Customs, Excise and Gold Tribunal - Bangalore
Commr. Of C. Ex. vs Swastik Vegetable Oil Products Ltd. on 8 March, 2004
Equivalent citations: 2004(95)ECC150, 2004(168)ELT206(TRI-BANG)
ORDER C.N.B. Nair, Member (T)
1. The appellant uses the same motivated input in the manufacture of dutiable and exempted goods. They reversed the credit amount as attributable to the inputs used in the manufacture of exempted goods. All the same, jurisdictional Assistant Commissioner passed an order holding that they were liable to pay duty at the rate of 8% on the value of the exempted products manufactured and cleared under Rule 57CC. The duty amounts so demanded were worked out to over Rs. 2.1 crores, while Modvat credit involved on the input used for the manufacture exempted goods was only about Rs. 6 lakhs. Thus, taking of unavailable Modvat credit has led to a duty demand which works out to almost 20 times the credit amount. When the as-sessee took up the matter in appeal, Commissioner (Appeals) set aside the demand holding it to be illegal and unjust. We quote :
"The appellants have repaid the entire Modvat credit taken on inputs and have cited Hon'ble Supreme Court judgment in the case of M/s. Chandrapur Magnet Wires (P) Ltd. v. Collector of Central Excise, Nagpur reported in 1996 (81) E.I.T. 3 (S.C) wherein it was held - Reversal of Modvat credit permissible to avail exemption. The Hon'ble Supreme Court further held that on reversal of the Modvat credit, the assessee cannot be said to have taken credit of duty on the inputs utilised in the manufacture of final products. The Assistant Commissioner's observation that the decision of the Hon'ble Supreme Court in the case of M/s. Chandrapur Magnet Wires (P) Ltd. v. CCE, Nagpur is not acceptable because the ground of the case law refers to the period prior to the introduction of Rule 57CC, has no force, because the issue decided by the Hon'ble Supreme Court is basic i.e., the reversal of Modvat credit amounts to non-availment of Modvat credit. This case law is, therefore, still relevant even after the introduction of Rule 57CC.
There is also considerable force in the appellants contention that for the availment of Modvat credit of Rs. 8,46,065/-, the demand of Rs. 2,13,03,982/- is unnatural and unjust and defeats the purpose of Rule 57CC when the entire Modvat credit availed was paid back.
Respectfully following the ratio of Hon'ble Supreme Court decision in the case of M/s. Chandrapur Magnet Wires (P) Ltd. v. Collector of Central Excise, Nagpur, reported in 1996 (81) E.L.T. 3 (S.C.), I hold that since the appellants have reversed the entire Modvat credit taken on inputs received into the factory, irrespective of the fact whether they are used in dutiable or exempted final products, the appellants cannot be said to have taken credit of duty on the inputs utilised in the manufacture of the final products. Hence, the invocation of Rule 57CC and demand of the amount of Rs. 2,13,03,982/-equal to 8% of the value of the clearances of the exempted goods is not justified in the facts and circumstances of the case. The same is set aside. Since the demand itself has been held to be unsustainable, the question of imposition of penalty of Rs. 50/000/- does not arise. The same is set aside."
2. The present appeal has been filed based on direction of Commissioner of Central Excise, Hyderabad to file an appeal against the aforesaid order. The appeal contends that the judgment of the Apex Court in the case of Chandrapur Magnet Wires (P) Ltd, v. CCE., Nagpur was not applicable to the present case inasmuch as in the present case, credit was reversed much after the clearance of the exempted goods and utilisation of the credit for the payment of duty on dutiable products.
3. We have perused the records and have considered the submissions made by both sides. In addition to the legal position as noted by the Commissioner, the appellant has also submitted that duty demand in the present case is contrary to the Circular No. 591/28/2001-CX., dated 1640-2001 of the Central Board of Excise and Customs wherein it has been clarified that in the cases like the appellant what is required is to recover the credit taken incorrectly.
4. We are entirely with the Commissioner (Appeals) on the issue. His order has correctly followed the legal position under the Rules and the ratio of the Apex Court judgment. The Circular of the Board also warranted only recovery of the improperly taken credit. The Commissioner (Appeals) is also right in holding that the duty demand of over Rs. 2 crores in regard to a dispute about availability of over Rs. 6 lakhs credit is grossly unjust. In fact, impropriety and illegality are not with the Order of the Commissioner (Appeals); but with the present appeal. It is grossly improper for an administrative Commissioner to irresponsibly continue with a dispute to higher and higher appellate fora. Such a feud mentality brings no additional revenue to the exchequer. It only generates bad blood by heaping unmerited misery on the assessees. Further, appellate fora also get clogged with fruitless disputes. High time Government deviced a method to put down this irresponsible tendency on the part of administrative authorities, to file too many unwarranted appeals.
5. In view of what is stated above, the appeal of the Revenue is rejected as entirely lacking in merit and the impugned order of Commissioner (Appeals) is confirmed.