Custom, Excise & Service Tax Tribunal
M/S Bombardier Transportation vs C.C.E. & S.T.-Vadodara-I on 27 March, 2018
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Zonal Bench 2nd Floor, Bahumali Building, Nr Girdharnagar Bridge, Asarwa Ahmedabad 380 004 Appeal No. : E/10633/2015 Arising out of OIO-VAD-EXCUS-001-COM-040-14-15 dt 30/01/2015 passed by the Commissioner of Central Excise, Customs and Service Tax-VADODARA-I M/s Bombardier Transportation India P Ltd - Appellant(s) Vs C.C.E. & S.T.-Vadodara-I - Respondent(s)
Represented by For Appellant(s) : Shri S Vyas, Advocate For Respondent(s) : Shri J Nagori, Authorised Representative CORAM :
Dr D.M. Misra, Hon'ble Member (Judicial) Date of Hearing : 30/11/2017 Date of Decision: 27/03/2018 ORDER No. A/10574 / 2018 Per : Dr D.M. Misra, This is an appeal filed against OIO-VAD-EXCUS-001-COM-040-14-15 dt 30/01/2015 passed by the Commissioner of Central Excise, Customs and Service Tax-VADODARA-I.
2. Briefly stated the facts of the case are that the appellants are engaged in the manufacture and supply of railway coaches to Delhi Metro Rail Corporation Ltd (DMRC). Such supplies to DMRC, during the relevant period was claimed to be exempted from payment of duty under Sr No 90 of Notification No 6/2006-CE dt 1.3.2006 and also under Sr No 91 of the said Notification as the supplies were made against International Competitive Bidding (ICB). The appellants had paid Service Tax under reverse charge mechanism for respective of services received by the appellant and availed cenvat credit on the same since used in or in relation to the manufacture of the said goods. Consequent to the investigation initiated by the Dept., it was informed to the appellant that credit of Service Tax paid on various input services were not admissible under Rule 6 of CCR, 2004 as the manufactured goods were exempted. Consequently, the appellant discharged/reversed credit of Rs 71,41,940/- vide RG-23 Part II Entry No 216 dt 12.7.2013. There was no demand issued to the appellant for the recovery of the said credit. Thereafter, a show cause notice were issued to them on 09.7.2014 demanding interest amount of Rs 38,47,721/- on the aforesaid amount which on adjudication was confirmed and penalty of equal amount imposed under Rule 15 of CCR 2004 and hence the present appeal.
3. The Ld Advocate Shri S Vyas for the appellant submits that the appellant was not required to reverse the cenvat credit of service tax paid against reverse charge mechanism under Rule 6 of CCR 2004 as the said provision does not apply to the goods supplied under ICB. However, he has contended that when cenvat credit amount was voluntarily reversed for which no show cause notice was issued, therefore, demand of interest and imposition of penalty is bad in law. In support of his contention, the Ld Advocate referred to the judgment of Honble Gujarat High Court in the case of CCE vs GNFC Ltd 2012(285)ELT.336 (Guj) and the Tribunal in the case of Paper Products vs CCE - 2013(292)ELT.389.
4. Per contra, the Ld AR for the Revenue has submitted that on an investigation by the Dept., it revealed that the supplies made to DMRC were exempted from payment of duty but the appellant had wrongly availed credit of Service Tax paid on input services, which was not admissible to them, accordingly, they reversed the credit amount voluntarily under the provisions of Sec. 11A(2B) of CCE, 1994. As they had not paid the interest amount, consequently, show cause notice was issued to them for recovery of interest amount. He has submitted that Sec 11A (2B) of CEA 1944 is a special provisions which was inserted in the Central Excise Act to reduce litigation. The said provision is very clear which lays down that if a person makes payment of duty on his own or subsequent to the calculation of duty liability by the Central Excise Officer, before issuance of the notice and inform the same to the Dept., no show cause notice would be issued to him. However, the Central Excise Officer could verify the payments and issue show cause notice in case of any short payment. Explanation-2 appended to the said provision makes it mandatory to pay interest on the short paid amount and one year period of limitation would start from the date of receipt of information of such payment. It is his contention that in the present case, the appellant had paid the differential amount voluntarily and since they had not paid interest demand notice was issued to them. As per proviso to Sec. 11A(2B), show cause notice is required to be issued within one year of date of payment and now in the present case the payment was made by the appellant on 12.7.2013 and show cause notice was issued on 9.7.2014. Further, he has submitted that the argument of the appellant that no demand has been confirmed in the show cause notice and in absence of it, interest amount cannot be recovered by invoking extended period of limitation is not acceptable. The said Sec. 11A(2B) no where provides for confirmation/appropriation of the amount which has been paid by the person and has not contested it; any other interpretation or meaning to the said provision would frustrate/defeat the entire purpose of insertion of this provision; also it is clear that the demand is to be issued by the proper officer only for the amount which has not been paid or short paid by the person within one year of payment. Distinguishing the judgment of the Honble Gujarat High Court in GNFCs case, the Ld AR submitted that it is not applicable to the facts of the preset case as in the said judgment the Honble High Court has proceeded on the sole basis of the fact that there was admittedly no suppression of fact and the duty which was paid voluntarily, in fact not payable. However, in the present case the investigation by the Preventive Wing resulted in the issuance of a show cause notice issued for the period November 2008 to September 2010 invoking extended period and the payment was made by the appellant but not disputed by them. Therefore, this vital differences of facts are apparent, hence, the judgments in the aforesaid cases is not applicable. As far the plea of the appellant that interest is not payable on the credit availed since the same has not been utilised does not hold good for the period being covered by the decision of this Tribunal in the case of Atul Ltd.& ors. Vs. CCE Final Order No.A10685-10696/2017 dt.31.3.2017.
6. Heard both sides and perused the records.
7. The short issue involved in the present appeal is whether interest is payable on the amount of cenvat credit of Rs 71,41,940/- which was wrongly availed in the year March 2010, but reversed pursuant to being pointed on investigation by the department on 12th July, 2013. The Ld Advocate for the appellant vehemently argued that the credit availed on various input services in March 2010 was not required to be reversed but voluntarily reversed by them on being insisted by the Dept. It is his contention that there was no suppression of fact nor any mis-declaration in availing the credit, therefore, on its reversal, no interest is required to be paid. In support, he has referred to the judgment of the Honble Gujarat High Court in GNFCs case. The Revenue, on the other hand, vehemently argued that the aforesaid credit was availed on input services by suppressing the fact of its utilization in the manufacture of exempted goods accordingly interest is required to be paid on reversal of the credit so availed. The Ld AR for the Revenue submitted that another show cause notice dt.2nd May, 2011 was issued to the appellant for recovery of the credit invoking extended period of limitation. Distinguishing the judgment of the Honble High Court in GNFCs case, it is pleaded by the Revenue that in the said case it has held that there was no suppression of fact being observed by the Commissioner of Central Excise in adjudicating the said case. Therefore, interest cannot be recovered when the time barred demand has been paid voluntarily. In the present case, no such findings has been recorded by the Adjudicating Authority i.e., whether the amount paid by the appellant can be confirmed by invoking the extended period or otherwise. Therefore, to ascertain the said fact, the matter need to be remanded to adjudicating Authority. Consequently, the matter is remanded to the adjudicating authority to decide the issues afresh keeping the principles of law settled in this regard after affording an opportunity of hearing to the Appellant. The impugned Order is set aside and the appeal is allowed by way of remand.
(Pronounced in the open Court 27.03.2018) (D.M. Misra) Member (Judicial) swami 2