Custom, Excise & Service Tax Tribunal
M/S. Iscon Surgicals Ltd vs Commissioner Of Central Excise on 30 May, 2013
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
PRINCIPAL BENCH, COURT NO. IV
Excise Appeal No. 736 of 2011-EX[SM]
[Arising out of Order-In-Appeal No 440 (CB)CE/JPR-II/2010 dated 13.12.2010 passed by Commissioner Central Excise, Jaipur-II]
For approval and signature:
Honble Mr. Rakesh Kumar, Member (Technical)
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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?
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Whether Their Lordships wish to see the fair copy of the Order?
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Whether Order is to be circulated to the Departmental authorities?
M/s. Iscon Surgicals Ltd. Appellant
Vs.
Commissioner of Central Excise, Respondent
Jaipur-II Appearance:
Shri Rakesh K. Mathur, AR for the Appellant Shri Jatin Singhal, Advocate for the Respondent CORAM:
Hon'ble Mr. Rakesh Kumar, Member (Technical) Date of Hearing/decision : 30.05.2013 ORDER NO . FO/ 56755 /2013-SM(Br) Per Rakesh Kumar:
The facts loading to this appeal are as under:-
1.1 The appellants are manufacturers of disposable syringe and needles chargeable to central excise duty for which they received the inputs from a 100% EOU. The appellant availed Cenvat credit of excise duty paid on inputs and capital goods as per the provisions of Cenvat credit Rules, 2004. The inputs received were the DTA clearances of a 100% EOU. According to the appellant, in respect of inputs received by them from the 100% EOU, the duty had been paid under proviso to Section 3(1)of the Central Excise Act, 1944 read with S.No.1 of table annexed to Notification No. 23/03-CE dated 13.1.03 under which the rate of duty payable on the DTA clearance is the aggregate of duties of Customs and the special Additional Customs Duty leviable under Section 3A of Customs Tariff Act is exempt subject to fulfilment of the condition, which in this case has been fulfilled. The appellant had taken Cenvat credit of the Additional Customs duty component plus education cess, of the total duty paid on the inputs received from 100% EOU. According to the department, the appellant should have restricted the Cenvat credit availment in terms of the formula prescribed in Rule 3(7)(a) of the Cenvat Credit Rule 2004. On this basis, the department issued a show cause notice dated 22.2.09 for demand of allegedly wrongly availed Cenvat credit amounting to Rs.26,292 along with interest and also for imposition of penalty. The period of dispute is from November, 2008 to August, 2009. The show cause notice was adjudicated by Deputy Commissioner vide order in original dated 29.4.10 by which the demand of Rs. 15,510/- was confirmed along with interest and equal amount of penalty was imposed. Though before the Deputy Commissioner, adjudicating the matter, it was pleaded by the appellant that since the duty on the goods received from 100% EOU had been paid in terms of S.No. 1 of the table to notification No. 23/07 CE and the provisions of Rule 3(7)(a) are applicable only in respect of inputs received from 100% EOU on which duty has been paid in terms of S.No. 2 of the table to the Notification No. 23/03 CE and , therefore, the provisions of Rule 3(7)(a) are not applicable, this plea was not accepted.
1.2 On an appeal to Commissioner (Appeals), the Commissioner (Appeals) vide order in appeal dated 29.11.10 upheld the Commissioners order. Against this order of Deputy Commissioner (Appeals), this appeal has been filed.
2. Heard both the sides.
3. Shri Jatin Singhal, learned Counsel for the appellant, pleaded that the inputs received by the appellant from 100% EOU have suffered duty under S.No.1 of Notification No. 23/03 CE and not under S.No.2 and as such the duty suffered on goods is basic customs duty plus additional customs duty plus education cess; that the appellant have confined the Cenvat credit availment only to the additional Customs duty component, and education cess and secondary and higher education cess (S & H cess), that the provisions of Rule 3(7)(a) prescribing a formula for determining Cenvat credit available in respect of inputs received from a 100% EOU are applicable only when the inputs received from a 100 EOU have suffered duty under S.No.2 of the Notification No. 23/03-CE, as all the provisions of this sub-rule are in respect of inputs received from 100% EOU on which the duty has been paid under S.No.2 of the table to the Notification No. 23/03-CE, that since in this case the inputs, in question, had suffered duty under S.No.1 of the notification, the provisions of the rule 3(7)(a) are not applicable; that this plea was made before the original adjudicating authority as well as the first appellate authority, but the same was not considered and that in view of this, impugned order is not sustainable.
4. Shri R.K. Mathur, the learned DR, defended the impugned order by reiterating the finding of the Commissioner (Appeals).
5. I have considered the submissions from both the sides and perused the records. The appellants plea is that the inputs received by them from a 100% EOU in respect of which Cenvat credit has been availed, have suffered duty in terms of S.No.1 of the table to the notification No. 23/03 CE and they have confined the Cenvat credit availment only to the additional customs duty component plus education cess and secondary and Higher education cess (S & H cess) thereon. Accordingly, the contention of the appellant is that the provisions of Rule 3(7)(a) are not applicable, as this sub-rule prescribes the formula restricting Cenvat credit only in the cases where the inputs received from a 100% EOU have suffered duty under S.No. 2 of the table annexed to Notification No. 23/03-CE. Neither the original adjudicating authority nor the Commissioner (Appeals) have given any finding on the appellants plea that inputs, in question, had suffered duty under S.No. 1 of the table annexed to Notification 23/03 CE and have gone by the presumption that in respect of the inputs received by the Appellant from 100% EOU, the Cenvat credit would be restricted in terms of the formula prescribed under Rule 3(7)(a). The basic question to be decided in this case is as to whether the provisions of Rule 3(7)(a) restricting the availment of Cenvat credit as per formula prescribed would be applicable, in respect of inputs received from a 100% EOU when the inputs received from the 100% EOU have suffered duty under S. No. 1 of the table to the Notification No. 23/03CE.
6. Rule 3(7)(a) is reproduced below:
(a) Cenvat credit in respect of inputs or capital goods produced or manufactured, by a hundred per cent, export-oriented undertaking or by a unit in an Electronic Hardware Technology Park or in a Software Technology Park other than a unit which pays excise duty levied under section 3 of the Excise Act read with serial numbers 3, 5, 6 and 7 of notification No. 23/2003-Central Excise, dated the 31st March, 2003 {GSR 266(E), dated the 31st March, 2003] and used in the manufacture of the final products or in providing an output service, in any other place in India in case the unit pays excise duty under section 3 of the Excise Act read with serial number 2 of the notification No.23/2003-Central Excise, dated the 31st March, 2003 {GSR 266 (E), dated the 31st March, 2003], shall be admissible equivalent to the amount calculated in the following manner namely:-
Fifty per cent of {X multiplied by(1+BCD/100) multiplied by (CVD/100)}, where BCD and CVD denote ad valorem rates, in per cent, on basic customs duty and additional duty of customs leviable on the inputs or the capital goods respectively and X denotes the assessable value:
[Provided that the CENVAT credit in respect of inputs and capital goods cleared on or after 1st March, 2006 from an export oriented undertaking or by a unit in Electronic Hardware Technology Park or in a Software Technology Park, as the case may be, on which such unit pays excise duty under section 3 of the Excise Act read with serial number 2 of the notification no. 23/2003-Central Excise, dated 31st March, 2003 [GSR. 266(E), dated the 31st March, 2003] shad be equal to {X multiplied by [(1+BCD/200) multiplied by (CVD/100)]}.
Provided further that the CENVAT credit in respect of inputs and capital goods cleared on or after the 7th September, 2009 from an export-oriented undertaking or by a unit in Electronic Hardware Technology Park or in a Software Technology Park, as the case may be, on which such undertaking or unit has paid -
(A) excise duty leviable under section 3 of the Excise Act read with serial number 2 of the notification no. 23/2003-Central Excise, dated 31st March, 2003 [G.S.R. 266(E), dated the 31st March, 2003]; and (B) the Education Cess leviable under section 91 read with section 93 of the Finance (No. 2) Act, 2004 and the Secondary and Higher Education Cess leviable under section 136 read with section 138 of the Finance Act, 2007, on the excise duty referred to in (A), shall be the aggregate of -
(I) that portion of excise duty referred to in (A), as is equivalent to -
(i) the additional duty leviable under sub-section (1) of section 3 of the Customs Tariff Act, which is equal to the duty of excise under clause (a) of sub-section (1) of section 3 of the Excise Act;
(ii) the additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act; and (II) the Education Cess and the Secondary and Higher Education Cess referred to in (B).]
7. On perusal of the 3(7)(a), it would be seen that while it is applicable in respect of units other than units which pay the customs duty under Section 3 of the Central Excise Act read with S.No. 3, 5, 6 and 7 of the Notification No. 23/03 CE, the formulas restricting the Cenvat credit have been prescribed only in respect of inputs cleared by a 100% EOU where the duty had been paid under S.No. 2 of the table annexure to the notification No. 23/2003-CE and the formulas restricting, the Cenvat credit availment have been changed with every amendment to notification No. 23/03-CE changing the effective rate of duty in S. No. 2 of the table to the notification.
7.1 The effective rate of duty prescribed in S. No.2 of the table to the notification No. 23/03-CE during different periods and the formulas restricting the Cenvat credit in Rule 3 (7) (a) during there periods are as under:-
Period Rate of duty prescribed in S. No. 2 of the table to notification No 23/03-CE Formula restricting the Cenvat credit prescribed is rule 3 (7) (a) Period prior to 01.03.2006 50% of duty leviable under sec. 3 of Central Excise Act, 1944 i.e. 50% of (XBCD)+X(1+BCD)(1+CVD) 100 100 100 50% of X multiplied by (1+BCD) 100 multiplied by(1+CVD) 100, where X denotes the assessable value and BCD and CVD denote the rate of basic custom duty and Additional custom duty respectively 01.03.2006 to 04.12.2008 Aggregate of duties of customs leviable on like goods as if -
(a) duty of customs specified in 1st scheduled to customs Tariff Act read with any other notification inforce is reduced by 75% and
(b) no additional custom duty leviable under Se 3(5) of custom Tariff Act, i.e. (XBCD)+X(1+BCD)(1+CVD) 400 400 100 X(1+BCD)(CVD) 100 100 When X denotes the assessable value of the goods.
From 5/12/08 to 7/7/09 Aggragate of duties of customs leviable on like goods as if
(a) duty of customs specified in the 1st scheduled customs Tariff Act, read with any other notification in force, was reduced by 50% and
(b) no additional custom duty leviable under sec 3(5) of the custom Tariff Act i.e. XBCD +x(1+BCD)(CVD) 200 200 100 x(1+BCD)(CVD) 200 100 When X denotes the assessable value, Thus when the duty has been paid in term of S. No. 2 of the table to the notification No. 23/03-CE, the Cenvat Credit available in term of Rule 3 (7) (a) is the additional custom duty component of the total duty. However Rule 3 (7) (a) does not prescribe any formula restricting the availability of Cenvat Credit in respect of inputs received from a 100% EOU when the EOU has cleared the finished goods on payment of duty under S. No. 1 of the table to the notification 23/03-CE.
7.1 Though the excise duty payable on DTA clearances of a 100% EOU paying duty under S. No. 2 of the table to the notification No. 23/03-CE has basic Customs duty component also, the Cenvat credit available is confined only to the component comprising of Additional Customs duty (also called contravailing duty). Therefore on this basis, it can be said that though Rule 3(7)(a) does not mention any formula restricting, the credit when the inputs received from a 100% EOU have suffered duty under S. No. 1 of the table to the notification No 23/03-CE i.e. duty paid on the goods is basic customs duty plus Additional Customs duty plus sp. additional customs duty, if any, payable, plus education cess and S & H cess payable under section 93 of Finance Act, 2004 & Section 138 of Finance Act 2007 respectively, the Cenvat credit available would be confined only to the Additional Customs duty plus sp. additional customs duty if payable plus education and S & H cess.
8. In these cases, the Appellant plea is that the duty on the inputs has been paid under S. No. 1 of the table to the notification No 23/03-CE. If this is correct, they have correctly taken the Cenvat credit of Additional Customs duty component and education and S & H cess. However, if the inputs received from the 100% EOU have suffered duty in terms of S. No. 2 of the table to notification No 23/03-CE, the Cenvat Credit entitlement would be as per the formulas prescribed is Rule 3 (7)(a). Since no finding has been given on the Appellants plea that the inputs received from the 100% EOU had suffered duty in terms of S. No. 1 of the table to the notification No 23/03-CE, this plea is required to be examined for which this matter would have to be remanded.
9. In view of the above discussion, the impugned order is set aside and the matter is remanded to the original adjudication authority for de-novo decision after ascertaining as to act whether the inputs received by the Appellant have suffered duty in terms of S. No. 1 of the table to the notification No. 23/03-CE. If this claim of the Appellant is cenvat, their Cenvat credit availment would be Correct and the formula prescribed is Rule 3(7)(a) would not be applicable. These formulas would be applicable only if the inputs received from a 100% EOU, had suffered duty in terms of S. No. 2 of the table to the notification No. 23/03-CE.
10. The appeal stands disposed of as above.
(Pronounced in the open court)
( Rakesh Kumar ) Member(Technical)
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