Custom, Excise & Service Tax Tribunal
M/S. Sanghi Polymers Pvt. Ltd vs Commissioner Of Customs, Central ... on 22 May, 2013
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, BANGALORE SOUTH ZONAL BENCH AT BANGALORE COURT - I Stay Application No.: E/Stay/2032/2012 in Excise Appeal No: E/2795/2012 (Arising out of Order-in-Original No: 10/2012-CE-HYD-III-ADJN. (COMMNR.) dated 11.7.2012 passed by the Commissioner of Customs, Central Excise & Service Tax, Hyderabad-III Commissionerate, Hyderabad.) 1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes 3. Whether their Lordship wish to see the fair copy of the Order? Seen 4. Whether Order is to be circulated to the Departmental authorities? Yes M/s. Sanghi Polymers Pvt. Ltd. Appellant Versus Commissioner of Customs, Central Excise & Service Tax Hyderabad-III Commissionerate Hyderabad. Respondent
Appearance Mr. S. Sridevi, Advocate for the appellant.
Mr. Ganesh Havannur, Addl. Commissioner for the Revenue.
CORAM HONBLE JUSTICE MR. G. RAGHURAM, PRESIDENT HONBLE MR. B.S.V. MURTHY, MEMBER (TECHNICAL) Date of Hearing : 22.05.2013 Date of decision : 22.05.2013 FINAL ORDER No._______________________2013 [Order per: Justice G. Raghuram]. Having heard the learned counsel for the appellant and the departmental representative for the Revenue/Respondent, we consider it appropriate to dispose of the appeal itself.
2. This appeal by the assessee is against the adjudication order dated 11.7.2012 passed by the Commissioner of Customs, Central Excise and Service Tax, Hyderabad whereby in respect of goods cleared during 7.7.2010 to 14.12.2010, valued at Rs.10,34,79,604/- involving Central Excise duty of Rs.1,06,58,470/- were cleared by irregularly paying duty by utilizing CENVAT credit, without payment of the duty consignment-wise. The goods were declared liable for confiscation. Since they were not available for confiscation, a redemption fine of Rs.1,00,000/- was imposed; Central Excise duty of Rs.1,06,58,470/- including cesses not paid consignment-wise during the aforesaid period was ordered to be recovered in terms of Section 11A of the Central Excise Act, 1994 by ordering appropriation of Rs.42,40,924/- paid through the current account towards the duty demand of Rs.1,06,58,470/-. Apart from the above, interest under Section 11AB and penalty under Rule 25 as specified was also imposed.
3. The relevant facts in brief are that the assessee-appellant is a manufacturer of self-adhesive tapes, electrical insulation tape, etc. These goods fall within the specified Chapters of Central Excise Tariff Act, 1985. During scrutiny of the returns filed for May 2010, Revenue noticed that the assessee disclosed the duty paid for May 2010 as Rs.4,90,598/- vide 10 GAR challans specified in the order; of which 4 challans comprising Rs.1,95,598/- were in the name of the assessee while 6 other challans representing Rs.2,95,000/- were in the name of M/s. SZF Pvt. Ltd. (claimed to a part of the group of companies comprising the assessee as well). Since the amount remitted in the name of the other company could not be adjusted towards appellants payments, these were considered as liable to be remitted by the assessee. Revenue concluded that the assessee had defaulted in payment of Central Excise duty to the extent of Rs.2,95,000/- for May 2010.
4. The assessee, vide letter dated 20.10.2010 requested the jurisdictional Commissioner to adjust Rs.2,95,000/- paid in the name of other group-company to its credit, as payments were made in the name of other company by a clerical error. This representation of the assessee was rejected by the jurisdictional Commissioner vide communication dated 25.11.2010. Thereafter, the assessee was called upon to remit the shortfall of Rs.2,95,000/- along with interest and also to pay in cash the amount of CENVAT credit irregularly utilized during the period July 2010 onwards besides intimating the assessee that duty must be paid consignment-wise without utilizing the CENVAT Credit, in terms of Rules 8(3A) of the CENVAT Credit Rules, 2004. In response, the assessee remitted Rs.2,95,000/- along with interest, on 14.12.2010.
5. However, applying the provisions of Rule 8(3A) of the CENVAT Credit Rules, the adjudicating authority concluded that the assessee irregularly and unauthorisedly availed CENVAT Credit towards discharging Central Excise duty and had cleared goods without payment of duty during the period July 2001 to December 2011 and determined the liability of Rs.1,06,58,470/-.
6. It is brought to our notice that in the judgment of this Tribunal in Solar Chemferts Pvt. Ltd. vs. Commissioner reported in 2012 (276) E.L.T. 273 (Tri.-Mum.) in analogous circumstances, on a harmonious interpretation of provisions of Central Excise Act, 1944 and CENVAT Credit Rules, 2004, this Tribunal held that even during the period of default, payment through CENVAT credit though would not amount to due discharge of duty, interest would be payable so long as there is no proper discharge of duty; that duty paid during the defaulting period would be proper discharge once the default in payment from the PLA is made good and the applicable interest is paid. Liability would be only of interest from the date of clearance to the date on which default in respect of CENVAT credit availed during that period, is made good, held the Tribunal.
7. This Tribunal concluded that once the default amount is paid, thereafter payment made through CENVAT credit becomes proper even if the CENVAT credit payment is before the date on which the defaulted amount is remitted and that in the circumstances, it is not necessary to ask the assessee to pay the duty in cash and take re-credit of the equivalent amount credited in their CENVAT credit account earlier; subject only to the condition that there occurs the liability of the assessee to remit interest for the period of default and if the default is made good subsequently.
5. Learned counsel for the petitioner also strenuously prays for invalidation of the penalty imposed under Section 11 and 11AB besides penalty under Rule 25 and redemption fine of Rs.1/- lakh. Since, we are remitting the matter to the adjudicating authority, the said authority will consider this plea of the assessee as well and in terms of the judgment of the Tribunal in the case of Solar Chemferts Pvt. Ltd.
6. In the light of the judgment of this Tribunal, we consider it appropriate to set aside the adjudication order and remit the matter to the adjudicating authority for de novo determination and application of the ratio of the judgment of this Tribunal in Solar Chemferts Pvt. Ltd. for determining the liability of the petitioner.
7. Appeal is allowed by way of remand, without any costs.
(Pronounced and dictated in open Court) (G. RAGHURAM) President (B.S.V. MURTHY) Member (T) rv 6