Custom, Excise & Service Tax Tribunal
Appeal No.E/636/2009 vs Unknown on 24 April, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH AT CHENNAI Appeal No.E/636/2009 [Arising out of Order-in-112/09-[CE] SLM dt. 26.8.2009 passed by the Commissioner of Customs & Central Excise (Appeals), Salem] Appellant : The Madras Aluminium Co. Ltd. Respondent: Commissioner of Central Excise, Salem
Appeal No. E/82/2010 [Arising out of Order-in-Appeal No.140/09-[CE] SLM dt. 25.11.2009 passed by the Commissioner of Customs & Central Excise (Appeals), Salem] Appellant : Guwahati Carbon Ltd.
Respondent: Commissioner of Central Excise, Salem Appeal No.E/83/2010 [Arising out of Order-in-Appeal No.141/09-[CE]SLM dt. 25.11.2009 passed by the Commissioner of Customs & Central Excise (Appeals), Salem] Appellant : Brahmaputra Carbon Ltd.
Respondent: Commissioner of Central Excise, Salem Appearance:
Shri Raghavan Ramabadran, Advocate For the Appellants Shri M. Rammohan Rao, DC (AR) For the Respondent CORAM:
Honble Shri R. Periasami, Technical Member Date of hearing:20.1.2015 Date of Pronouncement : 24.04.2015 FINAL ORDER No.40444-40446/2015 As the issue involved in these appeals is common, all these appeals are taken up together for disposal. The appeals are arising out of three separate impugned Orders-in-Appeals passed by Commissioner of Central Excise (Appeals), Salem in respect of common adjudication order dt. 7.1.2009.
2. The brief facts of the case are that appellant M/s.Madras Aluminium Company Ltd. (Appellant No.1) are manufacturers of Aluminium and Articles thereof falling under Ch.76 of CETA 1985 registered with Central Excise and are availing cenvat credit on the inputs supplied by the suppliers viz. M/s.Guwahati Carbon Ltd. (Appellant No.2) and M/s.Brahmaputra Carbon Ltd (Appellant No.3). A show cause notice dt. 29.4.2008 demanding cenvat credit of Rs.16,13,292/- availed on the invoices issued by M/s. Guwahati Carbon Ltd. and Rs. 1,40,078 /-credit availed in respect of invoices issued by M/s. Brahmaputra Carbon Ltd. on the ground that suppliers had included the freight and insurance charges upto the point of delivery and passed on higher duty amount. The adjudicating authority in his order dt. 7.1.2009 confirmed the demand of Rs.17,53,370/- with interest and imposed equivalent penalty on Appellant No.1. He also imposed penalty of Rs.16,13,292 & Rs.1,40,078/- on Appellant Nos.2 & 3 (suppliers) respectively. The period of dispute involved in these appeals is 16.5.2004 to 31.12.2004 and 11.6.2003 to 31.1.2005. The adjudicating authority held that the suppliers had inflated the value by including the cost of freight and insurance in their invoices and further held that appellant-manufacturer have availed excess credit on the freight and insurance which was included in the transaction value by relying on Commissioner (Appeals) order dt. 15.6.2005 passed in respect of two suppliers (appellant No.2 & 3 herein). On appeal by the appellants, the Commissioner (Appeals) has rejected their appeals and upheld OIO by relying on the Calcutta Bench of the Tribunal's decision in the case of CCE Shillong Vs Guwahati Carbon & Another reported in 2009 (93) RLT 353 (CESTAT-KOL). Hence the present appeals.
3. Ld. Advocate for the appellants submit that they have complied with substantive conditions for availing cenvat credit as per Rule 3, 4 & 9 of Cenvat Credit Rules, 2004. They have taken cenvat credit on the inputs based on the valid invoices raised by their suppliers where central excise duty has been discharged on the value of inputs by the supplier. Being receiver of inputs, they have paid the entire amount to their supplier including the excise duty and availed the credit and also they have filed monthly returns disclosing all the input details, input credit availed and the documents being disclosed to the department. He further submits that any subsequent reassessment made at the supplier's end cannot be reopened at the receiver's end. Once the cenvat credit has been validly availed on the documents, the jurisdictional authority at recipient side cannot dispute on the change of classification or rate of duty. He further submits that they have availed credit on the duty paid documents and the duty paid nature is not under dispute and there is also no dispute that the inputs were not utilized in the manufacture of final product. He submits that on identical issue pertaining to invoices issued by the same suppliers where the demand was raised on cenvat credit, a similar show cause notice was issued to M/s.Hindalco Industries Ltd. by Allahabad Commissionerate and M/s.DCM Engg. Products. by Jalandar Commissonerate respectively. In the case of Hindalco Industries Ltd. [2014-TIOL-2193-CESTAT-Del.], the Tribunal allowed the assessee's appeal. In the case of DCM Engineering Products [2009 (245) ELT 785 (Tri._Del.), the appeal filed by Revenue was dismissed by the Tribunal and upheld the Commissioner (Appeals) order. He further submits that Tribunals order was upheld by Honble High Court of Punjab and Haryana. He also relied Boards circular dt. 17.11.2008. He submits that the appellants as well as the suppliers are not liable for any penalty. Regarding Appellants 2 & 3, he submits that both the adjudicating authority and appellate authority decided the case exparte without following the principles of natural justice. The adjudicating authority has no jurisdiction to impose penalty on suppliers of inputs. He also relied on the other case laws :-
1) CCE Kolkata Vs ITC Ltd. 2013 (291) ELT 377 (T-Kol.)
2) CCE Chandigarh Vs Punjab Tractors Ltd. 2010 (259) ELT 123 (T.-Del.)
4. On the other hand, Ld. A.R reiterated the findings of the adjudication order and the impugned order. He submits that credit is admissible only on the excise duty leviable and paid on the inputs. If once it is proved that excise duty is not leviable on the value, appellant cannot avail the credit it was not held as duty. He relied on Tribunals decision in the case of CCE Shillong Vs Guwahati Carbon Ltd. - 2009 (243) ELT 307 (Tri.-Kolkata) and submits that once it has been held that duty has been erroneously paid by the supplier on the freight and insurance, the appellant-manufacturer is not entitled for the cenvat credit. The adjudicating authority rightly imposed penalties on the inputs supplier.
5. Heard both sides. The short issue is denial of cenvat credit availed on the inputs received from M/s.Guhawati Carbon Ltd. and M/s.Bramhaputra Carbon Ltd., Assam. Apparently, the department initiated proceedings against appellant-manufacturer and other appellants consequent upon the Tribunal's Kolkata Bench order passed against the above suppliers. The Tribunal held that freight and insurance charges would not form part of the assessable value for payment of central excise duty by the assessees. As stated by the learned counsel that the identical proceedings were also initiated by the Allahabad and Jalandar Commissionerates against the assessees who also received the inputs from the said suppliers. The Co-ordinate Bench of Tribunal at Delhi decided the issue in the following cases. In the case of Hindalco Industries Ltd. Vs CCE Allahabad (supra), and in the case of CCE Jalandar Vs DCM Engineering Products (supra) wherein the identical demands on the reversal of cenvat credit availed on the input invoices on the goods supplied by M/s.Gowhati Carbon Ltd. and Brahamaptra Carbon Ltd. . The relevant portion of the Tribunals order in Hindalco Industries Ltd. Vs CCE Allahabad is reproduced as under :-
"7. As is seen from the above, the identical issue between the same input suppliers was the subject matter of Tribunal's decision, which stand upheld by Hon'ble Punjab & Haryana High Court. As such we fully agree with the ld. Advocate that the issue stand exclusively decided by the above referred decision and the observations made by the Tribunal in the case ofC.C.E., Shillong vs. M/s Guwahati Carbons Ltd. - 2009 (243) ELT 307 (Tri.-Cal.), as regards the entitlement of credit by the input recipient cannot be adopted. We also agree with the ld. Advocate that such observations are general in nature and are not relatable to the issues before the Tribunal. The Tribunal was required to decide the "lis between the Revenue andM/s Guwahati Carbons Limited and not the entitlement of credit by the recipient of the inputs from M/s Guwahati Carbons Limited. The said recipients were not before the Tribunal and as such the grievance of the learned Advocate is well appreciated."
Further, the Honble High Court of Punjab & Haryana in their order dt.22.7.2010 in C.E.A.No.42 of 2010 upheld the Tribunal decision in the case of DCM Engg. Products and dismissed the appeal filed by Commissioner of Central Excise, Chandigarh. The relevant para of Honble High Court is reproduced below :-
"4. Learned Counsel for the appellant submits that the duty paid was more than due in as much as freight charges were wrongly included in the assessable value of goods. However, learned Counsel for the Revenue is unable to show any law that even if duty paid was in excess of the amount due, without excess amount being refunded, the assessee will be debarred from availing the CENVAT credit.
5. On the other hand, learned counsel for the Assessee relies on judgments of this court in CCE v. Ranbaxy Labs Ltd. [2006] 203 ELT 213 and CCE v. Swaraj Automotives ltd. [2002] 139 ELT 504 and judgment of Madras High Court in CCE v CEGAT, Chennai [2006] 202 ELT 753 and also circular issued by the Central Board of Excise & Customs, New Delhi being Circular No.877/15/2008-CX., dated 17.11.2008 to submit that credit could be availed to the extent of duty paid.
6. Since the view taken by the Tribunal is consistent with the view taken earlier by this Court, the questions proposed cannot be held to be substantial questions of law"
6. As the issue is identical and the input suppliers are also same, the ratio of the above Hon'ble High Court order is applicable to the facts of the present case. By respectfully following the ratio of the decisions rendered in Honble Tribunals decision (supra) and Honble High Court order (supra), the appellants correctly availed the credit and the demand on reversal of credit is not sustainable. Consequently, the imposition of equal penalty on the main appellant and imposition of penalty on M/s.Guwahati Carbon Ltd. and M/s. Brahmaputra Carbon Ltd. under Rule 13 of CCR does not survive and liable to be set aside. Accordingly, the impugned orders are set aside and all the three appeals are allowed with consequential relief.
(Order pronounced in open court on 24.04.2015) (R. PERIASAMI) TECHNICAL MEMBER gs 7