Karnataka High Court
The Union Of India vs M/S Jindal Praxair Oxygen Co Ltd on 8 September, 2011
Bench: V.G.Sabhahit, B.Manohar
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A PRAXAIR OXYGEN CO. LTD., V .'.T'ORA.NAGIAL*LU, BELLARY DISTRICT, A*.KARNATAKA$ . __. U.RESPONDENT (BYSRLEZHANUMAREDDY,ADVOCATEFOR zMu$AL1&<x1) THIS APPEAL IS FILED UNDER SECTION 35(G) "EDE'THE CENTRAL EXcun:AcT,1944 ARHHNG OUT goE ORDER DATED o7nxw2oo7 PASSED DJFWNAL ORDER NO.220/2007, PRAYING THAT THIS HON'BLE COURT MAY BE PLEASED TO: (1) TO DECIDE THE SUBSTANTIAL QUESTION OF LAW -2- STATED THEREIN; (11) SET ASIDE THI«:"'--i?f'iN';xAL ORDER NO.220/2007 DATED 07/02/200'7"PA.SSE}D. BY THE CESTAT, BANGALORE, VIDE I' IN THE INTEREST OF' JUSTICE.
THIS APPEAL BEING HEATQD JUDGMENT, COMING ON FOR PRAONOUNC-EMIENT°:THIS>0 DAY, V.G.SABHAHIT.J., DELIVERED "1'HE.FOLLO.WI.NC=i This Revenue being aggrieved.' /7-2-2007 passed by the ii i8t"""SierVice Tax Appellate Tribii.nall,_ ' Bench, Bangalore (hereinIaft_Ver~. as 'CESTAT') in the Final N_o.2i2"e/2907 in Appeal No.Excise/01/2005 ' ;IWherei'n"th'e___appeal filed by the assessee has been I'-a1'l.ovyedi."g:byxhuholding that the order passed by the Cornrnishsiioner of Central Excise 85 Customs, "I3.e_lgalum dated 1-10-2004 in Order«in--Original l7.jNo:.19/2004 is liable to be set aside and there is no "justification for imposing equal penalty. I}/Z -3-
2. The material facts leading up to are as follows:
The respondent--asjsiess'ee is .;e_n'gaged7 in the manufacture of gaseousfalnd li<:i'L1yid».o){;z_l.g*eVn',._ Nitrogen and Argon fal1in'g_l:u.nder' the"
Central Excise Tariff and'~...h.afve been working under 'SelfllAs.s'elsAsVri~ientll5?r.o.c'eVdure' which is a liberalised_::V¢'rs1§~b":»p:f: Procedure'. They their-faci_llit'ylllofl"lvIODVAT/CENVAT credit ____ " goods. When the Officl'e_rs__ Preventive Unit visited the responid.ent'sl that the respondent had irregularly availed the Cenvat credit during the 1--4:éOOO to 31-3-2001 and April and capital goods and spares falling under C'h'aptver.vil98l.O1 of the Customs Tariff Act, 1975 and Agvvhichfwere received by the factory prior to 1--3-- It is the contention of the Revenue that since l§Rule 57Q(3) of the Central Excise Rules, 1944 (hereinafter called as the 'Rules') provided that credit of additional duty leviable on goods falling bk./' under Chapter hearing No.98.01 shall be allowed to the extent of 75% of the additional such goods. This provision was amended rand' 2 words "75%" was changed to v'i'l"00'9/go" by No.11/2000--cEmNT) dated 1--é;2000. *As psi i5g_ said rule, respondent was-,,_ei=igibleV' to 'ayia.ili"on"iy 075°/0 2' of the additional 'duty under Section 3 of the as Modvat credit. l-Iowever, diiidiiinot take the credit .._til1i§.iiimieainwhile, the Rule was 1-4-2000. After the respondent again took Cenvatiicrediti li0(l.i"i:/0'--i:$ii)iiiiadditional duty of customs inst;ead_.ofi75%'.' The 50% of the said Cenvat credit 2000-01 and thereafter 25% was 2001 and remaining 25% in May, 2OQ1vLe§}50%>in 2000-01 and 50%)in 2001-02. Thereafter a case was registered for recovery of the irregularly availed Modvat/Cenvat credit. Thereafter, show cause notice was issued on 18-3- 2002 by the Commissioner asking them to show ken"
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cause as to why the excess Cenvat crediti_avla'i.l'e-dd 'Atoll. the extent of Rs.1,69,10,573/--
recovered under Rule 57/AH proviso to Section 11A(1)_of theClecntrallfilpicisev'=.'A'ctl;'--.. 1944 (hereinafter referre'd_i"*t.o as'.th=6:.'.='A'ct;)§l whyll interest under Secptio1'1V""lAllAE§"g._.'should "not be demanded; why penalty l1AC of the Act should uI1.o:t.__be why penalty should 173Q of the Rules ..... reply, the Adjudicating Authlo_'rit.y' No.13/2002 passed an confirming the demand of Rs.._§:l,be9,lO,l57__6ll/l-- being the amount of irregularly under Rule 57AH of the Rules read with 11A(1) of the Act and further, iin-t_erest.yfas demanded under Section 11AB of the Act and imposed penalty of Rs.1,69,10,576/-- under vSpe.c'A_tion 11AC of the Act and under Rule 173Q of the Rules. Being aggrieved by the said order, the A respondent-assessee preferred an appeal No.33?»/2004 before the CESTAT. The CESTAT, by \,?-\/i -5- order dated lO--2--2004, keeping open all issues, remanded the matter for adjudi_e'a'tio::nba~fre--sh__i observing that the Adjudicaiting-A.tiAvuiteho.rii't-yd'Vinayit.i examine the issue afreshfon the iapplei»Ci'a'f3tilpiityTgoifl Rule 57AC(2)(c) of the--.._rR_U1es to "pass appropriate orders ,--..lr1 iiwithii law. Accordingly, after Adjudicating Authority, to the respondent-ofif all the issues and No.19 /2004 dated 24--9--2:'QAO4_ ' ' "i the demand of Rs.1,69,i1=o3i5t7v6/'---- amount of irregularly _ availed credit' Rule 57AH of the Rules read ._ 11A(il")H(C) of the Act with interest and pen'alty.__'unde'r__ Rule 1lAC and 173Q of the Act. Bieeihngi by the said order, the respondent ass'e_sse_e'pi~°'eferred an appeal before the CESTAT, .i""--__ii"WnhpiChivwlas disposed of by order dated 7-2-2007. r.--'CESTAT, on careful consideration of the ii"'-.i:wp_rovisions of Rule 57/AB of the Rules read with Section 57AC(2)(c) of the Act, Rule 57Q(3) and K (V5 -7- subsequent Rule 57AG of the Rules, subsequent Rule 57AG of the Rules applicable to the instant case as thev~-~a_si3.es'é:e«.had earned on installation of the o,api:tailfjvgiouiod.s 2000 the Cenvat credit and_ 100% under Rule 57AB o"f~it:t'he Ruleis"iAxrsi/as"1.;also not 0 justified. The CESTAT a1ls'o--..lj1'elida,_thatiprovisions of Rule 57AC(2)(c) of and since under the of credit had been right in availing the and the impugned ordeii_is--. and that the entire issue 10.?'i..fi:fi-¢}ipiretation and there is no ju"s.§tiiifie.ation' ~ in imposing equal penalty. the CESTAT allowed the appeal. Being h'yv"'the said order passed by the CESTAT, this a._ppeal is filed by the Revenue.
3. This appeal has been admitted to determine _..the following substantial questions of law in this appeah L34/5
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(1) Whether the Tribunal is..righ.t in' _ granting CENVAT'"'c.re&diTt in spite' of the explicitflegal jpiiovigsion-sr__g Contained in Rule 75_7"Q(3)*.o'f_th_e~ Central Excise Ru=les=, 1944T;.aind (2) Whether theii"T:r'i»bunail' ~i_si"'riightj'inI setting asid_e____t_l':.e 'levy ofpenalty on thiegdebt payable upon "the capi tal vggoeoidgslf :0
4. We'hai?e izhearid counsel appearing _'
5. Thefilearnedi"eo..uniself appearing for the appellant _sub_--m_itt.ed*.{thVat_ the Tribunal was not justifiediflin' assessee is entitled to the F~r0Yisioin..si ne-wiiRule 57AC which has come .v.,/.intd_._léffe=!:t"'..fromiIIi§i4v-2000 as the goods had been 1-4-2000 and the question as to whe_.tiher.tih"ie, goods which were received prior to 1-4- Ci"~v._i'-.2000"Mitre utilised after 1-4-2000 has been l'~I'coVnCs"idered by the CESTAT, South Zonal Bench, I gnennai in GRASIM INDUSTRIES LTD VS OMMISSIONER OF CENTRAL EXCI E, TRICHY (2004 (176) E.L.T. 265) and also by the Hon'ble Supreme Court in COMMISSIONER OF CENTRAL KC;
-9- EXCISE, BHAVNAGAR vs M/s.sAu~RAs'§ti;*1_§A.p CHEMICALS LTD (Appeal (civil) 2428/_.2_0iO.7,'idecidied on 9-5-2007), wherein it is installed after 1-4-2000,y.onlyii50%_ credVi'_tAii's "eli§ibylie'«.V and balance 50% not eli"gri:b'l.e eve"n_i'ivnbsubsequentii years. ThereforeV,'V..he the order passed by the set aside and substantial. answered in favour of of his contention, he hasl"re.lAi"e..d oh; =th'e..above'**vsa~i'd two decisions. We l'1vave.,"gi"v-e__n'<careful consideration to the contentions, ofvllearnied counsel appearing for the paV'pp.el:lian"t..pand scrutinised the material on record. substantial questions of law as to whethperli the assessee can claim Cenvat credit " pursuant to the provisions of Section Rule 57AC of Rules in respect of the goods received prior to 1- 04-2000 and installed after date in view of the inclusion of the provisions of Rule 5"/AC of the Rules inserted on 3-5-2000, has already been ital/3 -10- considered by the Hor1'ble Supreme Cou'r_tW..in M/SSAURASHTRA CHEMICALS case The scrutiny of the material on the present case would clearly goods were received by the asseissee p.r.j1or' to';1i;4--*.. 2000, but they had not instali_led:.?as7_on 1-4- V 2000 and the asses's'e._e oif"s0'<3/ll for the assessment year ll of 50% in the next, irregular. In View of "vJh:iich._;is.clearly contrary to the i5'"7A-Ci(c) of the Rules, the Hon'b'l_e 0' after considering the provisioin«.4s.Viio.f of the Rules which was in existence pri"o-r._t_o__l-4-2000 and also the provisions of the Rules which has come into fif_~o_m:"'l'V;4-2000, has clearly held that in view thaeipriovisions of Rule 57AC(c) of the Rules, hi nCe'nvia"ti credit may also be taken in respect of such *_ic'ap'ital goods having been received in the factory,
--7ibut have not been installed before 1-4-2000 subject to the condition that during the financial year La )3;
,11_ 2000-01, the credit shall be taken for an amzjunt not exceeding 50% of the duty paid on goods. In the case of M/ CHEMICALS cited supra, the a[ssies'seei--,ha;d the capital goods in the year been installed as on l--4--200:0..,andi. on as in the present case,,zp50%.*o'fl..t_hei"C_envait"L:-redit was availed for the year 50% was Court, on --V.oi"'.."tlielpprloivisions of Rule 57AC of. into effect from 1--4--20:0__A0,--.while.':e.ofr;slid.er'i..ng'the said question, held that in respect iofilciapitlallgoods received prior to 1~ _ eAinstal'le__cliafter that date, only 50% credit is ieligiiblelai1_d"«..balance of 50% is not eligible to be aVai'l_e.d"..t_he:'s'ubsequent years.
8.. View of the above said decision, the f_'subst.antial questions of law have to be answered in ' favour of the revenue and against the assessee and order passed by the CESTAT is liable to be set aside and Cenvat credit allowed \Q>g'7> -12- subsequent to the assessment year it be set aside. Accordingly';"' --we a_Vr.1iisi'vl'lv'erll -thé-.' substantial questions of lavif.
revenue and against thela._§s,.f?Ssee.,_ {I1l'V_iéi'Wli"'Of"'the said finding, the assesses. "'l,iablei"--toA pay the penalty and interesft'iiiqwl'1ic1h:. _ consequently follow on the"-teco§«'efy--Ai.i*.regul.af'l availment of Cenvat credi'--t.. ~ i the appeal and set aside l"f,h:6. orde:r°'e«.ivd'al\éfli:ii,.7;2--2007 passed by the CESTAT App'ea1~,iN'o":Excise/O1/2005 and restore the__§:A order datedv l~lO-2004 passed by the ,Co_mn1iissiozn-er of Central Excise and Customs, ii"'Be-1.géu»§5...1iln ~ilO:'der--in--Original No. 19/200%. JUDGE sd/-
IUDGE Sp