M/S Precision Moulds And Dies vs. Commissioner Of Central Goods And Service Tax, Meerut

Facts

The appellant, M/s Precision Moulds and Dies, manufactures moulds and plastic articles. During an audit, it was observed that the appellant transferred moulds to another factory for job work without payment of duty. A show-cause notice was issued demanding duty of Rs. 27,88,702/-. The appellant contended that no duty was payable as the moulds were returned after job work and consumed in their factory. The adjudicating authority confirmed the demand and imposed a penalty. The Commissioner (Appeals) rejected the appellant's appeal, as did the Customs, Excise & Services Tax Appellate Tribunal (CESTAT). The present appeal is filed against these three concurrent orders.

Held

The Court held that the Tribunal was justified in dismissing the appeal. Regarding the first issue, the Court found that the Tribunal correctly concluded that Notification No. 67/95CE dated 16.03.1995 was not applicable. The reasoning was that the notification applies only to goods produced and used within the factory of production. Once goods leave the factory, even for job work, the notification's applicability ceases. The Court agreed that the fact that the goods were later used for production does not negate the initial clearance from the factory. Concerning the second issue, the Court upheld the Tribunal's rejection of the revenue neutrality plea. The Court reasoned that accepting such a plea would undermine the CENVAT Credit scheme, as it would permit assessees to avoid paying duty at the time of clearance, simply by claiming future credit. The Court found no reason to interfere with the well-reasoned order of the Tribunal, which upheld the concurrent findings of the adjudicating and appellate authorities. The appeal was dismissed.

Key Issues

1. Whether the Tribunal was justified in dismissing the appeal, considering that the moulds cleared without payment of duty for job work were returned and consumed in the appellant's factory, making Notification No. 67/95CE dated 16.03.1995 applicable? The appellant argued that the Tribunal erred by not considering the return and consumption of moulds, and that the notification should apply. The revenue contended that the notification applies only to goods produced and used within the factory of production, and once goods leave the factory, even for job work, the notification is inapplicable. 2. Whether the Tribunal was correct in rejecting the plea of revenue neutrality, given that any duty paid on capital goods would be available as CENVAT Credit? The appellant argued that the matter was revenue neutral as the duty paid would be recoverable as credit. The revenue argued that accepting this proposition would render the CENVAT Credit scheme redundant, as assessees would routinely avoid paying duty, claiming future credit.