No.890/2004 dated 13.10.2004 on the file of the CESTAT, Chennai.
Substantial question of law that arises for consideration in this appeal is "whether the second respondent was correct in law in allowing the MODVAT benefits when the sub-heading 8429.00 is one of the specifically excluded items for the grant of the said benefit under Rule 57-Q and the table annexed to it".
2. We heard Mr.K.Ravi Anantha Padmanabhan, learned Senior Counsel for the appellant and Mr.C.Saravanan, learned counsel for the first respondent.
3. The short facts which are required to be stated are that the first respondent is engaged in the manufacture of glass bottles falling under Chapter 70 of the Central Excise Tariff. On verification of MODVAT documents for the month of October, 1999, the authorities of the appellant noticed that Rs.3,44,000/- was availed as credit on Capital Goods for No.1 of Hindustan 2021 Loader with 2 Bar, which was classified by invoice No.20076 dated 21.8.1999 of M/s.Hindustan Motors Limited, Pondicherry. The invoice product was classified under the heading 84.29. As 84.29 was specifically excluded item under Rule 57-Q of the Central Excise Rules, 1944, a show-cause notice was issued to the first respondent on 7.3.2000. The first respondent filed its reply. After affording personal hearing, the original authority by its order dated 27.11.2000 held that since the capital goods for which Modvat credit was availed is a goods classified under 84.29. Even as per invoice of the manufacturer, the said item is specifically excluded in the table annexed to Rule 57-Q. The credit availed cannot be allowed and consequently, apart from ordering recovery of Rs.3,44,000/- a penalty of Rs.25,000/- was imposed. The first respondent preferred an appeal before the Commissioner (Appeals). The appeal came to be allowed by order dated 18.8.2003. Aggrieved by the order of the Commissioner (Appeals), the appellant approached the Tribunal. The Tribunal by the order impugned dated 13.10.2004 in Final Order No.80/2004, having confirmed the order of the lower authority, confirmed the order of the original authority.
4. Mr.K.Ravi Anantha Padmanabhan, learned Senior Standing Counsel for the appellant in his submissions after referring to Rule 57-Q and the table annexed to it and also bringing to our notice the fact that the manufacturer of the product except having mentioned the product item as falling under 84.29 having regard to the decision of the Hon'ble the Supreme Court in the decision in SARVESH REFRACTORIES (P) LTD. v. COMMISSIONER OF C. Ex & CUSTOMS (2007 (218) E.L.T., 488 (SC), the Tribunal was not justified in law in having reclassified the product under the heading 84.28. Learned Senior Standing Counsel for the appellant also contended that indisputable product for which MODVAT credit was claimed by the first respondent is called 'shovel loader' and that as per the description found in heading 84.29 shovel loader is one of the items and that by no stretch of imagination it would fall under the heading 84.28 under which classification the items viz., on the other lifting, handling, loading or unloading machinery (for example lifts, escalators, conveyors, teleferies, are specified. Learned Senior Standing Counsel would therefore, contend that the order of the Tribunal is liable to be set aside.
5. As against the above submissions, Mr.C.Saravanan, learned counsel for the first respondent contended that even if the product 'shovel loader' is excluded item falling under 84.29, having regard to clause 5 in the table annexed to Rule 57-Q it can be brought under other accessories and as such when the first respondent has been using the said shovel loader in the first process of manufacture of glass in the factory premises, applying the decision of the Hon'ble the Supreme Court in COMMR. OF C. EX., JAIPUR v. RAJASTHAN SPINNING & WEAVING MILLS LTD. [2010 (255)ELT., 481) (SC)], it should be held that the first respondent was entitled for credit availed. Extending the above submissions, learned counsel contended that even by applying the decision of the Hon'ble Supreme Court in SARVESH REFRACTORIES (P) LTD. v. COMMISSIONER OF C. EX. & CUSTOMS (2007 (218 ELT, 488 (SC)], if the shovel loader by virtue of its classification as falling under 84.29 has been excluded since such a classification has been specified by the manufacturer of product itself. The first respondent's contention based on clause 5 of the table annexed to Rule 57-Q should be allowed to be exempted by the lower authorities. Learned counsel made the above alternate submission while contending that the Tribunal was justified in classifying the capital goods as one falling under the heading 84.28.
6. Having considered the submissions of respective counsel, we find that the Commissioner of Appeals as well as the Tribunal have committed serious error in classifying the capital goods as one falling under 84.28. The decision reported in 2007-218 ELT,488 (SC) supra, the Hon'ble Supreme Court set at rest the legal position as under inparagraph NO.6 which reads as under:
"The finding recorded by the Tribunal is unexceptionable. We agree with the view taken by the Tribunal that the appellant could not get the classification of 'Loadall' changed to Heading 84.27 from 84.29, as declared by the manufacturer insofar as the penalty imposed by the authority-in-original is concerned, we are of the view that a case for imposition of penalty is not made out and accordingly the same is set aside and deleted. Rest of the order of the Tribunal restoring the order of the authority-in-original is confirmed." (emphasis added).
In the light of the said categoric pronouncement of the Hon'ble Supreme Court and applying the same to the facts of this case, when it is not in dispute that the manufacturer declared the product as one falling under 'shovel loader' under the heading 84.29, there is no scope for any other authority to classify the same under any other heading. We also perused the heading 84.29 and 84.28 as prescribed under the Central Excise Tariff 1999-2000. Shovel loader is one of the specific product under the heading 84.29. In the table annexed to Rule 57-Q, clause 2, while all goods falling under Chapter 84 were held to be entitled for Modvat credit, specific exclusion in respect of the product falling under heading 84.29 to 84.37 had been made. Therefore, when the product falling under 84.29 had been specifically excluded for the purpose of availing MODVAT credit and the 'shovel loader' was the product with reference to which the first respondent availed MODVAT credit, there was no scope for allowing such MODVAT Credit availed by the first respondent. The alternate contention of the first respondent by relying upon clause 5 of the table annexed to Rule 57-Q, is concerned, at the very outset, it will have to be stated that specific product in a specific description falling under specific heading having been specifically excluded for claiming MODVAT credit under Rule 57-Q read along with the table annexed to it, it will not be permissible for any authority much less, for this Court to countenance such a claim.
7. As far as the reliance placed on the decision reported in 2010- 255 ELT, 481 (SC) is concerned, that was a case where a Textile Mill which used steel plates and M.S.channels used fabrication of chimney for diesel generating set, claimed Modvat credit on capital goods. It contended that fabrication of chimney was an integral part of the diesel generating set and therefore, it would fall under other accessories and components as described in Serial No.5 of Column 2, to the table annexed to Rule 57-Q. In the first place, it will have to be noted that such steel plates and M.S.channels were not one of the specifically excluded items in Column 2 of the table annexed to Rule 57-Q. In the said circumstances, when the diesel generating set is an item falling under the description of final product as specified in Column 3 in the table annexed, in the absence of any other specific exclusion provided in Serial Nos.1 to 4 of the said table, the Hon'ble Supreme Court held that such steel plates other than M.S.channels used for the fabrication of chimney as integral part of the diesel generating set, would fall under Serial No.5 of the goods description in Column 2 of the table to Rule 57-Q. By no stretch of imagination, the reasons which weighed with the Hon'ble Supreme Court for extending the benefits in the specific circumstances stated therein, cannot be applied in the case of the first respondent where the capital goods for which it availed MODVAT credit was one of the specifically excluded item under Column 2 of the Serial No.2 of table annexed to Rule 57-Q. Consequently, there is no scope to even consider the alternate submission made on behalf of the first respondent.
8. Having regard to our above conclusion, we find that the impugned order of the Tribunal is not in consonance with law and therefore, we answer the substantial question of law against the assessee and in favour of the Revenue. The impugned order of the Tribunal as well as that of the Commissioner Appeals stand set aside and the order of the original authority is restored. The Civil Miscellaneous Appeal stands allowed. However, we are of the view that a case for imposition of penalty is not made out and accordingly, the same is set aside.
sai To Customs, Excise and Service Tax Appellate Tribunal, South Zone Beach, Chennai 600 006