Custom, Excise & Service Tax Tribunal
Tirupati Pipe&Amp;Allied Ind P Ltd vs Nasik on 13 February, 2019
IN THE CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
APPEAL NO: E/87658/2019
Arising out of: Order-in-Appeal No. NSK/CEX/000/APPL/
310/2017-18 dated 12/03/2018
Passed by: Commissioner (Appeals), Central Tax & Central
Excise, Nasik.
Appellants - Represented by:
Tirupati Pipe & Allied India Shri Mayur Shroff, Advocate
Pvt. Ltd.
versus
Respondent - Represented by:
CCGST, Nasik Shri A.B. Kulgod, Assistant
Commissioner (AR)
Date of hearing: 05/12/2018
Date of pronouncement: 13/02/2019
CORAM
Hon'ble Shri Ajay Sharma, Member (Judicial)
ORDER NO: A/85278 / 2019
The issue to be decided in this Appeal is whether the Appellant is required to reverse/pay back the amount equivalent to the Cenvat Credit contained in respect of inputs received for use in the manufacture of final product, which are lying in stock as on 1.4.20007, as per the proviso of Rule 11(2) & 11(3) of the Cenvat E/87658/2018 2 Credit Rules, 2004, before exercising the option for exemption of Excise duty, under notification No.8/2003-CE dated 1.3.2003?
2. The facts of the matter are that the appellant are availing the benefit of Notification No.8/2003-CE dated 1.3.2003 as amended. During the Financial Year 2006-07, the appellant procured/purchased the duty paid raw materials and availed the benefit of Cenvat credit facility under the Cenvat Credit Rules, 2004 on the raw materials procured for manufacturing of M.S. Pipes and paying central excise duty at the appropriate rate on the clearances of final products namely M.S. Pipes as well as raw materials after crossing the exemption limit. The appellant vide its letter dated 1.4.2007 informed that during the year 2006-07, the aggregate value of all excisable goods cleared by them for home consumption comes to Rs.3,84,64,932/-. Therefore during the ensuing financial year 2007-08, they are entitled to avail full exemption from central excise duty, on their clearances upto an aggregate value of Rs.1,50,00,000/- and have therefore opted out of Cenvat/Modvat facility w.e.f. 1.4.2007. They also informed the department about the position of Cenvat credit account as on the date of opting out of Cenvat and balance of inputs and finished goods containing the Cenvat credit lying with them as on 31.3.2007.
3. As per the department, the appellant after given the option letter to the competent authority, have cleared the excisable goods so manufactured at nil rate of duty of central excise including Ed. Cess & E/87658/2018 3 H.S. Ed. Cess from their factory by availing the benefit of aforesaid notification, even though they did not fulfill the condition laid down under Rule 11(2) & (3) ibid. The appellant is thus ineligible for benefit of exemption under the aforesaid notification. Accordingly a show cause notice dated 29/30.4.2008 was issued to the Appellant as to why:-
(i) Central excise duty on the excisable goods cleared without payment of duty from the factory by the assessee valued at Rs.1,50,00,000/- on which central excise duty Rs.24,62,478/-
including Ed.& H.S.Ed Cess should not be demanded and recovered under Section 11A of Central Excise Act, 1944.
(ii) interest should not be charged/ demanded and recovered under the provisions of section 11AB of Central Excise Act, 1944, and
(iii) penalty should not be imposed upon them under the Sec 11AC of Central Excise Act, 1944 read with rule 25 of Central Excise Rules, 2002 for the contravention of Rule 4,5,6 & 8 of Central Excise Rules, 2002 as they have removed the excisable goods without payment of duty from their factory and do not followed the provisions of rules made thereunder, The Adjudicating authority dropped the proceedings vide Order-in- Original dated 2.2.2017 while relying upon the decision of this Tribunal vide order No. A/797/09/SMB/C-IV, dated 15.12.2009 in appellant's own case, on the identical issue, for earlier financial year. The Adjudicating authority also relied upon the decision of the Hon'ble Supreme Court The Adjudicating authority dropped the proceedings vide Order-in-in the matter of CCE, Pune vs. Dai Ichi Karkaria; reported in 1999(112) ELT 353 (SC) while dropping the proceeding initiated by the revenue against the Appellant. On Appeal E/87658/2018 4 filed by the Revenue, the Commissioner (Appeals), Central Tax and Central Excise, Nasik vide impugned order dated 27.3.2018 partly allowed the Appeal filed by Revenue and reduced the demand to Rs.8,26,078/- alongwith interest.
4. I have heard ld. Counsel for the appellant and ld. Authorised Representative for the Revenue and perused the records. Ld. Counsel for the Appellant submitted that although on identical issue for the earlier financial year this Tribunal has held in favour of the Appellant but still the ld. Commissioner did not rely upon the same only on the ground that in view of Section 35R (1) & (2) of the Central Excise Act, 1944 the appeal filed by the department against the said order before the Hon'ble High Court of Judicature at Bombay was withdrawn and therefore the said decision of this Tribunal is not binding. He also submitted that the conduct of the ld. Commissioner, amounts to judicial indiscipline. He further submitted that although the issue involved in this matter is also covered in favour of the appellant in view of the law laid down by the Hon'ble Supreme Court in the matter of Dai Ichi Karkaria (supra) and also of the Hon'ble High Court of Punjab & Haryana in the matter of CCE, Chandigarh vs. CNC Commercial Ltd.; 2008 (224) ELT 239 (P&H) but still the ld. Commissioner did not rely upon the same and rather tried to distinguish them on some flimsy ground. The ld. Authorised Representative appearing on behalf of Revenue defended the findings E/87658/2018 5 recorded in the impugned order and after reiterating the same, prayed for dismissal of Appeal.
5. From the tenor of the order passed by the Commissioner (Appeals), I am of the view that the course adopted by him is not justified. Judicial propriety demands that when there is an order of higher forum available, that too in assessee's own case, the same has to be followed by the lower authority unless certain distinguishing features are pointed out by such lower authority or the order of the higher authority is reversed or suspended. Nothing of this sort has happened in the present case. It is true that the department has preferred an Appeal before the Hon'ble High Court against the order of this Tribunal. However, the Appeal was dismissed as withdrawn due to monetary limits. This fact itself is not sufficient to empower the Commissioner to take different view and not to follow the order passed by this Tribunal. The ld. Commissioner was bound to follow the decision of the Tribunal as per the demands of judicial propriety and the impugned order is nothing but the breach of doctrine of judicial discipline and judicial propriety. I am surprised to notice the reasoning given by the ld. Commissioner for not following the decision of this Tribunal in Appellant's own case on identical issue for the earlier financial year. Otherwise also, the Hon'ble Supreme Court in the matter of Dai Ichi Karkaria (supra) has laid down that the Cenvat credit is indefeasible and there is no one to one correlation E/87658/2018 6 between the input credit and final product (duty paid). On the similar issue, a co-ordinate Bench of the Tribunal in the matter of CCE, Chandigarh vs. CNC Commercial Ltd.; 2006(206) ELT 874 (Tri-Del) while dismissing the Appeal filed by Revenue, observed as under:-
"10. Coming to the submission of the learned DR that assessee opting for exemption must fulfil the terms of the exemption, it is to be noted that exemption is in terms of notification issued from year to year and not in terms of Rule 9(2) of Cenvat Credit Rules. There is no reference or incorporation of the condition of Rule 9(2) in those notifications. That apart, Rule 9(2) cannot be interpreted in a manner as to undermine the indefeasibility of Modvat credit. A reading of the said rule would make it clear that what is required in terms of the rule is to determine the Cenvat credit taken on the inputs in stock and debit it from the credit balance, "if any", lying in assessee's credit, and further credit balance, "if any", lapsing and not recall of Modvat credit already utilised correctly. If the Rule contemplated additional cash payment on account of balance in Cenvat credit being insufficient, the Rule would not have qualified the credit balance as balance "if any". The addition of those words make it clear that Cenvat credit balance alone is contemplated and no additional payment. An interpretation that requires additional payment if the balance in the credit account is not sufficient to meet debit of Cenvat credit on inputs in stock etc. would be to permit recall of Modvat credit correctly utilised. Such an interpretation goes against the scheme of Cenvat credit and the language of Rule 9(2)."
The aforesaid order of the Tribunal was affirmed by the Hon'ble Punjab & Haryana High Court in the Appeal filled by Revenue in the matter of CNC Commercial Ltd.(supra) and while following the law E/87658/2018 7 laid down by the Hon'ble Supreme Court in Dai Ichi Karkaria case (supra), the Hon'ble High Court held as under:-
"5. We have heard the learned Counsel for the appellant-revenue of a considerable length and find that no question of law warranting admission of the appeal would arise. There are findings of fact recorded by the Commissioner (Appeals) as upheld by the Tribunal to the effect that the assessee-respondent had correctly availed and utilized the credit of duty paid by them on those inputs when these final products were chargeable to excise duty. It has further been found that there was no one to one relationship of the inputs used and the final products manufactured and cleared from the factory. It has rightly been held that the credit of duty paid on inputs cannot be confined to a particular raw material to which the credit is related and out of which a final product is manufactured. Therefore, it has been rightly held that the assessee-respondent were not required to reverse the Cenvat credit of Rs. 88,731/- The judgment of the Hon'ble Supreme Court in Dai Ichi Karkaria case has been correctly applied. There is thus no merit in these appeals which are accordingly dismissed."
6. This Tribunal also while deciding the appeal filed by the appellant for the earlier financial year, vide order No.A/797/09/SMB/C-IV, dated 15.12.2009, relied upon the decision of the Hon'ble High Court in the matter of CNC Commercial Ltd.(supra) and held as under:-
"5. I have gone through the submissions made by both the parties and find that the case of the respondent is squarely covered by the decision of Punjab & Haryana High Court in Commissioner of Central Excise, Chandigarh vs. CNC Commercial Ltd.-2008 (224) ELT 239 (P&H), wherein the Hon'ble High Court has held that in these facts and circumstances, while opting for SSI exemption the assessee is not required to reverse the CENVAT Credit. Following the E/87658/2018 8 same ratio, I do not find any merits in the Appeal filed by the Revenue. Accordingly, the impugned order is upheld and the appeal is rejected."
7. Although the Revenue filed the Appeal against the aforesaid order of this Tribunal, but the same was withdrawn, for whatever reason. The decision passed by this Tribunal or any co-ordinate bench of the Tribunal has binding value and any lower authority is bound by the said decision, unless it is disagreed and referred to a Larger Bench.
8. Therefore in the light of the above mentioned facts and the judicial decisions cited as above, I am of the view that the earlier decision of this Tribunal in Appellant's own case is perfectly valid and is as per law and there is no reason to differ with the same and the ld. Commissioner has committed an error in not following the same and passing the impugned order. The impugned order is therefore set aside and the Appeal filed by the Appellant is allowed.
(Pronounced in Court on 13/02/2019) (Ajay Sharma) Member (Judicial) arch