Custom, Excise & Service Tax Tribunal
M/S. Reactive Metals Of India Pvt. Ltd vs Cc,Ce&St, Hyderabad-Iii on 13 January, 2016
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL REGIONAL BENCH AT HYDERABAD Bench SMB Court I Appeal No.E/3123/2011 (Arising out of Order-in-Appeal No.65/2011(H-III)CE dt. 27/07/2011 passed by CC,CE&ST(Appeals-I), Hyderabad) For approval and signature: Honble Ms. Sulekha Beevi, C.S., 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? 2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordship wish to see the fair copy of the Order? 4. Whether Order is to be circulated to the Departmental authorities? M/s. Reactive Metals of India Pvt. Ltd. ..Appellant(s) Vs. CC,CE&ST, Hyderabad-III ..Respondent(s)
Appearance Shri P. Dwarakanath, Consultant for the appellant.
Shri S.V. Nair, Authorised representative for the respondent.
Coram:
Honble Ms. Sulekha Beevi, C.S., Member(Judicial) Date of Hearing:13/01/2016 Date of decision:13/01/2016 FINAL ORDER No._______________________ [Order per: Sulekha Beevi, C.S.] The appellant who are engaged in the manufacture of sponge iron are also availing facility of CENVAT credit on inputs and capital goods. During the course of audit, it was observed that appellant had availed credit on MS angles, channels, plates, TMT bars, cement as capital goods. A show-cause notice dt. 08/10/2010 was served proposing to any the credit for recovery of the irregularly availed credit along with interest and proposing penalty. After due process of law, the credit was disallowed confirming the demand of Rs.7,99,468/- along with interest and imposing equal amount of penalty. The appellants carried the issue in appeal and vide order impugned herein, the Commissioner(Appeals) set aside the demand on steel items on the ground of limitation but upheld the demand of Rs.1,97,559/- availed on cement. Being aggrieved the appellants have preferred this appeal.
2. The learned consultant appearing for the appellant explained that the entire demand is hit by limitation and that the Commissioner(Appeals) has erred in sustaining part of the demand without any justification for invoking the extended period. The notice dt. 08/10/2010 was issued demanding irregular credit taken during January 2007 to August 2009. There was no suppression as the appellants had disclosed the availment of credit in their ER-1 returns. Along with these returns statements of availing credit was also furnished. It is pointed out that appellants unit was audited by the officers of the department. A show-cause notice dt. 11/09/2008 was issued earlier alleging irregular availment of credit on MS items taken during the period January 2007, May, 2007 to November 2007 and April 2008. After due process of law, the Assistant Commissioner, vide Order-in-Original dt. 19/01/2009 dropped the proceedings thus allowing the credit on MS items, observing that the MS items were used as support structures for pollution control equipment and other parts of plant/machinery. The show-cause notice of the present appeal was thereafter issued for the period January 2007 to August 2009. The periods of these two show-cause notices overlap and in the later notice, the credit amount of Rs.59,200/- allowed on MS items by the earlier proceedings was deducted. That these facts would establish that the department was all along aware of the credit availed on the impugned items and that there is no suppression of facts with intention to evade payment of duty on the part of the appellant. He contended that the issue relates to interpretation of law and that appellants had availed credit on the bona fide belief that the same is admissible. On merits, the learned consultant placed reliance on the judgments laid in Mundra Ports & SEZ Ltd. Vs. CCE&Cus [2015(39) STR 726 (Guj.)] and Sai Sahmita Storages (P) Ltd. [2011-TIOL-863-HC-AP-CX].
3. Against this the learned AR strongly argued that credit is not admissible. He submitted that the learned Commissioner has been lenient enough to set aside the credit availed on MS items on the ground of limitation. The disallowance of credit availed on cement is sustainable as held in the judgment of Vandana Global ltd. case [2010(253) ELT 440 (Tri. LB)].
4. I have heard the rival submissions. The Commissioner(Appeals) vide the impugned order has held the demand of credit on MS items to be barred by limitation, holding that there was no suppression and that department was all along aware of the fact that appellant was availing credit on these items. On perusal of the Annexure showing the details of invoices of the goods/items on which credit was availed, it is seen that all invoices except one are prior to 07/07/2009. The date shown in one invoice is 21/07/2009 (Rs.4,699/-). The invoices of steel items / MS items show various dates from January 2007 upto 30/05/2009. The invoice of cement shows various dates from 08/02/2008. The dates of these invoices of MS items and cement show that appellant has taken credit on these items from 31/01/2007 till 21/07/2009 (January 2007 to August 2009) intermittently. In the impugned order, it was held by the Commissioner(Appeals) that as the issue of availing credit on MS items was adjudicated in the earlier order dt. 19/01/2009, the department was aware of the availment of credit on steel items and therefore the demand on steel items is hit by limitation. If that be so, invoices show procurement of cement on intermittent dates from 31/01/2007 to 21/07/2009. It can be safely inferred that department was well aware of the credit availed on cement at the time of issuance of the earlier show-cause notice itself. As already mentioned earlier, the period of the earlier show-cause notice and the show-cause notice pertaining to this appeal are overlapping. The dates of the invoices of cement also fall in these overlapping periods. When the demand of part of the items of the subject period is hit by limitation unless there is some cogent evidence to establish willful suppression, regarding the cement items, the entire demand would be time barred. The contention of the department that credit availed on cement came to light only in audit is not tenable. The Revenue has failed to establish why the credit availed on cement was not made part of the earlier show-cause notice, when these items were availed during such period also. The fact that details for issuing the show-cause notice were taken from the appellants records, ER-I returns etc., together with the fact that an earlier show-cause notice was issued establishes that there was no suppression with intention to evade payment of duty. In view thereof, I hold that the entire demand is barred by limitation. As the issue of limitation is answered in favour of appellant, I do not wish to delve into the merits. In the result, the impugned order is set aside and the appeal is allowed with consequential reliefs, if any.
(Operative part of this order was pronounced in court on conclusion of the hearing) SULEKHA BEEVI C.S. MEMBER(JUDICIAL) Raja.
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