Custom, Excise & Service Tax Tribunal
M/S. Micro Labs Ltd vs Commissioner Of Central Excise, ... on 14 November, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Final Order No. 22006-22008 / 2014 Appeal(s) Involved: E/2221/2010-SM, E/2222/2010-SM, E/2223/2010-SM [Arising out of Order-in-Appeal No.33/2010 dated 15/07/2010; OIA No. 38/2010 dated 07/09/2010; and OIA No. 39/2010 dated 07/09/2010 passed by the Commissioner of Central Excise and Service Tax (Appeals), Bangalore.] M/s. MICRO LABS LTD PLOT NO.S 155 TO S 159, PHASE 3, VERNA INDSUTRIAL ESTATE, VERNA, GOA - 403 722 Appellant(s) Versus Commissioner of Central Excise, Customs and Service Tax BANGALORE-LTU 100 FT RING ROAD JSS TOWERS, BANASHANKARI-III STAGE, BANGALORE, - 560085 KARNATAKA Respondent(s)
Appearance:
Mr. PRADYUMNA G.H. NO. 244, 1ST CROSS, Banashankari 3rd Stage, 2nd Block BANGALORE - 560085 KARNATAKA For the Appellant Mr. R. Gurunathan, Addl. Commissioner (AR) For the Respondent CORAM:
HON'BLE SHRI B.S.V.MURTHY, TECHNICAL MEMBER Date of Hearing: 14/11/2014 Date of Decision: 14/11/2014 Order Per : B.S.V.MURTHY In all these appeals, the issue involved is common and therefore all the appeals are taken together and a common order is being passed. In the impugned order, the demand for excess availed CENVAT credit has been confirmed in respect of inputs received from 100% EOU during the material periods. These demands were raised on the basis of departments perception about the scope of the proviso to Rule 3(7)(a) of CENVAT Credit Rules 2004 which restricted the CENVAT credit to be availed by a DTA unit in respect of inputs procured from 100% EOU. During the relevant periods involved before me, the credit was restricted to an amount equal to the two formulae given below.
X multiplied by [(1+BCD/400) multiplied by (CVD/100)} upto 4.12.2008 X multiplied by [(1+BCD/200) multiplied by (CVD/100)] from 5.12.2008 Where BCD and CVD denote advalorem rates, in percent of basic customs duty and additional duty of customs on the inputs or the capital goods respectively and X denotes the assessable value.
2. According to the Revenue, BCD in the above formula denotes the basic customs duty actually paid by the 100% EOU. It is the appellants contention that it denotes the BCD leviable on like goods if imported into India. CENVAT credit calculated on this basis by the party was higher than what would be permissible on the basis of contentions of the Revenue.
3. Heard both the sides in detail. I find as submitted by the learned counsel, the correct formula had been indicated in the order in the case of S.V. Sales Corporation: 2012 (284) E.L.T 244 (Tri.-Ahmed.) by myself. Paragraph 3 of the order referred to above had table A & B and according to the observation in the order Table B reflected the correct position. (At Sl. No.3 the figures indicated is wrong but the principle emerges correctly). Since I have already taken a view about the correctness of the formula and this is the formula adopted by the appellants for availing the credit, I have to allow the appeals and accordingly appeals are allowed.
3.1 At this juncture, learned counsel consented to the proposition that the credit has to be restricted to the quantum of CVD, if the CVD paid is less than the amount admissible as per the formula. Therefore for this limited purpose of verifying whether the CVD paid is less than the amount of credit taken, the matter has to be remanded.
3.2 The learned counsel also would submit that in respect of two demands, suppression has been invoked and submits that appellant is a big manufacturer registered with LTU and paying crores of duty in revenue and would not be resorting to avail excess CENVAT credit running into a few lakhs and therefore even if credit has been availed more than what was availed it was basically a calculation mistake or an error of understanding of the provisions and therefore mandatory penalty could not have been imposed. He agrees that appellant has no problem in paying the differential amount if on remand it is found that CENVAT credit taken as per the formula is more than the CVD payable. I find myself in agreement with the submission that what is involved is application of formula and the very fact that disputes have arisen in respect of this formula would show that there can be mistakes that may be made by the employees who take credit. When I look at the amount involved in three appeals and the size of the appellant, the submissions are acceptable. In view of the fact that appellant has volunteered to pay the amount of differential credit if it is found that they are liable to pay as per the decision taken in these appeals, the penalties imposed on the appellant are set aside.
(Operative portion of the order has been pronounced in open court) B.S.V.MURTHY TECHNICAL MEMBER rv 3