Custom, Excise & Service Tax Tribunal
M/S. Cranes & Structural Engineers vs Commissioner Of Central Excise on 8 August, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: E/21578/2014-SM (Arising out of Order-in-Appeal No.51/2014-CE dated 31.1.2014 passed by Commissioner of Central Excise (Appeals-I), 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 M/s. Cranes & Structural Engineers. Near 3rd Mile, Kolar Bangalore Road, Bethani, P.O. Box No.33, Kolar 563 101. Appellant(s) versus Commissioner of Central Excise Bangalore-I, CR Buildings, Queens Road, Bangalore 560 001. Respondent(s)
Appearance:
Mr. K. Parameswaran, Advocate For the Appellant Mr. Mohammed Yusuf, Addl. Commissioner (AR) For the Respondent Date of Hearing: 04/08/2016 Date of Decision: 08/08/2016 CORAM:
HON'BLE SHRI S.S. GARG, JUDICIAL MEMBER HON'BLE SHRI ASHOK K. ARYA, TECHNICAL MEMBER Final Order No. 20617_/ 2016 Per : S.S. GARG The present appeal is directed against the Order-in-Appeal dated 31.1.2014 passed by the Commissioner of Central Excise (Appeals) by setting aside the Order-in-Original. The facts of the present case are that the appellants is a partnership concern inter alia engaged in the manufacture of cranes/crane un-loaders, crane bridges and trollies and crane stares falling under the Chapter Heading 84 of the Central Excise Tariff Act. The appellant cleared two cranes at nil rate of duty vide invoice dated 17.10.2008 and 13.11.2008 by availing the benefit of Notification No.33/2005-C.E. dated 8.9.2005 as amended vide Notification No.38/2005-C.E dated 30.12.2005. During the audit, an objection was raised requiring the appellant to pay 10% of the amount as per Rule 6(3) of CENVAT Credit Rules (CCR), 2004 on the ground that the appellant herein had not maintained separate books of accounts and also did not exercise the option as provided in Rule 6(3) read with Rule 6(3A) of the CCR, 2004. Thereafter a show-cause notice was issued and vide Order-in-Original dated 11.9.2012 read with corrigendum dated 18.10.2012, the Assistant Commissioner dropped the proceedings accepting the reversal of credit with interest made much prior to the issue of show-cause notice dated 13.3.2012. Thereafter Revenue filed an appeal before Commissioner (Appeals) and vide his order dated 31.1.2014 learned Commissioner (Appeals) set aside the Order-in-Original and hence the present appeal.
2. Learned counsel for the appellant submitted that the impugned order passed by the learned Commissioner (A) is misconceived and has been passed by ignoring the precedents on the issue as well as the correct interpretation of Rule 6(3). He further submitted that the learned Commissioner (A) has wrongly assumed that the adjudicating authority has erred in reducing the amount payable under Rule 6 of CCR, 2004 from 10% to 5% and that such reduction cannot be applied retrospectively as the same became effective from 7.7.2009. It is further submitted by the learned counsel that the impugned Order-in-Appeal has been passed ignoring the binding principles laid down in several decided case laws particularly a recent decision of the Honble CESTAT, Hyderabad in the case of Aster Pvt. Ltd. vs. CCE reported in 2016-TIOL-1035-CESTAT-HyD. which is fully and squarely applicable to the facts of the present case. He further submitted that the entire demand with interest and penalties as upheld in the impugned order is hit by limitation/time bar as the charges of suppression cannot be sustained at all as the appellant has disclosed the clearance of two cranes in their periodical ER1 returns and the demand could not have been made by alleging suppression and invoking the extended period of limitation, particularly when the whole issue pertains to interpretation of requirement/conditions as contained in Rule 6 of CCR, 2004. He also submitted that the show-cause notice in this case has been issued only on 13.3.2012 (for the reversal of pro rata credit with interest already made and communicated on 31.7.2010 itself) which would be beyond the normal period of limitation in support of this submission, he relied upon the following decisions.
* CCE vs. Manishreni Ferro Alloys: 2016-TIOL-1640-CESTAT-HYD.
* Suvidha Engineers India Ltd. vs. CCE: 2013 (32) S.T.R. 735.
2.1 Learned counsel further relied upon the following decisions in support of his submission that once appellants have reversed the proportionate CENVAT credit without intimating the Department, they cannot be denied the benefit under Rule 6(3) read with Rule 6(3A) of CENVAT Credit Rules.
* Sri Sarvaraya Sugars Ltd. vs. CCE: 2010 (251) E.L.T. 418.
* Ruchi Infrastructure Ltd. vs. CCE: 2008 (224) E.L.T. 123 * BEML Ltd. vs. CCE: 2015-TIOL-1149-CESTAT-BANG.
* CCE vs. ICMC Corporation Ltd.: 2015 (315) E.L.T. 388 (Mad.) * CCE vs. CESTAT: 2015 (323) E.L.T. 323 (Mad.)
3. On the other hand, the learned AR reiterated the findings in the impugned order.
4. I have heard both the parties and perused the records. Rule 6 of CCR, 2004 speaks about the obligation of manufacturer of dutiable and exempted goods and provider of taxable and exempted services. Sub-rule (i) of Rule 6(3) states that CENVAT credit shall not be allowed on such quantity of input or input services which is used in the manufacture of exempted goods or for providing exempted services. Sub-rule (ii) of Rule 6(3) states that in case the manufacturer or service provider uses common inputs/input services then such manufacturer or service provider has to maintain separate accounts and the credit is to be taken only on that quantity of input or input services which is intended for manufacture of dutiable goods or providing exempted services. Sub-rule (iii) of Rule 6 speaks about the situation where such manufacturer or service provider does not maintain separate accounts. The Rule provides for two options. This Rule was amended vide Notification No.10/2008-C.E. (NT) dated 1.3.2008 w.e.f 1.4.2008. As per the new Rule, the manufacturer or service provider opting not to maintain separate account has to follow either of the following two option:
a) A manufacturer shall pay 10% (5% w.e.f. 07/07/2009) of sale price of the exempted goods and an output service provider shall pay 8% (6% w.e.f. 07/07/2009) of the value of the exempted services; or
b) Reverse the credit on inputs and input services pertaining to exempted goods and exempted services as per the procedure and conditions prescribed in Rule 6(3A), and it also prescribes the formula for calculation of the proportionate credit to be reversed.
4.1 On analysis of Rule 6(3A), I find that while exercising the option, the manufacturer of goods or the provider of output service shall intimate in writing to the Department regarding the option exercised. In the present case, admittedly there is no intimation given by the appellant informing the exercise of his option. The argument of the Department is that when the appellant has not intimated his option in writing then the appellant is bound to pay the duty amount calculating under the first option. According to me, this argument is devoid of merit, because the said Rule does not say anywhere that on failure to intimate, the manufacturer/service provider would lose his right to avail second option of reversing the proportionate credit. Sub-Rule (3A) is only a procedure contemplated for application of Rule 6(3). Consequently, the argument of Revenue is that the appellants exercising option is mandatory and on its failure, the appellant has no other option but to accept and apply Rule 6(3)(i) and make payment of 5%/10% of the sale price of the exempted goods or exempted services is not acceptable, because the Rule does not lay down any such restriction and this has been held in the judgments cited supra. It has been held in the judgment cited supra that the condition in Rule 6(3A) to intimate the Department is only a procedural one and that such procedural lapse is condonable and denial of substantive right on such procedural failure is unjustified. Therefore keeping in view the facts and evidence on record, the demand raised by the Revenue is not legal and proper. Moreover, the demand raised by the Revenue is also hit by limitation as the appellant reversed the pro-rata credit with interest on 31.7.2010 itself and communicated to the Department whereas the show-cause was issued only on 13.3.2012 which is beyond the period of one year and the allegation of the Department regarding suppression of fact is also not tenable because the appellant has disclosed these facts in their periodical ER1 returns filed by them. Therefore, the impugned order is not sustainable on merit as well as on limitation and therefore, I set aside the impugned order by allowing the appeal of the appellant with consequential relief, if any.
(Order pronounced in Open Court on 08/08/2016.) (S.S.GARG) JUDICIAL MEMBER rv 8