Custom, Excise & Service Tax Tribunal
Arising Out Of The Order-In-Appeal No. ... vs M/S Mukund Ltd on 30 December, 2013
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, SOUTH ZONAL BENCH BANGALORE FINAL ORDER NO. 27216/2013 Appeal Involved: E/209/2007-SM [Arising out of the Order-in-Appeal No. 28/2007-CE dated 19.1.2nt007, passed by the Commissioner of Central Excise (Appeals), Mangalore] Commissioner of Central Excise, Customs and Service Tax, BELGAUM NO. 71, CLUB ROAD, CENTRAL EXCISE BUILDING, BELGAUM - 590001 Appellant (s) Versus M/s MUKUND LTD. HOSPET ROAD, GINIGERA, KOPPAL DIST Respondent(s)
Appearance:
Mr. Ganesh Havanur, Addl. Commissioner (AR) For the Appellant Mr. M.S. Nagaraj, Advocate For the Respondent CORAM:
HONBLE SHRI B.S.V. MURTHY, TECHNICAL MEMBER ________________________________________ Date of Hearing: 30/12/2013 Date of Decision : 30/12/2013 M/s Mukund Ltd. (ML), M/s Kalyani Steels Ltd. (KSL) and M/s Kalyani Ferrous Industries Ltd. (KFIL) combined together form an integrated steel plant. KFIL produces Pig Iron which is supplied to ML who produces steel billets, blooms and rounds which are the items supplied to KSL who in turn produces rolled steel. Three companies are separate legal entities and the entire operation in respect of all aspects, is treated as separate by each company and expenses / income is divided in the ratio agreed upon by the three companies. M/s Praxair India Ltd. situated besides ML was supplying gases Oxygen & Nitrogen to the three companies through parallel pipelines. While it is an admitted fact that in respect of the expenses and income, the same were shared in the ratio agreed upon, only in respect of oxygen gas as input, Cenvat credit of duty paid on oxygen was taken by ML only. It is also admitted that credits on other inputs are taken separately. Revenue took a view that this was not proper and credit of duty paid should have been taken in the same proportion of actual use of oxygen by three units and availment of credit by ML on the whole quantum is wrong. ML calculated the amount of Cenvat credit not attributable to the oxygen used by them and paid the entire amount to the department. The amount paid was approximately Rs. 31 lakhs for the period from April 1999 to November 2005. Proceedings were initiated by issue of show-cause notice by Revenue on 29.11.2005 proposing to appropriate the amount already paid by invoking extended period and proposing penalties on all the three companies as well as some officers of the companies. The original adjudicating authority confirmed the demand for the period from November 2000 to February 2005 amounting to Rs. 22,80,153/- and imposed penalties on all the companies concerned excluding M/s Praxair India Ltd. and also some of the officers. All the parties concerned had filed appeals before the Commissioner (Appeals) who set aside the demand and also set aside the penalties. Revenue is in appeal against this order.
2. Before commencement of the hearing, learned counsel for the respondent pointed out that appeal has been filed against ML and in the absence of any appeal against others, the issue of their liability cannot be considered by the Tribunal.
3. Learned AR submits that there is only one Order-in-Appeal and therefore, Revenue is correct in filing only one appeal and further points out that in the grounds of appeal in the prayer portion, it has been clearly stated that duties, interest and penalties as imposed on all the parties may be restored as per original adjudication order. Nevertheless, I find myself in agreement with learned counsel who submits that even though one appeal might have been sufficient, the Revenue should have issued notices to all the persons mentioned in the prayer so that they could get an opportunity to defend their case. That being the position, the objection taken by learned counsel is accepted and appeal filed by Revenue is considered to have filed only in respect of ML. This is in view of the fact that CESTAT rules also require separate appeals to be filed and CESTAT also has not issued notices to others.
4. Learned AR submits that in this case admittedly ML, KFIL and KSL are three separate entities in the eyes of law; they have taken separate registration from the department; they have been paying duty when the goods have been transferred from one unit to another even though their claim is that it is integrated steel plant; they have also taken Cenvat credit in respect of inputs separately; the duty paid by one of the units in respect of the supply made to other units is taken as credit by the other. In such a situation, their submission that oxygen being used by all the three units and it is integrated steel plant and therefore, the credit was availed by only ML is not correct. He submits that during the course of investigation, the department has found correspondence between the assessee about Cenvat credit attributable to oxygen gas used by KFIL and KSL and he draws my attention to paragraph 4 of the appeal memorandum filed by Revenue. Further he also submits that the appellants themselves had accepted the duty liability and draws my attention to their appeal memo wherein they had stated that ML paid duty under supplementary invoices and therefore, there was no question of appropriation of amount already paid to the Central Government. It was the claim of the appellant that amount deposited was not a deposit but payment of duty as per reply to the show-cause notice given to them and therefore, duty liability is admitted and this aspect has to be taken into account.
5. Learned counsel relies on the decisions in the case of Vikram Cement vs. Commissioner of Central Excise, Indore [2006 (194) E.L.T. 3 (S.C.)], Reliance Industries Ltd. vs. Commissioner of C. Ex., Raigad [2007 (215) E.L.T. 413 (Tri.-Mumbai)] and Dhampur Sugar Mills Ltd. vs. Commissioner of C. Ex., Meerut [2001 (129) E.L.T. 73 (Tri.-Del.)]. He submits that the Commissioner (Appeals) in the impugned order has relied upon the Tribunal decision in the case of Dhampur Sugar Mills Ltd. and only ground taken by Revenue is that the appeal has been filed against this decision. He submits that the appeal filed by Revenue against this decision has been dismissed by Honble Supreme Court and therefore, appeal is not sustainable.
6. I have considered the detailed submissions made by both sides. I am unable to consider the decisions relied upon by learned counsel because in my opinion, none of the decisions could be applied to the facts of this case. In this case, as submitted by learned AR, the appellants themselves have treated the three factories as different; they have taken separate registration from the department; they have been paying duty when the goods have been transferred from one unit to another and they have also taken Cenvat credit in respect of inputs separately. In view of the fact that the three units in this case were three corporate entities during a portion of the relevant period and the appellants themselves have treated them as three different factories, I consider that none of the decisions cited by learned counsel would help them. Further the appellants themselves have treated them as different factories and availed Cenvat credit separately in respect of the inputs oxygen, in my opinion, it was not correct on the part of the appellant to avail all the credit in respect of oxygen by ML only. Therefore, in my opinion, credit availed by ML in respect of oxygen as input is not admissible.
7. The next question to be decided is whether extended period could have been involved in this case. Admittedly, oxygen being supplied through pipelines has been used by the three units and all the three units are manufacturers of dutiable products. It was also submitted by learned counsel that it was a mistake on the part of the appellants as it was omitted to treat oxygen separately. When I am coming to the argument advanced by learned AR that there was actual segregation of quantity of oxygen, I find that paragraph 21 of the show-cause notice and paragraph 4 of Grounds of Appeal have been relied upon by learned AR to make this submission. On going through these paragraphs, I find that these are based on the submissions by Shri S.B. Jhaveri, Vice President of ML in August 2003 which is in the middle of the period we are concerned with. Even in paragraph 21 it is clearly stated that the estimates were given for future period and not for the past period. Further there is no evidence to support the claim that the appellants had correct quantity of oxygen consumed by the three units and therefore there was deliberate availment of oxygen by ML with an intention to avail excess credit. In any case, when the omission was pointed out, the appellants paid the Cenvat credit and if the department did not initiate any proceeding, the matter would have ended there. In these facts and circumstances, invocation of extended period was not called for. Therefore, I do not find any justification to confirm the demand for the extended period. Once the demand for extended period cannot be sustained, penalty also cannot be sustained. However for the demand for Cenvat credit wrongly availed within normal period, the matter is remanded to the original adjudicating authority for re-quantification of the amount payable for the normal period and interest thereon. The appeal is disposed of in above terms.
(Pronounced and dictated in open court) (B.S.V. MURTHY) TECHNICAL MEMBER /vc/