Custom, Excise & Service Tax Tribunal
M/S. Midas Care Pharmaceuticals Pvt. ... vs Commissioner Of Central Excise & ... on 21 February, 2008
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. APPEAL NO. E/1459/07 (Arising out of Order-in-Appeal No. RKR(135)13/2007 dtd.18.7.2007 passed by the Commissioner (Appeals) Central Excise & Customs, Aurangabad. For approval and signature: Hon'ble Shri M. V. Ravindran, 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? 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. Midas Care Pharmaceuticals Pvt. Ltd. : Appellant VS Commissioner of Central Excise & Customs, Aurangabad Respondent Appearance Shri N.J.Ansari, G.M. Finance & Accountance for Appellant Shri S.G. Dewalwar, Authorized Representative (SDR) CORAM: Shri M. V. Ravindran, Member (Judicial) Date of decision 21/02/08 ORDER NO.................................................... Per : Shri M. V. Ravindran, Member (Judicial) This appeal is directed against the Order-in-Appeal No. RKR(135)13/2007 dtd.18.7.2007. Vide which the Ld. Commissioner (Appeals) has set aside the order-in-original, which dropped the proceedings initiated by the show cause notice in respect of the amount of interest chargeable from the current appellant. 2. Heard both sides and perused the records. 3. The relevant facts in this case the appellant availed cenvat credit of Rs.8,88,599/- and Rs.375/- as Education Cess. On checking of the record on their own the appellant noticed that they had availed credit, which is not eligible to them and reversed the same on 10.4.05 and 28.4.05 and intimated the jurisdictional Superintendent about the same. Subsequently, on 25.11.2005 the office of Assistant Commissioner of Central Excise issued a show cause notice demanding and interest of Rs. 93,345/- also seeking impose penalty on the appellant. The adjudicating authority after considering the entire issue came to the following conclusion:- "I have also perused the copy of statement showing the balance in Cenvat Credit submitted by the assessee during the period April 04 to April 05 the assessee has maintained cenvat credit balance more than Rs. 30 lakhs. I have noticed that the excess credit is not utilize so availed by by them therefore no loss of Govt. Revenue. However although assessee did not utilize the Cenvat Credit but assessee has taken the admissible cenvat credit and contravened the provisions of Cenvat Credit Rules, 2002/2004 and rendered themselves for penalty. Therefore I come to the conclusion that the demand for interest on excess cenvat credit availed is not sustainable. Accordingly I pass the following order: ORDER
I hereby drop the demand of interest amounting to Rs. 95,345/- under section 11AB of CEA 1944. But I impose a penalty of Rs.10,000/- on the assessee under Rule 13 of Cenvat Credit Rule".
Against the above said order of the adjudicating authority, the Revenue filed an appeal before the Ld Commissioner (Appeals). The Ld. Commissioner (Appeals) after hearing both sides came to the conclusion which is as under:-
"I have carefully gone through the records of this appeal, the written submissions of the appellant and respondent and in course of personal hearing. The case law cited by the appellant seeking relief from payment of interest amount vide 2004 (62) RLT 709 has since been set aside. Interest demand is maintainable as per provisions of law. The extent of penalty, however is brought down to Rs.5000/- only in this case as per the facts & circumstances of the case".
4. It is contended before me by the representative of the appellant that the issue of payment of interest on the amount, would not arise. He draws attention to the page 30 wherein the appellant has given the details of the balance of cenvat credit in the statutory records for the entire period i.e. April 2004 to April 2005. It is his submission that for the entire period the balance was almost the tune of Rs. 40 lakhs to Rs. 45 lakhs hence there was no utilization of the amount of Rs.8,85,597/-. He submits that the decision of the Punjab and Haryana High Court in the case of Commissioner of Central Excise, Delhi-III Vs. Maruti Udyog Limited as reported at [2007 (214) E.L.T. 173 (P & H)] would apply. It is also his submission that the said judgment of the High of P &H was carried in appeal to the Apex Court by the Revenue by Special Leave Petition and was dismissed by the Apex Court as reported at [2007 (214) ELT A50]. The Ld. SDR on the other hand would contend that the provisions of Section 11AB are mandatory. It is the submission, having taken the credit of ineligible credit and subsequently reversing the same would require the payment of the interest for the period during which the credit was taken by the appellant. He draws my attention to the provisions of Section 11AB of Central Excise Act, 1944. It is also his submission that both the adjudicating authority have held that the penalty is imposable on appellant, which would indicate that there is a contravention of the provisions of law. It his submission that once there is contravention of law, payment of interest arises. It is his submission that the balance as shown by the representative of the appellant does not indicate that they had not utilized the same.
5. On perusal of the records I find that there is no dispute as to the fact that the reversal of the ineligible credit of Rs.8,85,597/- and Rs.375/- as Education Cess, was done by the appellant themselves in April 2005. The said reversal was informed to the Range Officers vide letter dt.30.6.2005. It is also undisputed that the balance of the cenvat credit lying in the statutory records of the appellant for the period April 2004 to April 2005 at the end of every month was more than Rs. 35 lakhs. To my mind, the issue in this case is whether the interest is chargeable or not is squarely settled by the Hon'ble High Court of Punjab and Haryana decision in the case of Maruti Udyog Ltd. (Supra). Their Lordships were hearing an appeal filed by the Revenue against the Tribunal's judgment, which held that assessee is not liable to pay interest as the credit was taken as an entry in the modvat record and was infact not utilized. While dismissing the appeal filed by the Revenue, their Lordships held as under:-
"Learned Counsel for the appellant is unable to show as to how the interest will be required to be paid when in absence of availment of Modvat credit in fact, the assessee was not liable to pay any duty. The Tribunal has clearly recorded a finding that the assessee did not avail of the Modvat credit in fact and had only made an entry.
In view of this factual position, we are unable to hold that any substantial question of law arises".
I also note that the said judgment of the Hon'ble High Court has been upheld by the Hon'ble Supreme Court by dismissing the Special Leave Petition filed by the Commissioner of Central Excise Delhi -III.
6. It is also to be noticed that Ld. Commissioner (Appeals), while confirming that the interest demand is sustainable as per the provisions of law, has not given any reasoning, as to why such interest demand is sustainable.
7. Suffice to say that any order that enhances or fixes the liability on an assessee, has to be reasoned one. In the absence of any reason, the said order is unsustainable.
8. In view of the above reasoning, the impugned order to the extent it confirms the interest demand on the assessee is liable to struck down and I do so. Since the appellant has not filed any appeal against the imposition of penalty the penalty imposed by the Ld. Commissioner (Appeals) is correct and no interference is called for to that portion of the order.
9. In view of the above reasoning, the appeal filed by the appellant to the extent of setting aside the amount of the interest is allowed, and impugned order to that extent is set aside.
(M. V. Ravindran) Member (Judicial) Sm 4