Custom, Excise & Service Tax Tribunal
St/Stay/25848/2013 In ... vs C.C.E., Hyderabad on 22 October, 2013
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE ST/Stay/25848/2013 in ST/25628/2013-DB [Arising out of the Order-in-Original No. 07/2012 Adjn (C.Ex.) (Commr.) dated 30.11.2012 passed by the Commissioner of Customs, Central Excise & Service Tax, Hyderabad] M/s Bharat Dynamics Ltd. Appellant Versus C.C.E., Hyderabad Respondent
Appearance:
Mr. Muralidhar, Advocate For appellant
Mr. R. K. Singhla, Commissioner (AR) For Respondent
CORAM:
HON'BLE SHRI B.S.V.MURTHY, TECHNICAL MEMBER
HON'BLE SHRI ANIL CHOUDHARY, JUDICIAL MEMBER
Date of Hearing: 22/10/2013
Date of Decision: 22/10/2013
FINAL ORDER NO. 26833/2013
Order Per : B.S.V.MURTHY
The facts in brief as submitted by appellant is reproduced below :
2. The appellants are PSU working under the Ministry of Defence. In respect of Akash Missile project, the finished goods were to be supplied to another PSU Bharat Electronics Ltd and not to MOD directly. Since the supply was not being made directly to MOD, the appellants took the view that their clearances are not exempted under Notification No.63/95 dt 16.3.1995. Vide letter dated 4.3.2010 addressed to Asst Commissioner/ they intimated that goods would be cleared to BEL on payment of excise duty and accordingly they will be availing cenvat credit. They started taking the cenvat credit from September 2010 onwards. Some of the inputs were required to be sent on job-work basis to the job workers. The appellants followed the procedure set under Rule 4 (5a) of sending the inputs under job-work challans. When the inputs sent for job-work were not returned by the job-worker within 180 days, the appellants reversed the Cenvat credit as specified under Rule 4 (5a). Such reversals were reflected in the monthly ER 1 Returns. When BEL told the appellant that the duty exemption should be applicable even for the supplies between the Units specified under Notification No.63/95, the appellant approached the Departmental officials seeking necessary clarification. Details of correspondence between appellant and Dept. are as under :
04.03.2010 : Letter to A C Hyd. towards Cenvat availment (Page No. 48) 29.1L.2010 : Letter to Commissioner (page No. 49) L3.12.2010 : Letter to AC (Technical) (page No. 53)
24.t2.2010 : Letter to Commissioner (Page No. 66) 08.02.2011 : Letter to Commissioner (Page No. 68) 18.03.2011 : Letter to Commissioner (Page No. 69) 18.03.2011 : Letter submitted to Asst. Commissioner (Page 70) 24.03.2011 : Letter to Range reg. clearance of goods on payment of duty. 30.03.2011 : TRU letter to Commissioner about exemption (Page No. 73) 12.04.2011 : Letter from Dy Commissioner enclosing therewith TRU letter (Page No. 72)
3. The appellants reversed the balance Cenvat credit of Rs.4,67,56,846/- in April 2011 and showed the same in the ER 1 Return and submitted a letter to the Range Superintendent intimating the reversal (Page 75). The Dept issued SCN on 07.05.2012, invoking the extended period, demanding reversal of Rs.5,58,51,697/- along with interest and with proposal to impose penalty under Section 11AC. (Para 7 & 10 of SCN - Page LL7/LlB). No issue was raised towards payment of excise duty on the FG (held as exempted vide clarification dated 72.4.2011), in the month of March 2011. The excise duty of Rs.90,94,857/- paid by the appellants was sought to be appropriated against the Cenvat reversal demand. (Page 119). The Adjudicating authority held that the allegation of suppression does not sustain in view of the factual evidence and accordingly dropped the proposed penalty under Section 11 AC. He confirmed the demand towards interest on the Cenvat credit taken.
4. The matter before us is whether the appellant is liable to pay interest or not. After hearing both sides for some time and going through the facts on record, we find that the appeal itself can be disposed of. Before we proceed, we want to make it clear that this is a very peculiar case and needs a holistic consideration of the whole facts and circumstances. It is a case where the appellant did not take credit instead they sought clarification from the department about the eligibility on exemption Notification.
5. Learned Authorised Representative submits that while TRU issued clarification about the eligibility on exemption notification, TRU had stated that the issue had been clarified in 2006 itself and the same was reiterated and therefore appellant had no business to seek clarification from the department.
6. In our opinion, the appellant has definitely a case for seeking clarification from the department. In March, 2010, appellant sought clarification from the department to know whether the clearance of goods to M/S BEL are exempted from payment of excise duty in terms of notification. In the absence of the clarification from the department, they took CENVAT credit during the intervening period September 2010 to March 2011. They had to take cenvat credit in September, 2010 since some of the job workers did not return all the inputs within 180 days and they had to reverse the credit. To reverse the credit, they had to take credit. When there was no clarification received from the department till March, 2011, the assessee had no option but to clear two consignments in March 2011 on payment of excise duty of Rs. 90,94,851/- by utilising the Cenvat credit. On getting the clarification from TRU in April 2011, the appellant reversed the entire amount of Cenvat credit.
7. In the above circumstances, the only question arises whether in terms of Rule 14 of the Cenvat Credit Rules, 2004, the appellant can be said to have taken credit wrongly. When the credit was not taken wrongly, the question of payment of interest does not arise. In this case, the circumstances discussed above show that the appellant could not have acted any other way than the way they did. In the circumstances, holding that credit was not admissible and was taken without eligibility and therefore asking them to pay interest was not correct. Moreover, any assessee, if he has any doubt, has a right to ask the department and such action is not contrary to the provisions of law. Further, in the circumstances of this case, it cannot be said that the credit had been taken by the appellant wrongly. When credit is not taken wrongly, question of payment of interest does not arise in terms of provisions of rule 14 of CCR 2004. In these circumstances, we do not find that the appellant is liable to pay interest since credit taken by them is not wrong in the first place. In the result, appeal is allowed with consequential relief, if any, to the appellant.
(Dictated and pronounced in open court) (ANIL CHOUDHARY) JUDICIAL MEMBER (B.S.V. MURTHY) TECHNICAL MEMBER /vc/