Custom, Excise & Service Tax Tribunal
N M D C Limited vs Rangareddy - G S T on 17 September, 2018
(1)
Appeal No: E//30543/2018
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH AT HYDERABAD
Single Member Bench
Court - I
Appeal No. E/30543/2018
(Arising out of Order-in-Appeal No. HYD-EXCUS-RRC-APP-023-17-18 APP I, Dated
04.01.2018 passed by CC&CT (Appeals-I), Hyderabad)
N M D C Limited .. Appellant
Vs.
CCT, Rangareddy GST .. Respondent
Appearance Shri Y. Srinivasa Reddy, Advocate for the Appellant. Shri P.S. Reddy, Asst. Commissioner /AR for the Respondent. Coram:
Hon'ble Mr. P. VENKATA SUBBA RAO, MEMBER (TECHNICAL) Date of Hearing: 17.09.2018 Date of Decision: 17.09.2018 FINAL ORDER No. A/31172/2018 [Order per: Mr. P. Venkata Subba Rao]
1. This appeal has been filed against Order-in-Appeal No. HYD-EXCUS-
RRC-APP-023-17-18 APP I, Dated 04.01.2018.
2. Heard both sides and perused the records.
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Appeal No: E//30543/2018
3. The appellant herein is a Public Sector Undertaking engaged in the manufacture of sponge iron from iron ore. During the process of manufacture, iron ore fines gets generated which is a waste product but it has marketable value. During audit, the assessee was asked to reverse CENVAT credit under rule 6(3) of CCR 2004 to the extent they have gone into the value of iron ore fines on the ground that they were exempted. Appellant assessee did not dispute and reversed the credit of an amount of about Rs. 10.00 lakhs. They have also filed ER-1 returns in which this reversal of credit was also reflected. Thereafter, during the audit, it was found that the amount of credit which the appellant has reversed was not correct and it was recalculated and an additional amount of about Rs.11.00 lakhs was also required to be reversed. Appellant was served a show cause notice accordingly, proposing to recover the amount along with interest. It was also proposed to impose penalty upon the appellant. After the issue of show cause notice, appellant reversed the demanded amount along with interest. The original authority had confirmed the demand as proposed in the show cause notice and appropriated the amount already paid by the appellant. He also imposed a penalty equivalent to the amount of CENVAT credit availed by the appellant. Aggrieved, the appellant filed an appeal before the first appellate authority which was dismissed and the Order-in-Original was upheld. Hence this appeal.
4. Ld. Counsel for the appellant submits that they had contested the demand both on merits as well as on limitation before the first appellate authority. They further contested that no penalty can be imposed on them (3) Appeal No: E//30543/2018 alleging suppression of facts with an intent to evade payment of duty for the reason that they are the Public Sector Undertaking and have no intention of avoiding payment of duty or irregularly availing CENVAT credit. Before the first appellate authority, he also relied on the cases of CCE Raipur vs. Arti Sponge & Power Ltd. 2017(350)ELT 268 (Tri.-Del.)] to argue that iron ore fines which are produced during the process of manufacture of sponge iron ore are not a manufactured product at all and therefore Rule 6(3) of CENVAT Credit Rules 2004 does not apply in this case. This was recorded in the order of the first appellate authority. Appellant further relied upon the case of Gujarat State Fertilizers & Chemicals Ltd. vs. CCE Vaddra [2015(38)STR 1165 (Tri.-Ahmd)] to assert that a Government undertaking cannot be alleged to have illegally gained any amount by violation and therefore the extended period of limitation cannot be sustained. However, in the findings, the first appellate authority has only considered the aspect of imposition of penalty and has not examined the contention of the appellant on merits that they were not required to reverse duty under Rule 6(3) on the value of iron ore fine generated by them.
5. Ld. DR does not dispute the facts of the case but he points out that appellant had nowhere contested before the original authority about their liability to reverse the CENVAT credit under rule 6(3) proportionate value of iron ore fine. Although the appellant had contested this point before the first appellate authority, he has not recorded any findings on this aspect. He therefore pleaded that the matter may be remanded back to the first appellate authority for consideration on this issue. (4)
Appeal No: E//30543/2018
6. I have considered the arguments of both sides. There is no dispute on the facts of the case that the demand is on reversal of CENVAT credit under rule 6(3) for the value of iron ore fines generated by the appellant during the process of manufacture of final products viz; Sponge iron. On the very same issue in the case of Maa Mangla Ispat Pvt. Ltd. [2017(49)STR 503 (Tri.-Del.)] and Aarti Sponge & Power Limited [2017(350)ELT 268 (Tri.-Del.)], the Principal Bench of CESTAT has decided that Rule 6(3) of CCR 2004 does not apply because iron ore fines are not manufactured let alone being exempted. I find that the first appellate authority has not considered this aspect at all.
7. In view of the above, I find that it is a fit case to be remanded back to the first appellate authority to examine the issue on merits and also on limitation in the light of the aforesaid decisions of the Tribunal.
8. Appeal is allowed by way of remand.
(Dictated and Pronounced in open Court) (P. VENKATA SUBBA RAO) MEMBER (TECHNICAL) vrg