Custom, Excise & Service Tax Tribunal
M/S. Minwool Rock Fibres Ltd vs The Commissioner Of Customs And Central ... on 7 November, 2012
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT BANGALORE
Bench - Single Member Bench
Court - I
Date of Hearing: 07.11.2012
Date of decision: 07.11.2012
Central Excise Appeal No. 72/2011
(Arising out of Order-in-Appeal No. 103/2010 (H-IV) CE dated 15.10.2010 passed by the Commissioner of Customs, Central Excise and Service Tax, Hyderabad)
For approval and signature:
Honble Mr. P.G. Chacko, Member (Judicial)
1. Whether Press Reporters 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 the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
Yes
3. Whether their Lordship wish to see the fair copy of the Order?
Seen
4. Whether Order is to be circulated to the Departmental authorities?
Yes
M/s. Minwool Rock Fibres Ltd. ..Appellant
Vs.
The Commissioner of Customs and Central Excise
Hyderabad Respondent
Appearance Mr. Raghavendra, advocate for the appellant Mr A.K. Nigam, Additional Commissioner (AR) for the respondent Coram:
Honble Mr. P.G. Chacko, Member (Judicial) FINAL ORDER No._______________________2012 This appeal filed by the assessee is directed mainly against a demand of interest on CENVAT credit of Rs. 6,82,965/- which was utilized by the appellant for pre-deposit pursuant to Stay Order Nos. 1020 & 1021/2007 dated 20.12.2007 passed by this Tribunal in Appeals Nos. E/830 & 831/2007. The said two appeals had been filed against a total demand of duty of Rs. 13,13,394/- which had arisen out of classification of the appellants product under SH6806.90 of the first schedule to the Central Excise Tariff Act. The appellant (assessee) had classified the goods under SH 6807.10 of the said schedule and claimed the benefit of nil rate of duty prescribed under Notification No. 3/2005-CE. In the said Stay Order, this Tribunal directed pre-deposit of Rs. 6,82,965/- being 50% of the duty demanded. The appellant debited this amount in their CENVAT account on 10.03.2008 and reported compliance to the Tribunal. Later on, the above two appeals along with two other appeals of the assessee came to be disposed of by Final Order Nos. 1345 to 1348/2009 dated 22.09.2009. The decision was in favour of the assessee on the classification dispute and consequently they got the benefit of the aforesaid notification. Against the decision, the Commissioner of Central Excise, Hyderabad filed Civil Appeal No. D16732/2010 but same was dismissed by the Honble Supreme Court by order dated 09.07.2010.
2. During the pendency of the appeals E/830 & 831/2007 ibid, the Additional Commissioner of Central Excise, Hyderabad IV issued show-cause notice dated 04.03.2009 to the assessee proposing to recover from them an amount of Rs. 6,82,965/- which was alleged to have been irregularly availed in CENVAT account and utilized for pre-deposit purpose. The notice also sought to levy interest under Section 11AB of the Central Excise Act read with Rule 14 of the CENVAT Credit Rules 2004. It also proposed penalty under Rule 15 (1) of the CCR 2004 for the alleged contravention of legal provisions. All these proposals were contested by the party. In adjudication of the dispute, the Additional Commissioner passed the following order:
I confirm and demand, interest on the CENVAT credit of Rs. 6,82,965/- availed irregularly under Section 11AB of the Central Excise Act, 1944.
I impose a penalty of Rs. 6,82,965/- on M/s. Minwool Rock Fibres Ltd. under Rule 15 of the CENVAT Credit Rules, 2004. Aggrieved by the above order, the party preferred an appeal to the Commissioner (Appeals) and the latter reduced the quantum of penalty to Rs. 50,000/- but sustained the demand of interest. The appellate authority directed the lower authority to calculate the period for levy of interest. The present appeal of the assessee is directed against the appellate Commissioners order.
3. Heard both sides. The learned counsel for the appellant has cited decisions of this Tribunal recognizing debit in CENVAT account as a valid mode of pre-deposit. These decisions are also seen cited in ground No. A5 of the appeal. The learned counsel further submits that the pre-deposit made by the appellant by way of debit in CENVAT account was accepted by this Tribunal and accordingly their appeal was taken up for hearing on merits. The respondent did not raise any objection either at the stay stage or at the final hearing stage of the appeal. They did not raise such objection before the Honble Supreme Court either. According to the learned counsel, it was not open to the department to issue the show-cause notice in question as it was barred by judicial discipline. For these reasons, it is argued that the subsequent proceedings of the department are also liable to be set aside.
4. The learned Additional Commissioner (AR) points out that the appellant was not entitled to avail or utilize CENVAT credit inasmuch as they were always manufacturing and clearing exempted final product only. Where the law barred the benefit of CENVAT credit, it was not open to the appellant to utilize CENVAT credit for the purpose of pre-deposit either. According to the learned Additional Commissioner (AR), the fact that no objection was raised by the department before this Tribunal or the apex court is not fatal to the impugned proceedings.
5. I have given careful consideration to the submissions. It is not in dispute that the appellant had ever been claiming the benefit of nil rate of duty by classifying the product under SH6807.10 of the CETA schedule. It is also true that, where the final product is exempted, the question of availment of CENVAT credit does not arise. Nevertheless, it cannot be gainsaid that the appellant was acting in pursuance of the Tribunals Stay Order dated 20.12.2007 when they debited the amount of Rs. 6,82,965/- in RG 23A part II on 10.03.2008. Apparently, they reported this debit in CENVAT account to the Tribunal and the latter recognized it as valid pre-deposit under Section 35F of the Central Excise Act. At that time, no objection was raised by the respondent. Later on, when the assessees appeals were taken up for final hearing on merits, the respondent did not raise any preliminary objection against the appeals being taken up for hearing on merits. Had it been the case of the respondent that the appellant had not made any valid pre-deposit and hence their appeal should not be considered on merits, this objection should have been raised before the Tribunal through the authorized representative of the department. But this was not done. There is no material to show that any objection of the above kind was raised by the department in Civil Appeal No. D16732/2010 before the Honble Supreme Court. Just like the passing of Stay Order under Section 35F of the Central Excise Act, the noting of compliance with that order was also a judicial act amenable to appeal by the aggrieved party. In the present case, indisputably, no appeal was filed by the department against the acceptance of debit in CENVAT account as valid pre-deposit under Section 35F of the Central Excise Act. On the other hand, during the pendency of the appeals E/830 and 831/2007, the department chose to issue a show-cause notice to the assessee for recovery of the CENVAT credit amount and interest thereon and for imposition of penalty. This was done on the premise that the assessee was not entitled to utilize CENVAT credit for pre-deposit purpose. This very premise is ill-conceived inasmuch as there are umpteen number of decisions of this Tribunal to the effect that pre-deposit could be made through debit in CENVAT account. This apart, the facts and circumstances narrated hereinbefore are enough to indicate that the show-cause notice in question was issued regardless of the fact that the assessee by debiting the amount in their CENVAT account was only implementing the order passed by this Tribunal under Section 35F of the Central Excise Act. By no stretch of imagination can it be said that the assessee was out to contravene any statutory provision.
6. As I have already indicated, the show-cause notice in question was issued during the pendency of the appeals E/830 & 831/2007. Had the department raised their objection before the Tribunal instead of issuing show-cause notice to the party, that would have been a healthy course of action to be appreciated. The action taken to the contra smacks of scant respect for the Tribunals orders.
7. For all the reasons stated hereinbefore, I hold that the show-cause notice in question and all departmental proceedings pursuant thereto have to be set aside and it is ordered accordingly. The appeal stands allowed.
(Pronounced and dictated in open Court) (P.G. CHACKO) MEMBER (JUDICIAL) iss