Custom, Excise & Service Tax Tribunal
Vilax Industrial Fabrics vs Commissioner Of Central Excise on 19 August, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: E/486/2009-SM [Arising out of Order-in-Appeal No. 17/2009 dated 18.02.2009 passed by the Commissioner of Central Excise, Bangalore] For approval and signature: HON'BLE SHRI S.S GARG, JUDICIAL 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? Yes 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 Vilax Industrial Fabrics Survey No. 13, Beratana Agrahara Begur Hobali, Off-Hour Road Bangalore Appellant(s) Versus Commissioner of Central Excise LTU, Bangalore 100Ft Ring Road, BSK III Stage, Bangalore 560 085 Respondent(s)
Appearance:
Shri Raghavendra, Advocate For the Appellant Shri J. Harish, AR For the Respondent Date of Hearing: 18/08/2016 Date of Decision: 19/08/2016 CORAM:
HON'BLE SHRI S.S GARG, JUDICIAL MEMBER Final Order No. 20645/ 2016 Per: S.S GARG The present appeal is directed against the impugned order passed by the Commissioner (appeals) vide its order dated 18.02.2009 upholding the Order-in-Original and rejecting the appeal of the appellant. Briefly the facts of the present case are that the appellant is a proprietary concern of Shri AG Sridharan and is a SSI unit engaged in the manufacture of the Dipped nylon tyre cord fabric falling under Chapter 59021090 of CETA 1985. Appellant is availing cenvat credit of duty paid on inputs under the Cenvat Credit Rules 2002. During the period from May 2005 to December 2005 the appellant imported 5 consignments of nylon yarn which is the main material of the final product and got the consignment released on payment of basic customs duty, CVD, cess on textile and education cess. It is further stated that the officer of the firm who was looking after excise matter inadvertently and without the knowledge of the appellant took the credit of basic customs duty amounting to Rs. 19,18,641/- (Rupees Nineteen Lakhs Eighteen Thousand Six Hundred and Forty One only) and cess on textiles of Rs. 7355 (Rupees Seven Thousand Three Hundred and Fifty Five only) [totaling Rs. 19,25,996/- (Rupees Nineteen Lakhs Twenty Five Thousand Nine Hundred and Ninety Six only)] on the said imported raw material, instead of taking only the countervailing duty and education cess as per law. As a result of the ineligible credit taken wrongly, the appellant has overdrawn an amount of Rs. 3,42,025/- (Rupees Three Lakhs Forty Two Thousand and Twenty Five only) during January 2006 and February 2006 in the cenvat credit account. However on 27.03.2006 when the preventive officers visited the unit and checked the accounts and told the appellant that he has wrongly taken the cenvat credit. Then on the same day the appellant reversed the credit balance available amounting to Rs. 16,02,274/- (Rupees Sixteen Lakhs Two Thousand Two Hundred and Seventy Four only) and the balance amount of Rs. 3,49,380/- (Rupees Three Lakhs Forty Nine Thousand Three Hundred and Eighty only) was credited under TR6 challan dated 18.04.2006. The appellant also credited a sum of Rs. 8,935/- (Rupees Eight Thousand Nine Hundred and Thirty Five only) towards interest. Thereafter a show-cause notice was issued to the appellant under Section 11AC for imposing the penalty. The Joint Commissioner vide Order-in-Original dated 31.07.2008 held the view that there was suppression with a view to evade duty and imposed equal penalty of Rs. 19,25,916/- (Rupees Nineteen Lakhs Twenty Five Thousand Nine Hundred and Sixteen only) under Section 11AC besides demanding the differential interest of Rs. 1,22,371/- (Rupees One Lakh Twenty Two Thousand Three Hundred and Seventy One only). Aggrieved by the said order, the appellant preferred an appeal before the Commissioner who vide his order dated 18.02.2009 confirmed the Joint Commissioners order while dismissing the appeal of the appellant. Hence the present appeal.
2. Heard both the parties and perused the records.
3. Learned counsel for the appellant has submitted that the impugned order is wrong and illegal and has been passed without considering the judgments passed by the Tribunal and the High Court. He further submitted that on account of the inadvertent mistake on the part of the person looking after the excise matters, appellant has wrongly taken the cenvat credit and on being pointed out by the audit, he reversed the same along with interest. He further submitted that the show-cause notice should not have been issued to the appellant in terms of the provisions of Section 11A (2B) of the Central Excise Act 1944. He also submitted that the appellant had reversed the credit before its utilization and wherever the credit had been utilized, the same was reversed along with interest and hence the question of demand of interest in respect of the credit reversed before utilization and imposition of penalty on the ground of suppression of facts does not arise. In support of his submissions he relied upon the following authorities:
(i) JK Tyre & Industries Ltd. Vs. ACCE 2016-TIOL-1781-CESTAT-BANG
(ii) CCE, Madurai Vs. M/s. Strategic Engineering (P) Ltd. 2014-TIOL-466-HC-MAD-CX-2014 (310) ELT 409 (Mad.)
(iii) TNT (India) Pvt. Ltd. Vs. CCE & ST, Bangalore 2016 (42) STR 285 (Tri.-Bang.)
(iv) CCE & ST, LTU Bangalore V. Bill Forge Pvt. Ltd. 2012 (279) ELT 209 (Kar)
(v) CCE, Bangalore-II Vs. Gokaldas Images (P) Ltd. 2012 (278) ELT 590 (Kar)
(vi) SRF Ltd. Vs. CCE, Chennai 2012 (280) 554 (Tri.-Chennai) 3.1. He also submitted that the show-cause notice for demand of interest has been issued beyond the normal period of one year from the date of reversal of credit and hence the demand of interest is hit by limitation.
4. On the other hand the learned AR reiterated the findings of the impugned order and further submitted that the appellant has overdrawn cenvat credit of Rs. 3,42,025/- (Rupees Three Lakhs Forty Two Thousand and Twenty Five only) during the month of January and February 2006 and the same has been utilized wrongly and therefore the appellant is liable to pay equal penalty under Section 11AC in view of the judgment in the case of Union of India Vs. Dharamendra Textile Processors reported in 2008 (231) E.L.T. 3 (S.C) and also CCE, Kolkata Vs. Praxair India Pvt. Ltd. 2012 (278) E.L.T. 579 (S.C).
5. After hearing the submissions of both the sides and perusal of the judgments cited at bar, I am of the considered opinion that the issue involved in the present case is no more res integra in view of the judgment of the Honble Karnataka High Court in the case of CCE, ST, LTU Bangalore Vs. Bill Forge Pvt. Ltd. cited supra and the decision of the Larger Bench in the case of JK Tyres & Industries Ltd. Vs. ACCE cited supra. It is a fact that the appellant has reversed the credit before utilization of the same and a small portion of the cenvat credit was utilized but the same was reversed along with interest before the issue of show-cause notice and in view of the judgment of this Tribunal in the case of Kumar Organics Product Ltd. Vs. CCE, Bangalore 2014 (307) ELT 774 (Tri.-Bang.) the appellant is not liable to pay interest as well as penalty. By following the ratio of the decisions cited supra, I am of the considered opinion that the impugned order is not sustainable in law and therefore I set aside the same by allowing the appeal of the appellant with consequential relief, if any.
(Order pronounced in open court on 19.08.2016) (S.S GARG) JUDICIAL MEMBER iss