Custom, Excise & Service Tax Tribunal
M/S. Aman Medical Products (P) Limited vs Commissioner Of Central Excise & S.T., ... on 18 September, 2015
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Zonal Bench, Ahmedabad Appeal No. : E/196/2010 (Arising out of OIA-AKP/111/DIVN/NDMN/DAMAN/2009-2010 dated 20.11.2009, passed by Commissioner (Appeals) Central Excise, & S.T., Daman) M/s. Aman Medical Products (P) Limited : Appellant (s) VERSUS Commissioner of Central Excise & S.T., Daman : Respondent (s)
Represented by :
For Appellant (s) : Shri S.J. Vyas, Advocate For Respondent (s) : Shri S.K. Shukla, Authorised Representative For approval and signature :
Mr. P.K. Das, Honble Member (Judicial) 1 Whether Press Reporter 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 CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
No 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 CORAM :
Mr. P.K. Das, Honble Member (Judicial) Date of Hearing / Decision : 18.09.2015 ORDER No. A/11327/2015 Dated 18.09.2015 Per : Mr. P.K. Das;
The relevant facts of the case, in brief, are that the appellants were engaged in the manufacture of Syringe classifiable under sub-heading No. 90183100 of the schedule to the Central Excise Tariff Act, 1985. They received parts and accessories of Syringe for manufacturing Syringe and availed CENVAT credit under Cenvat Credit Rules, 2004. A show cause notice dated 25.09.2008 was issued proposing demand of CENVAT credit of Rs. 19,68,918/- alongwith interest for the period 2004-05 to 2007-08. It has been alleged that the appellant availed CENVAT credit of Rs. 14,04,483/- on the parts and accessories which is nil rate of duty vide Notification No. 6/2002-CE dated 01.03.2002, as amended by Notification No. 26/2002-CE dated 27.04.2002 (Serial No. 223A of the table appended thereof), but the supplier of parts and accessories paid duty at 16% Adv. at the tariff rate of duty. It has been alleged that the parts and accessories are exempted and the supplier has erroneously paid the duty and therefore, the appellant is not eligible to avail CENVAT credit. There is denial of CENVAT credit of Rs. 5,64,435/- on the ground that the supplier paid the amount on exempted goods i.e. parts and accessories under Rule 6(3) of the Cenvat Credit Rules, 2004. It is stated that Rule 3 of the Rules 2004 permitted to avail credit on the duty and not the amount. The adjudicating authority confirmed the demand of duty alongwith interest and imposed penalty of equal amount.
2. The learned Advocate appearing on behalf of the appellant submits that the input supplier paid duty of Rs. 14,04,483/-, as evident from the invoices. The input supplier had not availed exemption and paid the duty and the credit is availed by the appellant and therefore, Rule 3 is clearly complied with. He relied upon the following decisions:-
(a) Commissioner vs. Purity Flexpack Limited 2008 (223) ELT 361 (Guj.)
(b) Neuland Lab Limited vs. CCE, Hyderabad 2015 (317) ELT 705 (Tri. Bang.)
(c) CCE, Chennai vs. CEGAT, Chennai 2006 (202) ELT 753 (Mad.)
(d) Balakrishna Industries Limited vs. CCE, Jaipur 2014 (309) ELT 354 (Tri. Del.)
(e) Oleofine Organics (India) Pvt. Limited vs. CCE, Thane-1 2014 (299) ELT 91 (Tri. Mumbai)
(f) Shakun Polymers Limited vs. CCE, Daman 2009 (241) ELT 250 (Tri. Ahmd.)
(g) V.G. Steel Industry vs. CCE 2012 (27) STR 94 (P&H)
3. He further submits that denial of CENVAT credit of Rs. 5,64,435/- cannot be sustained on merits as the Commissioner (Appeals) observed that the invoices would show Central Excise duty and therefore, it is covered under Rule 3 of the Cenvat Credit Rules, 2004. He further submits that the demand of the said amount is also barred by limitation. He submits that the invoices showing Central Excise duty and the appellant accordingly availed the credit. There is no suppression of facts with intent to evade payment of duty.
4. On the other hand, learned Authorised Representative on behalf of the Revenue submits that the parts and accessories are nil rate of duty by Notification No. 6/2002-CE (supra) so, the input supplier is not entitled to pay duty and the duty paid by them would not amount to Central Excise duty. He drew attention of the Bench to Rule 3 of the Rules 2004 to substantiate his contention that CENVAT credit would be eligible on the duty. Regarding the demand of Rs. 5,64,435/-, he submits that the appellants, prior to this period were manufacturing the parts and accessories and they were well aware that the goods were exempted. The amount as mentioned in the invoices would clearly show that it is not the duty but the amount was paid under Rule 6(3) of the Rules, 2004. He reiterates the findings of the Commissioner (Appeals).
5. After hearing both the sides and on perusal of the records, I find that there is no dispute that input supplier paid the Central Excise duty of Rs. 14,04,483/- instead of availing exemption notification. The appellant availed credit on the basis of invoices issued by the supplier. It is consistently viewed by the Honble High Court and the Tribunal that the jurisdictional officers of recipient of inputs have no authority for assessment of the duty paid by the input supplier. In the case of Commissioner vs. Purity Flexpack Limited (supra), it was a question before the Honble High Court as to whether or not the assessee is entitled for cenvat credit at the higher rate paid on inputs, for which manufacturer of inputs had not paid duty at the rate of 24% instead of 16%. The Honble High Court dismissed the appeal filed by the Revenue. Hence, the appellant is entitled to avail Cenvat credit of Rs. 14,04,483/-.
6. The denial of Cenvat credit of Rs. 5,64,435/-, there is no dispute that input supplier paid the amount under Rule 6(3) of the Cenvat Credit Rules, 2004. As per Rule 6 of the Rules, 2004, the manufacturer has been engaged in the manufacture of exempted goods and dutiable goods, cenvat credit was not to be allowed on such quantity of input or input services used in the manufacture of exempted goods. Rule 6 (3) of the said Rules provides that if the manufacturer of goods has not opted not to maintain separate accounts and follow the procedure as prescribed therein, the manufacturer of goods shall pay an amount of 5%/ 6%/ 10% of the value of exempted goods. Rule 3 of the Cenvat Credit Rules, provides that a manufacturer shall be allowed to take credit of the duty of excise and other duty as specified therein. It is clear from the Rules 2004 that Cenvat credit is to be allowed to the duties of excise and other duties as mentioned therein. It is also clear that the amount paid by the manufacturer of inputs in respect of exempted goods under Rule 6(3), is not duty. In the present case, the input supplier paid the amount under Rule 6(3) of the said Rules, but, they have shown in the invoices as Central Excise duty. According to the learned Advocate, the input supplier shown amount in the invoices as Central Excise duty, therefore, it can not be treated an amount under Rule 6(3). Learned Advocate also contested the demand of the said amount as barred by limitation. I am unable to accept the contention of the learned Advocate on merit as well as on limitation. The mere mentioning of Central Excise duty wrongly in the invoice by the input supplier, appellant is not entitled to take CENVAT credit. For proper appreciation of the case, the relevant portion of the findings of the Commissioner (Appeals) is reproduced below:-
12. From the above report of the Assistant commissioner it is clear that the relevant invoices clearly show payment towards central excise duty and not towards any amount deposited or reversed. In view of this can it be said that the appellants have exercised reasonable care before taking the credit on the strength of these invoices? The answer is obviously No! At the time of personal hearing the appellants have themselves submitted that up to 31.03.05 they were themselves manufacturing parts of syringes and clearing the same without payment of duty whereas the department has demanded reversal of credit at the rate 10% of the value of the parts under Rule 6(3) of the Cenvat Credit Rules 2004 (which requires that if an assessee manufactures both dutiable and exempted goods using common inputs and does not maintain separate records, it can take full credit of duty paid on inputs but will have to pay 10% on the value of the exempted goods at the time of their clearance from the factory). From 01.04.2005 onwards the appellants started paying duty on parts and accessories at the tariff rate of 16% which was also objected to by the department and demand was raised for payment of an amount of 10% of the value of the exempted parts and accessories. Thus, throughout the period of the present dispute, when the appellants were receiving parts and accessories syringes from out side suppliers, the appellants knew that those parts were fully exempt and, therefore, the amount shown as payment of excise duty towards 8% or 10% was actually payment of amount under Rule 6(3) of the Cenvat Credit Rules, 2004. Further, there was never any effective rate of duty at 10% adv on these parts and, therefore, in respect of invoices received form suppliers showing payment of central excise duty as 10%, the appellants should have clearly understood that it was not payment of central excise duty but payment of an amount on which no cenvat credit was available as the said amount is not duty. As such, the appellants did not exercise due care to ensure that what had been paid on the inputs was actually duty and not amounts under the Cenvat Credit Rules, 2004. They, therefore, cannot plead bonafide belief. This also establishes definite knowledge on the part of the appellants about the ineligibility of the credit which they illegally took with intent to evade duty by taking and utilizing irregular credit.
7. The main contention of the learned Advocate is that in both the cases, they have proceeded on the basis of invoices as mentioned by the input supplier and strongly relied upon the case law in support of his contention. I find that there is no dispute that the input supplier paid amount of Rs. 14,04,483/- as Central Excise duty, as evident from the invoices. But, in the case of Rs. 5,64,435/-, it was found that the input supplier have not paid Central Excise duty and wrongly declared the Central Excise duty in their invoices. This fact, is coming out from the verification report of the jurisdictional Assistant Commissioner, as mentioned in the impugned order. Thus, it is clear hit by Rule 3 of Cenvat Credit Rules, 2004. Regarding the demand is barred by limitation, it is seen that the appellant was earlier engaged in the manufacture of parts of syringes and were clearing the same without payment of duty and the amount 10% paid by the appellant on the value of exempted goods as per Rule 6(3) of the said Rules. So, I agree with the findings of the Commissioner (Appeals) that the appellant knowing fully well had taken the credit, which they were not eligible to avail in the cenvat account. So, extended period of limitation would apply.
8. In view of the above discussion, demand of cenvat credit of Rs. 14,04,483/- along with interest and penalty is set-aside. Demand of cenvat credit of Rs. 5,64,435/- along with interest and penalty is upheld. Appeal filed by the appellant is disposed of in above terms.
(Order dictated and pronounced in the Court) (P.K. Das) Member (Judicial) .KL 6