Custom, Excise & Service Tax Tribunal
Precision Metal Products Pvt Ltd vs Mumbai V on 22 August, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
APPEAL NO: E/321/2012
[Arising out of Order-in-Appeal No: YDB (5) MV/2012 dated 31st January 2012 passed by the Commissioner of Central Excise (Appeals), Mumbai Zone I.]
For approval and signature:
Honble Shri C J Mathew, 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 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
Precision Metal Products Pvt Ltd
Appellant
Vs
Commissioner of Central Excise
Mumbai V
Respondent
Appearance:
Shri D.H. Nadkarni, Advocate for the appellant Shri N.N. Prabhudesai, Superintendent (AR) for the respondent CORAM:
Honble Shri C J Mathew, Member (Technical) Date of hearing: 22/08/2016 Date of decision: 22/08/2016 ORDER NO: ____________________________ Appellant, M/s Precision Metal Products Pvt Ltd, claims to have sought refund of ` 9,27,776/- by filing an application before the Assistant Commissioner of Central Excise, Kandivali Division on 10th May 2011 which was rejected by that authority after issue of show cause notice and on appeal, was upheld by Commissioner of Central Excise (Appeals), Mumbai Zone-I vide order-in-appeal no. YDB (5) MV/2012 dated 31st January 2012 leading to this appeal.
2. From the records, the facts appear to be that the appellant had imported capital goods and inputs during the period from 2006-07 to 2010-11 and, though availing CENVAT credit of eligible additional duties, had not, owing to ignorance, availed the credit of special additional duty (SAD) paid. They did finally take the credit of ` 9,27,776/- vide entries 74 to 107 in RG 23A register on 28th February 2011. This was subsequently reversed ostensibly on advice from Central Excise authorities and, though appellant claims that the reversal was effected on the very next day vide entries 110 to 143 on 1st March 2011, it appears that the Divisional Assistant Commissioner had doubts thereof which were reflected in the show cause notice issued as a prelude to rejection of the refund claim. The appellant also made good the interest liability on this credit availed by remitting ` 330/- on 26th March 2011. The appellant, thereafter filed the refund claim referred supra.
3. A rather peculiar show cause notice was issued on 25th August 2011 with certain unusual and uncommon proposals amidst with proposal to reject the refund claim. The proposed rejection did not cite any particular provision that would apply to this unusual claim for refund. Nevertheless, the notice did allege that the claimant had indulged in subterfuge to claim this refund through a less than straight route. It alleges that the appellant had wrongly availed credit and, in order to avoid penal action, reversed the credit and resorted to refund claim as that is not a penalisable offence. It also alleges that reversal must be presumed to have been effected only on 26th March 2011 in view of correspondence between claimant and the Central Excise authorities. There are insinuations galore as well expressions that are not congruent with the gravitas that should mark such notices which deal with serious issues such as tax liabilities and recoveries.
4. The refund claim was rejected as the credit was not within the entitlement of the appellant for having been availed long after the receipt of the inputs within the factory of appellant. This was concurred with by first appellate authority.
5. The refund claim is undoubtedly uncommon; effectively, appellant, an importer for actual use, has tried to claim refund from Central Excise authorities of duty paid to Customs authorities. There is no provision for refund of duties of customs that have been paid save though the process of section 27 of Customs Act, 1962. However, it appears that the original authority and first appellate authority have failed to note that appellant has been merely seeking approval for restoration of the credit taken and reversed. Appellant admits that credit taken related to special additional duty (SAD) paid on imports of capital goods and inputs effected over a period of five years. Appellant also admits that the recording of reversal of credit taken on 28th February 2011 was included in the returns filed for the said period, i.e. on or about 5th April 2011, with reversals having been shown as effected on 1st March 2011. The critical issue here is that the said credit had never been utilised.
6. Appellant was advised against availment of credit and the finding of ineligibility was rendered by original authority, and concurred with in appeal, on the ground that rule 4 of CENVAT Credit Rules, 2004 permits credit of duty paid on inputs only when exercised immediately on receipt of inputs in factory and that on capital goods in similar manner, but restricted to on half of the duty with availment of the remaining amount in the following year. Learned Counsel for appellant canvassed for restoration of credit while Learned Authorised Representative opposed it.
7. I find this interpretation on the part of lower authorities to be erroneous. The Rules do not prescribe any outer limit for availment but they do insist upon taking of credit on inputs only after receipt in factory, i.e. it cannot be availed on the strength of a paper trail but on physical arrival at the factory. As long as that condition has been fulfilled, there can be no cavil on availment. Capital goods must similarly be received and the full credit was not to be availed in the first year; to the extent that appellant has not availed of the credit in the first year, there can be no cavil again on lumpsum availment beyond the first year.
8. Central Board of Excise & Customs, in clarification contained in F No 345/2/200-TRU dated 29th August 2000, has instructed this 10.?Rule 57AC provides that CENVAT credit may be taken immediately on receipt of inputs in the factory. Some apprehensions have been expressed that if the CENVAT credit is not taken immediately, like within 24 hours or so, the field officers may deny the CENVAT credit. The idea is that if the manufacturer desires he can take the CENVAT credit at the earliest opportunity when the inputs are received in the factory. This, however, does not mean, nor is it even intended that if the manufacturer does not take credit as soon as the inputs are received in the factory, he would be denied the benefit of CENVAT credit. Such an interpretation is not tenable.
9. In Coromandel Fertilizers Ltd v. Commissioner of Central Excise (Appeals), Vishakapatnam [2009 (239) ELT 99 (Tri-Bang)], the Tribunal held that 6.?We have gone through the records of the case carefully. The entitlement of credit on the fuel is not under dispute. The only objection is that whether the credit can be availed after a lapse of 3 to 7 years of receipts of inputs in the factory. Even though, the rule say that the credit may be taken immediately, it is true that no outer time limit has been prescribed. The Revenues contention is that within reasonable time, the appellant ought to have availed the credit. It has been held by the Apex Court in the case of CCE, Jaipur v. Raghuvar (India) Ltd. reported in 2000 (118) E.L.T. 311 (S.C.) that any law or stipulation prescribing a period of limitation to do or not to do a thing after the expiry of period so stipulated has a consequence of creation and destruction of right and therefore specifically enacted and prescribed therefore. It is not for the course to import any specific period of limitation by implication where there is really none. The Tribunal in the case of Bharat Heavy Electricals v. CCE, Chennai reported in 2000 (122) E.L.T. 256 (Tri.) held that when there is no time limit prescribed, time limit should not be read by implication. The Tribunal in the case of Steel Authority of India Ltd. v. Commissioner of Central Excise, Raipur reported in 2001 (129) E.L.T. 459 (Tri.-Del.) while considering the fact of taking Modvat credit after a period of 3 to 4 years from the date of issue of duty paid documents, which was disallowed by the lower authority held that there was no time limit prescribed for taking credit during the material period and therefore the credit could be taken. This was followed in the case of Tamil Nadu Petro Products Ltd. v. CCE, Chennai - 2003 (160) E.L.T. 199 (Tri.-Chennai). Further, we find that there was sufficient reasons for the appellants for not taking credit during the relevant period in view of the uncertainty in the matter. When the law is settled on the issue, there is no justification to deny the credit on the ground that it is availed after a long time. In any case, the Cenvat Credit Rules have not prescribed any outer time limit. In view of this, we do not find any merit in the impugned order. We set aside the same and allow the appeal with consequential relief.
10. The decisions cited by Learned Authorized Representative, viz.
i. Union of India v. Solar Pesticides Pvt Ltd [2000 (116) ELT 401 (SC)] ii. Commissioner of Central Excise, Mumbai II v. Allied Photographics India Ltd [2004 (166) ELT 3 (SC)] iii. Sahakari Khand Udyog Mandal Ltd v. Commissioner of Central Excise & Customs [2005 (181) ELT 328 (SC)] iv. Rajasthan Spinning & Weaving Mills Ltd v. Commissioner of Central Excise, Jaipur II [ 2006(194) ELT 254 (Tri.-Del.)] v. Kelhin Fie Pvt Ltd v. Commissioner of Central Excise, Pune I [2009 (16) STR 71 (Tri.-Mum)]
11. , all relate to doctrine of unjust enrichment which are not relevant to this dispute as no refund in cash is at issue.
12. The original authority erred in denying restoration of credit and the first appellate authority erred by concurring with this course of action. Appeal is allowed by restoring of credit of ` 9,27,776/-.
(Pronounced in Court) (C J Mathew) Member (Technical) */as 1 2