Custom, Excise & Service Tax Tribunal
M/S. Devendra Udyog vs Cce, Jaipur-Ii on 7 June, 2016
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST BLOCK NO. 2, R.K. PURAM, NEW DELHI-110066 COURT NO. IV Date of hearing: 07/06/2016 Appeal No. E/1030/2007-EX[DB] [Arising out of Order-in-Appeal No. 117/HKS/CE/JPR-II/07-Dt. 19.02.2007 passed by Commissioner (Appeals-II), Customs & Central Excise, Jaipur] For Approval and Signature: Honble Ms. Archana Wadhwa, Member (Judicial) Honble Shri V. Padmanabhan, Member (Technical) 1. Whether Press Reporter may be allowed to see the Order for Publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? No 3. Whether their Lordships wish to see the fair copy of the order? Seen 4. Whether order is to be circulated to the Department Authorities? Yes M/s. Devendra Udyog Appellant Vs. CCE, Jaipur-II Respondent
Appearance: Shri O.P. Aggarwal, CA for the appellant Shri Yogesh Aggarwal, DR for the respondent.
Coram: Honble Ms. Archana Wadhwa, Member (Judicial) Honble Shri V. Padmanabhan, Member (Technical) Final Order No. 52085/2016 Per: V. Padmanabhan The appellant is a manufacturer of Stainless Steel Cold Rolled Patta/Patti falling under sub-heading 7219 of the Central Excise Tariff Act. Upto 30/04/2006, they were paying duty and were also availing CENVAT Credit of duty paid on inputs and capital goods. W.e.f. 1/5/2006 , they opted for payment of duty as per the Compounded Levy Scheme in terms of notification No. 34/2001-CE dated 28/06/2001. This notification in Para 1 (proviso) imposed the following condition:
Provided that no credit of duty paid on any raw materials component part Or machinery or finished products used for cold rolling of stainless steel Pattis/Pattas, or aluminum circles under Cenvat Credit Rules, 2004 shall be taken.
2. At the time of opting for the benefit of this notification, there was stock of inputs, work in progress, components inputs, as well as finished goods, containing inputs on which CENVAT Credit was availed. The appellant paid the amount of Rs. 733739/- (CENVAT duty) and Rs. 14675/- (Education Cess) towards reversal of the CENVAT Credit taken on the inputs as on the date of opting for the notification. Subsequently, the appellant claimed refund of such amounts paid which was rejected by the Original Authority vide his order dated 16/11/2006 which was confirmed in appeal by the Commissioner (Appeals), vide his order dated 19/2/2007. The appellant is in appeal before us against the rejection of refund mainly on the ground that Proviso to Para 1 of the Notification No. 34/2001 imposes the condition that no credit of duty paid on raw materials, component parts, machinery or finished goods shall be taken. This cannot be interpreted by the Revenue to require reversal of the CENVAT Credit on inputs, which are lying in stock, contained in work in progress or in finished products in stock. The issue has already been settled in their favour by this Tribunal through many decisions delivered in the context of Compounded Levy Scheme. They also cited several such orders issued in their favour.
3. Heard both sides and perused the records.
4. The appellant has drawn our attention to many decisions in their favour, which are listed below:-
1. HMT Vs. CCE 2008 (232) ELT 217(Trib. LB)
2. CCE Vs. Bhushan Industries Ltd. 2003 (162) ELT 356 (Trib.)
3. Tulsyan NCE Ltd.Vs. CCE 2008 (224) ELT 423 (Trib.)
4. Kakda Rolling Mills Vs. CC 2005 (179) ELT 457 (Trib.)
5. Ld. DR on the other hand reiterated the order of the Authorities below.
6. The dispute centers around the interpretation of the Proviso to Para 1 in Notification No. 34/2001 dated 28/6/2001. This proviso is reproduced below:
Provided that no credit of any duty paid on any raw materials component part Or machinery or finished products used for cold rolling of stainless steel Pattis/Pattas, or aluminum circles under Cenvat Credit Rules, 2004 shall be taken.
7. The plain reading of the above proviso leads us to the interpretation that for availing the Compounded Levy Scheme, no credit of duty paid on raw materials, components parts etc. is allowed to be taken. However, the Revenue expanded the scope by interpreting that the credit of duty on the inputs, contained in work in progress and the finished products lying in the stock on the date of opting for the notification needs to be reversed as condition precedent to avail the benefit of the notification. In our view such an interpretation is uncalled for as already held by the Tribunal in the decisions cited by the appellant.
8. This Tribunal had occasion to examine the similar issue in the case of CCE Vs. Bhushan Industries Ltd. 2003 (162) ELT 356 (Trib.) with reference to inputs lying in stock at the time of opting for Compounded Levy Scheme and it has been held as follows:
The contention of the Revenue is that as respondents opted for Compounded Levy Scheme, therefore, the credit of the inputs lying in their stock was to lapse. The contention of the respondents is that credit of Rs. 19,790/- was lying in t heir Modvat account on the day, they opted for the Compounded Levy Scheme. The remaining amount of credit was already utilized towards payment of duty, therefore, that amount cannot be recovered. However, the respondents admitted that they are only liable to reverse the credit of Rs. 19,970/- which was lying in their Modvat credit on the date when they opted for Compoundd Levy Scheme.
We find that the Larger Bench of the Tribunal in the case of CC., Rajkot v. Ashok Iron and Steel Fabricator, reported in 2002 )140) ELT (Tri.-LB) 2002 (48) RLT 789 (LB) held that the utilized credit is not liable for reversal when the final product is exempted from payment of duty.
In the present case, the Revenue is admitting that some of the credit was utilized for payment of duty before opting the Compounded Levy Scheme by the respondents. As per the Compounded Levy Scheme, only credit of duty lying unutilized was to lapse, therefore, only the credit of Rs. 19,790/- which was lying unutilized was to lapse and the credit utilized for payment of duty before opting for the Compounded Levy Scheme is not recoverable. The appeal is disposed of as indicated above.
9. Further in the case of Tulsyan NCE Ltd.Vs. CCE 2008 (224) ELT 423 (Trib.) this Tribunal has held that the credit of duty taken and utilized in respect of not only inputs in stock, but also contained in finished products as on the date of introducing, the Compounded Levy Scheme is not recoverable.
10. Looking into the above decisions, we find that the issue is no more res-integra. Accordingly, we allow the appeal with consequential relief to the appellant.
(Archana Wadhwa) Member (Judicial) (V. Padmanabhan) Member (Technical) Ritu 2