Customs, Excise and Gold Tribunal - Calcutta
Nicco Corporation Ltd. vs Commissioner Of Central Excise, ... on 12 December, 2001
Equivalent citations: 2002(81)ECC137, 2002(147)ELT244(TRI-KOLKATA)
JUDGMENT
K.K. Bhatia
1. The appellants, M/s Nicco Corporation Ltd. M/s (sic) manufactured to Central Excise Tariff Act, 1985. They filed a classification list way back in 1989 showing the waste and (sic) scrap of insulated wires and cables as non-excisable. However, the Assistant Commissioner of Central Excise, Berhampore Division rejected this contention of the party. They filed a classification list and paid duty on the waste and scrap of wires and cables under protest from 1989 to 1994. They also filed an appeal against the above direction of the Assistant Commissioner and the Commissioner (Appeals) vide his Order dated 29.2.92 remanded the matter for denovo adjudication to the Assistant Commissioner of Central Excise, Berhampore. The Assistant Commissioner of Central Excise, Berhampore vide his order dated 25.4.94 held that the said waste and scrap was non-excisable. Consequent to this order, they filed a refund claim of Rs. 60,25,201/- on 21.7.94. They were however issued a show-cause notice dated 23.6.95 by the Assistant Commissioner of Central Excise, Berhampore Division calling upon them to show-cause why the refund claim filed by them should not be rejected. The Party filed a reply dated 26.12.95 to the show-cause notice. The matter of this claim of refund was resting at this stage but the Assistant Commissioner of Central Excise had however already passed an order dated 25.4.94 followed by another order dated 31.8.94 holding that the waste and scrap was non-excisable. The Department filed an appeal against this order but the same stood rejected by the order dated 12.6.96 of the Commissioner (Appeals) upholding the order passed by the Assistant Commissioner.
2. In the mean time, the appellants wrote a letter dated 5.11.96 to the Assistant Commissioner stating that their refund claim of Rs. 60,25,201/- filed on 21.4.96 was pending for over 27 months and no action was taken. They stated that in this matter since appeal of the Department had also since been dismissed by the Commissioner (Appeals) by his order dated 12.6.96, there was no valid reason to keep the refund claim pending as no appeal had been preferred by the Department against the order of the Commissioner (Appeals).
3. When the matter was pending at this stage, the appellants took credit of Rs. 21,50,808/- on 1.12.96 in their PLA and another credit of Rs. 37,74,393/- on 5.11.96 in their RG 23A Part II Account. The party wrote letters to the Assistant Commissioner on 5.12.96 and 6.1.97 that as per the telephonic advise given to them they had already adjusted the claimed amount in their Accounts. They wrote another letter dated 13.1.97 to the Assistant Commissioner in which they reiterated that according to the telephonic advise given to them they had already adjusted the claimed amount. However, the Assistant Commissioner vide his order dated 24.1.97 rejected the refund claim of the party.
4. Even before their refund claim was formally rejected by the Assistant Commissioner, the Superintendent of Central Excise, Kalyani Division, Range II visited their office and as per the version of the party forcefully and coercively reversed the credit entries in the party's accounts in his own handwriting on 26.11.97.
5. The party filed an appeal to the Commissioner of Central Excise (Appeals), Calcutta against the order dated 24.1.97 of the Assistant Commissioner rejecting their refund claim. The Commissioner (Appeals) vide his order dated 25.11.98 allowed their appeal by remanding the same to the Assistant Commissioner.
6. In the mean time, the Commissioner of Central Excise, Calcutta II issued a show-cause notice dated 25.5.99 to the party alleging that they had irregularly taken the credit of an amount of Rs. 60,25,201/- in their PLA and the modvat credit account and had utilised the same during the period from 1.12.96 to 29.11.97. It was alleged that they had irregularly taken the credit of the amount in violation of Rules 9, 57A, 57G of Central Excise Rules, 1944. It was further alleged that the credit in their account was taken with the collusion between the concerned departmental officers and the party. Accordingly, they were called upon to show-cause why the amount as referred to above of which they had taken an irregular credit should not be formally disallowed to them under Section 11A of the Central Excise Act, 1944 read with Rule 571 of the Central Excise Rules, 1944. They were further called upon to show-cause why the debit entries of the same amount already made in their account should not be appropriated and further an amount of Rs. 10,84,523/- of interest payable on the irregular credit should not be appropriated against the liability under Section 11AB. They were also called to show-cause why the penalty should not be imposed on them under Section 11AC read with Rule 571.
7. The party replied to the show-cause notice vehemently contesting the allegations levelled against them and gave details of the history of the case. They contended that the credit was taken by them only on positive advise of Assistant Commissioner of Central Excise, Behrampore in favour of taking credit of the above said amount in their account. It is stated that they also informed of their action vide their letter dated 13.1.97 addressed to the Assistant Commissioner. In their reply, they also contested the allegation of the collusion of the departmental officers with them for the alleged un-authorised availment of credit in their account and requested the adjudicating authority to reveal the names of the officers who alleged to have colluded with them. They pleaded that the show-cause notice was barred by limitation in the absence of any proof of collusion and the extended period of five years for the purpose of demand of duty was not liable to be invoked against them.
8. The above said proceedings culminated in passing the impugned order of the Commissioner of Central Excise, Cal. II dated 28.11.2000. In this order, it was observed that there were two separate proceedings being followed in this case. The first proceedings relate to certain claims for refund filed by the assessee with the Assistant Commissioner. These claims were filed on 20.7.94 and the Assistant Commissioner vide his order dated 24.1.97 rejected the same. Against the order, the assessee went in appeal before Commissioner (Appeals) who vide his order dated 23.10.98 set aside the order-in-original and remanded the case to the Assistant Commissioner. The Assistant Commissioner has not yet taken up the case for passing a fresh order on the refund claims and this matter is pending with him. He observed that the above proceedings have no bearing on the present proceedings which have emanated from the suo-moto taking of credit of the amount in their account by the party. The Commissioner (Appeals) has also observed that the assessee utilised the amount taken suo-moto in the books of account during the period 1.12.96 to 29.11.97. This amount of Rs. 60,25,201/- was subsequently debited by the Superintendent of Central Excise jointly with Shri N.K. Chatterjee, Senior Manager of the party. Both of them had signed below the debit entries and affixed their seals. The interest of Rs. 10,84,536/- on the said amount was also similarly debited on 29.11.97. The Commissioner of Central Excise, Cal. III issued a show-cause notice dated 25.1.99 asking the assessee why the said amount should not be formally disallowed as also the amount of the interest. The Commissioner has also observed that there is no provision of law which provides that an assessee can himself decide on the correctness of refund claim and take credit on his own. He has further observed that under the provisions of Section 11B only the Assistant Commissioner or Deputy Commissioner is competent to order for the refund and not the Superintendent. With regards to the aspect of collusion between the officers and the assessee alleged in the sho-cause notice and contested by the party in their reply to the show-cause notice, the Commissioner in his order is not seen to be forthcoming. The Commissioner in his order has stated that the assessee is a very big industrial unit having huge turnover and they were very well aware of the legal position that the refund claim had to be filed if they wanted the refund of duty paid by them. He has, therefore, observed that from their letter dated 5.11.96, it is clear that they were preparing the ground for consciously taking the illegal action of self deciding the refund claim, for which there is no legal basis. The Commissioner in his order has confirmed the reversal of refund claim and debiting the interest amount as aforesaid. He has further imposed a penalty of Rs. 60,25,201/- on the party under Section 11AC for the act of collusion and un-authorised self credit of the refund claim amounts.
9. The present appeal is against the above order of the Commissioner. We have heard Shri P.K. Dutta, ld. Advocate and Shri A.D. Roy, ld. Advocate for the appellants and Shri D.K. Bhowmik, ld. JDR for the respondents.
10. On careful consideration of the submissions made before us and the facts on record, it is observed that the claim for refund of Rs. 60,25,201/- filed by the party is still pending consideration with the Assistant Commissioner of Central Excise, Behrampore on remand by the Commissioner (Appeals) vide his order 25.11.98. In the mean time, it appears that the party had taken credit of this amount in their current and modvat accounts, suo-moto on 5.11.96 and 1.12.96 which subsequently was got debited along with interest of Rs. 10,84,536/- by the departmental authorities on 26.11.97. It is for the regularisation of this amount that the Commissioner issued a show-cause dated 25.5.99 allegaing collusion between the appellants and the concerned departmental officers. This show-cause notice has culminated into passing the impugned order-in-original dated 28.11.2000 by the Commissioner against which this appeal is filed. The appellants are not disputing that they had taken the credit of the above stated amount in their current and modvat credit accounts suo-moto but they say that the same was done since their refund claim was pending for over 27 months with the Assistant Commissioner and it was at the telephonic advise of the Assistant Commissioner that they had taken the credit. This is buttressed by the fact that they also followed it up by writing a letter dated 5.11.96 to the Assistant Commissioner and two other letters 5.12.96 and 6.1.97 to him on the same facts. The Departmental authorities are not disputing the receipt of these letters. However, we cannot ignore the fact that in terms of the provisions of the law, an assessee is not authorised to take credit of the amount of the refund suo-moto into their account without proper sanction of the competent authority by a written order. Notwithstanding, the claim that they had informed the departmental authorities about their having taken the credit of the refund amounts, they have not been able to show any written communication from the Assistant Commissioner permiting them to take credit of the amount. Therefore, their action of taking the credit suo-moto in their accounts cannot be approved. This amount, however, has since been reversed by them on 26.11.97, though it is contended by the appellants that this amount was got forcefully reversed by the Superintendent of Central Excise. In his order, the Commissioner has observed that the debited entries in the accounts in this regard are duly countersigned by the Superintendent of Central Excise and Shri N.K. Chatterjee, Senior Manager of the party. This proves that the contention of the appellants of coercion and use of force is not supported by the facts. On overall appreciation of the facts on record, therefore, it is observed that the act of the party in suo-moto taking of the credit amounts though is not in conformity with the provisions of law but it is also observed that the departmental authorities were fully in knowledge of the same. It is further observed that they have suo-moto debited the amounts and in this manner recified the irregularity commited by them earlier. In this view of the matter, there is no warrant to impose any penalty under section 11AC and to recover the interest under Section 11AB of the Central Excises Act, 1944 from the appellants, consequently, while upholding the order of the appropriation of the disputed amount of Rs. 60,25,201/- by the Commissioner in his order, we set aside the order for imposition of penalty of an equivalent amount and the interest of Rs. 10,84,536/- confirmed on the party.As already observed above, the matter for the refund of the amounts on merits is pending with the Assistant Commissioner in pursuance of the direction of Commissioner (Appeals) in his order dated 25.11.98 which may be decided expeditiously.
11. This appeal is thus partly allowed in the above terms.