Custom, Excise & Service Tax Tribunal
M/S.Samtel India Ltd vs C.C.E., Jaipur-I on 22 March, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.2, R.K. PURAM, NEW DELHI-110066
BENCH-DB
COURT III
Excise Appeal No.E/164/2005-EX [DB]
[Arising out of Order-in-Appeal No.323/CE/JPR-I/2004 dated 15.10.2004 passed by the Commissioner (Appeals), Central Excise, Jaipur-I]
For approval and signature:
HONBLE MR. S.K. MOHANTY, MEMBER (JUDICIAL)
HONBLE MR. B.RAVICHANDRAN, MEMBER (TECHNICAL)
1
Whether Press Reporters may be allowed to see 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 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 authorities?
M/s.Samtel India Ltd. Appellant
Vs.
C.C.E., Jaipur-I Respondent
Present for the Appellant : Shri.Bimal Jain, Advocate
Present for the Respondent: Shri.S.Namthuk, J.C.D.R.
Coram: HONBLE MR. S.K. MOHANTY, MEMBER (JUDICIAL)
HONBLE MR. B.RAVICHANDRAN, MEMBER (TECHNICAL)
Date of Hearing : 22.02.2016
Date of Pronouncement: 22.03.2016
FINAL ORDER NO. 51051/2016
PER: B.RAVICHANDRAN
The present appeal is against order dated 15.10.2004 of Commissioner (Appeals)-I, Jaipur. In the said order, the Commissioner (Appeals) upheld the Original Order dated 24.05.2004 passed by Dy. Commissioner, Biwadi rejecting the claim for refund of Rs.227.20 Lakhs filed by the appellant.
2. The brief facts of the case are that the appellants were engaged in the manufacture of black and white T.V. Picture Tubes of various sizes falling under tariff Heading 8540.12 of the Schedule to the Central Excise Tariff. They were availing credit of duty paid on various inputs used in the manufacture of these picture tubes. There were about 31 such inputs the credit on which were availed by the appellant under the then Rule 57 A of the Central Excise Rules, 1944. Out of these 31 inputs, except 2 inputs others are common for all types of picture tubes. Two inputs, namely, electron gun and gas shell are specific to the size of the picture tube. The appellants maintained consolidated RG-23 A, Part-II Accounts for all the screen sizes. They utilized the credit earned on inputs which are used in the manufacture of picture tubes of size 14 inch or less towards payment of duty on clearance of picture tubes of 17 inches and 20 inches. The Department entertained a view that such credit availed on inputs for picture tube size of 14 inch or less cannot be utilized for payment of duty on the picture tubes of 17 inch and 20 inch size. Accordingly, proceedings were initiated to recover such wrong utilization of credits during the period 01.03.1994 to 15.03.1995. Four show cause notices were issued for a total amount of Rs.4,19,33,605. When the matter was pending adjudication the appellants on their own calculated the amount covered towards the allegation made by the Revenue and paid an amount of Rs.2,27,20,000/- through their PLA, in two installments of Rs.1.00 Crore on 03.08.1995 and Rs.1,27,20,000/- on 07.08.1995. Simultaneously they took credit of the said amounts in their RG-23 A part II Accounts on 03.08.1995 and 07.08.1995. Another show cause notice dated 18.01.1996 was issued to the appellants against such suo moto availment of credit of the amounts paid through PLA. All these five show cause notices were taken up together for adjudication. The Asstt. Commissioner of Central Excise, Biwadi vide his order dated 27.09.1996 confirmed a demand of Rs.3,84,97,707 in terms of Rule 57-I of the Central Excise Rules, 1944. He imposed penalty of Rs.5.00 Lakhs. Regarding suo moto credit of Rs.2,27,20,000/-, the Original Authority held that since this is part of the total demand confirmed there is no need to disallow the said credit separately.
3. The appellant filed appeal against the above order and the Commissioner (Appeals), Jaipur vide his order dated 31.01.1997 rejected the appeal. A further appeal was preferred before the Tribunal. The Tribunal vide final order dated 12.06.1998 remanded the matter to the Commissioner (Appeals) for a fresh decision. Again the Commissioner (Appeals) vide his order dated 08.11.2000 upheld the original order and rejected the appellants appeal. Against the denovo order of Commissioner (Appeals) the appellant filed appeal before the Tribunal.
4. The Tribunal vide their final order dated 19.04.2002 held that appellants are eligible to utilize modvat credit taken on glass shell, electron gun which are inputs for the manufacture of 14 inch picture tubes for discharging the duty on 17 inch and 20 inch picture tubes. The Tribunal further held regarding prayer for refund, that the matter requires recalculation by the adjudicating authority. The Tribunal remanded the matter to the adjudicating authority only for the purpose of recalculation of the amount of credit lapsed, the period concerned and the quantum of refund, if any, due to the appellant in the light of relevant rules.
5. Here it is necessary to record another change in statutory provisions. With effect from 01.03.1997 a new Rule 57 F (17) was introduced which stipulated that any credit on specified duty lying unutilized on the first day of March, 1997 with the manufacture of black and white picture tubes will lapse.
6. In pursuance of Tribunals final order dated 19.4.2002 the appellant filed an application on 03.06.2002 for refund of Rs.227.20 Lakhs. The Original Authority examined the claim and rejected the same.
7. On appeal vide the impugned order the ld. Commissioner (Appeals) upheld the Original Order and rejected the appeal. Aggrieved by this order the appellant filed the present appeal.
8. Meanwhile the Revenue filed a reference petition No.6/2002 before the Honble High Court of Rajasthan challenging the Tribunals order dated 19.04.2002. The Honble High Court vide order dated 17.02.2003 directed the Tribunal to submit the statement of facts in regard to two questions framed for decision by the High Court. The present appeal was listed for hearing on various occasions from 2009 onwards. The Revenue submitted that the connected matter on merit was pending in reference petition with the Honble High Court. It is relevant to note the proceedings at the time of hearing of this appeal on various dates in this Tribunal. On 13.10.2010 the matter was heard for a considerable time and the Departmental Representative requested for adjournment to seek further instructions. The Tribunal directed the respondent to file an affidavit of a responsible officer giving details about the credit which was availed by the appellants during the period from 01.08.1995 to December, 1995 in terms of entries in RG-23 A part II Register 2 and the total balance which was available on 31.12.1995.
9. On 20.04.2011 again the matter was heard extensively. The ld. D.R. mentioned regarding pendency of reference petition. The Registry was directed to ascertain the present status of reference. Again on 13.03.2013 the Tribunal directed to report the status of the reference petition reported pending in the Honble High Court. There after also the matter was listed on many occasions. Again on 18.06.2014 the case was adjourned for four weeks to enable the respective parties to ascertain whether the reference petition No.6/2002 is pending before the Honble High Court of Rajasthan. On 01.10.2014 the Tribunal recorded the submission made by the A.R. on behalf of the Revenue to the effect that the reference petition is still pending consideration before the Honble High Court. On 23.01.2015 the Registry was again directed to ascertain the status of the reference petition and also as to the said reference has been sent to High Court or not. The Registry was also directed to give copy of Revenues reference application alongwith orders of the High Court dated 17.02.2003 to the Counsel for the appellant. On 12.03.2015 the Tribunal recorded the submission made by Joint C.D.R. on behalf of Revenue that the Honble High Court has not passed any order deciding the question of law referred to by the Tribunal. It was submitted that the statement of the case has not been received by the High Court. It was also noted that as per records of the Registry of the Tribunal, the statement of the case has been dispatched to the Registrar of High Court at Jaipur on 01.07.2004. Since as per Commissioners statement the case has not been received by the High Court, the Registry was directed to send the statement of fact again to Jaipur Bench of the Honble Rajasthan High Court.
10. On 28.10.2015 when the case was listed the Tribunal passed an interim order giving the developments in the case so far. It was submitted in the Court that the said reference petition was registered as E.G.C.R. No.9/2004 and the same was listed before the High Court on 02.12.2008. The Honble High Court vide order dated 02.12.2008 granted three weeks time to the Department as a last opportunity to file paper-book and stated that in default to file the same, the reference petition will be treated as dismissed for non-prosecution. It is seen that the Revenue failed to file the paper-book and their reference petition was dismissed on 05.02.2009.
11. From the above narration, it is apparent that the status of the reference petition which was dismissed on 05.02.2009 was not correctly informed to the Tribunal on various occasions when this appeal was posted for hearing. On 03.09.2015 when this appeal was posted for hearing ld. A.R. submitted a letter dated 29.08.2013 written by Additional Commissioner to state that they are making efforts to file an application for restoration of their reference petition dismissed for non-prosecution. It was further informed on 28.10.2015 that the application for the restoration of reference petition has been filed and pending decisions in the Honble High Court. After going through the appeal records and the fact of submission of incorrect information by the Revenue repeatedly, the Tribunal observed that it is not proper to grant any more adjournment in the appeal. However, as a last chance the Revenue was directed to file an affidavit before the next date of hearing stating the status of the reference petition and also stating if there is any stay granted. In the absence of any stay order, it was made clear that this appeal will be proceeded without any further adjournment. A cost of Rs.5,000/- was ordered to be paid by the Revenue to the appellants.
12. On 05.02.2016 the case was again heard, The Tribunal noted that when the case was heard on 12.01.2016 the Revenue sought time to verify the cenvat account of the appellant. It was also informed that a team of officers are attending to the work and it was noted by the Tribunal on 05.02.2016 that in the past 25 days no progress has been reported. Revenue was given a final chance to file a report on verification of the cenvat account as directed earlier. On 22.02.2016 the ld. A.R. submitted a copy of letter dated 08.02.2016 issued by the Commissioner, Alwar to the Commissioner A.R intimating that as per admission of the appellant in their application before the CESTAT their balance credit has become nil in their RG 23 A part II Register as on 31.12.1995. Regarding the verification of cenvat credit accounts he reported that despite of strenuous efforts the old records could not be traced as the jurisdiction was changed many times and the office was relocated many times.
13. The above narration explains long delay in disposal of the appeal and ultimately the verification report called for from the Jurisdictional Commissioner could not be filed to assist the Tribunal.
14. We have heard both sides extensively and perused the appeal records.
15. On merit of the case regarding availability of credit of inputs and eligibility of such credit for discharging duty liability on all the final products, the matter has been settled in favour of the appellant. The Tribunal vide the final order dated 19.04.2002 directed the original authority to examine the claim of the appellant for refund of Rs.227.20 Lakhs. It is an admitted fact that the said amount has been paid by cash by the appellant during the pendency of adjudication of 4 show cause notices issued to them regarding ineligible utilization of modvat credit. The details have already been narrated earlier in this order. The amount debited in the PLA was immediately taken credit in the RG 23 A Part II Account by the appellant. It is this amount which is now claimed as a refund in view of a favourable order on merit by the Tribunal. Such refund has been denied by the original as well as first appellate authority on the ground that the amount of Rs.227.20 Lakhs taken as a re-credit in August, 1995 has been utilized by them for payment of duty and there was no amount available as on 31.12.1995 on this account. In other words, it was concluded by the lower authorities that credit of amount of RS.492.28 Lakhs which lapsed on 01.03.1997 in terms of newly introduced Rule 57 F (17) did not include the impugned amount of Rs.227.20 Lakhs. During the course of argument, the ld. Consultant for the appellant strongly contested the correctness of the assertion made by the Jurisdictional Commissioner that the appellant admitted that the balance of credit has become nil as on 31.12.1995. It was submitted that he appellants maintained 2 registers of RG 23 A Part II (Register I and 2) the details of these registers during the material period are as below:-
Register No.1 Register No.2 Total Opening balance as on August 1, 1995 157.69 Lacs Opening Balance as on August 1, 1995 624.63 Lacs 782.32 Lacs Credit taken during August 1995 to December, 1995 235.42 Lacs Credit taken during April 1995 to February, 1997 3578.03 Lacs 3813.45 Lacs Sub-total 4595.77 Lacs Credit utilized during August 1995 to December, 1995 393.11 Lacs Credit utilized during April 1995 to February, 1997 3710.38 Lacs 4103.49 Lacs Closing Balance as on December 31, 1995 Nil Closing Balance as on March 1, 1997 492.28 Lacs Net Balance as on 1-3-1997 Nil Closing Balance as on March 1, 1997 492.28 Lacs Net Balance as on 1-3-1997 492.28 Lacs
16. It was further submitted that though for convenience they maintained 2 registers, the bonafideness of these Registers were never in question. The appellants had all along during the material time had modvat credit balance of more than Rs.227.20 Lakhs since August, 1995 to February, 1997.
17. We find much force in the above contentions of the appellant.
18. The ld. A.R. on the other hand stated that in Register 1 the balance was nil as on 31.12.1995. It is in this register the re-credit of the impugned amount was entered. As such, he claimed that it cannot be said that the credit amount lapsed as on 01.03.1997, which is as per register 2 can be said to have included the said amount.
19. In this connection, it is to be noted that the existence of bonafideness of the two registers has never been disputed by the Department from the beginning. In fact the Original Authority while deciding the demand notices categorically recorded as below:-
It has been further verified that the balance of RG-23 A II since the date of credit till 6.9.96 (the date of PH) has not gone below Rs.227,20,000/-. This implies that even though the assessee took credit of Rs.227,20,000/- during August 1995, they have not utilized it. In this situation, since the demand for Rs.384,97,707/- has already been held liable for confirmation on account of wrong utilistion of credit and since this credit of Rs.227,20,000/- forms a part of that parent demand, there is no question of disallowing this credit again..
20. The above observation was reported in the Appellate Order dated 08.11.2000 also. Hence we find that the present comment given by the Jurisdictional Commissioner regarding nil credit balance as on 31.12.1995 is factually incorrect and is contradictory to the earlier findings recorded by the adjudicating authority and the appellate authority. It is to be further noted that the jurisdictional officers have been given ample opportunity of many occasions to file an affidavit specifically stating the factual position in support of the claim regarding credit availed by the appellant, their utilization and balance available on the relevant dates. We note that no such affidavit could be filed by the Revenue and finally it has been submitted that the records could not be located because of change of jurisdiction and relocation of office etc.
21. As already noted the claim for refund in the present case arose consequent on a favourable finding by the Tribunal vide the final order dated 19.04.2002. The findings in the impugned order only focused on the credit balance in register-1 of RG 23 A part II without any reference to register No.2 which contained a balance of Rs.492.28 Lakhs. The finding is that this amount which is to lapse on 01.03.1997 does not include the amount now claimed as refund. This apparently is contrary to the earlier findings of the original and appellate authority at the time of disallowing the credit as discussed above. We have also perused the details submitted by the appellant vide their letter dated 04.01.2002 to the Jurisdictional Deputy Commissioner. The appellants in pursuance of the direction of the Tribunal on 27.11.2001 submitted statement showing daily balance of RG 23 A part II for the period 01.08.1995 to 01.03.1997. According to the statement the amount of modvat credit available was never below Rs.227.20 Lacs. As noted earlier, specific comments were called for from the jurisdictional office on this verification. After repeated adjournments and interim orders, the Jurisdictional Commissioner now reported that the documents are not available and could not be traced. We note that the relief which was granted by the final order dated 19.04.2002 of the Tribunal regarding refund could not be given effect till date. The direction was only to verify the various factual details as per the records and to sanction the refund, if any, to the appellant. As already noted the findings of the lower authorities in pursuance of these directions are not categorical and are in fact contradictory to the earlier findings by the original and appellate authorities while deciding the demand cases. Considering the submissions in writing made by the appellant as well as the appeal records, we find that the appellant has made out a case for refund of the amount paid by them in cash through PLA debit and taken re-credit immediately during the pendency of first round of adjudication. It is also established that they had all along modvat credit balance much higher than Rs.227.20 Lakhs, when both the credit registers were taken together as such we find they are eligible for the consequential relief of refund of this amount. The Consultant for the appellant also prayed for refund of the said amount with interest. We find the provision to pay interest has been introduced in the law only from 26.05.1995 vide Section 11BB of the Central Excise Act, 1944. Interest entitlement will be due from three months after the introduction of the provisions for payment of interest in the Act.
22. In view of the above analysis and discussions, we set aside the impugned order and allow the appeal with consequential relief as stated.
(Pronounced in the open Court on 22.03.2016)
(B.RAVICHANDRAN) (S.K. MOHANTY)
MEMBER (TECHNICAL) MEMBER (JUDICIAL)
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E/164/2005-EX [DB]