Customs, Excise and Gold Tribunal - Calcutta
Shree Uma Foundries Pvt. Ltd. vs Commr. Of Central Excise on 13 September, 2007
Equivalent citations: 2007(123)ECC241, 2007(149)ECR241(TRI.-KOLKATA), 2008(222)ELT317(TRI-KOLKATA)
ORDER D.N. Panda, Member (J)
1. Ld. Counsel, Mr. Partha Banerjee, appearing for the appellant submitted that both on merits and on limitation, the appellant should succeed without reopening the stale matter that has reached to finality. He fairly submitted that although the point of limitation was not raised before the ld. first Appellate Authority, that being a question of law, the appellant is not barred to raise before this Forum. He submitted that the period relates to April, 2004 to August, 2004 and the appellant was a manufacturer as well as job worker of cast iron articles falling under Chapter 73 and being registered, the assessee had also filed all documents with the Department. Job work was continuous feature of the appellant. Such fact was also well-known to the Authority. Authority having considered the method applied by the assessee have all long assessed. Suddenly a show-cause notice dated 27.7.06 was issued to them which was merely by a change of opinion and sitting over the judgment of quasi-judicial authority.
2. He further submitted that when the intermediate goods were delivered by the job worker to the principal manufacturer, the finished goods manufactured by such principal manufacturer have suffered duty and there was no double claim of Cenvat Credit by the manufacturer. This is evident from para 3 of the show-cause notice itself. There is nothing contrary on record to prove that the goods in question in any form has not suffered duty. If this is the factual position, in that circumstance, cascading effect should be avoided. This being intention of legislature, benediction of Cenvat Credit should not be denied to the appellant. The appellant has not contravened the law and the finding was also patent from the show-cause notice. Therefore, without charge as to evasion of duty in the show-cause notice, that itself was unsustainable and proceeding under Section 11A was inconceivable.
3. Ld. Counsel submitted that this Tribunal has taken a consistent view that when the input has given rise to output and that output has suffered duty, input credit in respect of raw materials cannot be denied. To support his contention, he relied on following decisions:
(i) Kinetic Engg. Ltd. v. Commr. of Central Excise, Pune III: 2007 (208) ELT 526 (Tri.-Mumbai);
(ii) Sterlite Industries (I) Ltd. v. Commr. of Central Excise, Pune: ;
(iii) Jindal Polymers v. Commissioner of Central Excise, Meerut III: 2001 (135) ELT 657 (Tri.-Del.).
4. According to ld. Counsel, the Tribunal has made elaborate examination of various issues relating to input credit in respect of job workers in the above cases. All the decisions of the Tribunal having been focused in respect of Cenvet credit to avoid cascading effect, such benefic provision of law should not be interpreted in any other manner to cause absurdity.
5. Ld. JDR appearing for the Revenue submitted that the manner of invoking Cenvat Credit by the job worker was not proper for which the ld. Appellate Authority below has passed appropriate order and that should not be interfered.
6. Heard both sides and perused the case records. The only question arose in this appeal is whether input credit shall be denied if the input has given rise to output and such output has suffered duty in absence of double claim of Cenvat Credit. Also because the Assessee agreed to deposit demand in view of Audit finding whether such a consent confers jurisdiction to issue show-cause notice. Input credit cannot be denied to avoid cascading effect which is intention of legislature. Revenue in the present appeal, without bringing any controversy as to suffering of duty on the output resulted out of the questioned input can not deprive the Appellant from benefic provision of Cenvat Credit. Also Revenue has not brought out whether there was double claim of Cenvat Credit. In absence of such a finding cascading effect is required to be avoided. Also show-cause notice was issued because the assessee retracted for making refund application for the demand already paid from its earlier agreement with Audit party who audited accounts of the Assessee from April 2004 to August 2004. It is settled principles of law that consent does not confer jurisdiction. Therefore, it appears that except Audit objection, the show-cause notice dated 27.7.06 had no basis. This clearly reveals that by mere change of opinion, the Authority initiated the proceeding without finding any intention to evade duty to satisfy elements of Section 11A of Central Excise Act, 1944.
7. In the fitness of the circumstances of the case, the factual aspect being very well on record and Revenue having proper knowledge about the modus operandi of the appellant, the appellant cannot be charged belatedly on the basis of audit finding. The audit which has sat over the judgments of quasi-judicial authority, has no power either to recommend a levy or to suggest interpretation of law in the manner which shall cause absurdity or defeat spirit of justice. The input used in job work resulting with the dutiable output having also been a cogent fact by the show-cause notice itself, the present proceeding denying Cenvat credit to the appellant, is inconceivable following the decisions cited by the Appellant.
8. In view of aforesaid observations, the impugned order is liable to be set aside both on the ground of limitation as well as merit.
9. In the result, the appellant should succeed with consequential relief if any, to be admissible in accordance with law.
Dictated and pronounced in the open Court.