Custom, Excise & Service Tax Tribunal
Santosh Match Industries vs Tirunelveli on 1 August, 2019
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CUSTOMS, EXCISE AND SERVICE TAXAPPELLATE TRIBUNAL
CHENNAI
Regional Bench - Court No. III
Excise Appeal No.40817 of 2013
(Arising out of Order-in-Appeal No.458/2013 dt. 31.01.2013 passed by the
Commissioner of Central Excise (Appeals), Madurai)
M/s. Sri Kaliswari Fireworks (P) Ltd. : Appellant
5A, Chairman A. Shunmuga Nadar Road,
Sivakasi 625 123.
VERSUS
The Commissioner of Central Excise, : Respondent
Tirunelveli Commissionerate Tirunelveli.
WITH
(i) Excise Appeal No. 40818 of 2013 (M/s. Sri Kaliswari Fireworks P. Ltd.) (Arising out of Order-in-Appeal No.67/2013 dt. 31.01.2013 passed by the Commissioner of Central Excise (Appeals), Madurai)
(ii) Excise Appeal No. 40819 of 2013 (M/s. Sri Kaliswari Fireworks P. Ltd.) (Arising out of Order-in-Appeal No.69/2013 dt. 31.01.2013 passed by the Commissioner of Central Excise (Appeals), Madurai)
(iii) Excise Appeal No. 40986 of 2013 (M/s.Sri Kannan Match Works) (Arising out of Order-in-Appeal No.44-69/2013 dt. 31.01.2013 passed by the Commissioner of Central Excise (Appeals), Madurai)
(iv) Excise Appeal No. 40987 of 2013 (M/s. Pappuraja Match Works) (Arising out of Order-in-Appeal No.44-69/2013 dt. 31.01.2013 passed by the Commissioner of Central Excise (Appeals), Madurai)
(v) Excise Appeal No. 40988 of 2013 (M/s. Suryakala Match Industries) (Arising out of Order-in-Appeal No.44-69/2013 dt. 31.01.2013 passed by the Commissioner of Central Excise (Appeals), Madurai)
(vi) Excise Appeal No. 40989 of 2013 (M/s.Standard Match Industries P. Ltd.) (Arising out of Order-in-Appeal No.44-69/2013 dt. 31.01.2013 passed by the Commissioner of Central Excise (Appeals), Madurai) 2
(vii) Excise Appeal No. 40990 of 2013 (M/s. Vel Match Industries P. Ltd.) (Arising out of Order-in-Appeal No.44-69/2013 dt. 31.01.2013 passed by the Commissioner of Central Excise (Appeals), Madurai)
(viii) Excise Appeal No. 40993 of 2013 (M/s. Santosh Match Industries) (Arising out of Order-in-Appeal No.44-69/2013 dt. 31.01.2013 passed by the Commissioner of Central Excise (Appeals), Madurai)
(ix) Excise Appeal No. 41645 of 2013 (M/s. King Match Co.) (Arising out of Order-in-Appeal No.44-69/2013 dt. 31.01.2013 passed by the Commissioner of Central Excise (Appeals), Madurai) APPEARANCE:
Shri M. Kannan, Advocate Shri S. Ramachandran, Consultant for the Appellant Shri L. Nandakumar, AC (AR) for the Respondent CORAM:
HON'BLE MR. P.VENKATA SUBBA RAO, MEMBER(TECHNICAL) HON'BLE MR. P. DINESHA, MEMBER (JUDICIAL) FINAL ORDER NOs. 40993-41002 / 2019 DATE OF HEARING: 01.08.2019 DATE OF DECISION: 01.08.2019 PER P.VENKATA SUBBA RAO These ten appeals are filed by the appellants on the same issue and hence are being taken up and disposed of together.
2. Heard both sides and perused the records. Appellants herein are manufactures of matches and availed cenvat credit on their inputs / input services used in the manufacture of the matches. Among the inputs which they used is paper board which was used to pack the matches. SCNs were issued to the appellants by the 3 department alleging that they had purchased paper board / kraft paper from their suppliers who were not required to pay Central Excise duty in terms of Sl.No.90 of Notification No.4/2006-CE dt.01.03.2006 (as amended) but had actually paid duty under Sl.No.91 of this notification. It is alleged in the SCNs that aforesaid exemption notification at Sl.No.90 is unconditional as far as clearances upto quantity not exceeding 3500 MTs in a financial year is concerned and that the suppliers of the paper board / kraft paper board were therefore not liable to pay Central Excise duty at all and therefore should not have paid Central Excise duty. However, they paid the same amount as representing Central Excise duty as per Sl.No.91 of the aforesaid exemption notification and the appellants as recipients of these invoices have claimed cenvat credit of this amount. It is the position of the department that since Central Excise duty is not payable at all, the amount which has been paid by the suppliers cannot be treated as Central Excise duty and therefore cenvat credit of the same is not available to the appellant. Cenvat credit to that extent has been wrongly availed by the appellants which needs to be recovered. SCNs proposed to recover the wrongly availed cenvat credit in Rule 14 of CCR 2004 read with Section 11A along with interest under Section 11AB. It has also proposed to impose penalty under Rule 15 (1) of CCR.
3. After due process of law, the lower authorities have confirmed demands and imposed penalties which, on appeal by the appellants, have been confirmed by the first appellate authorities.
4. Hence these appeals.
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5. Ld. Counsel for the appellants submits that it is not open for the officers of Central Excise having jurisdiction over their factory to decide the taxability of the products manufactured by their suppliers who fall in a different jurisdiction. He asserts that it is a well settled principle that once the assessment is done at the supplier's end, it is not open for the authorities at the recipient end to reclassify, reassess, revalue or requantify the duty and thereby deny cenvat credit to them. This issue has been settled by the Tribunal in the following cases :
(i) 2018 (2) TMI 927 CESTAT Chennai - CCE Salem Vs MSP Paper Mills Pvt. Ltd.
(ii) 2018 (9) TMI 1652 CESTAT Chennai - M/s.Akshera papers Vs CCE Salem
(iii) 2018 (9) TMI 891 CESTAT Chennai - M/s.Sripathi paper & Boards Vs CCE Tirunelveli
6. Ld. D.R agrees with the facts of the cases and reiterates the findings of the lower authorities.
7. We find that the question to be answered in these cases is when duty has been paid by the supplier at a particular rate availing a particular exemption notification and also invoices have been issued accordingly, whether the jurisdictional officers of the recipient assessees can dispute the assessment of duty and say that less duty was payable or no duty was payable and on that ground deny cenvat credit to the recipient. This issue has been settled by the Hon'ble Apex Court in the case of MDS - 2008 (229) ELT 485 (SC), paras 7-9 of which are reproduced below :
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"7. The Tribunal has come to the conclusion that in fact there was no loss of revenue. It accepted the appeal by recording the following reasons :
"Reasons given by the appellants for the alleged inflation of the value of the intermediate goods are logical. What was required of the Commissioner was to examine the quantum of the loading of the assessable value by the Modvat credit on the earlier inputs. That exercise has nowhere been done. If the department was of the opinion that the value of the final product was depressed, then they could have charged the Jalgaon unit with under-invoicing of their product. That has also not been done. The valuation as given by the Sinnar unit was duly approved by the department and the payment of duty was also duly accepted. We find absolutely no substance in the attempt of the learned Commissioner to convert a part of the duty so paid into „deposit of duty‟. There is no legal basis for such presumption. The rules entitled the receipt manufacturer to avail of the benefit of the duty paid by the supplier manufacturer. A quantum of duty already determined by the jurisdictional officers of the supplier unit cannot be contested or challenged by the officers in charge of recipient unit [2000 (38) RLT 179]."
8. Counsel appearing for the Revenue could not assail any of the findings recorded by the Tribunal.
9. That being the position, we agree with the view taken by the Tribunal and find no merit in these appeals which are dismissed leaving the parties to bear their own costs."
8. The ratio of this judgment was followed in several cases by this Tribunal. At any rate, even with respect to jurisdiction, the officers at the recipient end have no jurisdiction of the assessment done by the supplier-manufacturer. In case they did have the jurisdiction over the supplier-manufacturer, a notice should have been issued to such supplier-manufacturer who is alleged to have wrongly assessed and paid excise duty. By no stretch of imagination can the recipient of cenvat invoices along with the goods be expected to understand or anticipate how much duty was actually to be paid by the supplier and take credit accordingly. A plain reading of the CCR 2004 also provides for credit of duty paid and not credit of duty that should have been paid. Therefore, there is no scope for the credit to be altered from the amount of excise duty which has been paid as shown in the input invoices.
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9. In view of the above, we find that all the impugned orders need to be set aside and we do so.
10. Appeals are allowed and the impugned orders are set aside.
(Operative part of the pronounced in open court) (P. VENKATA SUBBA RAO) MEMBER (TECHNICAL) (P. DINESHA) MEMBER (JUDICIAL) gs