JOHN DEERE INDIA PVT. LTD. Vs. COMMISSIONER OF CENTRAL EXCISE, PUNE-III
LAWS(CE)-2015-9-17
CUSTOMS EXCISE AND GOLD(CONTROL) APPELLATE TRIBUNAL
Decided on September 08,2015

John Deere India Pvt. Ltd. Appellant
VERSUS
Commissioner Of Central Excise, Pune -Iii Respondents

JUDGEMENT

M.V.RAVINDRAN,MEMBER (J) - (1.)This appeal is directed against Order -in -Original No. PUN -EXCUS -003 -COM -007 -13 -14, dated 14 -8 -2013. The relevant facts that arise for consideration are the appellants were holding the status of EOU and engaged in the manufacture of agricultural tractors and parts & components thereof. The appellant converted their EOU into DTA unit on 8 -8 -2011. On conversion of DTA unit, the appellant had discharged the applicable duties on the inputs in stock, inputs contained in finished goods and Work in Progress (WIP) as envisaged in the provisions due to the reason that being a EOU they have received inputs without payment of duty. After reversing/paying the duty on conversion to DTA there was a carry -over of unutilized credit lying in balance. The appellant utilized this credit towards discharge of the duty liability in respect of goods cleared from DTA unit. The department issued a show cause notice to the appellant directing them to show cause notice as to why Cenvat credit so carried forward to DTA unit be not held as lapsed and an amount of Rs. 1,05,98,681/ - utilized/paid by them on clearances made to DTA through such Cenvat credit be not demanded with interest. Appellant contested the issue on merits. The adjudicating authority after following due process of law, did not agree with the contention raised by the appellant holding that the provisions of Rule 11 of Cenvat Credit Rules, 2004 will be attracted and the credit lying in balance when the appellant switched over from EOU to DTA need to lapse as the appellant's final product "agricultural tractors" were fully exempted with effect from 1 -3 -2006.
(2.)Learned Consultant appearing on behalf of the appellant would take us through the entire case records. He would submit that the adjudicating authority has erred in coming to such a conclusion in as much the appellant is not only manufacturing agricultural tractors but also the manufacturer of parts and components on which applicable Central Excise duty is paid. It is his submission that prior to obtaining debonding order the appellant could not have procured inputs without payment of duty and therefore paid the duty on inputs and capital goods and availed Cenvat credit and could not utilize the same as being an EOU. It is his submission that the Central Excise duty payable on inputs lying in stock, on finished goods and on WIP was calculated and paid as soon as debonding order was received and such payment of duty is not in dispute. It is his submission that provisions of Rule 11 of the Cenvat Credit Rules will be applicable only when the appellant is manufacturing exempted goods and not when various goods are manufactured and duty liability is discharged. He would draw our attention to the registration granted by the Central Excise authorities and submit that the registration clearly states that appellant is manufacturing agricultural tractors and parts, aggregates and components of tractors. He would then explain the aggregates and components & parts of tractors or various items are required for repair of the tractors if need be and are cleared to the market on payment of proper excise duty and there is no exemption to these aggregates components and parts of tractors. He would rely upon the decision of the Tribunal in the case of Shree Baba Exports - : 2015 (318) E.L.T. 328 (Tri. -Del).
(3.)Learned DR would read the findings recorded by the adjudicating authority in the impugned order and more specifically Paragraphs 18 to 20. It is his submission that the main manufacturing activity of the appellant is agricultural tractors, aggregates and components & parts thereof may not be main manufacturing activity. It is his submission that when inputs are procured for manufacturing of agricultural tractors, provisions of Rule 11 Cenvat Credit Rules will directly apply. He would then read the provisions of Rule 11 of the Cenvat Credit Rules. It is his submission that sub -rule (3) of Rule 11 of Cenvat Credit Rules will be applicable in this case and the adjudication authority has applied the same correctly. He would also rely upon the decision of the Joint Secretary as a reviewing authority in the case of Technocraft Industry (India) Ltd. [2014 (313) E.L.T. 888 (G.O.I.)] for the proposition that on debonding any Cenvat credit that is carried over has to lapse and cannot be used. He would also rely upon the judgment of the Tribunal in the case of Bajaj Foods Ltd. - : 2012 (280) E.L.T. 281 (Tri. - Ahmd.) for the same proposition.
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