Custom, Excise & Service Tax Tribunal
Yes vs Represented By : Shri Anand Nainawati, ... on 20 September, 2013
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Zonal Bench, Ahmedabad Appeal No. : E/606 of 2011 and E/766 & 767 of 2012 Arising out of : OIA No. 25/2011/Commr(A)/CMC/Raj dt. 14.02.2011- 15.02.2011 and 375 to 376/2012/Commr(A)/RBT/Raj dated 10.07.12 Passed by : Commr. (Appeals) C. Excise & Customs, Rajkot For approval and signature : Mr. M.V. Ravindaran, Honble Member (Judicial) 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 should be released under Rule 27 of 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 Departmental authorities? Yes Appellant (s) : M/s. Intolcast Pvt. Limited Shri Madhubhai Shambhubhai Patodia Represented by : Shri Anand Nainawati, Advocate Respondent (s) : Commissioner of Central Excise Rajkot
Represented by : Shri J. Nagori, A.R. CORAM :
Mr. M.V. Ravindaran, Honble Member (Judicial) Date of Hearing : 20.09.2013 Date of Decision : 25.10.2013 ORDER No. A/11392, 11378 to 11379/2013 Dated 25.10.2013 Per : Mr. M.V. Ravindaran;
These appeals are directed against the Order-in-Appeal No. 375 to 376/2012/Commr(A)/RBT/Raj dated 10.07.2012.
2. Facts in brief is that during the course of visit of the factory premises of the main appellant, officers of preventive wing of Central Excise noticed that main appellant is engaged in manufacturing of investment casting and were purchasing aluminium moulds for using them in their factory. Such moulds were purchased by the main appellant from open market and no manufacturing activity were carried out on such moulds, however appellant were recovering cost of moulds from their clients by issuing Central Excise invoices to them and paying duty from Cenvat account. Coming to such a conclusion that appellant is not following the proper procedures, show cause notice was issued for demanding wrongly utilised cenvat credit from them under the provisions of Rule 14 of Cenvat Credit Rules, 2004 read with Section 11A of the Central Excise Act, 1944, interest thereof and also for imposition of penalties on the main appellant as well as Director of the appellant. The adjudicating authority, after following the due process of law confirmed the demands raised, appropriated the amount paid by the appellant, imposed interest and penalties on the main appellant as well as on the Director of the Company. Aggrieved by such an order, appellants preferred appeals before the first appellate authority. The first appellate authority did not agree with the contentions raised by the appellants and hence rejected the appeals. The appellants are before the Tribunal against such confirmation of demands, interest and imposition of penalties.
3. Learned counsel at the outset would submit that the order is incorrect. It is his submission that the main appellant had under the bonafide belief paid the duty when invoices were raised. It is his submission that since there was eligible cenvat credit available with them, they debit the amount in the cenvat account. It is his submission that there was no intention to evade any duty as the said discharge of duty liability has been reflected in all the Central Excise returns filed by them. He would fairly submit that in an identical issue the Hon'ble High Court of Gujarat in the case of CCE, Ahmedabad-II vs. Inductotherm (I) Pvt. Limited 2012 (283) ELT 359 (Guj.) has held that there is no requirement to pay duty, any amount paid by the appellant through modvat cannot be accepted and the said amount having been collected from the assessees purchasers, should be returned back to the Government in cash. He would submit that the said judgment of the Hon'ble High Court may not cover the issue in the question in hand, inasmuch as the provisions of Section 11D was being considered by their Lordship in that case while the question raised in the show cause notice in these appeals is the recovery of the amount under the provisions of Rule 14 of Cenvat Credit Rules, 2004 read with the provisions of Section 11A of Central Excise Act, 1944. It is his submission that the show cause notice was issue to the appellant on 25.11.2010 for the period February 2006 to August 2010. It is his submission that the entire demand is hit by limitation inasmuch, as the appellants were showing the clearances of moulds in their ER-1 returns religiously and no question was raised by the department.
4. Learned departmental representative on the other hand would submit that the judgment of the Hon'ble High Court of Gujarat in the case of Inductotherm (I) Pvt. Limited would squarely cover the issue in favour of the Revenue. It is his submission that mentioning of wrong provisions or Section in the show cause notice would not vitiate the issue and demand should be considered as having been raised under the provisions of Section 11D of the Central Excise Act,1944 which does not have any limitation.
5. I have considered the submissions made by both side and perused the records.
6. It is seen from the records that there is no dispute as to the fact that appellant had raised invoices of the moulds which were purchased by them from their clients and indicated the payment of Central Excise duty. The said excise duty was debited from the RG23 Part II account i.e. Cenvat account, is also undisputed.
7. I find that in the case of Inductotherm (I) Pvt. Limited the Hon'ble High Court was considering the similar issue wherein the respondent in that case was billing his clients for sell of inputs as such and discharging excise duty on the amount which has been billed by them as cost of the inputs; the said amounts were double the amount on which cenvat credit was availed. In that case, Revenue issued show cause notice under the provisions of Section 11D for recovering the said amount. Their Lordship in the said judgment has held that any amount indicated on the invoice which is not payable by an assessee and even if it is paid by the assessee through cenvat account and collected from their purchasers, need to be paid to the Government through cash and their Lordship were considering the provisions of Section 11D in that case. I find that the ratio laid down by their Lordship in the case of Inductotherm (I) Pvt. Limited, on merits, is in respect of the provisions of Section 11D which were invoked in the said show cause notice. In the case in hand, I find that the show cause notice specifically invokes the provisions of Rule 14 of the Cenvat Credit Rules, 2004 read with Section 11A of the Central Excise Act, 1944. The said Rule and the said Section if read harmoniously, talks about the recovery of an amount due from the assessee as Central Excise duty or for wrongly availed or utilised cenvat credit. In the case in hand, there is no dispute as to the fact that cenvat credit availed by the appellant is not disputed and there is also no dispute as to the fact that all the amounts which have been debited by the appellant are indicated as Central Excise duty.
8. Be that as it may, I find that the appellant has made out a case on limitation. On perusal of the ER-1 returns i.e. monthly excise returns, I find that the appellant has been categorically indicating in the returns that there are sale of moulds from their factory, on payment of Central Excise duty. The Revenue authorities are not disputing about the filing of excise returns by the appellant. It is also seen that appellants ER-1 returns were not contested by the Revenue authorities for the period from February 2006 to August 2010 in any way. It is to be noted that the said ER-1 specifically indicates that invoices under which the goods were cleared and remarks also talks about clearance of moulds on sales. The department is aware that the registration of the appellant with the Central Excise department is for manufacturing of casting of Stainless Steel. It is also to be noted that in the registration granted to the appellant, there is no mention of manufacturing activity of moulds which fall under the different Chapter other than the Chapters under which manufacturing activities is undertaken by the appellant. My views that the extended period of limitation can not be invoked are also fortified from the statements of Director recorded on the date of visit of factory premises by the Preventive Officers. In the said statement dated 16.8.2010, the Director has specifically stated that they have paid the Central Excise duty on the sale of moulds under an impression that they were liable to pay duty on the same. There can not be any dispute or motive attached to the said payment of Central Excise duty by the appellant on the mould which were billed to their clients. The findings recorded by both the lower authorities on limitation seems to be only the presumptions and not on the factual matrix as the first appellate authority has recorded that contention of the appellant is quite astute and pre-meditated one and the said findings do not find any support from the statements recorded of the Director and also is not referring the fact that appellant, in his monthly returns filed, specifically indicated that there was sale of moulds. The findings of the first appellate authority that any offence committed deliberately and obviously put down on statutory paper or document to the department does not lead to a conclusion that the appellant has acted fairly, bonafidely and in lawful manner, seems to be only a presumption and nothing else. When the statements were recorded of the Director, the said Director has categorically admitted that they were under the bonafide impression and there was no motive attached to such discharge of duty liability on the sales of moulds. In view of this, I find that demands which has been raised and confirmed against the appellant are liable to be set-aside on the ground of limitation.
9. Since I am holding that the demands are hit by limitation, the question of demanding interest and imposing penalties on both the appellants does not arise.
10. As regards the submissions of learned Additional Commissioner (AR) that the show cause notice, even if it is indicating wrong Section or Rule, does not preclude from demanding duty under the correct provisions, seems to be misplaced, inasmuch as the provisions of Section 11D are different provisions and needs to be invoked in a situation where it demands whereas, in the case in hand, it is very clear that the Revenue authorities invoked the provisions of Rule 14 of the Cenvat Credit Rules, 2004 read with Section 11A of the Central Excise Act, 1944, which in my view cannot be sustained due to the fact that appellants have made out a case on limitation.
11. Accordingly, the impugned orders are set-aside and appeals are allowed with consequent relief, if any.
(Pronounced in the Court on 25.10.2013) (M.V. Ravindaran) Member (Judicial) KL...
2ORDER No. A/11392, 11378 to 11379/2013 Dated 25.10.2013