Custom, Excise & Service Tax Tribunal
M/S. Balmer Lawrie & Co. Ltd vs Commissioner Of Central Excise, ... on 20 March, 2015
IN THE CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
Appeal No.
E/635/08
- Mum
(Arising out Order-in-Original No. 85/COMMR/Taloja/ AKP/2007-08 dated 28.03.2008 passed by the Commissioner of Central Excise, Belapur)
For approval and signature:
Honble Mr. M.V. Ravindran, Member (Judicial)
1. Whether Press Reporters may be allowed to see No
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 Yes
of the Order?
4. Whether Order is to be circulated to the Departmental Yes
authorities?
M/s. Balmer Lawrie & Co. Ltd.
Appellant
Vs.
Commissioner of Central Excise, Belapur
Respondent
Appearance:
Shri T.C. Nair, Advocate for the appellant Shri N.M. Prabhudesai, Supdt. (AR) for the respondent CORAM:
Honble Mr. M.V. Ravindran, Member (Judicial) Date of hearing : 20.03.2015 Date of decision : 20.03.2015 O R D E R No:..
This appeal is directed against Order-in-Original No. 85/COMMR/Taloja/AKP/2007-08 dated 28.03.2008.
2. Heard both sides and perused the record.
3. The issue involved in this case is regarding the demand confirmed by the Adjudicating Authority on the remission application made by the appellant due to the loss of finished goods, inputs during the flood of 26 & 27th July 2005 in their factory premises. The remission claimed by the appellant is in respect of their finished goods and as well as finished goods of penzoil for which they were doing job work.
4. ld. Counsel would draw my attention to para 39 wherein the Adjudicating Authority has confirmed the duty required to be reversed/ paid by the assessee which is as under:-
Amt (in `)
1.
Duty on lost finished goods of Penzoil alleged to be included/received from Insurance Company (para 25) 6,67,906/-
2. Duty on lost finished goods of Penzoil on which remission not claimed/not included Para 30 1,07,896/-
3. Duty on lost finished goods of Balmer Lawrie on which remission not claimed/not included Para 29 36,213/-
4. Duty on inputs as such lost para 36 1,57,010/-
5. Duty/credit on inputs contained in the lost finished goods on which remission of duty claimed para 37 7,54,203/-
Total 17,23,228/-
Duty admittedly paid/credit reversed by BL 9,11,213/-
5. He would submit that as regards the remission application made by the appellant at item no. 2,3, and 4 in the above table they are not pressing the same. He would submit that they are pressing the remission application in respect of item no. 1 and 5. As regards item no. 1, duty on the lost finished goods, he would submit that the rejection of the remission application is only on the ground that the appellant had received more amount from insurance company than the assessable value; accordingly, it was held that the insurance company must have paid duty involved as insurance claim. He would draw my attention to page no. 148 and 154 wherein National Insurance Co. Ltd. and ICICI Lombard, have given certificates that the amount of claim settled by them is net of Central Excise duty payable on the lost/damaged goods. As regards the item no. 5 in the above table, it is his submission that the input credit need not be reversed as the law before 7.09.2007 when the Cenvat credit Rule 3(5)(C) of the CENVAT Credit Rules, 2004 were amended. He would submit that the Larger Bench of the Tribunal in the case of Grasim Inds. 2007 (208) ELT 336 will cover the issue in their favour.
6. Ld. DR on the other hand, drew my attention to the adjudication order. He would submit that if the assessee receives an amount more than the assessable value as has been claimed by them, it is a presumption that they have received the excise duty payable on such goods from the insurance company. He would also submit that the duty/credit on the inputs contained in the lost finished goods has to be reversed as that is the law which has been amended by the Legislature w.e.f. 07.09.2007 which is clarificatory in nature. He would reiterate the finding of the Adjudicating Authority.
7. On perusal of the records, I find the issue is regarding the rejection of the remission application filed by the appellant for the remission of the Central Excise duty on the finished goods lost due to flooding and allowing the benefit of Cenvat credit on the inputs, which were used for the manufacture of such lost finished goods. Since appellant has already accepted that they are not eligible for the remission of duty of `1,07,896/-; `36,213/- and `1,57,010/- in item no. 2, 3 and 4 of the table as reproduced in para 4. I uphold that portion of the demand as has been confirmed by the Adjudicating Authority along with interest as correct. The appeal filed by the appellant to that extent is disposed of accordingly.
8. As regards the duty demand confirmed on the finished goods which was lost by denying the remission application, I find that the Adjudicating Authority has not considered the issue in its correct prospective. It is seen from the records at page 148 and 154, the insurance companies have categorically stated that the loss which has been compensated to the appellant in respect of the finished goods, was net of excise duty, though the insurance company has paid more than the declared assessable value, it would not mean that the insurance company has compensated the appellant excise duty also. On the face of it, it is clear from certificate issued by the National Insurance Co. Ltd. and ICICI Lombard. It is to be recorded that the Adjudicating Authority has not brought on record any contrary evidence against the certificate issued by the Insurance companies.
9. In view of the these factual position, the application filed by the appellant for remission of the duty on the finished goods of `6,67,906/- needs to be allowed and impugned order to that extent needs to be set aside and I do so.
10. As regards the denial of Cenvat Credit on the inputs contained in the finished goods lost, I find that the Adjudicating Authority was apprised of the judgment of the Larger Bench in the case of Grasim Inds. (supra) (wherein I was also one of the Member), I find that the Adjudicating Authority has lost the track of the fact that judicial discipline requires the Adjudicating Authority needs to follow the ratio laid down by the Tribunal, more so by the Larger Bench. Before the Larger Bench in Grasim Inds. the issue was whether credit on inputs contained in the finished goods lost needs to be reversed for granting of remission or not. Larger Bench has held in favour of the assessee therein stating clearly that, as the provisions stand there is no need to reverse to the Cenvat credit on inputs used for manufacture of finished goods which were lost and remission of duty is claimed; the said ratio will directly apply in case in hand. No contrary views expressed by higher judicial forum were brought to my notice. In view of the foregoing, the appeal filed by the appellant to the extent of Sr.no.1 and 5 of the table reproduced in para 4 is allowed.
11. Ld. Counsel would submit that they have already deposited/paid a sum of `9,11,213/- which I order to be adjusted against the dues which has been upheld along with interest and refund the balance to the assessee.
12. Appeal is disposed of as indicated hereinabove.
(Dictated in Court) (M.V. Ravindran) Member (Judicial) //SR 6