Custom, Excise & Service Tax Tribunal
M/S. Vinayak Steels Ltd vs Cce, Hyderabad-Iii on 16 March, 2016
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL REGIONAL BENCH AT HYDERABAD Bench SMB Court I Appeal No.E/27612/2013 (Arising out of Order-in-Appeal No.44/2013(H-III)CE dt. 30/04/2013 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. Vinayak Steels Ltd. ..Appellant(s) Vs. CCE, Hyderabad-III ..Respondent(s)
Appearance Shri Lalit Mohan Chandana, Advocate for the appellant.
Shri S.L. Karalia, Authorised representative for the respondent.
Coram:
Honble Ms. Sulekha Beevi, C.S., Member(Judicial) Date of Hearing:25/02/2016 Date of decision:.
FINAL ORDER No._______________________ [Order per: Sulekha Beevi, C.S.] The appellants are engaged in manufacture of sponge iron, MS ingots, TMT bars and are availing the facility of CENVAT credit on inputs and capital goods. During the period February 2008 to December 2008, the appellants supplied goods to units and developers in SEZ without payment of duty under Letter of Undertaking (LUT). The appellants were of the view that goods supplied to SEZ developers/units is export and took credit on all inputs (Rs.18,40,670/-) used in manufacture of goods supplied to developers/units in SEZ. The department on the other hand entertained the view that credit on the inputs used in goods supplied to SEZ is not available, as these supplies are to be treated as exempted goods. It is the case of appellant that due to pressure from department, the appellant reversed the credit of Rs.18,40,670/- by making debit entry on 12/01/2009 and 16/01/2009 and informed the same to the Superintendent of Central Excise, vide letter dated 19/01/2009.
2. In spite of this payment, a show-cause notice dt. 12/02/2009 was served on appellants proposing demand of Rs.2,18,46,185/- being 10% of the value of exempted goods (i.e. goods cleared to SEZ developer). Thus as per this notice, the department did not accept the reversal of credit made by appellant on the same credit taken on inputs.
3. After adjudication, the original authority vide order dated 21/07/2009 confirmed the demand. The appellant carried the issue in appeal and the Tribunal, vide Final Order No.26542-26543/2013 dated06/09/2013 relying upon the decision rendered in Sujana Metal Products case [2011(273) ELT 112 (Tri. Bang.)] held that the supply to SEZ are to be treated as exports and the demand to pay 10% of the value of the goods for the clearances made to SEZ is not sustainable.
4. Meanwhile, the appellant took recredit of the amount of Rs.18,95,888/- (Rs.18,40,670/- towards BED + education cess Rs.36,813/- + Secondary & Higher Education cess Rs.18,405/- = Rs.18,95,888/-) and informed the same to Superintendent vide letter dated 10/08/2009. They explained in the letter that the department having not accepted the reversal of credit made by the appellants by issuing notice and confirming the demand for payment of 10% of the value of the goods on the same allegation of non-admissibility of credit as the goods were supplied to SEZ developers, the appellant has taken recredit of the amount which was reversed earlier for the same cause. That there cannot be two payments for the same cause of action and that it would tantamount to double payment. The appellant re-credited their books of account with Rs.18,95,888/- in July 2009 and disclosed the same in their ER-1 return.
5. During the scrutiny of ER-1 return, it was observed that appellants had taken irregular credit of Rs.18,95,888/-. A show-cause notice was issued which is the subject matter of the present appeal. According to department the appellant after reversing the credit of Rs.18,95,888/- under protest which was the credit availed in respect of inputs used in manufacture of final products supplied to SEZ developer, took suo motto credit of the same amount, which is in contravention of CENVAT Credit Rules, 2004. The original authority observed that there is no provision to take suo motto credit and confirmed the demand of Rs.18,95,888/- along with interest and imposed equal amount of penalty. The appellants filed appeal before Commissioner(Appeals). As per the order impugned herein, the Commissioner(Appeals) upheld the demand & interest, but reduced the penalty to Rs.2,00,000/-. Being aggrieved the appellants have preferred the present appeal.
6. The moot question for consideration is whether the appellants could avail the re-credit of Rs.18,95,888/- which was debited by them earlier under protest.
7. On behalf of the appellant, the learned counsel Shri Lalit Mohan Chandana submitted that the appellants had reversed the credit under protest earlier only due to pressure from the department. In spite of this reversal, alleging inadmissibility of the same credit, department issued show-cause notice demanding 10% of the value of goods. Only after such notice, appellants took recredit of Rs.18,95,888/- as there was a demand raised by department in respect of the same credit. He contended that taking recredit of the same amount was only an adjustment made by appellant because the department had raised demand / issued show-cause notice with respect to the same credit claiming 10% of value of goods. The demand was confirmed by original authority and Commissioner(Appeals). But later set aside by Tribunal. That therefore the adjustment made by re-credit in CENVAT account of the earlier reversal is legal and proper. He relied on the judgment laid in KMC Corporation Ltd. Vs. CESTAT, Chennai [2014(302) ELT 45 (Mad.)] and CCE,C&ST, Bangalore Vs. Stumpp Schedule & Somappa (P) Ltd. [2015(319) ELT 146 (Tri. Bang.)].
8. Against this, the learned AR supported the findings in the impugned order. He urged that the appellant cannot take suo motto credit. The appellant ought to have filed a refund application under Section 11B. That therefore the appellant having contravened the provisions of CENVAT Credit Rules, 2004 by taking suo motto credit, the demand raised is sustainable. He drew support from the judgment laid in BDH Industries ltd. Vs. Commissioner [2008(229) ELT 364 (Tri. LB)].
9. I have heard both sides. The question is whether the recredit taken by the appellant is admissible or not. It is not disputed that the show-cause notice raising the demand of Rs.2,18,46,145/- being 10% of the value of goods supplied to SEZ developer was issued alleging the same cause of action. At present the allegation is that though the credit was admissible, the appellant ought not to have taken suo motto credit, but should have applied for refund under Section 11B. The Revenue relies upon the judgment laid in BDH Industries case (supra). Section 11B deals with refund of excess duty paid. The appellant here has made adjustment in the CENVAT account and there is no outflow of funds.
10. The Tribunal in the case of Sopariwala Exports (P) Ltd. Vs. CCE, Vadodara-1 [2013(291) ELT 70 (Tri. Ahmd.)] and in the case of Push Enterprises Vs. CCE, Jaipur-I [2015(322) ELT 728 (Tri. Del.)] held that credit taken suo motto for such adjustment is admissible. The issue stands covered by the judgments laid in Stumpp, Schedule & Somappa (P) Ltd. case (supra) and KMC Corporation Ltd. case (supra). The Tribunal in the case of Stumpp, Schedule & Somappa case has distinguished the ratio laid in the case of BDH Industries. Following the dictum laid in the above judgments, the issue being same and facts being similar, I hold that in the said circumstances, there is no impediment in the appellant taking suo motto credit of Rs.18,95,888/-.
11. In view of the foregoing, the impugned order is set aside. The appeal is allowed with consequential reliefs, if any.
(Pronounced in open court on ..) SULEKHA BEEVI C.S. MEMBER(JUDICIAL) Raja.
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