Custom, Excise & Service Tax Tribunal
Kamani Oil Industries vs The Commissioner Of Central Excise on 10 July, 2008
IN THE CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No.II APPEAL No.E/1004/08 (Arising out of Order-in-Appeal No.SRK/395/M-II/2008 dated 03/07/2008 passed by Commissioner of Central Excise & Customs (Appeals), Mumbai) For approval and signature: Honble Mr. Ashok Jindal, Member (Judicial) ====================================================
1. Whether Press Reporters may be allowed to see :
the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy :
of the Order?
4. Whether Order is to be circulated to the Departmental : authorities?
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Kamani Oil Industries Appellants
Vs.
The Commissioner of Central Excise,
Mumbai Respondents
Appearance:
Shri.J.C.Patel, Advocate for Appellants
Shri.Manish Mohan, SDR for Respondents
CORAM:
Mr. Ashok Jindal, Member (Judicial)
Date of Hearing : 10/07/2009
Date of decision : 10/07/2009
O R D E R No:..
Per: Ashok Jindal
1. This appeal is filed by the appellant against the order-in-appeal confirming the demand against the appellant imposed by the Assistant Commissioner, Central Excise Mumbai.
2. Brief facts of the case are that the appellant is engaged in the manufacture of refined edible, vanaspati oil and acid oil. While refined edible oil is exempted from duty, but vanaspati oil and acid oil are dutiable items.
3. A show cause notice was issued to the appellant stating that they have availed credit on inputs services viz. goods transport services in respect of both dutiable and exempted products and since they have not maintained separate accounts, they were liable to pay duty @ 10% in respect of exempted products cleared by them. The appellants have taken credit of service tax in the month of December 2005 and have reversed the entire amount of Rs.86,665/- in March 2006.
4. Duty of Rs.1,90,960/- was imposed along with interest and penalty of Rs.10,000/- and the same was confirmed in order-in-appeal. Aggrieved by the order, the appellant is before me.
5. Shri J.C. Patel, Ld. Advocate appearing for the appellant submits that the exempted goods were cleared by them in the month of February 2005 whereas the credit was taken in the month of December 2005. Therefore, the question of payment of duty on exempted products does not arise as credit was taken nine to ten months after the clearance of exempted products. This was the first instance where they have availed the credit and earlier they have not taken credit against goods transport services.
6. Ld. Advocate contended that this credit was taken by mistake and on detection they themselves reversed the entire credit in March 2006. Therefore, once they have reversed the credit, the question of payment of duty and penalty does not arise at all.
7. He placed reliance on Ruchi Infrastructure Ltd., Vs. CCE, Visakhapatnam, 2008 (224) ELT 123 (Tri-Bang) wherein it was held that credit had been reversed after the goods were cleared, however, we notice that even though the assessee has delayed in reversing the credit, but they had paid interest for the delayed reversal. Therefore, the question of directing the assessee to pay 8% or 10% of the value of the exempted goods which runs to an exorbitant 340% is not justified and proper. The prayer of the appellants for availing the benefit as they have reversed the credit is required to be accepted in terms of the judgements cited by them. Thus, all these four appeals are allowed with consequential relief, if any.
8. Shri J.C. Patel, Ld. Advocate further relied on Magtech Mobilespares Pvt Ltd., Vs. CCE, Belapur 2006 (205) ELT 481 (Tri-Mumbai) wherein it was held that in the present case the admitted position by both sides is that the assessee had opted to reverse the entire amount of credit. If that was the option, the same had to be enforced by the department. The department cannot change or and alter the option by directing 8% recovery on the grounds as arrived at in this order now impugned before us. We would therefore set aside the order.
9. He further placed reliance on Habib Agro Industries Vs. CCE, Mysore (2007 (219) ELT 489 (Tri-Chennai) wherein it was further held that it appears from the records that the entire credit taken on Hexane received in the factory and used in or in relation to the manufacture of both the dutiable and exempted products was reversed by the party. In other words, they chose to exercise the first option and, in fact did more than that. In the circumstances, there was no room for the department to demand 8% of the price of the exempted products.
10. He further placed reliance on Satyakala Agro Oil Products Ltd., Vs. CCE, Guntur, 2008 (223) ELT 441 (Tri-Bang) and Bellarpur Industries Ltd., Vs. CCE, Nagpur 2006 (201) ELT 146 (Tri-MumbaI).
11. On the other hand Ld. SDR relied on Kamra Bottling Co. Vs. CCE, Jaipur 2003 (02) LCX 0149.
12. Heard.
13. I find that the appellant has paid the service tax in February 2005 but they have wrongly taken the credit in December 2005 and the entire credit was reversed by them in March 2006 and the question of payment of 10% of duty on the exempted goods does not arise.
14. I find that by availing the credit in December 2005, the appellant has committed an error and for the same the appellant is liable to pay penalty. In these terms I drop the demand of duty and interest against the appellant but I confirm the order of imposing penalty of Rs.10,000/- on the appellant. In these terms the appeal is partly allowed.
(Pronounced in Court) (Ashok Jindal) Member (Judicial) pj 1 5 2