Custom, Excise & Service Tax Tribunal
M/S. Gary Pharmaceuticals (P) Ltd vs Commissioner Of Central Excise on 22 July, 2013
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
PRINCIPAL BENCH, COURT NO. IV
Excise Appeal No. 55449 of 2013-EX[SM]
Excise Stay Application No. 55595 of 2013-EX[SM]
[Arising out of Order-In-Appeal No.282/CE/APPL/Ldh/2012 dated 22.11.2012 passed by Commissioner of Customs, Central Excise & Service Tax (Appeals ), Chandigarh ]
For approval and signature:
Honble Ms. Archana Wadhwa, 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. Gary Pharmaceuticals (P) Ltd. Appellant
Vs.
Commissioner of Central Excise, Respondent
Ludhiana Appearance:
Shri Vickrant Kackria, Advocate for the Appellant Shri R.K. Verma, AR for the Respondent CORAM:
Hon'ble Ms. Archana Wadhwa, Member (Judicial) Date of Hearing /Decision: 22.07.2013 ORDER NO . FO/ 57159/2013-SM(Br) Per Ms. Archana Wadhwa:
After hearing both sides and after dispensing with the condition of pre-deposit, I propose to dispose of the appeal with the consent of both the sides.
2. I find that the appellant is engaged in the manufacture of Pharmaceutical product and prior to 1.4.09, they were availing the Cenvat credit of duty and were paying duty of excise on their final product. However, with effect from 1.4.09, the appellant opted for small scale exemption. According to the appellant, on account of inadvertent mistake they continued to avail the benefit of Cenvat credit of duty paid on the inputs as also on capital goods during the period April, to June, 2009. The said availment of Cenvat credit was duly reflected by them in their quarterly return so filed. The said mistake on the part of the appellant was pointed out by the Revenue, who raised objections for availment of credit as also in respect of credit involved on the inputs, either lying as such or as contained in the final product as on 1.4.09. On being pointed out, appellant immediately reversed the sum of Rs. 3,64,843/- without utilizing the same.
3. On the above basis, proceedings were initiated against them for confirmation of reverse entry as also for interest and imposition of penalty. The Assistant Commissioner vide his impugned order confirmed the demand of Rs. 3,64,843/- and appropriated the same by observing that it stand already deposited by them by debiting the same in the Cenvat account and a part amount involved is in respect of inputs lying in stock as on 1.4.09 by way of cash.
4. The appellant filed the appeal against the impugned order before Commissioner (Appeals) who however observed that there was short deposit of Rs.11,572/- & accordingly directed the appellant to deposit the said amount and also confirmed the interest and upheld the penalty. Hence, the present appeal.
5. Learned advocate appearing for the appellant submits that he is not challenging the confirmation of demand. Infact the same was already deposited by the appellant immediately on being pointed out by the department. He clarifies that they were availing credit prior to 1.4.09 without they were not working under small scale exemption. They continue to avail the credit by mistake without realizing that they have opted for small scale exemption with effect from 1.4.09. He submits that there was no malafide intention on their part to do so and it was a pure clerical error inasmuch as entire facts are reflected in their records as also in their quarterly returns so filed by them. He also clarifies that credit for the quarter during the period April to June was not utilized by them and as such confirmation of interest and penalty is neither justified nor in accordance with the law.
6. Learned advocate further submits that an amount of Rs.60,000/- was involved in respect of inputs which were received prior to 1.4.09 and they had availed the credit prior to said date but since the Revenue insisted on reversal of credit, they reversed the same; though there was Larger Bench decision laying down that no such reversal is otherwise required. He submits that having deposited the amount he is not contesting the same. As regards observation of Commissioner (Appeals) that there was reversal of Rs. 11,000/- approx., he draws my attention to the finding of Assistant Commissioner wherein he had clearly accepted that the entire amount of duty of Rs. 3,64,843/- stands reversed by the assessee and appropriated by the adjudicating authority. He submits that though the Commissioner has reduced the demand to Rs. 3,38,578/- by taking into account the fact that approximately Rs. 30,000 Cenvat credit was lying unutilized in the records as on 1.4.09 but he observed that there was shortage of 11,000 as against finding of Asstt. Commissioner, which do not stand challenged by the Revenue.
7. I have heard learned DR Shri R.K. Verma, who reiterated the finding of the authorities below.
8. After having gone through the impugned order I find that Asstt. Commissioner has in categorical stand has held that assessee has reversed the entire Cenvat credit of Rs. 3,64,843/-. Though Commissioner (Appeals) has reduced the amount to Rs. 3,38,578/- but the appellant is not contesting the original confirmed demand of Rs. 3,64,843/-. As such, the only question requires to be decided in the present appeal is as to whether the appellant is liable to pay interest or are required to be imposed penalty.
9. As regards interest, I find that said credit so availed by the assessee was lying unutilized in their records and was immediately reversed on being pointed out by the Revenue. The Honble Supreme Court decision in the case of Ind-Swift Laboratories Ltd. [2011 (265) ELT 3(SC)] laying down that interest would be leviable in such cases stand considered and interpreted by the Honble Karanataka High Court in the case of CCE & ST, Bangalore vs. Bill Forge Pvt. Ltd. [2012 (26) STR 204 (Kar)]. It stand held that in case the wrongly availed credit stand reversed without utilizing the same, no interest would become liable to be paid. Both said decision were considered by the Tribunal in the case of CCE, Raipur vs. M/s. Sharda Engery & Minerals Ltd. vide its Final order No. 55193/2013 dated 10.1.2013, it was observed as under:
8. Learned Advocate appearing for the respondent draws my attention to a latest decision of the Hon'ble High Court of Karnataka in the case of Commissioner of Central Excise and ST Bangalore V/s Bill Forge Pvt. Ltd. 2012 (26) S.T.R. 204 (Kar.). The Supreme Court decision in the case of Ind-Swift Laboratories Ltd. was considered and it was held, that the interest would be payable from the date Cenvat credit is taken or utilized wrongly. By following the said decision of the Hon'ble Supreme Court, the Hon'ble Karnataka High Court, in an identical set of facts held that the assessee had not taken or utilized the Credit but only availed wrong credit in their account books and on pointing out the mistake, immediately reversed the entry. As no benefit of wrong entry in account books was taken, interest is not payable. The said order of the Karnataka High Court stand subsequently followed by them in the case of Commissioner of Central Excise, Bangalore V/s Pearl Insulation Ltd 2012 (281) E.L.T. 192 (Kar.).
10. As such by following the above decision, I set aside the confirmation of demand of interest.
11. As regards penalty, though the appellant have accepted that they had wrongly availed the credit but it was on account of inadvertent mistake and the fact that appellant continued to reflect the same in their statutory records i.e. Cenvat credit account as also in the quarterly return reflects upon the bonafide of the appellant. Tribunal in the case of Kesarwani Zarda Bhandar vs, CCE Allahabad reported as [2013 (289) ELT 331 (Tri-Delhi)] has observed that penal proceeding being quasi criminal in nature, conception, preparation, attempt and commitment should demonstrate contumacious conduct and result in causing prejudice to Revenue. The fact of non-utilization of credit and reflection of the same in statutory records reflects upon absence of attempt and commitment causing any prejudice to the Revenue, there is no occasion for imposition of penalty. Inasmuch as in the present case the appellant was availing credit with due knowledge of the Revenue and was reflecting the same in the statutory records, I hold that there was no malafide on the part of the assessee i.e. inviting any penal action against them.
12. In view of the above, I confirm the demand of duty as having been debited in full in terms of finding of Assistant Commissioner and as not contested, and set aside the confirmation of interest or imposition of penalties.
13. Stay petition as also appeal gets disposed of in the above terms.
(Dictated and pronounced in the open Court) (Archana Wadhwa) Member (Judicial) ss ??
??
??
??
2