Custom, Excise & Service Tax Tribunal
M/S. Shiv Om Paper Mills Pvt. Ltd vs C.C.E., Rohtak on 15 September, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
WEST BLOCK NO.2, R.K. PURAM, NEW DELHI 110 066
Date of Hearing 15.09.2015
For Approval & Signature :
Honble Mr. S.K. Mohanty, Member (Judicial)
1.
Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2.
Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
Yes
3.
Whether Lordships wish to see the fair copy of the order?
Seen
4.
Whether order is to be circulated to the Department Authorities?
Yes
Appeal No.E/51856/2014-EX[SM]
[Arising out of Order-in-Appeal No.655/SVS/RTK/2013, dated 26.12.2013 passed by the C.C.E.(Appeals), Gurgaon]
M/s. Shiv Om Paper Mills Pvt. Ltd. Appellant
Vs.
C.C.E., Rohtak Respondent
Appearance Mr. Dinesh Verma, Advocate - For Appellant Mr. GR Singh, DR - For Respondent CORAM: Honble Mr. S.K. Mohanty, Member (Judicial) Final Order No.___54170/2015_, dated 15.09.2015 Per Mr. S.K. Mohanty :
The brief facts of the case are that during the course of audit of records of the appellant, for the years 2006-07 to 2009-10, the Central Excise Department observed that the appellant had taken full CENVAT credit of duty paid on capital goods, instead of 50% in the year of receipt and remaining in the next financial year. In terms of Rule 4(2a) and 4(2b) of CENVAT Credit Rules, 2004 read with CBEC Circular No.942/03/2011-CX, dated 14.03.2011, the Department proceeded against the appellant for recovery of interest amounting to Rs.3,37,251/- under Rule 14 of the said Rules read with Section 11AB of the Central Excise Act, 1944 and imposition of penalty under Rule 14 of the said Rules read with Section 11AC of the said Act. The Show Cause Notice dated 16.11.2011 issued in this regard culminated into the adjudication order dated 29.04.2013, confirming the interest amount of Rs.3,37,251/- and imposing equal amount of penalty. In appeal, ld. Commissioner (Appeals) vide the impugned order dated 26.12.2013 has confirmed the adjudged interest amount and set aside the penalty imposed in the adjudication order. Confirmation of interest liability by the authorities below is the subject matter of the present dispute.
2. Shri Dinesh Verma, ld. advocate for the appellant submits that full amount of CENVAT credit taken by the appellant inadvertently during the disputed period has not been utilised for payment of central excise duty on the finished products, since the commercial production in the appellants unit commenced on 01.07.2009. He further submits that taking CENVAT credit, without its utilisation, is a mere book entry, for which there is no loss of revenue to the Govt. exchequer. As such, interest liability cannot be fastened on the appellant. To support his stand, he cited the judgement of Honble High Court of Madras in the case of CCE, Madurai Vs. M/s. Strategic Engineer (P) Ltd. [2014-TIOL-466-HC-MAD-CX] and the decision of Honble High Court of Karnataka in the case of CCEST, LTU, Bangalore Vs. M/s. Bill Forge Pvt. Ltd. [2011-TIOL-799-HC-KAR-CX]. He further relied on the decision of this Tribunal in the case of Indian Oil Corporation Ltd Panipat Refinery Vs.CCE, Gurgaon [Final Order No.A/58435/2013-SM(BR), dated 26.11.2013].
3. On the other hand, Shri GR Singh, ld. Departmental Representative appearing for the Respondent-Revenue, reiterated the findings recorded in the impugned order and further relied on the judgement of the Honble Supreme Court in the case of Union of India Vs. Ind-Swift Laboratories Ltd. [2011 (265) ELT (SC)] to substantiate his stand that if the CENVAT credit is taken erroneously or refunded, irrespective of the fact that the same is utilised or not, interest liability is automatic, which is required to be paid by the assessee.
4. I have heard both parties and perused the records.
5. The fact is not in dispute that the appellant has commenced its commercial production on 01.07.2009. Thus, in the absence of manufacture of final products, there was no scope for removal of the same from the factory on payment of central excise duty. Hence, in such an eventuality, taking of CENVAT credit in the register maintained by the appellant will be considered as a mere book entry. Entering the credit particulars in the books has no revenue implication. Thus, in the absence of any loss of revenue to the Govt. exchequer, the demand of interest cannot be sustained against the appellant since the interest liability is compensatory in character. The issue, whether the interest is required to be paid when the CENVAT credit taken has not been utilised is no more res integra, in view of the judgement of Honble Karnataka High Court in the case of CCEST, LTU, Bangalore Vs. M/s. Bill Forge Pvt. Ltd.. The relevant paragraph in this regard is extracted herein below:-
20.?From the aforesaid discussion what emerges is that the credit of excise duty in the register maintained for the said purpose is only a book entry. It might be utilised later for payment of excise duty on the excisable product. It is entitled to use the credit at any time thereafter when making payment of excise duty on the excisable product. It matures when the excisable product is received from the factory and the stage for payment of excise duty is reached. Actually, the credit is taken, at the time of the removal of the excisable product. It is in the nature of a set off or an adjustment. The assessee uses the credit to make payment of excise duty on excisable product. Instead of paying excise duty, the cenvat credit is utilized, thereby it is adjusted or set off against the duty payable and a debit entry is made in the register. Therefore, this is a procedure whereby the manufacturers can utilise the credit to make payment of duty to discharge his liability. Before utilization of such credit, the entry has been reversed, it amounts to not taking credit. Reversal of cenvat credit amounts to non-taking of credit on the inputs.
6. The judgement of Honble Supreme Court in the case of Union of India Vs. Ind-Swift Laboratories Ltd. (supra), relied upon by the Revenue is not applicable to the facts of the present case, in-as-much-as, CENVAT credit in the said case was taken by the Respondent wrongly on the basis of fake invoices, whereas; in the circumstances of the present case, the credit taken in the register of the appellant on the basis of genuine documents, has not been utilised for clearance of the final product.
7. In view of the fact that the credit taken has not been utilised by the appellant for clearance of final product, I am of the opinion that the judgement of Honble High Court of Karnataka in the case of CCEST, LTU, Bangalore Vs. M/s. Bill Forge Pvt. Ltd. (supra) is squarely applicable, according to which no interest is required to be paid in the event where the credit taken inadvertently has not been utilised. Therefore, I do not find any merits in the impugned order, and the same is set aside. The appeal filed by the appellant is allowed.
[Operated portion pronounced in the open court] (S.K. Mohanty) Member (Judicial) SSK -6-