Custom, Excise & Service Tax Tribunal
M/S Welspun India Limited vs C.C.E. & S.T.-Vapi on 15 July, 2015
In The Customs, Excise & Service Tax Appellate Tribunal
West Zonal Bench At Ahmedabad
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Appeal No : E/10517/2013-SM
(Arising out of OIA-SRP/181/DMN/2012-13 Dated 10/01/2013 passed by Commissioner of Central Excise, CUSTOMS (Adjudication)-VAPI)
M/S Welspun India Limited : Appellant (s)
Vs
C.C.E. & S.T.-Vapi : Respondent (s)
Represented by:
For Appellant (s) : Shri S. Suriyanarayana For Respondent (s): Shri Govind Jha (Authorised Representative) For approval and signature:
Mr. H.K. Thakur, Honble 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?
No
2. Whether it should be released under Rule 27 of the 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
CORAM:
MR. H.K. THAKUR, HONBLE MEMBER (TECHNICAL)
Date of Hearing/Decision: 15/07/2015
Order No. A/11035 / 2015
Per: H.K. Thakur
This appeal has been filed by the appellant against OIA No. SRP?ISI?DMN?2012-2013 Dated 10/01/2013 under which first Appellate Authority has upheld the OIO No. Vapi-I?DEMAND?11?2012-2013 Dated 18/09/2012 passed by the Adjudicating Authority.
2) Shri S. Suriyanarayan (Advocate) appearing on behalf of the appellant argued that appellant is engaged in the manufacture of both dutiable and exempted goods and was also availing the benefit credit on inputs under Cenvat Credit Rules 2004 [CCR]. That appellant was excercising option as per Rule 6(3A)(b) of CCR as separated accounts for input Furnace Oil, used in the manufacture of exempted and dutiable final products, were not maintained. That at the end of the financial year appellant worked out the consumption of input Furnace Oil used in the manufacture of exempted goods and reversed proportionate Cenvat Credit of Rs. 18,41,260/- in the months of June 2009 and June 2010 for the years 2008-2009 and 2009-2010 respectively. That a SCN Dated 19/07/2011 was issued for Rs. 3,44,207 to the appellant under Section 11AB of the Central Excise Act 1944 for not reversing proportionate Cenvat Credit on monthly basis required to be reversed under Rule 6(3A)(b) of CCR. It was the case of the learned Advocate that no interest is payable under Rule-6(3A)(e) and (h) of CCR if the Cenvat Credit proportionate to exempted goods is reversed by 30th June of a particular Financial Year.
2.1) It is also the case of the appellant that demand is issued beyond the normal period of limitation when no extended period has been invoked in the Show Cause Notice. Appellant relied upon the following Case Laws to argue that demand of interest is time barred:-
i)CEAT Ltd. Vs. CCE Mumbai-III [2012 ELT 433(Tribunal Mumbai)]
ii)Hindustan Insecticides Ltd. Vs. CCE LTU [2013 (297) ELT 332(DEL)]
iii)Jai Bharat Maruti Ltd. Vs. CCE, Delhi-III [2014(307) ELT 282 (P and H) On a specific query from the bench Learned Advocate of the appellant brought to the notice of the bench that time barred aspect of the Show Cause Notice was raised in the prayer portion of their reply to the Show Cause Notice Dated 17/08/2011 and also the prayer (a) of their appeal filed before the first appellant authority.
3) Shri Govind Jha (Authorised Representative) on the other hand argued that as per the provisions of Rule-6(3A) a provisional amount was required to be reversed each month on the basis of previous years of consumption of Furnace Oil used in the manufacture of exempted goods. It was his case that monthly reversal/payments were not made by the appellant and payment of interest has been correctly confirmed as per the findings of first appellate authority given in para - 9 and 10 of OIA Dated 10/01/2013. Regarding time barred nature of demand of interest it was argued by the learned Authorised Representative that no time limit has been presented demanding interest under Section 11AB of the Central Excise Act 1944.
4) Heard both sides and perused the case records. The issue involved in the present appeal is whether interest is payable by the appellant under Central Excise Law when a monthly payment prescribed is not paid by the appellant, but entire payment of a Financial Year is paid subsequently within the specified due date under Rule-6(3A) of CCR. It is observed from the provisions of Rule-6(3A) of the CCR that in a situation when common inputs are used for making dutiable and exempted Final Products and separate accounts are not maintained, then appellate is required to follow a prescribed procedure. As per this procedure prescribed appellant was required to determine and pay every month of a Financial Year an amount provisionally on the basis of certain parameters of the preceding Financial Year. At the end of the current Financial Year exact amount of inadmissible Cenvat Credit was required to be worked out and paid before 30th June of the Succeeding Financial Year. There are clauses in Rule 6 (3A) to the effect that if entire differential amount is not paid by the due date (30th June of Succeeding Financial Year) then interest on the differential amount is required to be paid. The argument of the appellant that no interest is payable, if monthly payments are not paid, is required to be rejected because Rule 6(3A)(e) is applicable only with respect to amount short paid on final determination. It has thus been correctly observed by the first appellant authority in para-10 of the OIA Dated 10/01/2013 that appellant cannot take the shelter of Rule-6(3A)(e) of the CCR to avoid payment of interest. Once a monthly payment mode is prescribed the same is required to be discharged by the appellant. By not doing so interest is payable from that due date of payment till the amount is paid as per the provisions of Section 11 AB (upto 30/03/2011) or Section 11 AA of the Central Excise Act 1944. I find no reason to interfere with the order of the first appellant authority on merits and appeal to that extent is rejected.
5) So far as demand being time barred is concerned, it is observed that no findings have been given by both the lower authorities when this point was agitated in appellants prayers before the lower authorities. The issue of time barred is thus remanded to the Adjudicating Authority to decide the same in denavo consideration in the light of relied upon Case Laws and by affording a personal hearing to the appellant to explain their case.
6) Appeal filed by the appellant is allowed by way of remand only to the extent indicated in para-5 above.
(Operative portion of the order pronounced in Court) (H.K. Thakur) Member (Technical) Abhishek 2