Custom, Excise & Service Tax Tribunal
Air Liquide India Holdings Pvt. Ltd vs C.C.E.& Cus., Bharuch on 22 December, 2017
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Zonal Bench, O-20, NMH Compound Ahmedabad Central Excise Appeal No.11369 of 2015 -SM Arising out of the Order-in-Original No.BHR-EXCUS-000-COM-001-15-16 dated 20.5.2015 passed by the Commissioner, Central Excise & Customs, Bharuch. .
Air Liquide India Holdings Pvt. Ltd. ... Appellants Vs. C.C.E.& Cus., Bharuch . Respondent Appearance: Present Shri Jigar Shah, Advocate for the appellants Present Shri Sameer Chitkara, A.R. for the Respondent-Revenue Coram: Honble Dr. D.M. Misra, Member (Judicial) Date of hearing:05.09.2017 Date of pronouncement: 22.12.2017 Final Order No.A/13856 /2017 Per Dr. D.M. Misra:
This is an Appeal filed against the Order-in-Original No. BHR-EXCUS-000-COM-001-15-16 dated 20.5.2015 passed by the Commissioner, Central Excise & Customs, Bharuch.
2. Briefly stated the facts of the case are that the Appellants are engaged in the manufacture of excisable goods failing under Chapter 28 of CETA, 1985. On the basis of Audit report conducted during March 2012, it was noticed that the Appellant had availed CENVAT credit on input services used in the manufacture and clearance of both dutiable and exempted final products namely, liquid Nitrogen and medicinal Oxygen without following the procedure laid down under Rule 6(3)(ii) & (iii) of CENVAT Credit Rules, 2004. Consequently, after correspondences with the Appellant, show cause cum- demand notice was issued to them on 9.6.2014 for recovery of the 5%/6% of the value of the exempted products i.e. an amount of Rs.80,95,717/- for the period December 2009 to March 2013 with interest and proposal for penalty. On adjudication, the ld. Commissioner of Central Excise and Customs reduced the demand to Rs.13,30,195/- with interest and penalty. Hence, the present Appeal.
3. The ld. Advocate Shri Jigar Shah for the Appellant has submitted that in the show cause notice, it was alleged that since they had failed to follow the procedure prescribed under Rule 6(3)(ii) & (iii) of CCR, 2004 they were required to discharge 5%/6% of the value of the exempted goods cleared during the relevant period. It is his contention that even though the ld. Commissioner in the impugned order had categorically observed that the Appellant had complied with the conditions of the said Rule by exercising option and reversed proportionate credit attributable to exempted goods cleared, but proceeded further observing that the amount of credit reversed by them was not in accordance with the formula prescribed under Rule 6(3A) (c)(iii) of CCR, 2004. It is his contention that even though the Audit had raised the query on the issue of non-compliance with the procedure laid down under the provisions of Rule 6(3)(ii) & (iii) of CCR, 2004, but they have replied to the said query submitting thereunder their letter of intimation exercising option to reverse the proportionate credit and the quantum of proportionate CENVAT credit attributable to exempted products required to be reversed by them. In the show cause notice, no allegation has been leveled on the correctness of the quantum of CENVAT credit reversed by them during the said period. Therefore, the observation of the ld. Commissioner that the quantum of proportionate CENVAT credit reversed by them during the period is incorrect, travels beyond the scope of show cause notice, hence, bad in law. In support, the ld. Advocate for the Appellant referred to the judgment of the Honble Gujarat High Court in the case of C.C.E. vs. Reliance Ports and Terminals Ltd. -2016 (334) ELT 630 (Guj.), in the case of C.C.E., Ballapur Industries Ltd. - 2007 (215) ELT 489 (SC) and C.C.E. vs. Gas Authority of India Ltd. 2008 (232) ELT 7 (SC).
4. Further, the ld. Advocate has submitted that the Appellant had correctly applied the formula prescribed under Rule 6(3A) of the CENVAT Credit Rules, 2004 in arriving at the quantum of proportionate CENVAT credit attributable to exempted products. It is his contention that the adjudicating authority has wrongly observed that the value of clearance made to the SEZ should be included in the numerator by treating the same as exempted service is erroneous finding. It is his contention that by virtue of Rule 6(6) of CCR, 2002, the clearance to SEZ is never treated as exempted supplies as held by the Honble Bombay High Court in the case of Repro India Ltd. vs.UOI 2009 (235) ELT 614 (Bom.). Further, the ld. Advocate has submitted that from time to time necessary intimation to reverse proportionate credit had been furnished by the Appellant indicating their intention to reverse the proportionate CENVAT credit availed on various input services used in the exempted products, hence, no fact had been suppressed from the knowledge of the Department nor misdeclared. Consequently, invoking larger period of limitation is bad in law.
5. Ld. A.R. for the Revenue reiterated the findings of the ld. Commissioner.
6. Heard both sides and perused the record. The demand notice was issued to the Appellant for recovery of 5%/6% of the value of the exempted goods cleared during the relevant period October 2009 to October 2013, alleging non-compliance with the provision of Rule 6(3(ii) & (iii) of CCR, 2004.The said allegation was based on Audit observation conducted during the period March 2012. Consequent to the said Audit report, the Appellant through letters dated 3.2.2013 and 20.11.2013 submitted a detailed statement indicating the quantum of proportionate credit reversed by them. In the letter dated 20.11.2013, it has been informed to the Department that total credit required to be reversed was Rs.4,31,140/-, whereas they have already reversed the credit of Rs.6,87,047/-. In the said statement, the Appellant had indicated inclusion of the clearance value to SEZ/100% EOU in arriving at the total turnover of the goods cleared. Even though the show cause notice was issued a year after i.e. 9.6.2014, no allegation on the correctness of proportionate credit reversed has been made out against the Appellant. Therefore, I find force in the contention of the ld. Advocate for the Appellant that in the adjudication order, the ld. Commissioner has travelled beyond the scope of the allegations leveled in the show cause notice which cannot be sustained in view of the judgment of the Honble Gujarat High Court in the case of Reliance Ports & Terminals Ltd. (supra). Their Lordships observed as follows:
9. On a conjoint reading of the show cause notice? issued to the assessee and the questions proposed in this appeal, it is evident that the issues raised in the questions proposed do not find place in the show cause notice. From the averments made in the memorandum of appeal and the grounds raised therein as well as on a perusal of the impugned order passed by the Tribunal, it appears that the appellant does not dispute the validity of the order of the Tribunal on the grounds decided by the Commissioner, but on grounds, which were not subject matter of the show cause notice. In the show cause notice, the assessee was not called upon to state as to whether the services of Consulting Engineers and Banking and other Financial Services are input services of the respondent or as to whether the capital goods were used for providing output services provided by the respondent viz. Port Services, etc. Evidently therefore, in the present appeal, the appellant seeks to challenge the impugned order passed by the Tribunal on grounds which were never subject matter of the show cause notice. Under the circumstances, in the light of the settled legal position as emerging from the above referred decisions of the Supreme Court, that the show cause notice is the foundation of the demand under the Central Excise Act and that the order-in-original and the subsequent orders passed by the appellate authorities under the statute would be confined to the show cause notice, the question of examining the validity of the impugned order on grounds which were not subject matter of the show cause notice would not arise.
10. In the aforesaid premises, in the absence of any? infirmity in the findings recorded by the Commissioner or the Tribunal, there is no warrant for interference. The questions proposed by the appellant which were not subject matter of the show cause notice, do not arise out of the impugned order passed by the Tribunal. The appeal being devoid of any merit, is, accordingly, dismissed.
Since the ld. Commissioner has categorically observed that the Appellant had complied with the conditions of Rule 6(3)(ii) of CCR, 2004, the amount of 5%/6% of the exempted products sought to be recovered in the show cause notice cannot be sustained. In the result, the impugned order is set aside and the Appeal is allowed.
(Pronounced in the open Court on 22.12.2017) (Dr. D.M. Misra) Member (Judicial scd/ E/11369/2015-SM 6