Custom, Excise & Service Tax Tribunal
Hemarus Industries Ltd vs Commissioner Of Central Excise, ... on 30 September, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT NO. Appeal No. E/297/12-Mum [Arising out of Order-in-Appeal No. PII/RKS/140/2011 dated 30/11/2011 passed by the Commissioner of Central Excise (Appeals), Pune-II] For approval and signature: Honble Mr. Devender Singh, Member (Technical) =======================================================
1. Whether Press Reporters may be allowed to see : No
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
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3. Whether Their Lordships wish to see the fair copy : seen
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4. Whether Order is to be circulated to the Departmental: Yes
authorities?
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Hemarus Industries Ltd.
:
Appellant
VS
Commissioner of Central Excise, Kolhapur
:
Respondent
Appearance:
Shri J.N. Somaiya, Advocate for the Appellant
Shri S.V. Nair, Superintendent (A.R.) for the Respondent
CORAM:
Honble Mr. Devender Singh, Member (Technical)
Date of hearing: 04/08/2016
Date of decision: 30/09/2016
ORDER NO.
Per : Devender Singh
This appeal is directed against order-in-appeal No. PII/RKS/140/2011 dated 30.11.2011 passed by Commissioner of Central Excise (Appeals), Pune-II.
2. Brief facts of the case are that the appellants are engaged in the manufacture of sugar molasses and had availed cenvat credit during February, 2009 to June, 2009 on certain imported goods listed in Table-A of the show cause notice. They had also availed cenvat credit on structural items listed in table B of the show cause notice. Based on intelligence, Central excise officers visited their factory and on scrutiny of the documents, it was revealed that cenvat credit on these items was not admissible to them. Statement of General Manager (Tech.) of the appellant was recorded and the appellants during the course of investigation, realized their mistake and reversed the inadmissible cenvat credit availed on the basic customs duty and cess and also reversed the credit availed on the structural items. The dispute is whether interest is liable on the cenvat credit which was reversed and whether the appellant is liable to penalty under Rule 15(1) of the Cenvat Credit rules, 2004. Both the adjudicating authority and the first appellate authority have upheld the liability of the interest and penalty though the penalty has been reduced from Rs. 5 Lakhs to Rs. 3,60,000/- by the first appellate authority.
3. It submitted by the Ld. Advocate that the appellant had not started production till the time of reversal of the cenvat credit and had not utilized the cenvat credit any time before its reversal. For this, he relied on the statement of Shri J. Venkatrao, General Manger of the appellant (Questions 3 and 4), to substantiate that production was not started. He further submits that since there was no production and no clearance prior to the reversal of the cenvat credit, there is no loss to the Revenue as the cenvat credit had not been utilized at any stage. He has tried to distinguish the judgment of the Honble Supreme Court in the case of Indo-Swift laboratories Ltd. Vs. CCE as reported in 2015 (12) TMI-1050-CESTAT and also emphasized the point that in the case of Indo-Swift Laboratories Ltd. (supra), the credit was taken on fake invoices and the facts are different from the facts of the present case. He also relied on the Tribunals judgment in the case of GTL Infrastructure Ltd. Vs. CCE as reported in 2015 (37) STR 577, and judgment of the High Court of Madras in the case of CCE Madurai Vs. M/s Strategic Engineering (P) Ltd. Reported in 2014-TIOL-466-HC-MAD-CX. He further submits that since there is no loss to the Revenue and as per the case laws relied by him, interest and penalty be set aside.
4. The Ld. AR appearing for the Revenue, on the other hand, submits that the onus and responsibility to take admissible credit was on the party as per Rule 9(5) of the Cenvat Credit Rules. Relying heavily on the judgment of the Honble Supreme Court in the case of Indo-Swift Laboratories as reported in 2011 (2) TMI 6- SC, he argued that the law does not make distinction on the cause of taking credit and the crux of the case had not been mitigated. He also submits that under rule 15(1) of the Cenvat Credit rules, intent to evade is not necessary. Hence the contravention is established and the appellant is liable to penalty. He relied on the Tribunals decision in the case of Meghdoot Gramoudyog Sewa Sansthan Vs. CCE, Noida as reported in 2014 (312) ELT 699.
5. Heard the parties and perused the records.
6. As pointed out by the Ld. Advocate, it is clear from the statement of Shri J. Venkatrao, General Manager, that the unit had not commenced production when the investigation started and hence there was no clearance from the factory. This fact has not been contested ted by the Ld. AR. As there was no clearance from the factory, there was no question of utilization of the cenvat credit availed by the party. On these facts, the case of GTL Infrastructure Ltd. Vs. CCE (supra) cited by the Ld. Advocate, is directly applicable. In the said judgment, the Tribunal held as below:
The case in hand although the appellant has taken the Cenvat Credit, the same has been reversed on pointing out therefore the facts of this case are similar to the case of Bill Forge Pvt. Ltd. (supra) and distinguishable from the facts of the case of Ind-Swift Laboratories Ltd. (supra), as in the case of Ind-Swift Laboratories Ltd. (supra), the Cenvat Credit was taken by the assessee on the strength of fake invoice and credit was not reversed by them but it was recovered by way of demanding duty. Therefore, the said facts are not applicable to the facts in hand. In these terms, we hold that the appellants are not liable to pay interest for wrongful availment of Cenvat Credit which has been reversed before utilization by the appellant in light of the decision of the Honble High Court in the case of Bill Forge P. Ltd. (supra) which has been followed by coordinate bench in CCE, Raipur Vs. M/s. Sharda Energy and Minerals Ltd. -2013 (291) E.L.T. 404 (Tri. Delhi) and in Commissioner of C. Ex. Allahabad V Balrampur Chini Mills Ltd. 2014 (300) E.L.T. 449 (Tri. Delhi). In view of this, the demand of interest in this case is not proper and justified.
7. As for penalty under Section 15(1) of Cenvat Credit Rules, 2004, the Honble Madras High Court in the matter of CCE Madurai Vs. M/s Strategic Engineering (P) Ltd. (supra) has held as below:
8. The entire argument put forth on the side of the appellant/Department is based upon decision reported in 2012 (25) S.T.R. 184 (SC) (Union of India Vs. Ind- Swift Laboratories Limited)- U2011-TIOL-21-SC-CX, wherein the Apex court has given a finding to the effect that in Rule 14 of Cenvat Credit Rules, 2004 it has been clearly mentioned three states, known as taken or utilisation of erroneous refund. In the instant case, the first limb of Rule 14 of the said Rules is applicable and therefore, the assessee is bound to pay interest as well as penalty. The Honourable Apex court has dealt with rule 14 of the said Rules and subsequently on the basis of facts available in that case has given a finding to the effect that assessee therein is liable to pay interest as well as penalty.
9. The learned cousel appearing for the respondent has contended that the decision reported in 2012 (25) S.T.R. 184 (SC) (Union of India) Vs. Ind-Swift laboratories Limited) 2011-TIOL-21-SC-CX has been elaborately dealt with in the decision reported in 2012 (26) S.T.R. 204(Karnataka) (Commissioner of Central Excise & S.T. Bangalore Vs. Bill forge Private Limited)-2011-TIOL-799-HC-KAR-CX.
10. In fact, this Court has perused the entire decision reported in 2012 (26) S.T.R. 204 (Karnataka) (Commissioner of Central Excise & S.T. Bangalore Vs. Bill Forge Private Limited)- (2011-TIOL-779-HC-KAR-CX and ultimately found that mere taken of CENVAT credit facilities is not at all sufficient for claiming of interest as well as penalty. Following the said judgment of Honble Madras High Court, the appellants are not liable to penalty in this case.
8. Under the circumstances, the order of the Commissioner (Appeals) is set aside and the appeal is allowed.
(Order pronounced in court on 30.9.2016) Devender Singh Member (Technical) RAS 6 E/297/12-Mum