Custom, Excise & Service Tax Tribunal
Cyient Dlm Pvt Ltd vs Commissioner Of Central Tax, Mysuru ... on 18 August, 2023
E/20287/2021
CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, BANGALORE
REGIONAL BENCH - COURT NO. 2
Excise Appeal No. 20287 of 2021
[Arising out of Order-in-Appeal No. MYS-EXCUS-000-APP-
MSC-099-2020-21 dated 13/01/2021 passed by the
Commissioner of Central Tax (Appeals) Mysore]
Cyient DLM Pvt. Ltd.
Plot No. 347-D1 & D2, KIADB
Electronic City, Hebbal ..................... Appellant(s)
Industrial Area
Mysuru - 570 009
VERSUS
Commissioner of Central Tax
Mysuru
No. S1 & S2, Vinaya Marga ..................... Respondent(s)
Siddhartha Nagar Mysuru - 570 011 APPEARANCE:
Mr. Vageesh Hegde, CA for the Appellant Mr. P. Saravana Perumal, AR for the Respondent CORAM:
HON'BLE MR. PULLELA NAGESWARA RAO, MEMBER (TECHNICAL) Final Order No. 20906 / 2023 Date of Hearing: 20/04/2023 Date of Decision: 18/08/2023 PER: PULLELA NAGESWARA RAO M/s CYIENT DLM Pvt. Ltd., the appellant is engaged in the manufacture of Printed Circuit Boards falling under Page 1 of 11 E/20287/2021 Chapter Heading 8534 of the CETA, 1985. They were availing the benefit of Notification No.12/2012-CE dated 17.03.2012 (Sl.No.309) for clearing the PCBAs for medical equipment to various customers without payment of duty.
2. Audit of the appellant was conducted and it was found that the appellants were not maintaining separate accounts in respect of inputs used in manufacture of finished goods (PCBAs) as per CENVAT Credit Rules, 2004. On pointing by the Audit they have reversed an amount of Rs. 4,08,748/- (Rupees Four Lakhs Eight Thousand Seven Hundred and Forty Eight only) being 6% of the exempted goods in terms of Rule 6(3)(i) of Cenvat Credit Rules, 2004, before the issue of the show-cause notice. Further, the Audit found that the appellant had also availed cenvat credit of service tax of Rs. 2,81,659/- (Rupees Two Lakhs Eighty One Thousand Six Hundred and Fifty Nine only) on bills dated July 2014 and August 2014 (Rs. 1,26,693/-) and bills dated after 1st September 2014 (Rs. 1,54,966/-). A time limit of 6(six) months for availing the cenvat credit was introduced w.e.f 01.09.2014 vide Notification No.21/2014-CE (NT) dated11.07.2014.
3. A show-cause was issued to the appellant with regard to the above issues raised by the audit. The adjudicating authority confirmed the demand of duty of Rs. 4,08,748/- (Rupees Four Lakhs Eight Thousand Seven Hundred and Forty Eight only) being 6% of the value of exempted goods cleared without payment of duty and imposed equal penalty Page 2 of 11 E/20287/2021 and the demand of interest was set aside as sufficient balance in cenvat account is available. However, the issue of limitation was rejected. As regards the demand of Rs. 2,81,659/- (Rupees Two Lakhs Eighty One Thousand Six Hundred and Fifty Nine only) on the irregularly availed cenvat credit after 6(six) months the demand was confirmed with interest and penalty of 50% was imposed.
4. Aggrieved by the above the appellant has filed an appeal before Commissioner (Appeals). The Commissioner (Appeals) confirmed the demand of Rs.4,08,748/- (Rupees Four Lakhs Eight Thousand Seven Hundred and Forty Eight only) and imposed equal penalty. However, the issue of limitation was rejected. As regards the availment of Cenvat Credit of Rs.2,81,659/- (Rupees Two Lakhs Eighty One Thousand Six Hundred and Fifty Nine only) availed during December 2015, Commissioner (Appeals) has confirmed the total demand amount with interest for the period prior to 17th March 2012 and imposed 50% penalty.
5. Aggrieved by the above order, appellant filed an appeal before Hon'ble CESTAT. The Tribunal vide Final Order No. 20121/2019 dated 28.01.2019 held that out of the demand of Rs. 4,08,748/- (Rupees Four Lakhs Eight Thousand Seven Hundred and Forty Eight only) an amount of Rs.2,58,144/- (Rupees Two Lakhs Fifty Eight Thousand One Hundred and Forty Four only) was hit by limitation and demand of Rs.1,50,604/- (Rupees One Lakh Fifty Thousand Six Hundred and Four only) was upheld. As regards availment of cenvat Page 3 of 11 E/20287/2021 credit the Tribunal held that credit of Rs. 1,26,693/- (Rupees One Lakh Twenty Six Thousand Six Hundred and Ninety Three only) is eligible and Rs.1,54,966/- (Rupees One Lakh Fifty Four Thousand Nine Hundred and Sixty Six only) is held to be ineligible and demand of interest was set aside.
6. Consequent to the Hon'ble CESTAT order dated 28.01.2019, a refund application was filed on 26.02.2020. The adjudicating authority rejected the refund claim of Rs.2,58,144/- (Rupees Two Lakhs Fifty Eight Thousand One Hundred and Forty Four only) as time-barred as the refund claim was filed after one year of CESTAT order. However, he has sanctioned the refund of Rs.1,26,693/- (Rupees One Lakh Twenty Six Thousand Six Hundred and Ninety Three only) as it was paid under protest. However, he has adjusted the penalty amount of Rs. 77,483/-, (Rupees Seventy Seven Thousand Four Hundred and Eighty Three only) being 50% of Rs. 1,54,966/- (Rupee One Lakh Fifty Four Thousand Nine Hundred and Sixty Six only). On appeal against this order, Commissioner (Appeals) confirmed the Order-in- Original.
7. Aggrieved by the order of Commissioner (Appeals) the appellant has filed this appeal.
8. The appellant in the appeal filed submitted that the impugned Order-in-Original it is mentioned that cenvat credit of Rs. 2,58,144/- (Rupees Two Lakhs Fifty Eight Thousand One Hundred and Forty Four only) was paid voluntarily without registering any protest. However, they have reversed the credit consequent to the audit finding and were contesting Page 4 of 11 E/20287/2021 the said findings on the ground of limitation throughout the adjudication and appeal proceedings. When a demand is contested by filing an appeal or contesting the show-cause notice, the payment made amounts to payment made under protest and separate letter registering protest is not necessary. The appellant further submits that in the adjudication of the show-cause notice the adjudicating authority has mentioned that in reply to the show-cause notice the ground of limitation was taken up. Further the first appellate authority in the first round of litigation has mentioned in the order that the appeal memorandum inter alia contains the issue of limitation raised by the appellant. Hence, in the first round of litigation, issue of limitation has been raised by them and hence, the rejection of refund of Rs. 2,58,144/- (Rupees Two Lakhs Fifty Eight Thousand One Hundred and Forty Four only) on the ground that the appellant has not paid that amount under protest is incorrect and it amounts to not adhering to Tribunal's judgment or ignoring, which is bad in law. The appellant further submits that filing of or contesting the adjudication order is sufficient and this act itself shall be deemed as payment under protest. In this regard, the appellant submitted the following case- laws:
(i) Mafatlal Industries Ltd. Vs. U.O.I=1997 (89) E.L.T. 247 (SC)
(ii) Ashok Shetty & Associates C.A Vs. Commissioner of C. Ex., Mangalore=2017 (4) GSTL 53 (Tri.-Bang.) Page 5 of 11 E/20287/2021
(iii) Manik Machinery Mafs. Pvt. Ltd. Vs. Commissioner of C. Ex., Mumbai=2003 (157) E.L.T. 439 (Tri.-Mum.)
(iv) Commissioner of C.Ex., Nagpur Vs. Abhideep Chemicals Pvt. Ltd. = 2002 (143) E.L.T 70 (Tri.-Mum.)
(v) Surbhi Enterprise Vs. Commissioner of C. Ex., Ahmedabad=2007 (210) E.L.T. 588 (Tri.-Ahmd.)
(vi) Commissioner of Central Excise, Chennai-II Vs. Rane Brake Linings Ltd. =2003 (158) E.L.T. 840 (Tri.-
Chennai)
(vii) Fluidomat Ltd. Vs. Commissioner of Central Excise, Indore =2002 (139) E.L.T. 82 (Tri.-Del.)
(viii) Jayanta Glass Industries Pvt. Ltd. Vs. CCE, Calcutta-III=2008 (223) E.L.T. 607 (Tri.-Kol.)
(ix) I.T.C. Ltd. Vs. CCE, Patna = 2003 (155) E.L.T. 115 (Tri.)
(x) Shree Ram Food Industries Vs. Union of India = 2003 (152) E.L.T. 285 (Guj.-HC) 8.1. The appellant further submits that the Revenue has cited the decision of the Hon'ble Apex Court in Mafatlal Industries Ltd. (supra) which was rendered in respect of Section 11B of the Central Excise Act, 1944 prior to amendment inserted w.e.f 11/05/2007. Hence, it is not applicable in the present case. Appellant further submits that any amount paid during pendency of dispute amounts to pre-deposit under Section 35F of Central Excise Act, 1944 and hence, the refund claim of the appellant is covered by this Circular F. No. 275/37/2K-CX.8A dated 02/01/2002, Page 6 of 11 E/20287/2021 wherein it is mentioned that refund of pre-deposit does not require a claim under Section 11B of Central Excise Act, 1944 and a simple letter would suffice. The appellant further submits that the Commissioner (Appeals) relied upon sub- section 5 of Section 11B explanation B (ec) thereto and upheld the rejection of refund claim on the ground that the refund claim was filed after one year from the date of Hon'ble CESTAT's Final Order dated 28/01/2019 and has not considered that any payment made under protest as mentioned in Section 11B (1), ibid.
9. As regards the proposal to adjust penalty against sanctioned refund in the Order-in-Original, it is averred that Hon'ble CESTAT granted waiver of interest only and not penalty in respect of invoices dated beyond September 2014. The appellant cites the case-law in the case of Commissioner of Central Excise and Service Tax, Bangalore Vs. Bill Forge Pvt. Ltd. - 2012 (279) E.L.T. 209 (Kar.) wherein it is held as under:
"4. Aggrieved by the said order of the Commissioner, the assessee preferred an appeal to the Tribunal. The Tribunal on reappreciation of the entire material on record held that when the assessee had wrongly taken the credit to the extent of Rs. 98,77,446-00 in their cenvat account without receipt of capital goods in June 2007 and the same was reversed in September 2007, there is no dispute that the assessee had not utilized the said credit except to the extent of Rs. Page 7 of 11
E/20287/2021 11,691-00 towards education cess. The material on record does not give rise to a conclusion that the assessee had taken irregular credit with an intention to avoid payment of duty. Therefore they held that imposition of penalty is unsustainable and accordingly set aside the said portion of the order. In so far as payment of interest is concerned, they relied on the judgment of the Punjab and Haryana High Court in the case of C.C.E., Delhi v. Maruthi Udyog Ltd. [2007 (214) E.L.T. 173 (P & H)] [2007 (214) E.L.T. A50 (sic)] and held that as the assessee had only made an entry in the records and actually not taken or utilized such credit, the question of payment of any interest would not arise. Therefore, the levy of interest was also set aside. Aggrieved by the said order, the Revenue is in appeal."
9.1. The appellant submits that the Honb'le CESTAT's decision is based on the decision of Hon'ble High Court of Karnataka in the case of Bill Forge, wherein the penalty was dropped at the Tribunal stage and thereafter the Department went in appeal to the Hon'ble High Court, which rejected the appeal. Since the appeal before the High Court is not with regard to penalty, therefore, in their case as well the penalty imposed in the first round of litigation is considered to have been dropped.
10. Heard the learned counsel for the appellant and learned authorized representative for the Revenue. Page 8 of 11
E/20287/2021
11. The learned authorized representative filed written submissions during the hearing wherein he has submitted that it is clear from Section 11B (5)(B) (ec), which reads as under:
"(ec) in case where the duty becomes refundable as a consequence of judgment, decree, order or direction of appellate authority, Appellate Tribunal or any Court, the date of such judgment, decree, order or direction"
Therefore, in this case the appellant had filed a refund application on 28/02/2020 but that is after one year from the date of Hon'ble CESTAT's Order dated 28/01/2019. Hence, the rejection of refund on this ground is legally tenable. As regards the adjustment of an amount of Rs. 77,483/- (Rupees Seventy Seven Thousand Four Hundred and Eighty Three only) towards penalty from the sanctioned refund amount is tenable as the adjudicating authority has held that the Hon'ble CESTAT has not set aside the imposition of penalty. Hence, the adjudicating authority was right in adjusting the penalty amount.
12. I have considered the submissions of the learned counsel and the Learned AR and perused the records.
13. I find that the issues for decision are;
a) Whether the duty amount paid by the appellant through reversal of cenvat credit and thereafter disputing/contesting Page 9 of 11 E/20287/2021 the same on grounds of limitation can be construed as payment under protest?
b) Whether the Commissioner (Appeals) is right in confirming the order of the adjudicating authority that the refund claim is time barred as it is filed after one year from the order of Hon'ble CESTAT Final Order No. 20121/2019 dated 28.01.2019?
c) Whether the adjustment of the penalty amount from the sanctioned refund amount by the adjudicating authority is legally tenable?
14. The appellant avers that the time limit does not apply in their case as the payment of the duty amount through reversal of Cenvat Credit was disputed/ contested from the show-cause stage, hence it was paid under protest, and therefore the time limit under Section 11B does not apply. I find that the appellant on being pointed out by the audit has agreed and paid the duty amount. Thereafter, after the issue of the show-cause notice they have contested the demand on the ground of limitation, the same cannot be considered as payment under protest.
15. I find that the appellant has filed the refund claim after one year after the Hon'ble CESTAT Final Order No. 20121/2019, the relevant date for filing the refund in such cases is as per Section 11B(5) Explanation (B) (ec) of Central Excise Act, 1944, which mentions that the relevant date for filing the refund is the date of order of the Appellate Page 10 of 11 E/20287/2021 Tribunal, however in this case the refund claim has been filed after one year of the Tribunal's order, hence it was held to be time-barred.
16. As regards the adjustment of the proportionate penalty imposed and adjusted by the adjudicating authority. I find that the Commissioner (Appeals) has held that the Hon'ble Tribunal's has not passed any order as regards the penalty on the ineligible cenvat credit availed by the appellant. The appellant submits that the Hon'ble Tribunal has followed the decision in the case of Bill Forge of the Hon'ble High Court of Karnataka and interest only has been set aside, hence the Hon'ble Tribunal has not passed any order as regards the penalty. I find that proportionate penalty amount is payable as there was wrong availment of Cenvat credit. Therefore the imposition and adjustment of the penalty amount from the sanctioned refund amount is maintainable.
17. In view of the above discussion the appeal is not maintainable and hence the same is dismissed.
(Order pronounced in Open Court on 18/08/2023) (PULLELA NAGESWARA RAO) MEMBER (TECHNICAL) ...pr/iss Page 11 of 11