Custom, Excise & Service Tax Tribunal
Sita Singh & Sons Pvt.Ltd vs Cce, Delhi-Iv on 24 September, 2013
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066.
DIVISION BENCH
Court No.3
Appeal No.E/1926/2005-Ex
(Arising out of OIA No.36/CE/Appl/DLHIV/05 dated 13.4.05 passed by the CCE, (Appeals), New Delhi)
Date of Hearing/Decision: 24.09.2013
For approval and signature:
Honble Mrs.Archana Wadhwa, Member (Judicial)
Honble Mr.Manmohan Singh, Member (Technical)
1
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
N0
2
Whether it should 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 copy of the Order?
seen
4
Whether Order is to be circulated to the Departmental authorities?
Yes
Sita Singh & Sons Pvt.Ltd. Appellant
Vs
CCE, Delhi-IV Respondent
Present for the Appellant: Shri Amit Jain, Advocate Present for the Respondent:Ms.S.Bector, DR Coram: Honble Mrs.Archana Wadhwa, Member (Judicial) Honble Mr.Manmohan Singh, Member (Technical) FINAL ORDER NO.58001/2013 PER: ARCHANA WADHWA As per the facts on records, the appellant is engaged in the manufacture of motor vehicles. They are fabricating bodies on duty paid chassis. In terms of Notification No.3/2001 dated 1.3.2001 subsequently followed by Notification No.6/2002, they were entitled to the benefit of exemption subject to the condition they do not avail credit of duty paid on chassis and also various other inputs. The appellant was availing credit in respect of inputs and were clearing their final product on payment of duty. However, some of the goods were manufactured by them were cleared in terms of said notification.
2. As they were maintaining a common account for the purpose of credit of duty availed on the inputs which were used in the manufacture of duty paid clearances also in respect of exempted clearances, the appellant reversed an amount of 8% of value of exempted goods, in terms of provisions of Rule 6(3) (d).
3. The Revenue entertained a view that as the appellant had availed credit on common inputs which have been used in the manufacture of duty paid clearances as also exempted clearances and payment of 8% in terms of Rule 6(3) (d) is not sufficient, the conditions of Notification are violated. As such, the appellants are not entitled to the benefit of exemption notification. Accordingly the proceedings were initiated against them. The appellants during the course of adjudication, calculated the total credit availed by them in respect of inputs used in the manufacture of exempted final products. After taking into account the payment already made in terms of Rule 6, they debited the credit so availed by them to the extent of Rs.11,61,409/-. The said fact is recorded in the impugned order of the Commissioner (Appeals).
4. Short issue required to be decided is as to whether such reversal of credit, either by payment of 8% in terms of Rule 6 or by debiting the same from the cenvat credit account, would result to satisfying the condition of notification in question. The condition of the notification is that no credit should have been availed in respect of inputs used in the manufacture of such goods. We find that the issue is no more res integra and stands settled by Honble Supreme Court in the case of Chandrapur Magnet Wires Ltd. vs.CCE- 1996 (81)ELT 3 (SC). It stands held that when credit so availed is subsequently reversed, the situation would be as if no credit was ever availed. Reference is made to the following decisions:
(1) Asha Rubber P.Ltd. vs. CCE, Ahmedabad-II-2009 (233) ELT 120 (Tri.-Ahmd.) (2) Lifelong Appliances Ltd. vs.CCE, Delhi-III-2000 (123) ELT 1110 (Tri-Del.) (3) CCE, Delhi-IV vs.M/s.Escorts Ltd.-2010-TIOL-378-P&H-CX (4) Escorts Ltd. vs. CCEm Delhi-IV-2004 (176) ELT 817 Tri.-Del.) (5) Steelco Gujarat vs.CCE, Vadodara-2000 (122) ELT 381 (Tri.-Mumbai) (6) Mardia Chemicals Ltd. vs.CCE, Rajkot-2006 (199) ELT 110 (Tri.-Mumbai) (7) CCE, Nagpur vs.Ballarpur Industries Ltd.-2007 (215) ELT 489 (SC) (8) Godrej Industries Ltd. vs.CCE, Mumbai-2008 (229) ELT 484 (SC) (9) Refnol Resins & Chemicals Ltd. vs.Union of India-2013 (287) ELT 61 (Guj.)
5. The ratio of law declared by the above decisions to the effect that the credit, initially taken, if reversed subsequently is required to be considered as if no credit was ever taken and amounts to satisfying the condition of notification which are to the effect that no credit should be availed on inputs. We also note that Honble Gujarat High Courts decision in the case CCE vs. Ashima Dyecot Ltd.-2008 (232) ELT 580 (Guj.) where the provisions of explanation to Rule 3, which also stands relied upon by the lower authorities in the present case, were taken note of it was held that reversal would amount no credit situation. Inasmuch as the appellant has reversed the entire credit, either by way of payment of 8% or by debiting the same cenvat credit account, we hold that the condition of notification is satisfied.
6. At this stage, Ld.DR submits that the fact that whether the entire proportionate credit was reversed by the appellant that is required to be verified. We accordingly direct the original adjudicating authority to examine whether cenvat credit reversed by the appellant is in respect of inputs used in the manufacture of final exempted goods or not. Inasmuch as the matter is being remanded for verification of above fact, the original adjudicating authority would also decide the issue of interest liability on the credit so availed and subsequently reversed in accordance with law.
7. As regard penalty, we agree with ld.Advocate that when exemption has been held to be admissible to the appellant no penalty is required to be imposed.
8. The appeal is disposed of in the above terms.
(Pronounced in the open court)
(MANMOHAN SINGH) (ARCHANA WADHWA)
MEMBER (TECHNICAL) MEMBER (JUDICIAL)
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