Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, ... vs M/S.Hindusthan Engineering & ... on 29 March, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, KOLKATA
EASTERN ZONAL BENCH: KOLKATA
Appeal No.EA-233/11
(Arising out of Order-in-Appeal No.08/KOL-IV/2011 dated 21.01.2011 passed by the Commissionerof Central Excise(Appeals), Kolkata-IV.)
FOR APPROVAL AND SIGNATURE
HONBLE SHRI H.K.THAKUR, MEMBER(TECHNICAL)
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
Authorative report or not?
3. Whether Their Lordship wishes to see the fair copy
of the Order?
4. Whether Order is to be circulated to the Departmental
Authorities?
Commissioner of Central Excise, Kolkata-IV
Applicant (s)/Appellant (s)
Vs.
M/s.Hindusthan Engineering & Industries Ltd.
Respondent (s)
Appearance:
Shri K.Chowdhury, Supdt.(AR) for the Revenue Shri Saurabh Bagaria & Shri Partha Banerjee, Advocates for the Respondent CORAM:
Honble Shri H.K.Thakur, Member(Technical) Date of Hearing :- 29.03.2016 Date of Decision :- 04.04.2016 ORDER NO.FO/A/75241/2016 Per Shri H.K.Thakur.
This Appeal has been filed by the Revenue against Order-in-Appeal No.08/KOL-IV/2011 dated 21.01.2011 passed by Commissioner(Appeals), Kolkata-V under which Order-in-Original dated 02.07.2007 passed by the Adjudicating Authority has been set aside. Under Order-in-Original dated 02.07.2007 Adjudicating Authority rejected a refund claim of Rs.8,63,245.82 filed by the Appellant.
2. Shri K.Chowdhury, Supdt.(AR) appearing on behalf of the Revenue argued that Respondent is a manufacturer of Railway Wagons etc. and has taken MODVAT Credit of Rs.8,63,246/- on MS Waste and Scrap on the basis of invoices issued by M/s.Vikash Industrial Corporation, a Registered Dealer. That on 02.04.1997 DGCEI carried out certain investigations and pointed out to the Respondent herein to pay back the MODVAT Credit improperly taken. That on 07.05.1997 Respondent paid back MODVAT Credit taken through cheque and informed DGCEI Authorities that the payment is made to settle the difference, to buy peace and maintain cordial relations with the Department. That on 02.12.1997 a Show Cause Notice was issued to the Respondent only with respect to imposition of penalty upon the Respondent under Rule 173Q of the Central Excise Rules, 1944. That Adjudicating Authority under Order-in-Original dated 06.08.2001 imposed a penalty of Rs.1.00 Lakh upon the Respondent against which Appeal was filed and Commissioner(Appeals) vide Order dated 01.01.2004 allowed the Appeal filed by the Respondent and Department filed an Appeal with the CESTAT. That on 05.01.2006 Appeal filed by the Revenue was dismissed by this Bench holding that penalty was not imposable. That after the issue was finally settled by this Bench vide Order dated 05.01.2006 Appellant filed refund claim of Rs.8.63,245/- which was rejected under Order-in-Original dated 02.07.2007 and Ld.Commissioner(Appeals) under Order-in-Appeal dated 21.01.2011 allowed the appeal as per para-6 holding that Appellant at no stage has accepted its liability and inadmissibility of MODVAT Credit. The ld.AR made the Bench go through the letter dated 07.05.1997 written by the Respondent to DGCEI and emphasized that amount was paid voluntarily by the Respondent with respect to inadmissible MODVAT Credit. He also made the Bench go through para 5 of Order dated 05.01.2006 passed by this Bench in the first round of litigation where a specific observation has been made by this Bench that the Respondent paid the duty voluntarily before the issue of Show Cause Notice. That in view of the existing facts, Respondent cannot now take a contrary stand after 10(ten) years from the date of paying back improperly taken credit. The ld.AR relied upon the case law of Apex Court in the case of Tractors and Farm Equipment Ltd. vs. CC, Madras [1997 (91) ELT 254(SC)].
3. Shri Saurabh Bagaria (Advocate) and Shri Partha Banerjee (Advocate) appeared on behalf of the Respondent. It was argued by Shri Bagaria that Respondent never accepted the duty liability and amount was paid as a result of coercion by the Investigating Agency. That amount paid has not been appropriated by the Adjudicating Authority and has to be considered as a deposit for which no time limit is applicable. He relied upon the case law decided by this Bench in the case of Steel Products Ltd. vs. CCE, Kol-II [2003 (158) ELT 476(Tri.-Kolkata). It was also his case that doctrine of unjust enrichment is not applicable to the present refund claim in view of the following case laws:-
a) CCE, Kol-III v. Vegetable Products Ltd. [2009 (247) ELT 180(Tri.-Kolkata)
b) Jalan Dyeing & Bleaching Mills v. CCE, Mumbai[2011(272)ELT 408 (Tri.- Mumbai)
c) CCE, Ahmedabad v. Shayona Enterprises [2008(230) ELT 378(Tri.-Ahmd.)
d) Remsons Industries Ltd.v.CCE, Mumbai-V [2012 (275) ELT 573 (Tri.-Mumbai)
e) A.R. Plastics P.Ltd.v.CCE, Delhi-III [2004 (171) ELT 413(Tri.-Del.)
f) CCE, Coimbatore v. EL.P.EM.Industries [2003 (157) ELT 498(SC)
4. As a counter to the arguments made by the ld.Advocate of the Respondent Shri Chowdhury (AR) argued that this Bench in the case of Steel Products Ltd. vs. CCE, Kol-II relied upon Gujarat High Courts decision in the case of Parle International Ltd. v. UOI [2001 (127) ELT 329(Guj.)], which has been set aside by Honble Supreme Court as per citation Commissioner v. Parle International Ltd. [2005 (188) ELT A-81(SC)].
5. Heard both sides and perused the case records.
6. The issue involved in the present proceedings is whether Respondent can seek refund of MODVAT Credit once taken and paid back as a result of initiation of investigation by DGCEI. In the present proceedings a case was initiated against the Respondent on 02.04.1997 on the grounds that credit taken with respect to certain invoices received from M/s.Vikash Industrial Corporation, a Registered Dealer is not admissible. The amount was paid by the Respondent on 07.05.1997. An intimation was also given to DGCEI(earlier named as DGAE) indicating that the amount paid is towards MODVAT Credit taken by the Respondent. It is the case of the Revenue that amount paid back was voluntary payment. On the other hand Respondent is of the view that the payment cannot be considered as an admission of improperly taken credit and has to be treated as a deposit with the Department. In this regard it is observed from para 5 of Order No.A-5/KOL/06 dated 05.01.2006 passed by this Bench in the earlier proceedings that Shri S.K.Roychowdhury, Advocate of the Respondent before CESTAT has submitted that the duty paid by the Respondent is voluntary before issue of Show Cause Notice. It is further observed from Order-in-Original dated 06.08.2001 passed by the Adjudicating Additional Commissioner, in the first round of litigation, in last two paras of internal page 3 of the said Order-in-Original, that Respondent herein took an argument that credit on the Waste and Scrap purchased from M/s.Vikash Industrial Corporation was taken under the cover of appropriate documents. However, no Appeal against the admissibility of MODVAT Credit was preferred by the Respondent before the Commissioner(Appeals) and CESTAT in the first round of litigation to stake a claim on admissibility of credit. If Respondent was of the view that MODVAT Credit and resultant refund is admissible then they should have filed an Appeal on this aspect before the First Appellate Authority and this Bench in the first round of litigation. In the absence of any such Appeal Respondent cannot file another refund claim on 27.11.2006 without contesting the merits of the case in the first round of litigation. The amount paid back has to be considered as improperly taken credit and not a deposit which was not further contested by the Respondent.
7. The ld.AR has relied upon the case law of Apex Court in the case of Tractors and Farm Equipment Ltd. v. CC, Madras (supra), where the Appellant M/s.Tractors and Farm Equipments Ltd. claimed the imported internal Combustion Piston as certain components. Subsequently the same Appellant claimed the imported goods as sub-assemblies for Piston Engines. It was observed by the Honble Apex Court that Appellant cannot later turn around and say that the goods imported by them constitute sub-assemblies of Piston Engines. The ratio laid down by the Apex Court in this case law relied upon by AR is squarely applicable to the factual matrix of the present proceedings. Having raised the issue of admissibility of MODVAT Credit on the basis of appropriate documents, as recorded in the Order-in-Original dated 06.08.2001 by the Adjudicating Authority in the first round of litigation, Respondent did not file any Appeal before the higher forum claiming admissibility of MODVAT Credit in the first round of litigation. The observations made by the First Appellate Authority in para 6 of Order-in-Appeal dated 21.01.2011 that Appellant did not admit duty liability is thus not correct and is required to be set aside. Accordingly Appeal filed by the Revenue is allowed by setting aside the Order-in-Appeal dated 21.01.2011 passed by the First Appellate Authority and Order-in-Original No.7/DKN/07-08/R dated 02.07.2007 is restored. Bench has not gone into the unjust enrichment and time bar aspect of refund claims, which were the issues taken up in the case laws relied upon by the Respondent, as these issues were not raised before the lower authorities.
8. Appeal filed by the Revenue is allowed.
(Pronounced in the open court on 04.04.2016.)
SD/
(H.K.THAKUR) MEMBER(TECHNICAL)
sm
7
Appeal No.EA-233/11