Custom, Excise & Service Tax Tribunal
Gmm Pfaudler Limited vs C.C.E.& Cus.,Vadodara on 25 May, 2017
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Zonal Bench, O-20, NMH Compound Ahmedabad Central Excise Appeal No.11343 of 2013-SM Arising out of the order-in-appeal No.SRP/473/VDR-I/2013 passed by the Commissioner(Appeals), Central Excise, Vadodara. GMM Pfaudler Limited .. Appellant Vs. C.C.E.& Cus.,Vadodara .. Respondent
Appearance:
Present Shri Jigar Shah, Advocate for the appellant Present Ms. Nitina Nagori , A.R. for the Respondent-Revenue Coram: Honble Dr. D.M. Misra, Member (Judicial) Date of hearing:8.3.2017 Date of pronouncement: 25.5.2017 Final Order No.11202/2017 Per Dr. D.M. Misra:
Heard both sides.
2. This appeal is filed against the Order-in-Appeal No.SRP/473/VDR-I/2013 passed by the Commissioner(Appeals), Central Excise, Vadodara..
3. Briefly stated the facts of the case are that the appellants are engaged in the manufacture of excisable goods and availed CENVAT credit on inputs, capital goods and input services during the relevant period i.e. after 10.9.2004. They availed CENVAT credit on the input services namely, insurance service for which the Policy commenced with effect from 1.7.2004 to 30.6.2005, 6.8.2004 to 5.8.2005, 28.8.2004 to 27.8.2005 and 11.8.2004 to 10.8.2005, since the appellants had availed proportionate credit of the premium paid under invoice/bill raised prior to 10.9.2004, alleging that such proportionate credit is not admissible, show cause notice was issued on 18.3.2011 for appropriation of the credit already reversed and recovery of interest with proposal for penalty. On adjudication, the credit already reversed was appropriated and the interest on the said amount was directed to be paid with equal amount of penalty under Rule 15(2) of the Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944.
3. Ld. Advocate for the appellant submitted that premium for insurance policy though paid on invoices/bills raised before 10.9.2004 but they continued to receive insurance service after 10.9.2004 and accordingly, they availed proportionate credit of the service tax paid on the premium relevant to the period after 10.9.2004. He submitted that the issue is covered by the judgement of Tribunal in the case of G.H.C.L. Ltd. vs. C.C.E., Bhavnagar 2009 (16) STR 89 (Tri-Ahmd.). Further, he has submitted that the credit was availed in 2004 and the demand was issued in 2007, therefore , it is barred by limitation.
4. Per contra, Ld. A.R. for the Revenue reiterated the findings of the ld. Commissioner (Appeals). She submitted that in G.H.C.L. Ltds. case, Rule 9(1)(f) of Cenvat Credit Rules, 2004 was not brought to the notice of the Tribunal, resulting into allowing proportionate credit on the invoice raised prior to 10.,9.2004. It is her contention that thus the said decision is not a binding precedent being sub silentio. She submits that in the subsequent judgment, the Tribunal in Ester Industries Ltd. vs. C.C.E., Meerut II 2012 (26) STR 550 (Tri-Del.), after taking into consideration Rule 9(1)(f) of CENVAT Credit Rules, 2004 categorically held that credit contrary to the provision of Rule 9(1)(f) of Cenvat Credit Rules,2004 cannot be held to be admissible. It is her contention that this Tribunal taking into consideration the facts upheld the extended period of limitation. Hence, the said ratio is squarely applicable to the facts of the present case and rightly followed by the ld. Commisisoner (Appeals).
6. I have carefully considered the submissions of both sides. I agree with the contention of the ld. A.R. for the Revenue that Rule 9(i)(f) deals with the document and accounts required for availing CENVAT credit, and this rule was not brought to the notice of the Tribunal in G.H.C.L. Ltd. (supra); whereas considering the said Rule in Ester Industries Ltd., this Tribunal observed as follows:
6.?I have considered arguments on both sides. This is a case where credit is taken contrary to provisions in Rule 9(1)(f) of Cenvat Credit Rules, 2004. There is no case to deviate from the express provisions in the rule. So on merits of the issue I do not see any reason to agree with the contention of the appellant. I am also not able to agree with the contention of the appellant that extended period cannot be invoked if suppression is detected during audit conducted by department. As far as suppression is concerned the matter has to be decided with reference to facts of each case. The issue to be considered is whether the relevant information was placed before the department earlier and if so in what form, whether in a manner from which the issue at hand was clearly discernible to the department. The provision in the rule relevant to the credit taken is very clear and simple and easy to understand. The very fact that the assessee has taken proportionate credit by adopting their own interpretation without intimation to department would justify to consider this as a case of mis-representation and suppression to invoke extended period for demanding the excess credit availed and utilized. So I do not agree with the contention of the appellants on time bar either.
7. I fully agree with said observation in Ester Industries Ltd., therefore, the impugned order on merit is upheld. However, the Tribunal has also taken into consideration the fact that the benefit of discharging 25% of the penalty being not extended to the appellant by the authorities below allowed the same observing as follows:
7.?In the matter of penalty I find that Rule 15 of Cenvat Credit Rules does not mandate imposition of penalty equal to wrong credit taken. Further even under Section 11AC the assessee is to be given an option to pay 25% of the duty evaded as penalty within 30 days of receipt of the order for final closure of the matter. No such option has been given in this case. So I find it proper to give an option to the appellant to pay, within 30 days of receipt of this order, the duty demanded, interest thereon and 25% of the duty amount as penalty for final closure of the case. If such payment is not paid the penalty shall get restored to the amount equal to wrong credit taken.
8. Therefore, in the present case also, the benefit of discharging 25% of the penalty on fulfillment of necessary condition as laid down under the said provision is extended to the appellant. The Impugned order is modified in extending the benefit of discharging 25% of the penalty imposed subject to fulfillment of the condition laid down therein. The appeal is partly allowed to the extent mentioned as above.
(Pronounced in the open Court on 25.5.2017) (Dr. D.M. Misra) Member (Judicial scd/ Appeal No.E/11343/2013-SM 1