Custom, Excise & Service Tax Tribunal
Datasol Innovative Labs vs Commissioner Of Central Excise, ... on 8 January, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Application(s) Involved: E/Stay/22210/2014 in E/22018/2014-DB Appeal(s) Involved: E/22018/2014-DB [Arising out of Order-In-Original No. 03/2014 dated 17/02/2014 passed by the Commissioner of Central Excise, Bangalore-II ] For approval and signature: HON'BLE Mrs. ARCHANA WADHWA, JUDICIAL MEMBER HON'BLE Mr. B.S.V. MURTHY, TECHNICAL MEMBER 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? 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 Datasol Innovative Labs No. 793, Ground And First Floor Datasol House, 17th Cross Vyakikaval HBCS Layout, Veeranna Palya, Arabic College, Nagawara Bangalore 560 045 Karnataka Appellant(s) Versus Commissioner of Central Excise, Service Tax And Customs Bangalore-II PB 5400, CR Building, Queens Road, Bangalore 560 001 Karnataka Respondent(s)
Appearance:
Mr. Anil Kumar & Mr. Cherian Punnoose, Advocates AKB Associates #311-312, 'Commerce House' Above Hotel Chandrika, 9/1, Cunningham Road, Bangalore - 560 052 Karnataka For the Appellant Mr. R. Gurunathan, AR For the Respondent Date of Hearing: 08/01/2015 Date of Decision: 08/01/2015 CORAM:
HON'BLE Mrs. ARCHANA WADHWA, JUDICIAL MEMBER HON'BLE Mr. B.S.V. MURTHY, TECHNICAL MEMBER Final Order No. 20078 / 2015 Per : ARCHANA WADHWA After dispensing with the condition of pre-deposit, we proceed to decide the appeal itself.
2. After hearing both the sides duly represented by Mr. Anil Kumar & Mr. Cherian Punnoose, Advocates for the appellant and Mr. R. Gurunathan, DR for the Revenue, we find that the appellants are engaged in the manufacture of various excisable goods, viz., parts of aircrafts and helicopters, instrumental landing systems and direction finding equipments, during the relevant period, supplied to M/s. Hindustan Aeronautical Laboratories (hereinafter referred to as HAL) in terms of Notification No. 63/95-CE dated 16.03.1995 or other identical relevant notifications for different periods. The goods supplied by M/s. HAL to defence were exempted from payment of duty, in terms of the said notifications. Inasmuch as the goods manufactured by the appellant, which were cleared to M/s. HAL, were further supplied to defence, the same were being cleared by the appellant without payment of duty, in terms of the notifications in question and based upon a certificate given by M/s. HAL that the goods are meant for defence.
3. Subsequently the appellants were issued a show-cause notice on 05.03.2013, raising demands of duty during the period April 2008 to December 2012 on the ground that the notifications in question grant exemption to M/s. HAL and not to the vendors of HAL. At that stage the appellants claimed that if differential duty has to be paid by them, they would be entitled to the benefit of cenvat credit of duty paid on the inputs. Accordingly they created cenvat credit account and claimed cenvat credit to the tune of Rs. 1,25,26,746/- (Rupees One crore Twenty Five Lakhs Twenty Six Thousand Seven Hundred and Forty Six only), as against the demand of duty of Rs. 1,59,44,653/- (Rupees One Crore Fifty Nine Lakhs Forty Four Thousand Six Hundred and Fifty Three only).
4. The Commissioner vide his impugned order confirmed the duty of excise in respect of the final products cleared by them in terms of the notification in question, by denying the benefit of the same and also denied them the cenvat credit so availed and used for neutralization of the said duty. This was done on the ground that the appellant has not maintained or created proper cenvat account showing the eligibility of credit to them in respect of the inputs used in the manufacture of such exempted final products.
5. Learned advocate appearing for the appellant submits that during the relevant period, there was confusion in the field as regards the availability of the said notification or the other identical notifications to the vendors of the specified manufacturers in the notification. He submits that earlier Board had issued a clarification that the benefit of the notification would be available to the vendors of the specified manufacturers in the notification including HAL. By taking note of the said clarifications, the Tribunal in number of cases has set aside the demands created against the vendors. However learned advocate fairly agrees that subsequently the said clarifications were withdrawn and it was observed by the Board that the benefit in terms of the said notification can only be given to the specified manufacturers. He also fairly agrees that there are adverse decisions of the Tribunal on the said issue. However it is his contention that this fact would lead only to one inevitable conclusion that there was doubt in respect of the availability of the notifications and different Courts were taking different views, in which case no malafide can be attributed to him so as to justifiably invoke the longer period of limitation.
6. As regards cenvat credit, he submits that the observations made by the Commissioner are factually incorrect inasmuch as they have subsequently obtained a letter written by the Superintendent on 28.10.2013, under the RTI Act, which reveals that the entire accounts maintained by them in respect of cenvat credit, were scrutinized by the Superintendent and found to be correct. The adjudicating authority has chosen not to take the said communication into consideration for the reasons best known to him.
Learned advocate fairly agrees that the demand within limitation is payable by them but the same has to be neutralized against the cenvat credit available to him for the normal period. He further submits that the demand should be requantified by treating the entire consideration as cum-duty price. He also prays for setting aside the penalty.
7. Countering the arguments learned DR submitted that apart from Notification No. 63/95-CE, there were other two notifications being Notification No. 10/97-CE dated 01.03.1997 and 06/2006-CE dated 01.03.2006, which required the certificates to be produced by the proper officer. Notification No. 10/97-CE dated 01.03.1997 required a certificate to be produced duly signed by Deputy Secretary of the concerned Ministry, whereas the certificates produced by the appellants are issued by CSIO and Aeronautic Development Agency, and cannot be held to be proper certificate. Similarly in terms of Notification No. 06/2006, he submits that the benefit is available only when the goods manufactured by the manufacturer is supplied to M/s. HAL for servicing, repair or maintenance and not for further use in the manufacture of their product. As M/s. HAL has used it for further manufacture, he submits, that inasmuch as the conditions of the said notification have not been fulfilled, the benefit cannot be extended to the appellant.
8. We find that the appellants are not contesting the matter on the availability or applicability of the notifications in question. Their main contention is on the point of demand being barred by limitation inasmuch as they were entertaining the bona fide belief, based upon various decisions of the Tribunal as also the Boards Circular and the clarification issued by Bangalore Commissionerate that they are not liable to pay any duty of excise. We find force in the above contention of the learned advocate. We have been shown various decisions by both the sides. In some of the decisions, benefit of the Notification No. 63/95-CE stands extended to the vendors whereas in some other decision it stands denied. As such it becomes clear that there was no one uniform opinion on the disputed issue. In such a scenario no malafide can be attributed to the appellant.
9. As regards Notification No. 10/97-CE dated 01.03.1997 is concerned, the Revenues objection is that the certificate produced by the assessee in terms of the said notifications are not duly signed by the proper officer. However we find that certificates handed over to the appellant duly signed by CSIO or aeronautic development agency and based on which the appellant availed the benefit of notification. Even if the fact that they were not signed by the proper officer is admitted, no suppression or misdeclaration can be attributed to the assessee so as to invoke the longer period of limitation. Apart from that we find, as is seen from the certificate, the person signing the same is holding the rank in pay scale higher than the Deputy Secretary to Government of India in which case even though the certificates were not signed by Deputy Secretary, the same should be accepted. Further the Superintendent in his letter dated 28.10.2013 has also verified the said certificates and has reported that the same appears to be adequate.
10. In view of the foregoing, demand cannot be held sustainable on the point of limitation itself. As regards the benefit of Notification No. 6/2006-CE learned advocate submits that they are not aware as to whether M/s. HAL would use the goods for repair, maintenance or for further manufacture of the goods. On being informed by M/s. HAL and as certified by them that the goods would be used for maintenance and repair, they have claimed the benefit of the said notification and if M/s. HAL has not used the same for the said purpose, the appellant cannot be held responsible for them. As the entire demand is barred by limitation, we hold that no liability on the said count would also arise against them.
11. In view of the foregoing, we set aside the impugned order remand the matter to Commissioner for fresh decision, limiting the demand to the period of limitation, granting the benefit of cenvat credit of duty paid on the inputs used for the said goods, after taking note of the letter dated 28.10.2013 of the Superintendent and requantifying the demand by extending the benefit of cum-duty benefit. Inasmuch as we have held that there was no suppression on the part of the appellant, the penalty imposed upon them is required to be set aside. We order accordingly. Stay petition as also appeal get disposed of in above manner.
(Order pronounced and dictated in open court) (B.S.V. MURTHY) TECHNICAL MEMBER (ARCHANA WADHWA) JUDICIAL MEMBER iss