Custom, Excise & Service Tax Tribunal
Commissioner Of Customs, Central ... vs Jairaj Ispat Ltd on 3 December, 2013
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Final Order No. 27060/2013 Appeal(s) Involved: E/326/2008-SM [Arising out of Order-in-Appeal No. 1/2008 dated 18/01/2008 passed by the Commissioner of Customs, Central Excise & Service Tax, Hyderabad] Commissioner of Customs, Central Excise and Service Tax Hyderabad-IV Posnett Bhawan, Tilak Road, Ramkoti, Hyderabad - 500 001, Andhra Pradesh Appellant(s) Versus Jairaj Ispat Ltd. Phase-III, IDA, Jeedimetla, R.R. District, Hyderabad - 500 055 Respondent(s)
Appearance:
Mr. N. Jagdish, Superintendent (AR) For the Appellant Mr. B. Kamala Vishnu, Authorized Rep. For the Respondent CORAM:
HON'BLE SHRI B.S.V. MURTHY, TECHNICAL MEMBER Date of Hearing: 03/12/2013 Date of Decision: 03/12/2013 M/s. Jairaj Ispat Ltd. (JIL) are manufacturers of TMT Bars, Billets etc. They had purchased an electrical generator in the year 2000-01 and sold it in 2004. At the same time of sale, they paid duty by calculating the same on transaction value. Subsequently in 2007 proceedings were initiated against the appellant on the ground that the generator was cleared as such and as per the provisions of Rule 3(5) of CENVAT Credit Rules, when the capital goods were cleared as such, entire credit taken has to be reversed. The matter travelled up to the Commissioner (Appeals) who relying upon the decision of the Tribunal in the case of Madura Coats Pvt. Ltd. Vs. CCE, Tirunalveli [2005 (190) E.L.T. 450 (Tri.-Bang.)] decided in favour of the appellant. Revenue is in appeal against this decision. The learned AR on behalf of the Revenue submitted that as per the latest decision in the case of CCE, Hyderabad-III Vs. Navodhaya Plastic Industries Ltd. rendered by Larger Bench dated 18.11.2013 reported in [2013-TIOL-1773-CESTAT-MAD-LB], it has been held that when capital goods are cleared after using the same for some time, duty has to be paid on the basis of value arrived at after allowing depreciation at the rates prescribed by the Board in the circular issued in 2002. This decision was rendered taking note of the fact that the Rule incorporated the provisions relating to depreciation much later than the issue of circular.
2. I find that on merits as submitted by the learned AR, the appellants are required to pay duty after calculating the value on the basis of actual depreciation liable as per the circular issued by the Board. Nevertheless I find that in the rejoinder submitted by the appellants and today when the matter was heard, the respondents have fairly contended that the whole demand is time-barred. The generator was cleared in 2004 whereas the show-cause notice was issued in 2007.
3. Learned AR vehemently argued that in this case the appellant failed to intimate to the department about the sale of generator and only at the time of audit this was noticed and therefore appellant is liable to pay the duty. He also submits that during the relevant period the stand taken by the department that the entire credit should be reversed treating the clearance of used generator as the clearance of capital goods as such. He relies on the decision in the case of Modernova Plastyles Pvt. Ltd. Vs. CCE, Raigad [2008 (232) E.L.T. 29 (Tri.-LB)].
4. I have considered the submissions made by both the sides. I have already taken a view that on merits, the appellant is liable to pay excise duty after calculating the value on the basis of actual depreciation as per the Board circular. Nevertheless I consider that appellant has a strong case on limitation. In this case, Modernova Plastyles Pvt. Ltd. took the view that clearance of used capital goods would amount to clearance as such, the decisions which help the respondents were the ones wherein the Tribunal had taken the view that no duty would be payable. The Commissioner (Appeals) himself has allowed it relying upon the Tribunals decision taking a view that no duty is payable. When the Tribunal Members after analyzing the Rule and hearing two sides to come to the conclusion that no duty is payable, if an assessee interprets the Rule to show that he need not pay duty, extended period may not be invocable. The respondents in this case stand on much better footing. They have not interpreted the Rule to mean that they need not pay any duty. They have paid duty on transaction value. That being the position, I feel it would be totally unfair if it is held that respondent could not have entertained a bona fide belief and they have resorted to suppression of fact, miss-declaration etc. to evade payment of duty when the Tribunal itself had come to the conclusion subsequently and in accordance with statutory provision no duty is payable. Further I also have to take note of the fact that final decision taken by the Larger Bench of the Tribunal which is the latest one on the subject also has come to the conclusion that even though there is no provision for payment of duty on the basis of transaction value or on the basis of depreciated value, the circular issued by the Board in 2002 can be applied and the assessee can be asked to pay duty on depreciated value. This only shows that during the period from the date when the Rule was amended the transaction value for clearance of capital goods till it was amended to provide for depreciation, there were decisions taking a view that no duty is payable, duty is payable on transaction value, duty is payable on depreciated value and entire credit has to be reversed. That being the position, in my opinion this is a case where extended period should not have been invoked. Accordingly the appeal filed by the Revenue has no merits and is rejected.
(Order dictated and pronounced in open court) (B.S.V. MURTHY) TECHNICAL MEMBER iss