Custom, Excise & Service Tax Tribunal
Jk Tyre & Industries Ltd vs Asst. Commissioner Of Central Excise on 23 July, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: E/493/2012-SM [Arising out of Order-in-Appeal No.44/2012 dated 27/01/2012 passed by CCE (Appeals), Mangalore] For approval and signature: HON'BLE SMT. ARCHANA WADHWA, JUDICIAL MEMBER 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 the 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 JK Tyre & Industries Ltd. Vikrant Tyre Plant-I, KRS Road, Metagalli, Mysore 570 016. Appellant(s) Versus Asst. Commissioner of Central Excise, Mysore II Division, Mysore Respondent(s)
Appearance:
Shri Dattatray D Bhat, Advocate For the Appellant Shri N. Jagdish, Superintendent(AR) For the Respondent Date of Hearing: 09/07/2015 Date of Decision: .
CORAM:
HON'BLE SMT. ARCHANA WADHWA, JUDICIAL MEMBER Final Order No. / 2015 Per : ARCHANA WADHWA As per facts on record, the appellant is engaged in the manufacture of tyres, tubes and flats, falling under Chapter 40 of Central Excise Tariff Act, 1985. They were also availing the benefit of CENVAT credit of duty paid on inputs, capital goods as also input services. During the audit of their unit, it was found that they have availed CENVAT credit in respect of certain invoices twice, the appellant admitted that it was a mistake on their part and immediately reversed the wrongly availed CENVAT credit of Rs.1,38,748/-.
2. On the above basis, proceedings were initiated against them by way of issuance of a show-cause notice dt. 17/12/2009 proposing to confirm the interest and imposition of penalty upon them. The said show-cause notice culminated into an order passed by the original adjudicating authority confirming the interest of Rs.11,959/- in terms of Rule 14 of CENVAT Credit Rules, 2004 read with Section 11AB of the Central Excise Act, 1944 and also imposed penalty of Rs.2000/- under Rule 15A of the CENVAT Credit Rules. The said order stands upheld by the Commissioner(Appeals).
3. Hence the present appeal.
4. Learned advocate Shri Dattatray D Bhat relies upon the Honble Karnataka High Courts decision in the case of CCE&ST, LTU, Bangalore Vs. Bill Forge Pvt. Ltd. [2012(279) ELT 209 (Kar.)] wherein, after considering the Honble Supreme Courts decision in the case of UOI Vs. Ind-Swift Laboratories Ltd. [2012(25) STR 184 (SC)], the Honble High Court held that if the wrongly availed credit does not stand utilised by the assessee and is reversed before utilisation, no interest liability would arise against them. As such, he submits that inasmuch as the credit having been taken inadvertently stands reversed by them even before utilisation, no interest liability would arise inasmuch as there is no loss to the Revenue and the credit remained as a paper entry in their books of accounts. As regards penalty, he submits that it was an inadvertent mistake on the part of the clerk responsible for making entries in their CENVAT account and is not attributable to any mala fide, in which case, there is no justification for imposition of penalty.
5. As against the decision of the Honble Karnataka High Court, learned AR has brought to my notice a latest decision of the Honble Madras High Court in the case of CCE, Chennai-IV Vs. Sundaram Fasteners Ltd. [2014(304) ELT 7 (Mad.)]. After taking note of the Honble Supreme Courts decision in the case of Ind-Swift Laboratories Ltd. and Honble Karnataka High Courts decision in the case of Bill Forge Pvt. Ltd., the Honble High Court held that the credit wrongly availed even though not utilised becomes recoverable along with interest.
6. Inasmuch as there are two contrary decisions of the High Courts, one by the Honble Karnataka High Court and the other by the High Court of Madras and inasmuch as the said issue keeps on repeatedly coming up before the Tribunal, I deem it fit to refer the matter to the Honble President for constitution of a Larger Bench on the following question of law:-
When the wrongly availed credit is reversed before utilising the same, whether interest liability would arise in respect of the same or not.
(Order pronounced on .) ARCHANA WADHWA JUDICIAL MEMBER Raja..4