M/S Minebea Intec India Private ... vs The Union Of India
2022 Latest Caselaw 2506 Kant

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

     DATED THIS THE 16TH DAY OF FEBRUARY, 2022
                          BEFORE
     THE HON'BLE MR. JUSTICE S. SUNIL DUTT YADAV
        WRIT PETITION No.8649/2020 (T-RES)
Between:

M/s Minebea Intec India Private Limited
(Previously known as Sartorious Mechtronics (I) Ltd)
26-D Phase-II KIADB Industrial Area
Peenya
Bengaluru-560058
(Represented by its Managing Director
Shri Mohan Kumar Bhat)
                                             ... Petitioner
(By Sri. Rajesh Chanderkumar, Senior Advocate a/w
    Sri. Ajayan T V, Advocate)

And:

1.     The Union of India
       Represented by
       Secretary (Revenue)
       Ministry of Finance
       North Block
       New Delhi - 110 001

2.     Additional Commissioner of GST
       Office of the Commissioner of Central Tax
       GST Commissionerate
       Bengaluru North West
       BMTC Building, Shivajinagar
       Bengaluru-560051
                                           ... Respondents

(By Sri. Jeevan J Neeralgi, Advocate)

                             ****
      This Writ Petition is filed under Articles 226 and 227
of the Constitution of India praying to issue a writ of
mandamus or any other such writ order or direction, as this
Hon'ble Court may deem fit, quashing the impugned Order-
                              2


in-Original    No.     C.No.IV/15/84/75/2017            Adjn
BNW/5429/20 No.16&17/ADC/NWD4/ST/2019 dated
31.12.2019 passed by Respondent No.2 at Annexure-A
as being in abuse of jurisdiction, violation of the
principles of natural justice, wholly arbitrary, illegal and
untenalbe in law, as well as being in violation of Articles
14 and 19(1)(g) of the Constitution of India and etc.
      This Writ Petition coming on for Preliminary Hearing
this day, the Court made the following:

                          ORDER

The petitioner has sought for issuance of writ to

quash the Order-in-Original dated 31.12.2019 passed

by the second respondent at Annexure-A. The petitioner

has sought for alternative reliefs as well.

2. The petitioner submits that it is engaged in

the business of manufacture of weighing systems such

as, electronic weigh bridges. It is submitted that the MS

Platforms, which is a part of weigh bridge were procured

by the petitioner from independent fabricators, who

after payment of duty on the said MS Platforms supplied

the same to the petitioner at the customers' site where it

is to be installed. It is further submitted that the other

components which are parts of the weigh bridge are

cleared by the petitioner on payment of duty from the

factory. The petitioner submits that the Department

raised a demand in respect of the impugned Order-in-

Original pertaining to the period between April 2012 to

February 2014. It is submitted that such demands

which were raised earlier had resulted in appeals being

filed by the petitioner before the Customs, Excise and

Service Tax Appellate Tribunal at Bengaluru (For short,

'the Tribunal') against the confirmation of demands from

the lower adjudicating authorities and the Tribunal had

allowed the appeals preferred by the petitioner by order

dated 27.05.2015 covering the period between July

2006 to August 2008 at Annexure-B and similar orders

were passed for the period between September to June

2011 at Annexure-C. In fact, it is pointed out that an

appeal filed by the Department against the order of the

Lower Appellate Authority for the period 2008 - 2009

which was allowed, came to be dismissed as per the

order dated 22.09.2017 at Annexure-E. Accordingly, it

is submitted that the present demand made is pursuant

to the Show Cause Notice dated 22.04.2013 for the

period between 01.04.2012 to 31.03.2013 at Annexure-

F and further, Show Cause Notice for the period

01.04.2013 to 29.02.2014 at Annexure-G were not

legally tenable. The ground on which such demand for

disallowance of CENVAT credit was made was that the

MS Platforms were not received in the petitioner's

factory. It is submitted that pursuant to proceedings

under the Show Cause Notice, the petitioner availed of

the opportunity of personal hearing and appeared before

the Authority on 19.11.2019 and brought to the notice

of the Authority regarding the earlier orders passed,

including the order of the Tribunal bearing

No.22219/2017 dated 22.09.2017 and had sought for

dropping of the proceedings1. It is submitted that

however the Authority has proceeded to pass an order

rejecting the submission of the petitioner and refusing

benefit of CENVAT credit while raising a demand as

Order Number is stated to be No.22219/2017 dated 06.10.2017

detailed in the operative portion of the order at

Annexure-A.

3. It is the contention of Sri. Rajesh

Chanderkumar, learned Senior counsel appearing for

the petitioner that the adjudicating Authority was

bound by the orders at Annexures - B, C and D insofar

as the said orders though were passed for different

periods regarding the same assessee and it was further

pointed out that in the hierarchy of adjudicating

authorities, the second respondent was bound by the

orders of the Co-ordinate Authorities as well as the

order of the Tribunal.

4. It was also pointed out that even on merits,

the position of law as laid down by the Hon'ble Apex

Court in the case of Birla Corporation Limited Vs.

Commissioner of Central Excise 2 as well as the

judgment in Vikram Cement Vs. Commissioner of

Central Excise, Indore3, wherein the legal position has

2005 (186) E.L.T 266 (SC)

2006 (194) E.L.T 3 (SC)

been settled and even otherwise the Authority was

required to follow the legal position as laid down in the

aforesaid judgments which would have led to the same

conclusion as was made by the Authorities as per the

orders at Annexures - B, C and D. It is also pointed out

that the orders at Annexures - B, C and D have not

been referred to by the Authority in the impugned order

despite the petitioner having brought the said aspect to

the knowledge of the Authority as is indicated in the

impugned order wherein, reference is made to the

record of personal hearing at paragraph No.9 of the

impugned order.

5. Sri. Jeeven J Neeralgi, learned counsel

appearing for the Revenue would submit that the orders

may not have been challenged in light of the instruction

which provided for non-challenge of orders below

monetary limit and accordingly, the orders at

Annexures - B, C and D would not tie the hands of the

Authority in arriving at an independent conclusion.

That appears to be the main objection by the

respondents insofar as the present petition is

concerned. It is further pointed out that even otherwise

if the order of the Authority requires to be set aside, the

matter is to be remanded back for re-consideration by

the Authorities and this Court ought not to grant relief

to the petitioner in the present proceedings itself.

6. What requires to be noted is that the orders

at Annexures - B, C and D for different assessment

periods between the petitioner and the Department and

that the question raised in the present proceedings has

also been considered in the orders at Annexures - B, C

and D. The only question that arose for consideration

was that the component of the electronic weigh bridge

i.e., MS Platform was not received in the petitioner's

factory, but were sent directly to the customers' site for

Erection and Commissioning. Accordingly, whether for

such supply of MS Platform at the site, the petitioner

could claim CENVAT credit, was the point for

consideration and this would come out on a reading of

paragraph No.2 of the order in original at Annexure-A.

Paragraph No.2 of the said order is extracted as herein

below:

"2. Whereas it appeared that the noticee undertakes orders from various customers for manufacture and installation of Electronic Weigh Bridge at the cutomers' site. Such electronic weigh bridge consists of (i) MS Platforms (ii) Load cell and (iii) Electronic system. The noticee imports Load Cells and Electronic components assembly in his factory and clears the same on payment of Central Excise Duty. The other component of the Electronic Weigh Bridge i.e. MS Platforms are not received in the noticee's factory but are directly sent to customers' site for Erection and Commissioning. However, the vendors/suppliers of the said item raise invoice in the name of the noticee and the noticee are availing Cenvat Credit based on the said invoices even though the goods have not been physically received in the factory."

7. A perusal of the orders at Annexures - B, C

and D would reveal that the same has not been

considered in Appeal No.166 & 166A/2010-CE dated

31.05.2010. The Tribunal in its final order in Final

Order No. 21205-21206/2015 filed against the order in

Appeal referred to above at paragraph No.3 has

considered the very same question which was being

considered by the Authority at Annexure-A and has

observed as follows at paragraph No.3:

"3. After hearing both the sides, I find that the issue is no more res integra and it stands held that inputs not received directly in the factory but received at site of the project are also cenvatable inputs and credit cannot be denied on this short ground of not bringing the inputs into the factory. The appellant had admittedly included the value of the said inputs in the value of their final products and have paid duty of excise on the full value including the value of the inputs. Tribunal in the case of Commissioner of Central Excise, Ghaziabad vs. Central Electronics Ltd. 2011 (271) E.L.T. 586 (Tri.-Del.) has held that in the absence of any dispute that the inputs were duty-paid, were utilized in the final product, on which duty has been paid, the mere fact of non-receipt of goods in the factory but sent directly at site of the project will not result in the denial of credit to the assessee. As such, I find no reasons to deny credit to the appellant. Accordingly, the impugned order is set aside and appeal allowed with consequential relief to the appellant."

8. In the order at Annexure-C which is another

appeal before the Customs, Excise and Service Tax

Appellate Tribunal, South Zonal Bench, Bengaluru

[Arising out of Order-in-Appeal No.533/2014-CE dated

28.08.2014], the Tribunal has again dealt with the same

question and answered as follows at paragraph No.5 of

the order:

"5. On the other hand, the learned counsel for the assessee submitted that the issue involved in the present case is not more res integra and the CENVAT credit availed on inputs not received in the factory but at the customer site and when its value has been included in the value of the final product on which duty has been paid is licit as decided in the assessee's own case for an earlier period from July 2006 to September 2007 wherein it has been held that the issue is no more res integra and it stands held that inputs not received directly in the factory but received at site are also cenvatable inputs and credit cannot be denied on the short ground of not bringing the inputs into the factory vide Final Order No.21205-21206/2015 dated 27.5.2015 of this Tribunal. Learned counsel for the assessee further relied upon the decision in the case of CCE, Ghaziabad vs. Central Electronics Ltd.: 2011 (271) ELT 586 wherein also it has been held that in the absence of any dispute that inputs were duty-paid, were utilized in the final product on which duty has been paid, the mere fact of non- receipt of goods in the factory but sent directly at

site will not result in denial of credit to the assessee."

9. In the order in Appeal No.166/2012 at

Annexure-D, the Commissioner of Central Excise,

Bengaluru has also considered the same aspect and

finding is recorded at paragraph No.8, which is

extracted herein below:

"8. In view of the above findings and in the light of the Board's circular cited supra, I am inclined to hold that the appellants are eligible for the credit on MS platforms used for manufacture of weigh bridges which are directly supplied to job workers place for manufacture of weigh bridges. Hence the demand for recovery of credit availed on MS platforms does not survive. When the demand does not survive recovery of interest and imposition of penalty on the appellants also does not survive."

10. Further, it must be noticed that the

Customs, Excise and Service Tax Appellate Tribunal,

South Zonal Bench, Bengaluru, in its order at

Annexure-E, while considering the appeal [Arising out of

Order-in-Appeal No.166-2012 dated 02.07.2012] has

affirmed the orders in appeal while observing that there

is no illegality justifying interference.

11. It ought to be noted that the question raised

by issuing Show Cause Notices at Annexures - F and G

involve the identical questions as noticed above and the

subject matter of the earlier proceedings have

culminated in the orders being passed at Annexures - B,

C and D. In light of the same, the conclusion to be

arrived at by the Authority while passing the Order-in-

Original at Annexure-A could not have been different

from the orders passed at Annexures - B, C and D.

12. Though, learned counsel for the Revenue

would contend that the orders at Annexures - B, C and

D were not challenged in light of the policy of the

Government not to challenge the orders which were

subject to a monetary limit. As pointed out by the

learned counsel for the petitioner, the Instruction dated

17.12.2015 provided for a monetary limit and in each of

the orders at Annexures - B, C and D, the subject

matter of adjudication did not fall within the monetary

limits. The monetary limit for challenging orders as per

the table forming part of the Instruction in

F.No.390/Misc./163/2010-JC dated 17.12.2015 is

extracted below:

       Sl.No.         Appellate Forum      Monetary Limit
         1.          CESTAT                 Rs.10,00,000/-
         2.          HIGH COURTS            Rs.15,00,000/-
         3.          SUPREME COURTS         Rs.25,00,000/-

13. In the present case, it is to be noticed that

the order at Annexure-B relates to demand of

Rs.15,88,290/- (Rupees Fifteen Lakhs Eighty Eight

Thousand Two Hundred Ninety Only) for the period

between July 2006 to September 2007 and the demand

of Rs.46,32,229/- (Rupees Forty Six Lakhs Thirty Two

Thousand Two Hundred Twenty Nine Only) relates to

the period between September 2007 to August 2008.

Insofar as the order at Annexure-C is concerned, the

demand amounted to Rs.28,70,807/- (Rupees Twenty

Eight Lakhs Seventy Thousand Eight Hundred Seven

Only) for the period between September 2009 to June

2010, while it was Rs.24,36,052/- (Rupees Twenty Four

Lakhs Thirty Six Thousand Fifty Two Only) for the

period between July 2010 to June 2011. As regards

Annexure-D is concerned, the demand was

Rs.44,38,233/- (Rupees Forty Four Lakhs Thirty Eight

Thousand Two Hundred Thirty Three Only), which was

again the same amount which was the subject matter of

the appeal proceedings before the Tribunal at Annexure-

C. It is clear that the demands for the respective periods

as noted above was beyond the monetary limit and

technically there was no bar for the Authority to have

filed appeals and to take up the matter before the higher

adjudicating Authorities. In light of a finding of law and

facts which is identical and has been a subject matter of

earlier orders between the same assessee and the

Department, it was not open for the second respondent

to ignore such orders and pass an order contrary to the

conclusion arrived at, as has been done in the order in

original at Annexure - A.

14. As rightly pointed out by the learned Senior

counsel appearing for the petitioner that the judgment

of the Hon'ble Apex Court in Union of India Vs.

Kamlakshmi Finance Corporation Limited 4, has

clarified, that once there is an order by the Superior

Authority, the Authorities low down in the hierarchy

which may be adjudicating Authorities, are to give effect

to the orders of the Authorities higher to them in the

hierarchy.

15. It is further to be noted that the learned

counsel for the Revenue Authority is not in a position to

controvert the assertion of the petitioner that the

question involved and decided in the orders at

Annexures - B, C and D were identical in the facts and

in law as was being considered in the proceedings

leading to the passing of the Order-in-Original at

Annexure-A. Normally, the Court would have remanded

the matter back to the Authority for fresh consideration

in light of observations made. However, in the present

1991 (55) E.L.T 433 (SC)

case, if the conclusion at Annexures - B, C and D are to

be made applicable with respect to the period which was

subject matter of proceedings culminating in the Order-

in-Original, there could be nothing more that could be

done by the second respondent except in accepting the

conclusion as per the orders at Annexures - B, C and D.

In view of the same though the supply of MS platforms

is directly to the customers' site, as the said component

is used in the manufacture of the final product on

which duty of excise is discharged, the petitioners are

eligible for the credit on MS Platforms used for the

manufacture of weigh bridges.

16. Accordingly, the writ petition is allowed.

The Order-in-Original (C.No.IV/15/84/75/2017 Adjn

BNW/5429/20 No.16&17/ADC/NWD4/ST/2019) at

Annexure-A dated 31.12.2019 passed by the second

respondent is set aside.

Sd/-

JUDGE RB