Custom, Excise & Service Tax Tribunal
Yes vs Represented By : Shri Kuntal Parikh, ... on 19 August, 2013
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Zonal Bench, Ahmedabad Appeal No. : E/346 of 2007 Arising out of : OIA No. 313/2006(Ahd-I) dated 02.01.2007 Passed by : Commr. (Appeals) C. Excise & Customs, Ahmedabad For approval and signature : Hon'ble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. H.K. Thakur, Member (Technical) 1 Whether Press Reporter 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 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 Appellant (s) : M/s. Ambica Fashion Represented by : Shri Kuntal Parikh, Advocate Respondent (s) : Commissioner of Central Excise Ahmedabad
Represented by : Shri K.J. Kinariwalla, A.R. CORAM :
Hon'ble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. H.K. Thakur, Member (Technical) Date of Hearing / Decision : 19.08.2013 ORDER No. _____________ /WZB/AHD/2013 Per : Mr. H.K. Thakur;
This appeal has been filed by the appellant against Order-in-Appeal No. 313/2006 (Ahd-I) dated 02.1.2007. Under the Order-in-Original No. 26/Ad. Commr/2006 dated 10.05.2006 a transitional credit of Rs. 20,55,276/- under Notification No. 35/2003-CE (NT) dated 10.4.2003 was disallowed to the appellant and a penalty of Rs. 10,000/- was also imposed upon the appellant. During the course of personal hearing, held by Commissioner (Appeals) appellant was called upon to produce invoices under which credit was taken. Thereafter, a show cause notice was issued to the appellant on 16.11.2006 by Commissioner (Appeals) and under the impugned order in appeal dated 02.1.2007, Commissioner (Appeals) disallowed higher deemed cenvat credit of Rs. 29,85,059/- and enhanced the penalty from Rs. 10,000/- to Rs. 10 Lakh.
2. Shri Kuntal Parikh (Advocate) appearing on behalf of the appellant argued that appellant was entitled to the cenvat credit as per Sr. No. 1(c) of the table annexed to Notification No. 35/2003-CE (NT) dated 10.04.2003. His case is that cenvat credit of Rs. 6,87,536/- denied to the appellant with respect to second declaration filed on 26.5.2003 and denial of credit of Rs. 13,67,740/-, by holding that credit to appellant is admissible as per Srl No. 2 of table annexed to Notification No. 35/2003-CE, is not proper. It was also argued that issue of a show cause notice by Commissioner (Appeals) proposing denial of higher cenvat credit and imposition of higher penalty is beyond the scope of the show cause notice and Section 35A (3) of the Central Excise Act, 1944. That by passing order in appeal dated 02.1.2007, Commissioner (Appeals) has exceeded his jurisdiction and the appeal filed by the appellant is required to be allowed on this ground alone.
3. Shri K.J. Kinariwalla, (A.R.) appearing on behalf of he appellant reiterated the findings of the lower authorities and defended the Orde-in- Appeal passed by Commissioner (Appeals).
4. We have heard the rival submissions and perused the case records. In the present proceedings, the following issues are required to be decided:-
(i) Whether Commissioner (Appeals) has the jurisdiction to enhance the dues confirmed and penalty imposed by the first adjudicating authority?
(ii) Whether appellant is entitled to file more than one declaration under Notification No. 35/2003-CE (NT) dated 10.4.2003?
(iii) Whether appellant was entitled to deemed cenvat credit under Srl No. 1(c) of the table to Notification No. 35/2003-CE (NT) dated 10.4.2003?
5. So far as point mentioned in Para 4 (i) is concerned it will be relevant to first see the provisions contained in Section 35 of the Central Excise Act, 1944:-
Section 35, Appeals to Commissioner (Appeals) (3) The Commissioner (Appeals) shall, after making such further inquiry as may be necessary, pass such order, as he thinks just and proper, confirming, modifying or annulling the decision or order appealed against:
Provided that an order enhancing any penalty or fine in lieu of confiscation or confiscating goods of greater value or reducing the amount of refund shall not be passed unless the appellant has been given a reasonable opportunity of showing cause against the proposed order:
Provided further that where the Commissioner (Appeals) is of opinion that any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, no order requiring the appellant to pay any duty not levied or paid, short-levied or short-paid or erroneously refunded shall be passed unless the appellant is given notice within the time-limit specified in section 11A to show cause against the proposed order.
6. From the above provisions of law, Commissioner (Appeals) has the power to modify the order passed by lower adjudicating authority. However, as per second proviso to Section 35A (3), if Commissioner (Appeals) is of the opinion that any duty of excise has not been levied or is short levied then he has to put the aggrieved party to notice within the time limit prescribed made under Section 11A of the Central Excise Act, 1944. In the present proceedings a show cause notice dated 16.11.2006 has been issued by Commissioner (Appeals) to the appellant demanding reversal of entire credit of Rs. 29,85,059/- taken by the appellant. Enhancement of penalty imposed was also proposed in the show cause notice dated 16.11.2006. Commissioner (Appeals), thus have the authority to issue show cause notice for enhancing the duty or penalty as per the provisions of Section 35(3) of the Central Excise Act, 1944 within the time specified in Section 11A of the Central Excise Act, 1944. However, it is seen that the original show cause notice dated 28.6.2004 was issued for an amount of Rs. 20,55,276/- and extended period was not invoked. In the show cause notice dated 16.11.2006 issued by Commissioner (Appeals) demand has been proposed to be enhanced but extended period of five years has not been invoked by Commissioner (Appeals) nor penalty under Section 11AC of the Central Excise Act has been invoked. Therefore, as per the judgment of Honble Supreme Court in the case of Collector of Central Excise, Pune vs. Maharashtra Scooters Limited [1997 (17) RLT 697 (SC.)], the show cause notice dated 16.11.2006 issued by Commissioner (Appeals) can not be sustained as neither proviso to Section 11A regarding extended period has been invoked nor provisons of Section 11AC of the Central Excise Act, 1944 have been pressed into operation. The corrective action attempted by Commissioner (Appeals) in his findings in Para 14 of the order in appeal dated 02.11.2007 can not rectify the defect of the show cause notice.
7. So far as the point mentioned at Para 4(ii), whether multiple declarations can be filed by the appellant, is concerned, it is observed that under Notification No. 25/2003-CE (NT) dated 25.5.2003, Rule 9A with respect to Transitional Provision for Textile and Textile Articles was introduced as per the Cenvat Credit (Fifth Amendment Rules, 2003. By a further notification No. 28/2003 (NT) dated 01.4.2003, sub Rule-4 was added to Rule 9A of the Cenvat Credit Rules, 2003 as follows:-
(4) The declaration referred to in this Rule shall be made on or before the 7th Day of April 2003.
7.1 The date for filing declaration was further extended to 15.4.2003, 25.4.2003, 02.5.2003, 12.5.2003, 26.5.2003 and 15.6.2003 under Notification No. 34/2003-CE (NT) dated 10.4.2003, 36/2003-CE (NT) dated 25.4.2003, 42/2003-CE (NT) dated 01.5.2003, 43/2003-CE (NT) dated 14.5.2003 and 52/2003-CE (NT) dated 06.6.2003 respectively. Once the time limit for filing declarations was extended from time to time up to 15.6.2003, then it has to be understood that any declaration filed up to that date is a valid declaration, as held by Ahmedabad CESTAT Bench in the case of L.B. Textiles vs. CCE Ahmedabad-I [ 2008 (230) ELT 493 (Tri. Ahmd.)] relied upon by the appellant. It is accordingly held that there is no requirement under the provisions of Rule 9A of the Cenvat Credit Rules, 2003, as amended from time to time, for filing only one declaration.
8. The last point raised in Para- 4(iii) above required to be decided is whether appellant was entitled to a credit on grey textile fabric as per the provisions contained in Srl. No.2 or Sr. No.1(c) of the table annexed to Notification No. 35/2003-CE (NT) dated 10.04.2003. Both these serial numbers, as given in the table annexed to Notification No. 35/2003-CE (NT) dated 10.04.2003, are reproduced below:-
TABLE S. No. Description Amount of credit (1) (2) (3) 1 Input lying in stock or in process, namely, -
(a) Texturised yarn lying in stock in a composite mill;
Rs. 18 per Kg of texturised yarn multiplied by quantity in Kg of such texturised yarn
(b) Yarn other than (a) above;
Deemed value multiplied by the rate of duty on such yarn
(c) Fabrics (unprocessed or processed) Deemed value multiplied by the rate of duty on such fabrics 2 finished goods lying in stock, namely, -
(a) Unprocessed fabrics of cotton not containing any other textile material;
Declared value multiplied by 26% of the rate of duty on such unprocessed fabrics
(b) Unprocessed fabrics other than (a) above Declared value multiplied by 60% of the rate of duty on such unprocessed fabrics 8.1 It is also relevant to peruse the Transitional provisions under Rule 9 (A) of the Cenvat Credit Rules, 2003, introduced under Notification No. 25/2003-CE (NT) dated 25.03.2003 reproduced below:-
Rule 9A. Transitional provisions for Textile and Textile Articles. - (1)A manufacturer, producer, first stage dealer or second stage dealer of yarn and unprocessed fabrics falling under Chapter 50, 51, 52, 53, 54, 55, 58, 59 or 60 of the First Schedule to the Tariff Act or a manufacturer of processed fabrics falling under Chapter 50, 51, 52, 53, 54, 55, 58, 59 or 60 of the First Schedule to the Tariff Act shall be entitled to avail credit equal to the duty paid on inputs of such finished product, lying in stock or in process or contained in finished products lying in stock as on 31st day of March, 2003 upon making a written declaration of the description, quantity and value of the stock of inputs (whether lying in stock or in process or contained in finished products lying in stock) and subject to availability of the document evidencing actual payment of duty thereon. 8.2 It is evident from the provisions of Rule 9A (1) that a first stage dealer or a second stage dealer is entitled to the service tax credit equal to the duty credit on inputs contained in the finished goods. This Rule talks only of dealers of yarn and unprocessed fabrics, therefore, the word finished goods used in the Rule for dealers will only mean Yarn and or Unprocessed fabrics. For the present appellant of unprocessed fabric the input on which credit is admissible will be only the yarn contained in the finished goods (unprocessed fabric). The words used under the description column against Srl No.1 of the table annexed to Notification No. 35/2003-CE (NT) are - Input lying in stock or in process namely. It can not be disputed that yarn as an input is contained in the unprocessed fabrics, lying as finished goods in which a dealer in dealing. Such input (yarn in the present case) on which cenvat credit is to be calculated can be in the form of yarn contained in the unprocessed fabric of the appellant. Yarn as credit admissible input with a dealer could be in the form of yarn as such lying with a dealer (Srl No. 1 (b) of the table) or contained in the finished unprocessed fabric (part of Srl No. 1 (c) of the table to the notification). It is thus incorrect on the part of the lower authorities to hold that Srl No.1 of table to Notification No. 35/2003-CE (NT) will be applicable only to the composite with or processors of the fabric. Appellants case is therefore covered under srl. No. 1(c) of the table to Notification No. 35/2003-CE (NT) dated 10.4.2003.
9. In the light of the above observations, appeal filed by the appellant is allowed with consequential relief, if any.
(Operative part of the order pronounced in the Court) (M.V. Ravindran) (H.K. Thakur) Member (Judicial) Member (Technical) .KL 8