Custom, Excise & Service Tax Tribunal
Cce, Delhi-Iii vs Saurer Embroidery System (India) Ltd on 5 December, 2016
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL SCO 147-148, SECTOR 17-C, CHANDIGARH 160 017 COURT NO. II APPEAL NO. E/3745/2010 [Arising out of Order-in-Appeal No. 325/BK/GGN/2010 dated 16.08.2010 passed by the Commissioner of Central Excise (Appeals), Delhi-III, Gurgaon] Date of hearing: 21.10.2016 Date of decision: 05.12.2016 For approval and signature: Honble Mr. Devender Singh, Member (Technical) =======================================================
CCE, Delhi-III :
Appellant(s) VS Saurer Embroidery System (India) Ltd.
:
Respondent(s) ======================================================= Appearance:
Sh. Satya Pal, A.R. for the Appellant(s) Sh. Suvineet Sharma, Advocate for the Respondent(s) CORAM:
Honble Mr. Devender Singh, Member (Technical) FINAL ORDER NO. 61693/2016 Per : Devender Singh
The Revenue is in appeal against the Order-in-Appeal No. 325/BK/GGN/2010 dated 16.08.2010 passed by the Commissioner of Central Excise (Appeals), Delhi-III, Gurgaon.
2. Brief facts of the case are that the respondent M/s Saurer Embroidery System (India) Ltd. were registered with Central Excise for manufacture of embroidery falling under chapter 5805.19 which attracted central excise duty till 09.07.2004, after which date, the excise duty on the manufacturing activity was completely withdrawn. On 21.07.2004, the respondent surrendered the Central Excise Registration.
2.1 During the period of their operation, the respondent had opted for the Compounded Levy Scheme under Rule 96ZH of the C.E.R., 1944 (for brevity erstwhile rules). Vide Notification No. 15/98-CE(NT) dt. 2.6.1998, Rule 96ZH of the erstwhile Rules was amended to the effect that the Modvat Credit under Rule 57A, 57B and 57Q of the erstwhile rules was made unavailable to a manufacturer operating under the Compounded Levy Scheme (proviso to Rule 96ZH(1) of the erstwhile rule). The respondent had imported embroidery machines before 2.6.1998 and had taken Modvat Credit of CVD, amounting to Rs. 31,18,085/- on those machines. Out of the Modvat Credit of Rs. 31,18,085/-, an amount of Rs. 3,01,820/- was utilized by the respondent towards discharge of duty liability during the period of Sept, 1998 to Feb, 1999. In view of the provisions of 96ZI of the erstwhile rules, the department took a view that the respondent was not entitled to avail the benefit of Modvat Credit and as such a demand notice for Rs. 3,01,820/- was issued against the respondent. The Adjudicating Authority confirmed the demand and imposed a penalty of Rs. 30,000/-. Against the order of Adjudicating Authority, the respondent preferred an appeal before Commissioner (Appeals) who upheld the demand of duty but reduced the penalty from Rs. 30,000/- to Rs. 2000/-. This particular decision of Commissioner (Appeals) was further appealed in the Honble CESTAT, both by the department and by the party. The Honble CESTAT vide its final order no. 1730-1730/06 dt. 08.12.2006, decided both the appeals by upholding the order of Commissioner (Appeals). Aggrieved by the decision of Honble CESTAT, the respondent preferred appeal before Honble High Court of Punjab & Haryana.
2.2 The case has finally been decided by the Honble High Court vide order dt. 26.09.2009 (CEA No. 54 of 2007). In its final order the High Court, besides other issues, has discussed the issue as to whether the Tribunal and the quasi judicial authorities were correct in ordering recovery of the Modvat Credit taken prior to the amendment to 96ZL, but utilized at a later date. To this issue the Honble High Court has held that it was correctly availed by the respondent. Consequent to the High Courts order, the respondent sought refund of Rs. 3,01,820/- deposited against the stay order no. 1047/05/SM/BR and final order no. 1730-1730/06 dt. 08.12.2006, and duty of Rs. 28,16,625/- paid on the embroidery manufactured during the period of March 1998 to August 1998 and April 1999 to March 2002.
3. The refund claim of Rs. 28,16,265/- was examined by the Assistant Commissioner and the same was rejected. The respondent went in appeal and the Commissioner (Appeals) has allowed the refund claim on the following grounds:
(i) The period of limitation for reckoning the duty limit will start only after the final disposal of the case in Honble High Court.
(ii) The refund claim is not hit by unjust enrichment and the issue is squarely covered by the ratio laid down in the case of Gauri Plasticulture (P) Ltd. vs. CCE 2006 (202) ELT 199 (Tri.-Mum.).
4. Heard both the parties and perused the records.
5. I find that the Assistant Commissioner has rejected the refund on the following grounds:
(i) Refund of Rs. 2,97,362/- was rejected as no documentary proof for payment of excess duty was submitted. Refund for this amount was also rejected on the ground that the proceedings confirmation of demand of Rs.2,97,362/- had attained finality as party appealed against the O-I-A No. 23/AKG/GGN/04. Thus the refund of Rs. 2,97,362/- was also rejected on limitation.
(ii) Refund of Rs. 25,38,903/- was rejected because central excise duty has been paid only once and no excess duty was paid.
(iii) The refund was also rejected on the ground that it was not clear from the submission of the claimant under which provision of Central Excise Law, they had asked for refund of Modvat Credit of capital goods. (para 16.12 of Order-in-Original)
6. Adjudicating Authority has given no finding on the aspect of unjust enrichment.
7. From the order of the First Appellate Authority, it is evident that the grounds on which the refund was rejected have not been fully examined by the First Appellate Authority. The First Appellate Authority has examined the ground of limitation and unjust enrichment. However, he has given no findings on the main grounds of rejection by the Adjudicating Authority that no excess duty had been paid by the respondent, substantive requirements of Section 11B of the Act are not met and lack of provision for grant of refund of Modvat credit of capital goods.
8. The matter, therefore, requires to be re-examined thoroughly by the Commissioner (Appeals), who should pass a fresh order after examining various grounds of rejection by the Adjudicating Authority and give specific findings on each of them. Needless to say that the parties will be given adequate opportunity to defend their case.
9. The appeal is allowed by way of remand on the above terms.
(Order pronounced in the court on 05.12.2016) Devender Singh Member (Technical) RAS 5 E/3745/2010 - CHD