Custom, Excise & Service Tax Tribunal
M/S Rochem Separation Systems (I) Pvt. ... vs Commissioner Of Central Excise, ... on 12 April, 2012
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. I Application No. E/S/1917 & 1918/11 in Appeal No. E/1670 & 1671/11 (Arising out of Order-in-Original No. 1/2011 dated 30.8.2011 passed by the Commissioner of Central Excise, Thane-II). For approval and signature: Honble Shri S.S. Kang, Vice-President Honble Shri Sahab Singh, Member (Technical) ======================================================
1. Whether Press Reporters may be allowed to see : No 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 : No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair copy : of the order? 4. Whether order is to be circulated to the Departmental : Yes authorities? ====================================================== M/s Rochem Separation Systems (I) Pvt. Ltd. Appellant Vs. Commissioner of Central Excise, Thane-II Respondent Appearance: Shri Prakash Shah, Advocate for Appellant Shri Y.K. Agarwal, Addl. Commissioner (A.R.) for Respondent CORAM: SHRI S.S. KANG, VICE-PRESIDENT SHRI SAHAB SINGH, MEMBER (TECHNICAL) Date of Hearing: 12.04.2012 Date of Decision: 12.04.2012 ORDER NO. Per: Shri S.S. Kang, Vice President Heard both sides.
2. Applicant filed this application for wavier of pre-deposit of duty of Rs.2,09,34,411/-, interest and penalty. Demand is confirmed in view of the provisions of Rule 6(3)(b) of the Cenvat Credit Rules on the ground that the applicants were availing input service credit in respect of common input services and the same were used in the manufacture of excisable as well as exempted goods during the period from March, 2005 to November, 2008.
3. The contention of the applicant is that provisions of Rule 6 were retrospectively amended by Section 73 of the Finance Act, 2010 and as per the provisions of retrospective amendment in case where the manufacturer is availing credit in respect of the common inputs common input services and the same are being used in exempted as well as excisable goods, the manufacturer has to reverse the credit attributed to the exempted goods and for the past period an option was given to file a declaration reversing the credit alongwith interest to the Commissioner of Central Excise. In pursuance of the provisions of Section 73 of the Finance Act, 2010, the applicant filed a declaration on 15.10.2010 after reversing the credit of Rs.2,91,696/- alongwith interest on the ground that this amount is attributed to the credit in respect of taxable services used in or in relation to manufacture of the exempted goods.
4. The contention of the applicant is that a show-cause notice was issued demanding duty of Rs. 2,09,34,411/- in view of the provisions of Rule 6(3)(b) of the Cenvat Credit Rules on the ground that the applicant had availed the credit in respect of the common input services which are used in or in relation to manufactured of excisable goods and exempted goods.
5. The Commissioner of Central Excise rejected the declaration filed under Section 73 of the Finance Act on the ground that the applicant had not correctly reversed the credit attributable to input services used in or in relation to manufacture of the exempted goods. The contention of the applicant is that as per provisions of Section 73 of the Finance Act the Commissioner of Central Excise on receipt of application in respect of reversal of credit attributable to the common input services used in or in relation of manufacture of exempted goods can verify the correctness of the amount paid within a period of two months from the date of filing of declaration and in case it is found that the amount paid is less, the Commissioner of Central Excise can direct the applicant to pay the differential amount which was to be paid within 10 days from the date of communication from the Commissioner of Central Excise in this regard.
6. The contention of the applicant is that the Commissioner of Central Excise rejected their declaration without calling upon the applicant to make the case justified. Consequently the Commissioner of Central Excise also confirmed the demand in view of the provisions of Rule 6(3)(b) in respect of the show-cause notice already issued.
7. The contention is that the rejection of the declaration filed under Section 73 of the Finance Act is not sustainable as the Commissioner of Central Excise has no power to reject the declaration. The Commissioner of Central Excise, in case the amount has not been paid correctly, has to call the assessee and convey the exact amount required to be reversed. In this situation, the rejection of the declaration is not sustainable and the consequential demand in pursuance of the show-cause notice is also not sustainable.
8. It is also submitted by the learned Advocate that verification was conducted in pursuance of the declaration filed and as per the report of the Dy. Commissioner, the applicant was required to reverse the credit of Rs.8,61,411/- only attributable to the input services used in or in relation to manufacture of the exempted goods. Hence the demand is not sustainable.
9. The Revenue relied upon the evidences of the lower authority to submit that the applicant has not disclosed the true facts and circumstances, therefore, it is rightly rejected the declaration. The declaration was rejected on the ground that the applicant has not maintained separate record on the taxable services used in or in relation to manufacture of the excisable goods. Hence, the demand is rightly made.
10. We find that the demand is confirmed under Rule 6(3)(b) of Cenvat Credit Rules on the ground that applicant availed CENVAT Credit in respect of the common input services which were used in or in relation to manufacture of exempted and excisable goods. As per the provisions of Section 73 of the Finance Act, 2010, for the previous period the assessee has to file a declaration showing the reversal of credit along with interest attributable to the credit in respect of inputs used in the manufacture of the exempted goods. The applicant filed necessary declaration and reversed the credit of Rs.2,91,696/- along with interest. The Commissioner of Central Excise has to, on receipt of an application under sub-section (2), verify the correctness of the amount paid within a period of two months from the date of receipt of the declaration and in case the amount so paid is found to be less than the amount payable, the Commissioner has to call upon the applicant to pay the differential amount along with interest, which shall be paid within a period ten days from the date of receipt of the communication from the Commissioner in this regard.
11. In the present case, the declaration filed by the applicant was rejected without affording an opportunity of hearing to the applicant. Further, we find that as per the provisions of Section 73 of Finance Act, 2010 in case the amount so paid is found to be less that the amount payable, the Commissioner has to call upon the assessee to pay the differential amount along with interest. From the order passed on the declaration, we find that the applicant has deposited an amount of Rs.2,91,696/- whereas during the period in question, the applicant claimed credit of Rs.20,97,979/- in respect of the common input services used in or in relation to manufacture of the goods. The verification report of the Dy. Commissioner of Central Excise show that the applicant requires to reverse the credit of Rs.8,61,411/- attributable to the input services used in or in relation to manufacture of the exempted goods.
12. In view of the above, we find merit in the contention of the applicant that the rejection of the declaration filed under provisions of Section 73 of the Finance Act, 2010 is not sustainable. From the record, we find that as per verification reported conducted by the Dy. Commissioner, the applicant is liable to reverse the credit of Rs.8,61,411/- and applicant had reversed the credit of Rs.2,91,696/- only. In these circumstances, the applicant is directed to deposit the amount as per the verification report (deducting the amount already deposited) within four weeks and on deposit of the above mentioned amount, the pre-deposit of the balance amount shall stand waived and recovery thereof stayed.
13. As noted above, the order rejecting the application under Section 73 of the Finance Act, 2010 is not sustainable, therefore, the impugned orders rejecting the application as well as demanding duty in view of the provisions of Rule 6(3)(b) of the Cenvat Credit Rules are set aside and the matter is remanded to the jurisdictional Commissioner of Central Excise for de novo adjudication after affording reasonable opportunity of hearing to the appellant.
14. The appeals are allowed by way of remand.
(Dictated and pronounced in open Court)
(Sahab Singh) (S.S. Kang)
Member (Technical) Vice-President
Sinha/
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