Custom, Excise & Service Tax Tribunal
Mahindra &Amp; Mahindra Ltd. vs Cce Mumbai - V on 6 November, 2018
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
APPEAL NO: E/1273/2009
[Arising out of Order-in-Original No: Order-in-Original No. 226/18/
V/2009/COMMR/ KS dated 28/08/2009 passed by the Commissioner
of Central Excise, Mumbai - V.]
For approval and signature:
Hon'ble Shri C J Mathew, Member (Technical)
Hon'ble Shri Ajay Sharma, Member (Judicial)
1. Whether Press Reporters may be allowed to see the
Order for publication as per Rule 27 of the : Yes
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of
CESTAT (Procedure) Rules, 1982 for publication : Yes
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy
: Seen
of the Order?
4. Whether Order is to be circulated to the
: Yes
Departmental authorities?
Mahindra & Mahindra Ltd. ... Appellant
versus
Commissioner of Central Excise
Mumbai - V ...Respondent
Appearance:
Shri Rajesh Ostwal, Advocate for appellant Shri AB Kulgod, Assistant Commissioner (AR) for respondent E/1273/2009 2 CORAM:
Hon'ble Shri C J Mathew, Member (Technical) Hon'ble Shri Ajay Sharma, Member (Judicial) Date of hearing: 12/07/2018 Date of decision: 06/11/2018 ORDER NO: A/ 87858/2018 Per: C J Mathew The dispute in this appeal of M/s Mahindra & Mahindra Ltd (FES) against order-in-original no. 226/18/V/2009/COMMR/KS dated 28th August 2009 of Commissioner of Central Excise, Mumbai-V pertains to availment of CENVAT credit of ₹ 64,56,066 of education cess paid on inputs procured by them in 2005-06 and 2006-07. Under challenge is the confirmation of demand of the CENVAT credit availed, along with interest thereon, and the imposition of penalty under rule 15 of CENVAT Credit Rules, 2004. The claim of the appellant is that they are not manufacturers of 'exempt goods' as they are required to discharge automobile cess and education cess.
However, the adjudicating authority has held that this claim is not maintainable as, by their own admission, the appellant had stopped availing CENVAT credit on inputs after insertion of Explanation III in rule 6(3) of CENVAT Credit Rules, 2004 with effect from 16 th May 2005 and had reversed the credit of duty availed of inputs till 1 June E/1273/2009 3 2005.
2. Learned Counsel for appellant admits that the goods manufactured by them are not liable to basic excise duty or any additional duty. Relying upon the provisions of The Industries (Development and Regulation) Act, 1951 for imposition of cess, viz., '9. Imposition of cess on scheduled industries in certain cases-(1) There may be levied and collected as a cess for the purposes of this Act on all goods manufactured or produced in such scheduled industries as may be specified in this behalf by the Central Government notified order the duty of excise at such rate as may be specified in the order...' and the decision of the Hon'ble High Court of Karnataka in TVS Motor Co Ltd v. Union of India [2015 (323) ELT 57 (Kar)] to the effect that '24. Thus, it would indicate that the phrase "duties of excise" and "duty of excise" were used interchangeably namely sometimes and plural and sometimes and singular i.e., prior to 12-5-2000. However, said phraseology came to be substituted by phrase viz., 'Cenvat' with effect from 12-5- 2000. In order to overcome the difficulty of replacing these words on entire Central Excise Act, 1944, Section 2A was introduced with effect from 12-5-2000 by Finance Act, 10/2000 whereunder expression "duty", "duties", "duty of excise" and "duties of excise" was to be construed to include a reference to "Central Value Added Tax (Cenvat)". Thus, intention of the legislature is clear and unambiguous and the purpose of introduction of Section 2A was twofold viz., E/1273/2009 4
(i) To minimise the amendments to be carried out in entire Central Excise Act, 1944 by replacing the phrases earlier used in the Act with the words 'Cenvat', and
(ii) Not to create any distinction between various phrases used in Central Excise Act, 1944.
Thus, it would clearly indicate that there can be no distinction between the phrases 'duty', 'duties', and "duty of excise" and "duties of excise".' when construed harmoniously with the statutory provision supra would exclude them from coverage as manufacturers of 'exempted goods.'
3. Learned Authorised Representative relies upon the letter of appellant referred to in the impugned order admitting to the ineligibility for availment of CENVAT credit from 16 th May 2005 with insertion of Explanation III in rule 6 (3) of CENVAT Credit Rules, 2004. He also drew attention to the finding of the adjudicating authority that the education cess discharged by them was of their own accord even and despite such liability did not devolve upon them; it is his contention that such assumption of liability would not entitle them to availment of CENVAT credit in the absence of authority of law to do so.
4. Though the Learned Counsel for appellant attempts to convince E/1273/2009 5 that the decision of the Tribunal against them in Mahindra & Mahindra Ltd v. Commissioner of Central Excise, Mumbai [2007 (211) ELT 481 (Tri-Mumbai)] is in jeopardy owing to admission of the appeal in Hon'ble High Court of Bombay, we are not entirely convinced of our inability to rely upon the decision. It is Revenue which is in appeal against that order of the Tribunal and, thereby, restricting the scope of any reversal to that which was detrimental to Revenue. The finding of the Tribunal that reference to 'duty of excise' in any other law, even if deemed to be 'duty' for the purposes of Central Excise Act, 1944, does not extend to CENVAT Credit Rules, 2004, which has been established as the machinery provision for eliminating the cascading effects of taxation, would continue to guide us till set aside by appropriate superior court.
5. In view of the above, and as the decision in re TVS Motor Ltd was in response to a writ petition challenging the denial of refund of such cess on goods exported which is on an entirely different footing from the issue before us, we have no hesitation in respectfully following the earlier decision of the Tribunal in re Mahindra & Mahindra Ltd to hold that the appellant is ineligible to avail CENVAT credit. To consider the cess discharged by the appellant under another law to which CENVAT Credit Rules, 2004 does not apply, or coverage therein by self-inflicted burden of duty, despite escapement under law, would be a construction that negates the entire scheme of E/1273/2009 6 CENVAT credit. Accordingly, the erasure of CENVAT credit in the impugned order cannot be faulted. Interest liability in accordance with law, would be applicable.
6. The question that remains to be answered is the liability to penalty under rule 25 and rule 26 of CENVAT Credit Rules, 2004. It is not controverted that the credit so availed has been utilised for any purpose. Moreover, it was only with the insertion of Explanation III in rule 6(3) of CENVAT Credit Rules, 2004 that the ineligibility became unambiguously clear. The existence of various decisions in relation to the interpretation of 'duty' and 'duties' supports the submission of Learned Counsel that the issue was not free of doubt. In the circumstances, the availment of credit should not be viewed through the prism of attempted evasion or to seek undue benefit and we are of the opinion that the imposition of penalty is not warranted.
7. Subject to this modification of setting aside of penalty, the impugned order is sustained. Appeal is accordingly disposed off.
(Pronounced in Court on 06/11/2018)
(Ajay Sharma) (C J Mathew)
Member (Judicial) Member (Technical)
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