Custom, Excise & Service Tax Tribunal
4. Whether Order Is To Be Circulated To ... vs M/S Sanathan Textiles Pvt.Ltd on 7 April, 2014
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT AHMEDABAD
COURT - I
Appeal No.E/899/2011-DB
Arising out of: OIO No.16/DEM/VAPI/2011, Dt.07.06.2011
Passed by: Commissioner of Central Excise & Customs, Vapi
For approval and signature:
Mr.M.V. Ravindran, Honble Member (Judicial)
Mr. H.K. Thakur, Honble Member (Technical)
1. Whether Press Reporters may be allowed to see the No
Order for publication as per Rule 27 of the CESTAT
(Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the No
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy of Seen
the order?
4. Whether order is to be circulated to the Departmental Yes
authorities?
Appellant:
M/s Sanathan Textiles Pvt.Ltd.
Respondent:
CCE Vapi Represented by:
For Assessee: Shri Willingdon Christian, Adv. For Revenue: Shri Alok Srivastava, Dy.Commissioner (AR) CORAM:
MR.M.V. RAVINDRAN, HONBLE MEMBER (JUDICIAL) MR. H.K. THAKUR, HONBLE MEMBER (TECHNICAL) Date of Hearing/Decision:07.04.2014 Order No. A/10560/2014, dt.07.04.2014 Per: M.V. Ravindran
1. This appeal is directed against OIO No.16/DEM/VAPI/2011, Dt.07.06.2011.
2. The relevant facts that arise for consideration are that the appellant herein was charged with the availment of Service Tax credit on the common inputs which are used by them in the manufacturing activity. It was also noticed by lower authorities that the appellants are manufacturing dutiable product POY and were also manufacturing the cotton yarn on which Nil rate of duty was paid by availing exemption under Notification No.30/2004-CE, dt.09.07.2004. It was also noticed that since the appellant did not maintain separate accounts for the services consumed for dutiable and exempted products, they were liable to pay the amount which is equivalent to 8% or 10% as the case may be, of the value of exempted goods cleared from the factory premises. A show cause notice was issued to the appellant. The appellant contested the entire allegations made in the show cause notice on the ground that the appellant had reversed the amount of CENVAT Credit availed on common inputs and hence there cannot be any demand of an amount which is 8% or 10% of the value of the goods cleared. The adjudicating authority, after following the due process of law, did not agree with the contentions of the appellant and confirmed the demand. Hence, this appeal.
3. Ld.Counsel, at the outset, submits that there is no dispute that the appellant had availed the CENVAT Credit on the common input services. It is his submission that the appellant had reversed the entire amount of CENVAT Credit availed during the period 18.01.2007 to 31.03.2010. He would also submit that the appellant had not reversed the amount of Rs.1,22,606/- of the CENVAT Credit availed on the common input services during the period 30.08.2005 to 17.01.2007 as they had not started manufacturing the exempted cotton yarn during the relevant period. In support of such a claim, he would draw our attention to the correspondence entered by the appellant with Dy.Commissioner, Central Excise, Silvassa, Division III. He would submit that they are ready to reverse the amount of Rs.1,22,606/- in order to buy peace. He would submit that the amount which is reversed subsequently at the Tribunal stage can also be considered as enough compliance of the provisions of law and relief can be granted.
4. Ld.Departmental Representative reiterates the findings of the lower authorities.
5. On considering the submissions made by both sides and perusal of the records, we find that the issue which falls for consideration is whether the reversal of entire amount of CENVAT Credit availed on the common input services is enough compliance of the provisions of Rule 6; when an assessee manufactures and clears dutiable as well as exempted product.
6. At the outset, we find that the contention of the ld.Counsel that they have reversed an amount of Rs.3,26,564/- of the CENVAT Credit availed on common input services for the period 18.01.2007 to 31.03.2008 and 01.04.2008 to 31.03.2010. To that extent, we hold that the appellant has complied with the law as has been settled by the higher Court that once the CENVAT Credit is reversed, it has to be held that the appellant had not availed such CENVAT Credit. For this, we gainfully rely upon the ratio laid down by the Apex Court in the case of CCE Mumbai Vs Bombay Dyeing & Mfg.Co.Ltd 2007 (215) ELT 3 (SC), which has been followed by the Hon'ble High Court of Bombay in the case of Steelco Gujarat Ltd Vs. UoI 2012 (285) ELT 161 (Bom.) and also by the Hon'ble High Court of Karnataka in the case of CCE Bangalore Vs Himalaya Drug Co. 2012 (27) STR 95 (Kar.)
7. As regards the amount of credit not reversed i.e. Rs.1,22,606/- for the period 30.08.2005 to 17.01.2007, though the appellant has produced some kind of evidence before us which would indicate that the appellant had started manufacturing the exempted cotton yarn from 18.01.2007, we find that the issue is unverifiable and the adjudicating authority has recorded that the appellant did not produce any evidence before him. Keeping in mind the elapsed time, we are of the view that if the appellant is directed to reverse this amount of Rs.1,22,606/-, it would meet the ends of justice and also the compliance of the law under Rule 6 of CENVAT Credit Rules, 2004. We direct the appellant to reverse an amount of Rs.1,22,606/- (Rupees One Lakh, Twenty Two Thousands, Six Hundred and Six only) within 30 days from the date of receipt of certified copy of this order and produce evidence before the jurisdictional Assistant/Deputy Commissioner.
8. This takes us to the question of demand of interest on the appellant. Since we held that the appellant needs to reverse the amount of CENVAT Credit of the common inputs on which he has availed credit, we are of the view that the appellant also needs to be directed to pay interest on both the amounts i.e. Rs.3,26,554/- and Rs.1,22,606/-. Lower authorities will calculate the interest in accordance with the provisions of law and inform the appellant accordingly, and the appellant within 10 days of such amount being intimated, will pay the same into the Government treasury.
9. Since the issue involved in this case is solely of interpretation, in the facts & circumstances of the case, we set aside the penalty imposed on the appellant.
10. Since we have held that reversal of CENVAT Credit is enough compliance of the provisions of Rule 6 of CENVAT Credit Rules, 2004, we hold that the impugned order which confirms the demand of 8% or 10% of the value of the exempted goods along with interest and penalties, needs no further consideration, and is liable to be set aside. The impugned order to that extent is set aside.
11. The appeal is disposed of as indicated hereinabove.
(Operative portion of the order pronounced in Court) (H.K. Thakur) (M.V. Ravindran) Member (Technical) Member (Judicial) cbb ??
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