Custom, Excise & Service Tax Tribunal
M/S. National Aluminium Co. Ltd vs Commr. Of Central Excise, Customs & on 24 June, 2013
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
EAST REGIONAL BENCH : KOLKATA
Excise Appeal Nos.-356/2011
(Arising out of the Order in Appeal No.17/CE/BBSR-I/2011 dated-18/02/20101 passed by the Commissioner (Appeals), Central Excise, Customs & Service Tax, BBSR-I)
For approval and signature of :
DR. I.P. LAL, HONBLE TECHNICAL MEMBER :
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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. National Aluminium Co. Ltd.
APPELLANT(S)
VERSUS
Commr. of Central Excise, Customs &
Service Tax-BBSR-I
RESPONDENT(S)
APPEARANCE
Sri S.C. Mohanty, Advocate
FOR APPELLANTS
Sri S. Chakraborty, A.C. (A.R.)
FOR THE RESPONDENTS
CORAM:
DR. I.P. LAL, HONBLE TECHNICAL MEMBER
DATE OF HEARING : 24.06.2013 Date of Pronouncement:
ORDER NoA-215/KOL/13
Per DR. I.P. LAL
This appeal has been filed against the Order-in-Appeal No. 17/CE/BBSR-I/2011 dated-18/02/2011.
2. Brief facts of the case are that the appellant had taken the input service credit of Rs.22,52,527/- during January, 2009 in their service tax credit register vide entry Sl. No. 2592 dated 12/1/2009 against RA bill No. 02 dated 28/07/2007 of M/s. BHEL against the services utilized in their captive plant. Subsequently, they again took the credit of the said amount against same invoice vide entry Sl. No. 2826 dated 16/01/2009 resulting in double credit against an invoice. The excess credit of Rs. 22,52,527/- taken was reversed by the appellant from their Cenvat credit account on 30/01/2009 but the interest amount of Rs.2,67,156/- has not been paid by them. Therefore, the proceedings were initiated by issuing a show cause notice for demand of interest under Rule 14 of Cenvat credit Rules, 2004 read with Section 11 AB of Central Excise Act, 1944. Adjudicating authority confirmed the demand. Commissioner (Appeals) relying on the Board Circular No. 897/17/2009-CX dated 3/9/2009 upheld the irder-in-original passed by the adjudicating authority. Being aggrieved by the Commissioner (Appeals) order this appeal has been filed.
3. The Ld. Advocate appearing for the appellant has stated that the appellant had taken the credit twice against one and the same invoice inadvertently and after detection of the mistake reversed voluntarily the said excess credit of Rs.22,52,527/-.It is the contention that the appellant during the relevant period had sufficient credit balance in his accounts, so they never utilized the wrongly availed credit. He cited in his support the judgement of the Honble High Court of Karnataka in case of Commr. of Central Excise and Service Tax, Bangalore Vs. Bill Forge Pvt. Ltd. -2012 (26) S.T.R. 204 (Kar.). wherein it is held that the credit of excise duty in the Register maintained for the said purpose is only a book entry. It might be utilized later for payment of excise duty on the excisable product. It is entitled to use the credit at any time thereafter when making payment of excise duty on the excisable product. In other words where the assessee has promptly reversed the entry, he did not take the advantage of wrong entry. He did not take the Cenvat credit or utilized the cenvat credit and therefore since assessee had not taken (utilized) benefit of wrong entry in their account books, there was no liability to pay interest, once entry was reversed. He further contended that the Apex Court in case of Commr. Vs. Bombay Dyeing and Mfg. Co. Ltd.-2007 (215) E.L.T. 3 (S.C.), held that under Notification 14/2002-CE, the requirement was that exemption on grey fabrics was admissible subject to the assessee paying duty on yarn before claiming exemption and subject to the assessee not claiming CENVAT credit before claiming exemption. The assessee paid the duty on the input (yarn) and the assessee got the credit which was never utilized, that before utilization, the entry has been reversed. Honble Court held that this amounts to not taking credit, hence, the condition that assessee not claiming Cenvat credit before claiming exemption is satisfied and the benefit of exemption was extended. He reiterated the judgement of the Honble High Court of Punjab & Haryana in case of CCE Delhi-III Vs. Maruti Udyog Ltd. reported in 2007 (214) ELT 173 ( P&H) , wherein it was held that the assessee had only made an entry in the records and actually not taken or utilized such credit, the question of payment of any interest would not arise.
4. Per contra, the Ld. A.R. appearing for Revenue has contended that in view of the Board Circular 8/97/70/2009-CX dated 3/9/2009 and the judgement of the Honble Supreme Court in the case of Union of India Vs. Ind-Swift Laboratories Ltd. -2011 (265) ELT 3 (SC), the appellant was required to pay interest from the date of taking irregular/excess credit till the date of their reversal under Rule 14 of Cenvat Credit Rules read with Section 11AB of Central Excise Act, 1944. He contended that Apex Courts order is binding on the various appellate authorities.
5. Ld. Advocate in his rejoinder to above submitted that the facts of the appellants case are not similar to the facts of the case covered in case of Ind-Swift Laboratories Ltd.(supra).
6. Heard both the sides and perused the records.
7. In the light of aforesaid facts and rival contentions, the issue in dispute is whether liability of interest under Rule 14 of Cenvat Credit Rules, 2004 read with Section 11AB arises from the date of taking wrong credit in books of accounts or when such credit is taken (utilized) while clearing the finished products.
8. I find that Rule 14 of Cenvat Credit Rules, 2004 reads as under:
Rule 14. Recovery of CENVAT credit wrongly taken or erroneously refunded:- Where the CENVAT credit has been taken or utilized wrongly or has been erroneously refunded the same along with interest shall be recovered from the manufacturer or the provider of the output service and the provisions of Sections 11A and 11AB of the Excise Act or Sections 73 and 75 of the Finance Act, shall apply mutandis for effecting such recoveries.
9. The Apex Court in case of M/s. Ind-Swift Laboratories Pvt. Ltd. (supra) held that-
2. A bare reading of the said Rule would indicate that the manufacturer of the provider of the output service becomes liable to pay interest along with the duty where CENVAT credit has been taken or utilized wrongly or has been erroneously refunded and that in the case of the aforesaid nature the provision of Section 11AB would apply for effecting such recovery. The Court further pronounced that the word OR found in Rule 14 cannot be read as AND.
10. As regards the reliance placed by the Ld. Advocate for the appellant on the Bill Forge Pvt. Ltd., case cited supra, the facts are distinguishable. In that case the credit wrongly taken was reversed before the liability to pay duty arose and, therefore, it was held that without the liability to pay duty, the liability to pay interest would not arise and liability to pay interest would arise only when the duty is not paid on the due date. In the case before me the assessee has taken the input service credit on 12.01.2009 against an invoice. They again took the credit of the said amount against the same invoice on 16.01.2009. They however, reversed the excess credit of Rs.22,55,527/- on 13.01.2009 i.e. after a period of about 11 months from the date of taking the wrong credit. The Ld. Commr. (Appeals) in this regard has observed that the assessees contention that they did not utilize this credit towards payment of duty cannot be accepted when there were clearances of final products and duty has been debited from the credit account. I find that this contention of the Commr. (Appeals) has some force in as much as during this period, the liability to pay duty/service tax would have arisen any number of times, in fact every month. Therefore, the ratio of the decision in the Bill Forge case, would not apply as the facts are clearly distinguishable.
11. I find that the Honble Supreme Court in the case of Ind-Swift Laboratories (supra) categorically held that interest on irregular credit would arise from the date on which credit was wrongly taken irrespective of the fact whether the credit was utilised or not. Accordingly, I hold that the Appellant is liable to pay interest from date of taking the wrong credit. I therefore uphold the order passed by the Commr. (Appeals). Consequently, the appeal is rejected.
(Pronounced in the Court on 26/7/13) Sd/-
(DR. I.P.LAL) TECHNICAL MEMBER k.b/-
Excise Appeal Nos.-356/2011 2