Custom, Excise & Service Tax Tribunal
M/S Rama Phosphate Limited vs Cce, Indore on 10 June, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Principal Bench, New Delhi COURT NO. IV DATE OF HEARING : 10/06/2016. DATE OF DECISION : 10/06/2016. Excise Appeal No. 2336 of 2008 [Arising out of the Order-in-Original No. 18/Commr/Ex/IND/2008 dated 21/07/2008 passed by The Commissioner, Central Excise & Customs, Indore.] For Approval and signature : Honble Ms. Archana Wadhwa, Member (Judicial) Honble Shri V. Padmanabhan, Member (Technical) 1. Whether Press Reporters may be allowed to see :No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it would be released under Rule 27 of : the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair :Seen copy of the order? 4. Whether order is to be circulated to the :Yes Department Authorities? M/s Rama Phosphate Limited Appellant Versus CCE, Indore Respondent
Appearance Shri A. Upadhyay, Advocate for the appellant.
Shri Yogesh Agarwal, Authorized Representative (DR) for the Respondent.
CORAM: Honble Ms. Archana Wadhwa, Member (Judicial) Honble Shri V. Padmanabhan, Member (Technical) Final Order No. 52174/2016 Dated : 10/06/2016 Per. V. Padmanabhan :-
The appeal is directed against the order of the Commissioner, Indore dated 21/07/2008.
2. The appellant is engaged in the manufacture of dutiable goods such as Sulphuric Acid, Detergent Powder etc. and exempted goods like Single Super Phosphate (Fertilizer). A portion of the sulphuric acid is also cleared without payment of duty for special purposes. The appellant availed the Cenvat credit on certain services, such as Courier Service, C&F Agent Service, Advertisement etc. which were used in common for dutiable as well as exempted goods. They did not maintain separate accounts for the use of inputs for dutiable as well as exempted products as required under Rule 6 (3) (b) of the Cenvat Credit Rules. The dispute pertains to the period June 2005 in which the appellant cleared the exempted products valued at nearly Rs. 8 crores. For failure to maintain separate accounts as required under Rule 6 (3) (b) ibid, the appellant was slapped with demand of Rs. 80 lakhs approximately under Rule 6 (3) (b) @ 10% of the value of the exempted goods. It is also to be noted that the total credit availed on the common services was to the extent of Rs. 14,363/- which was also reversed by them alongwith interest on 25/3/2006.
3. The appellant has challenged the impugned order with the submission that for a meager credit of Rs. 14,363/- the demand of over Rs. 80 lakhs alongwith equal amount of penalty is absolutely unjustified. They have argued that in the decision of the Honble Supreme Court in the case of Chandrapur Magnate Wires (P) Ltd. vs. CCE, Nagpur reported in 1996 (81) E.L.T. 3 (S.C.) it is held that once the Cenvat credit taken is debited it will be presumed that the credit taken stands deleted in the account of the Assessee. They have further submitted that the Tribunal in several other cases of such unjustified demand, have allowed the appeal giving the benefit to the appellants.
4. Heard Shri A. Upadhyay, learned Advocate for the appellant as well as Shri Yogesh Agarwal, learned DR for the Revenue. The facts are not in dispute. Admittedly Cenvat credit to the tune of Rs. 14,363/- has been availed and utilized by the appellant on common services. A mechanical application of Rule 6 (3) (b) of the Cenvat Credit Rules has lead the Commissioner to a demand of over Rs. 80 lakhs, calculated @ 10% of the value of the exempted products cleared alongwith imposition of a penalty of equivalent amount. But it is easy to see the grossly unjust nature of the demand. The Honble Supreme Court in the case of Chandrapur Magnate Wires (P) Ltd. vs. CCE (supra) has categorically held that on reversal of the Modvat credit, the Assessee cannot be said to have taken credit of duty on the inputs utilized in the manufacture of final products. When this Apex court judgment is applied to the present case, the Cenvat credit on common services stand reversed with interest, and hence, it is to be presumed as not having been taken up initio. In such a case there will be no justification for any demand under Rule 6 (3) (b) of the Cenvat Credit Rules. We find that identical issues have been brought up before the Tribunal time and again. In one such case in CCE, Hyderabad III vs. Swastik Vegetable Oil Products Ltd. reported in 2004 (168) E.L.T. 206 (Tri. Bang.). Under similar circumstances, the Tribunal set aside the demands made under Rule 6 (3) (b). The Tribunal has held as follows :-
4. We are entirely with the Commissioner (Appeals) on the issue. His order has correctly followed the legal position under the Rules and the ratio of the Apex Court judgment. The Circular of the Board also warranted only recovery of the improperly taken credit. The Commissioner (Appeals) is also right in holding that the duty demand of over Rs. 2 crores in regard to a dispute about availability of over Rs. 6 lakhs credit is grossly unjust. In fact, impropriety and illegality are not with the Order of the Commissioner (Appeals); but with the present appeal. It is grossly improper for an administrative Commissioner to irresponsibly continue with a dispute to higher and higher appellate fora. Such a feud mentality brings no additional revenue to the exchequer. It only generates bad blood by heaping unmerited misery on the assessees. Further, appellate fora also get clogged with fruitless disputes. High time Government deviced a method to put down this irresponsible tendency on the part of administrative authorities, to file too many unwarranted appeals.
5. In view of what is stated above, the appeal of the? Revenue is rejected as entirely lacking in merit and the impugned order of Commissioner (Appeals) is confirmed.
5. This Tribunal has followed this judgment in other so many cases such as in Satyakala Agro Oil Products Ltd. vs. CCE, Guntur reported in 2008 (223) E.L.T. 441 (Tri. Bang.).
6. In line with the above discussion, the appeal is allowed.
(Operative part of the order pronounced in the open court.) (Archana Wadhwa) Member (Judicial) (V. Padmanabhan) Member (Technical) PK ??
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