Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise vs M/S. International Cylinders Pvt. Ltd on 31 January, 2014
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
PRINCIPAL BENCH, COURT NO. III
Excise Appeal No . 2434 of 2011-SM
[Arising out of Order-In-Appeal No. 267/CE/CHD-I/2011 dated 15.7.2011 passed by Commissioner of Central Excise (Appeals ), Chandigarh ]
For approval and signature:
Honble Ms. Archana Wadhwa, Member (Judicial)
1
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
Yes
3
Whether Their Lordships wish to see the fair copy of the Order?
Seen
4
Whether Order is to be circulated to the Departmental authorities?
Yes
Commissioner of Central Excise. Appellants
Chandigarh
Vs.
M/s. International Cylinders Pvt. Ltd. Respondent,
Appearance:
Shri U K Srivastava, AR for the Appellants
None for the Respondent
Date of Hearing /Decision: 31.1.2014
ORDER NO . FO/ 50766 /2014-SM(Br)
Per Ms. Archana Wadhwa:
Being aggrieved with the order passed by Commissioner (Appeals), Revenue has filed the present appeal. I have heard Shri U K Srivastava, learned DR appearing for the revenue. Nobody appeared for the respondent.
2. The respondents are engaged in the manufacture of Metal containers LPG Cylinders and component of LPG cylinders waste and scrap of iron and steel. The appellant opted for exemption notification No. 50/2003 dated 10.6.03 for exemption from payment of duty with effect from 28.11.03.
3. In view of the above claim of respondents, they were advised by their Central Excise officers to reverse the credit of Rs. 9,29,288/- involved in the stock of final product, semi- finished goods and raw materials lying as such in their stock as on 28.11.03. The same was reversed by the respondents under protest. Subsequently, they filed the refund claim of the amount so revered by them on the ground that they were not required to reverse the same.
4. The original adjudicating authority rejected the refund claim of the appellant. However, on appeal, Commissioner (Appeals) took note of various Larger Bench decision of the Tribunal holding that on claiming exemption, the assessee is required to reverse the credit in respect of the goods lying in stock. Reference was made to the decision in the case of HMT vs. CCE Panchkula as reported in [2008 (89) RLT 558]; Ashok Iron and Steel Fabricators [2002 (140) ELT 277 (T-LB)] as confirmed by Honble Supreme Court as reported in [2003 (156) ELT A 212 (SC)]. Accordingly he allowed the appeal.
Hence, the present appeal by the Revenue.
5. For better appreciation of the reasons adopted by Commissioner (Appeals) for setting aside the impugned order of the original adjudicating authority, the relevant paragraphs from his order is reproduced below:-
Having regard to the above provisions of CCR-02 and CCR-04, I have no doubt in my mind that:
(i) The appellant had done nothing wrong in taking credit of duty on the inputs lying in stock or in process or contained in the final products lying in stock with them as on 28.11.2003, when they opted for full exemption under notification no. 50/2003-CE dated 10.6.2003. Rule 6(1) had no application to their case since they had not taken credit of duty on such inputs on or after 28.11.2003 i.e. after opting for the exemption.
(ii) The appellant were under no obligation to reverse the said Cenvat credit already taken. Rule 9(2) of the CCR-02, the only Rule providing for reversal as on 28.11.2003, was inapplicable to their case since the exemption they had opted for, was not under a notification based on the value or quantity of annual clearances.
(iii) The only provision of law which called for reversal of such credit in the circumstances the appellant was, was under Rule 11(3) of the CCR04. However, that rule was inserted only wef 01.03.2007. This rule could not applied retrospectively to demand reversal of credit taken days back before 28.11.2003.
10. These views are further fortified by the decision of the Honble High Court of Himachal Pradesh in the case of CCE, Chandigarh vs. Saboo Alloys Pvt. Ltd. reported as [2010 (249) ELT 0519 (HP), in which it has been held that even though the final product may be exempt from payment of excise, the assessee cannot be asked to reverse the Modvat credit already taken by it. Although the Principal Bench of the Honble CESTAT has held in the case of Ranbaxy Labs Ltd. vs. CCE Chandigarh reported as [2010 (253) ELT 578 (Tri-Del), that the Cenvat credit availed on the inputs, in stock on the day the assessee opts for exemption from payment of duty under Notification No.50/03 dated 10.6.2003, was required to be reversed, the decision of Honble High Court of Himachal Pradesh in Saboo Alloys case takes procedure over the Honble CESTAT decision.
11. Thus as per the law, as it stood during the relevant time, the appellant was neither required to reverse the credit, nor could he utilize the same. The unutilized credit could remain unutilized in their books of account.
12. This brings me to the second issue of eligibility of the appellant for refund of the amount already reversed by them. As noted in para 2 supra, the appellant had paid / reversed an amount of Rs. 9,29,288/- which was attributable to the duty paid on inputs lying in stock or to the semi-finished or finished goods lying in stock as on 28.11.2003, i.e. the day on which they had opted for full exemption from duty under notification No. 50/2003 dated 10.6.2003, I have already held in this connection that:
(i) the appellant were not required to revese the amount they had reversed; and
(ii) the amount of credit already taken on inputs lying in stock or in semi finished / finished goods could at best remain unutilized in the books of account of the appellant.
13. It, therefore, follows that the appellant are indeed entitled to the refund of the said amount of Rs.9,29,288/-, if otherwise in order. Further, this amount otherwise refundable, is to be refunded only by way of recredit to their Cenvat account as it pertained to the duty paid on the inputs lying in stock or in process or contained in final products lying in stock with the appellant as on 28.11.2003. This amount cannot be refunded to the appellant in cash.
6. The Revenue in their grounds of appeal have nowhere contended how the said decisions relied upon by the appellate authority were not applicable to the facts of the instant case. They have made reference to the Tribunals decision in the case of Albert David Ltd. vs. CCE, Meerut [2003 (151) ELT 443 (Tri-Del)] as confirmed by Apex Court reported as [2003 (158) ELT A 273 (SC)]. However, I find that said decisions have been taken note of subsequent decision of the Larger Bench. Further, the contention of the Revenue that the Tribunals decision in the case of M/s. Ranbaxy Lab Ltd. vs. CCE, Chandigarh [2010 (253) ELT 578 (Tri-Del)] have not been accepted by the Revenue and an appeal thereagainst is pending before Punjab and Haryana High Court cannot be appreciated inasmuch as there is no stay of operation of the Tribunals order by the Honble High Court . It stands accepted by the Revenue in their ground of appeals that the decision of Honble High Court of Himachal Pradesh in the case of CCE Chandigarh vs. Saboo Alloys Pvt. Ltd. [2010 (249) ELT 519 (HP)] has been accepted by them inasmuch as the amount of duty was low.
7. In view of the foregoing discussions, I find that the appellate authority was justified in following the Larger Bench decision as also the decision of Honble Himachal Pradesh High Court in the case of Saboo Alloys Pvt. Ltd. No infirmity can be found in the impugned order of Commissioner (Appeals). Accordingly, Revenues appeal is rejected.
(operative part of the order pronounced in the open Court )
( Archana Wadhwa ) Member(Judicial)
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