Custom, Excise & Service Tax Tribunal
Bajaj Auto Ltd vs Commissioner Of Central Excise & ... on 16 September, 2009
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI
APPEAL NO. E/725/07 Mum
(Arising out of Order-in-Original No. 06/KUS/2007 dated 31.01.2007 passed by the Commissioner of Central Excise, Aurangabad).
For approval and signature:
Honble Shri. B.S.V. Murthy, Member (Technical)
and
Honble Shri Ashok Jindal, Member (Judicial)
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
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
Bajaj Auto Ltd.
:
Appellants
Versus
Commissioner of Central Excise & Customs,
Aurangabad
Respondents
Appearance Shri U.K. Godbole, Sr. Manager for Appellant Shri P.K. Agarwal, SDR for Respondents CORAM:
Shri. B.S.V. Murthy, Member (Technical) Shri. Ashok Jindal, Member (Judicial) Date of Hearing : 16.09.09 Date of Decision : 16.09.09 ORDER NO.
Per : Shri. Ashok Jindal, Member (Judicial) This appeal is preferred by the appellant against the confirmation of demand of Cenvat credit of Rs.4,74,78,266/- under Section 11A(1) of the Central Excise Act, 1944, read with the provisions of Rule 14 of Cenvat Credit Rules, 2004 and equivalent amount of penalty under Section 11AC of Central Excise Act, 1944 read with Rule 15(2) of Cenvat Credit Rules, 2004 along with interest at applicable rate.
2. Brief facts of the case are that M/s. Bajaji Auto Ltd., the appellant, are the manufacturer of the Motor Cycles, rickshaws and spares thereof. They are also availing the facility of Cenvat credit of the duty paid on the specified inputs received in their factory premises in terms of the provisions of Cenvat Credit Rules, 2004. The appellants are procuring these specified inputs from various manufacturers against contractual agreements namely purchase orders for the agreed prices / values.
3. On scrutiny of records maintained for the purpose of availing Cenvat credit reveals that the appellant have availed the full credit of the duty paid on such specified inputs received in their factory as mentioned in the invoices issued by the supplier. Later on the prices of such inputs were reduced by the appellant with retrospective effect and the differential values accrued in respect of all such suppliers were made good by issuance of debit notes. It is alleged that the act of the appellant regarding availment of credit to the extent of the proportionate duty credit involved on the reduced quantum of value appeared to be in contravention of Rule 3 of Cenvat Credit Rules, 2004 as the duty involved on reduced portion of value appeared to be a deposit. Therefore credit availed is not of the duty but of a deposit and credit of such amount is not admissible under the Cenvat Credit Rules. A show cause notice was issued and demand of duty, interest and penalty were confirmed against the appellant. Aggrieved by the same the appellant is in appeal before us.
4. Shri. U.K. Godbole, Sr. Manager of the appellant submits that in the instant case the suppliers of the raw materials are selling the goods to them in accordance with the price mentioned in the purchase order on principal to principal basis. The said inputs are being cleared on payment of appropriate duty on value prevailing on the date of sale and time of the clearance. Accordingly, the appellants are availing the Cenvat Credit of the actual duty paid by the said suppliers. So, the clearance was made by the suppliers are well within the provisions of Section 4(1) of the CEA, 1944 and the appellants have lawfully availed the Cenvat Credit of the excise duty so paid within the provisions of Cenvat Credit Rules, 2004. He further submits that it is well settled principle that the duty is chargeable at the rate and price when the commodity is cleared at the factory gate and not on the price reduced at a subsequent date. To support this contention he relied on MRF Ltd. vs. CCE Madras reported in 1997 (092) ELT 0309 (S.C.) He further submitted that in the instant case it is an admitted fact that they have raised debit notes for the rate reduction, subsequent to clearances of goods by the suppliers from their factories. It is pertinent to note that the assessment of the said goods was final at the suppliers end and there is no dispute at the end of the supplier regarding the assessment / reassessment of the goods cleared by them. Therefore the excise duty so paid by the supplier was finally assessed and the appellants are legally entitled to avail the Cenvat credit on the duty paid of such inputs. To support this contention he, further, relied on CCE & Cus. Vs. MDS Switchgear Ltd. 2008-TIOL-245-SC-CX wherein it was held that magnitude of duty determined by jurisdictional officer of supplier unit cannot be disputed by the officers of recipient unit.
5. On the other the learned JCDR submits that the appellant is entitled to take the Cenvat Credit of the duty payable on assessable value of the input and in the instant case the price has been reduced so the appellant is not entitled to avail Cenvat credit on the portion of the value to which the instant price reduced and the same will remain as deposit and the adjudicating authority is rightly held that the appellants are not entitled to avail the Cenvat credit on the portion of the value which has been reduced by issuing debit note. With regard to the assessment, Shri. P.K. Aggarwal, learned SDR pointed out that now it is the regime of self assessment and it was the duty of the supplier to re-assess the duty payable by himself and the same was not opted by them, hence, the appellant is not entitled to avail the Cenvat credit of such differential duty of duty assessable and duty paid.
6. We have heard submissions made by both the parties and we take note that the appellants have availed Cenvat credit of the actual duty paid on the inputs at the time of clearance of the goods of their supplier and the contention of Shri. P.K. Agarwal, ld. SDR is not acceptable as the supplier has assessed the value of the goods at their end and paid accordingly. If there is any differential duty then it is the burden on the department to re-assess the duty payable which exercise has not been done by the Jurisdictional range of suppliers end. In these circumstances the appellants have rightly claimed the Cenvat credit on the actual duty paid. There is no provision in the Cenvat Credit Rules that the appellants are not entitled to take the Cenvat credit of such duty paid. We have gone through the reliance placed by the learned Advocate and ratio of those reliance are that the duty has to be determined by the jurisdictional officer of the supplier unit and if it is not done, it cannot be disputed by the officer of the recipient unit.
7. With these observations, we do not find any merit in the impugned order and the same is set aside. The appeal is allowed with consequential relief, if any.
(Pronounced in Court) (B.S.V. Murthy) Member (Technical) (Ashok Jindal) Member (Judicial) nsk 4