Custom, Excise & Service Tax Tribunal
M/S Kirloskar Pneumatic Co. Ltd vs Cce, Faridabad on 30 June, 2010
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH - COURT NO. 1
Excise Appeal Nos. 6045 6046 of 2004
(Arising out of Order-in-Appeal No. 65-CE/Appl/Div-1/DLH-IV/2002 & 64-CE/Appl/Div-1/DLH-IV/2002 both dated 27.10.2004 passed by the Commissioner of Central Excise (Appeals), Faridabad).
DATE OF HEARING : 30.06.2010
DATE OF DECISION : 30.06.2010
FOR APPROVAL AND SIGNATURE :
HONBLE MR. JUSTICE R.M.S. KHANDEPARKAR, PRESIDENT
HONBLE MR. RAKESH KUMAR, MEMBER (TECHNICAL)
1.
Whether Press Reporters may be allowed to see 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 of the Order ?
4.
Whether Order is to be circulated to the Departmental Authorities?
M/s Kirloskar Pneumatic Co. Ltd. .. Appellants
(Rep by Sh. B.L. Narsimhan, Adv.)
VERSUS
CCE, Faridabad .. Respondent
(Rep. by Sh. Nitin Anand, DR)
CORAM : HONBLE MR. JUSTICE RMS KHANDEPARKAR, PRESIDENT
HONBLE MR. RAKESH KUMAR, MEMBER (TECHNICAL)
ORAL ORDER NO.___________________________
PER JUSTICE R.M.S. KHANDEPARKAR :
Heard the learned advocate for the appellants and the learned DR for the respondent.
2. Since common question of law and facts arises in both these matters, they were heard together and are being disposed of by this common order.
3. The appellants are engaged in the manufacture of air compressors & parts and accessories classifiable under Chapter sub-heading 8414.80 and 8414.90 respectively of the first Schedule to the Central Excise Tariff Act, 1985. They had been availing Cenvat Credit on the inputs and capital goods in terms of the provisions of Cenvat Credit Rules, 2002.
4. The investigation discloses that for the period March 2002 to July 2003, the appellants had availed the Cenvat Credit, as above, without maintaining separate accounts for the receipt, consumption and inventory of the inputs meant for the use in the manufacture of dutiable final products and those inputs used in the manufacture of exempted goods and thereby had contravened the provisions of Cenvat Credit Rules, 2002. Consequently, show cause notices came to be issued to the appellants and the same were contested by the appellants without any success. The appeals carried against the order of the adjudicating authority also failed. Hence the present appeals.
5. The Assistant Commissioner, Faridabad, by his order dated 26th April, 2002 had confirmed the demand of Rs. 1,16,331/- being 8% of the price of Rs. 14,54,135/- of the goods cleared for the period December, 2002 to July, 2003 along with the interest payable thereon and also imposed penalty of equal amount. The Commissioner (Appeals), Delhi, refused to interfere in the said order while dismissing the appeals by its orders dated 27th October, 2004.
6. The learned advocate for the appellants fairly submitted that, as far as the main issue is concerned, the same stands covered by the decision of the Bombay High Court in the matter of Commissioner of Central Excise, Thane vs Nicholas Piramal (India) Ltd., reported in 2009 (244) ELT 321 (Bom). However, he submitted that, in the facts and circumstances of the case and taking into consideration the impugned orders, there is absolutely no case for imposition of penalty. Drawing our attention to the provisions of law comprised under Rule 12 and 13 of the Cenvat Credit Rules, 2002 as well as the amendment introduced to Rule 6 under the Finance Act, 2005, the learned advocate submitted that the impugned orders nowhere disclose any finding to the effect that there was either any fraud played by the appellants or any wilful mis-statement made or there was any collusion or suppression of facts which would justify the imposition of penalty. The impugned orders also do not disclose contravention of the provisions of the Central Excise Act, 1944 or the said Rules with intent to evade the payment of duty. In such circumstances, according to the learned advocate, there was no case for imposition of penalty.
7. The learned DR, on the other hand, referring to the assessment of materials on record made by the authorities below, submitted that there is no case for interference in the impugned orders.
8. Perusal of the impugned orders, apparently, disclose that the demand @ 8% of the price of the goods cleared during the relevant period was made and has been confirmed solely on the ground that the appellants failed to maintain separate accounts in relation to the inputs utilized in the manufacture of dutiable final products and for those inputs used in the manufacture of exempted goods. Obviously, it was on account of non-compliance of the requirement under Rule 6(2) of the Cenvat Credit Rules, 2002.
9. Rule 13(2) of the said Rules provides that, In a case, where the Cenvat credit has been taken or utilized wrongly on account of fraud, wilful mis-statement, collusion or suppression of facts, or contravention of any of the provisions of the Act or the rules made thereunder with intention to evade payment of duty, then, the manufacturer shall also be liable to pay penalty in terms of the provisions of Section 11-AC of the Act. Obviously, therefore, unless the requirement of Rule 13(2) is satisfied, the question of imposition of penalty could not arise in case of wrongful availment or utilization of Cenvat Credit. Certainly, non-maintenance of the separate accounts in relation to the inputs utilized for dutiable final products and those utilized for non-dutiable final products would amount to wrongful utilization of the Cenvat Credit. However, unless the act is done with the intention to evade the payment of duty, question of imposition of penalty would not arise, except when fraud, wilful mis-statement, collusion or suppression of facts is established. It was not the case of the respondent that there was any case of fraud, wilful mis-statement, collusion or suppression of facts on the part of the appellants in utilizing the credit without complying with the requirement of Rule 6(2) of the said Rules. The impugned orders also does not disclose any finding about the intention on the part of the appellants to evade the payment of duty in not complying with the requirement of law. Being so, the appellants are justified that in the absence of any finding on any of the above mentioned aspects, the authorities could not have imposed the penalty.
10. In the result, therefore, the appeals partly succeed as far as it relate to the imposition of penalty is concerned. Hence, the appeals are partly allowed and the impugned orders to the extent of imposition of penalty is concerned are hereby quashed and set aside. No further interference is called for in the impugned orders. The appeals are accordingly disposed of in the above terms.
(JUSTICE R.M.S. KHANDEPARKAR) PRESIDENT (RAKESH KUMAR) MEMBER (TECHNICAL) Golay ??
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