Custom, Excise & Service Tax Tribunal
Texmaco Ltd vs Coms,C.Ex - Kol-Iii on 2 March, 2020
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE
TRIBUNAL, KOLKATA
EASTERN ZONAL BENCH : KOLKATA
REGIONAL BENCH - COURT NO.2
Excise Appeal Nos. 521 of 2010
Arising out of Order-in-Original Nos. 01/COMMR./CE/KOL-III/2020-11 dated
06.04.2010 passed by Commissioner of Central Excise. Kolkata - III.
M/s. Texmaco Ltd.
Agarpara Works,
P.O. Belgharia,
Kolkata - 700056. ...Appellant
VERSUS
Commissioner of Central Excise, Kolkata - III
180, Shantipally,
Rajdanga Main Road,
Kolkata - 700 107.
.....Respondent
With Excise Appeal No. 624 of 2010 Commissioner of Central Excise, Kolkata - III 180, Shantipally, Rajdanga Main Road,Kolkata - 700 107.
...Appellant VERSUS M/s. Texmaco Ltd.
Agarpara Works, P.O. Belgharia, Kolkata - 700056.
.....Respondent APPEARANCE Shri Pulak Saha, C.A. & Ms. Dimple Jogani, C.A. for the Appellant assessee Shri H.S. Abedin, Authorized Representative for Department.
CORAM:
HON'BLE SHRI S.S. GARG, MEMBER(JUDICIAL) HON'BLE SHRI P.V.SUBBA RAO, MEMBER(TECHNICAL) Final Order No. 75327-75328/2020 2 DATE OF HEARING : 05.02.2020 DATE OF PRONOUNCEMENT / DECISION :
PER P.V.SUBBA RAO :
Appeal No. E521/2010 is filed by the appellant assessee.
while Appeal No. E 624/2010 has been filed by the revenue against the same impugned Order. Hence, both Appeals are being taken up together for disposal. Learned Counsel for the Appellant Assessee submits that the name of the Company has been changed from M/s. Texmaco Ltd. to M/s. Texmaco Rail and Engineering Ltd. as per the Order of the Hon'ble High Court Calcutta dated 6th September 2010. Accordingly, we direct that the name of the Appellant/Respondent may be recorded M/s. Texmaco Rail and Engineering Limited.
2. The facts of the case are that the Assessee is registered with the Central Excise Department and are manufacturing excisable goods such as structural materials, Pressure Vessels, parts of Sugar Mills machinery, railway wagons, etc. They have imported wheel sets for use in the manufacture of railway wagons. They availed CENVAT credit on the amount of additional duty of Customs (CVD) and special additional duty of Customs (SAD) paid on the imported wheel sets on the strength of the Bills of Entry. However, after availing the CENVAT Credit they have not used some of the wheel sets for manufacture of railway wagons, but instead transferred them to their Sister Unit at Sodepur during the period May 2008 to October 2008 after reversing the CENVAT Credit.
3. Scrutiny of the records of the Assessee by the department revealed that while they availed CENVAT Credit on both the CVD and SAD they have reversed only the CVD and they have not reversed the credit of SAD availed by them.
34. Therefore, a Show Cause Notice dated 20.10.2009 was issued to the Appellant demanding an amount of Rs.63,40,120.00 equal to the credit of SAD availed by them along with interest under Rule 14 of CENVAT Credit Rules 2004. It was also proposed to impose a penalty under Rule 15 of CENVAT Credit Rules 2004 read with Section 11 A C of the Central Excise Act 1994.
5. After following due process, the Learned Commissioner, by the impugned Order, confirmed the demand along with interest as proposed. He also imposed a penalty of equal amount under Rule 15 (2) of CENVAT Credit Rules 2004 read with Section 11AC of the Central Excise Act 1944. The Assessee is aggreieved by this Order confirming the demand and also imposing the penalty. Revenue is aggrieved by the fact that no penalty has been imposed under Rule 15 (1) of the CENVAT Credit Rules 2004.
6. Learned Counsel for Assessee Appellant contests the demand on the following grounds :-
(i) Against the same Bills of Entry which are subject of dispute in the present appeals, they had imported wheel sets both "on payment of duty" and without payment of duty under DEEC Licence. The goods which were imported under DEEC Licence were not subject to any duty and therefore they had not availed any CENVAT Credit at all on the goods. Therefore, they were not required to reverse any CENVAT Credit at all while transferring the goods to their Sister Unit. By mistake, they reversed CENVAT Credit of the CVD taken. The amount of CVD so reversed has been taken as credit by the receiving Sister Unit. Therefore, the question of reversing more amount towards the SAD does not arise. He gave the details of the imports as follows :-
Sl. Bills of Quantity Quantity Total Quantity Remarks No. Entry No. (nos.) (nos.) Quantity (nos.) and date Imported (nos.) removed In on payment covered to advertantly of by Bill of Sodepur reversed appropriate Entry Works the credit, duty from allegation 4 imported that goods removed received from goods under received as DEEC reflected in Licence as column (D) reflected is not in column correct.
(C)
(A) (B) (C) (D) (E) (F) (G)
1. 37787 425 325 750 325 322
dated
26/11/2007
2. 335971 274 326 600 82 82
dated
11/04/2007
3. 342281 488 146 634 56 56
dated
16/05/2007
4. 381155 680 800 1480 370 370
dated
12/12/2007
TOTAL 1867 1597 3464 833 830
(ii) Even if it is held that they were required to reverse the CENVAT
Credit, it cannot be alleged that they had an intention to evade payment of duty since the entire exercise is revenue neutral. Whatever CENVAT was reversed by them was taken as credit by their sister unit.
For this reason extended period of limitation cannot be invoked for raising the demand.
iii. For the same reason, the penalty imposed under Rule 15 (2) of CENVAT Credit Rules 2004 read with Section 11 AC of the Central Excise Act 1944 is liable to be set aside.
5(iv) With respect to the appeal filed by the Revenue he would argue that there is no case for imposition of penalty under Rule 15 (1) of CCR 2004. This Sub - Rule was not invoked in the SCN at all. During the period this Sub - Rule read as follows :-
" If any person, takes or utilises CENVAT Credit in respect of the input of capital goods or input services wrongly or in contravention of any of the provisions of this Rule 6 of such goods shall be liable to confiscation and such person shall be liable to penalty not exceeding the duty or services takes on such goods or services as the case may be, or Rs.2,000.00, whichever is higher".
Learned Counsel for the Assessee would submit that there is no allegation in the entire SCN that they have availed or utilized CENVAT Credit wrongly. The only allegation is that they have not reversed the CENVAT Credit while transferring the goods to their sister unit. Therefore Rule 15 (1) of CCR 2004 does not apply to their case. On a specific query from the Bench as to how they have inventorised the imported wheel sets and which wheel sets have been transferred to their sister unit i.e. whether duty paid and CENVAT availed wheel sets were transferred or duty free DEEC cleared wheel sets were transferred, he submits that the two types of wheel sets cannot be distinguished. They maintain of bill of entry-wise stocks of the wheel sets but cannot say on which wheel sets duty was paid and on which it was not against the same Bill of Entry.
7. Learned D.R. reiterates the grounds of appeal as far as the imposition of penalty under Rule 15 (1) is concerned. As far as the substantive question of reversal of CENVAT Credit availed on SAD is concerned, he would submit that it is not the revenue which has decided that the goods which were transferred were duty paid and CENVAT availed. The assessee themselves who have reckoned the transferred wheel sets as duty paid and CENVAT availed. Therefore, they have reversed the CENVAT Credit availed on the goods but only partly and the demand is with respect to the nonreversed part of the CENVAT Credit. He would, therefore, argue that the demand has been correctly confirmed and the penalty has been correctly imposed.
68. We have considered the argument on both sides and perused the records. It is not in dispute that the appellant assessee availed CENVAT Credit on the imported wheel sets in respect of both the CVD and SAD paid by them. It is not in dispute that against the same Bills of Entry some wheel sets were cleared on payment of duties and same were cleared under DEEC without payment of duty and it is not possible to separate duty paid goods from the goods cleared under DEEC. Therefore, the only way to decide whether the goods which were transferred to the sister unit were duty paid or duty free is based on the records of the assessee and how they treated the transferred goods.
9. It is not in dispute that the appellant assessee has treated the transferred goods as duty paid and also reversed some portion of the CENVAT Credit so availed. The amount of CENVAT Credit so reversed has been taken as credit by the sister unit. Under the circumstances we find that no force in the argument of the Assessee that the goods which were treated by them as duty paid for the purpose of reversing CENVANT Credit of CVD must be treated as duty free for the purpose of reversing SAD. Just as a man cannot be both married and unmarried at the same time, the goods in question cannot be both duty paid and duty free at the same time. Once the Assessee has reckoned the goods as a duty paid, they must reverse the entire amount of CENVAT Credit availed on them. Therefore, on merits, we do not find any force in the argument of the assessee. They must reverse the CENVAT Credit availed on SAD in respect of the transferred goods. Since they have not done so, the demand, along with the interest on this ground has been correctly confirmed by the original authority in the impugned order.
10. However, we had find force in the argument of the assessee that their sister unit gets credit of the amount of CENVAT Credit reversed by the appellant and therefore no malafide can be attributed to them. For extended period of limitation to be invoked, there must be fraud or collusion or willful misstatement or suppression of facts or violation of the provisions of the Act or Rates with an intent to evade 7 payment of duties. We find none of these elements in the present case. For this reason, we find that extended period of limitation under Section 11 (A) cannot be invoked. For the same reason, we also find that the imposition of penalty under Rule 15 (2) of CENVANT Credit Rules 2004 read with Section 11 A C of the Central Excise Act 1944 is liable to be set aside.
11. So far as the appeal of revenue is concerned we find that penalty under Rule 15 (1) of CCR 2004 is imposable only when any person takes or utilizes CENVAT Credit wrongly. There is no such allegation at all in the Show Cause Notice. Therefore revenues appeal is liable to be rejected and we do so.
12. In view of the above, the appeals are disposed of as below :-
a. Revenues - Appeal E/624/2010 is rejected. b. The demand of reversal of CENVAT Credit within the normal period of limitation is upheld along with applicable interest. c. The demand, if any, for the extended period of limitation is set aside.
d. The penalty under Rule 15 (2) of CCR 2004 read with Section 11AC of the Central Excise Act 1944 imposed in the impugned order is set aside.
e. The appeal is remanded to original authority for the limited purpose of calculation of the amount of CENVAT Credit to be reversed for the normal period of limitation.
(Pronounced in the open Court on 02.03.2020) Sd/-
(S.S. GARG) MEMBER (JUDICIAL) Sd/-
(P.V.SUBBA RAO) MEMBER (TECHNICAL) Akc 8