Custom, Excise & Service Tax Tribunal
M/S. Trimurti Ispat Ltd vs Commissioner Of Central Excise & ... on 10 August, 2011
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. Appeal No. E/3842/2002 (Arising out of Order-in-appeal No. PKA/501/M-III & NGP/2002 dated 6/9/2002 passed by the Commissioner (Appeals) Customs & Central Excise, Bhopal ) For approval and signature: Honble Mr. Sahab Singh, 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. Trimurti Ispat Ltd.
:
Appellant
Vs.
Commissioner of Central Excise & Customs, Nagpur.
Respondent
Appearance:
None for appellant
Shri Navneet, SDR, Authorized Representative for respondent
CORAM:
Mr. Sahab Singh , Member (Technical)
Date of hearing : 10/08/2011
Date of pronouncement : /2011
ORDER NO.
This is an appeal filed by the appellant against the order-in-appeal No. PKA/501/M-III & NGP/2002 dated 6/9/2002.
2. The brief facts of the case are that the appellants were engaged in the manufacture of excisable goods M.S. Ingot falling under Chapter 72 of the Central Excise Tariff Act, 1985 and were availing MODVAT credit on the inputs used in or in relation to the manufacture of their final products under Rule 57A of Central Excise Rules, 1944. It was alleged by the department that appellant had availed the MODVAT credit of Rs.2,63,509/- during the period from November 1994 to May 1995 on the strength of invoices issued by M/s. Tara Re-rolling Mills, Tedesora- (M.P.). It was revealed that M/s. Tara Re-rolling Mills had neither received any raw material/input in their factory nor they had undertaken any manufacturing activity in their factory, but had shown the manufacture of large quantities of excisable goods in their factory and issued fabricated invoices to the appellant to facilitate them to avail in admissible MODVAT credit during the period November 1994 to May 1995. Accordingly a show-cause notice was issued to the appellant by the Joint Commissioner, Nagpur asking them for recovery of the MODVAT credit of Rs. 2,63,509/- under Rule 57-I (1) of Central Excise Rules, 1944 along with interest @ 20% per annum recoverable under Rule 57-I (5) and proposing the penalty under Rule 57-I (4) as well as under Rule 173-Q and Rule 226 of the Central Excise Rules, 1944. The show-cause notice was adjudicated by the lower authority disallowing the MODVAT credit of Rs.2,63,509/- and imposing a penalty of equal amount and also ordering the recovery of interest @ 20% per annum. The appellants preferred an appeal before the Commissioner of Central Excise (Appeals), who vide the impugned order rejected the appeal. Thereafter appellants preferred an appeal before this Tribunal and this Bench vide the Order No. C-IV/320-21/WZB/2003 dated 4/07/2003 has ordered as under:-
I have carefully considered the rival submissions. I find substance in the plea of the appellants that interest cannot be levied as the entire period covered is prior to the introduction of Rule 57F(5) which provides for levy of interest. Further, there is great force in the plea that composite penalty cannot be imposed in the light of the Tribunals decision cited supra. Therefore since the position is already settled by way of orders of the Tribunal there is no justification or necessity to remand the case. I therefore set aside the interest and penalty and allow the appeal in respect of these two items whole upholding the duty liability.
This order was corrected vide Tribunals Order No.M/198/WZB/2004-C-I dated 26/03/2004 correcting Rule 57F(5) to Rule 57I(5).
Against the said order the Commissioner of Central Excise, Nagpur have filed Central Excise Appeal No. 1/2004 in the High Court of Judicature at Bombay, Nagpur Bench, Nagpur. The Honble High Court vide its Order dated 30/08/2010 has held as under:-
It is true that Rules 57-I(4) and 57-I(5) of the Central Excise Rules, 1944, which were brought into force with effect from 23/7/1996, would not have any retrospective effect. However, the said Rules would be prospectively applicable to the case of the assessee. This Court in the case of Commissioner of Central Excise and Customs, Raigad Vs. Fibre Foils Ltd. [2009 (241) ELT 201 (Bom.)] has held that penalty under Rule 57-I (4) is mandatory. In these circumstances, the Tribunal was not justified in deleting the imposition of penalty and interest merely on the ground that the said Rules came into force with effect from 23/7/1996. In this view of the matter, the order of CESTAT dated 4/7/2003 is quashed and set aside and the matter is remanded back to the CESTAT to decide the appeal afresh in accordance with law.
3. Nobody appeared on behalf of the appellant despite notice. They have submitted the written submissions wherein they submitted that the case referred by the Honble Bombay High Court is distinguishable on the facts as the period of dispute in the cited case was April 1998 whereas in the present case, it is November 1994 to May 1995. They further submitted that, it can be seen that, the irregularity, if any, committed prior to insertion of said Rule in the Central Excise Rules and hence cannot be the subject matter of penalty under the said provision.
4. The learned SDR appearing for the Revenue reiterated the findings of the Commissioner (Appeals) and stated that the order passed by the Honble High Court of Bombay is very categorical. The Court in para-5 of the order has held that Tribunal was not justified in deleting the imposition of penalty and interest merely on the ground that said Rule came into force w.e.f. 23.7.1996. In view of the above, the appeal filed by the appellant may be dismissed and the order-in-appeal restored.
5. After hearing both the sides and going through the case papers and the order passed by the Honble High Court, I find that the Tribunal in the order dated 4/07/2002 (supra) has set aside the interest and penalty accepting the plea of the appellant that the period under which the duty has been demanded is prior to 23/07/1996, date on which the new provisions of Rule 57-I(4) and 57-I(5) came into force. The Honble Bombay High court in the case of Commissioner of Central Excise & Customs, Raigad Vs. Fibre Foils Ltd. reported in 2009 (241) ELT 201 (Bom.) has held that penalty under Rule 57-I(4) is mandatory penalty. In the present case, the show-cause notices were issued to the party on 27th July 1999 and the case was adjudicated vide its order No. 2/2000 dated 25th January 2000 in which the duty of MODVAT credit of Rs.2,63,509/- was disallowed and the interest was ordered to be recovered under Rule 57-I (5) of the Central Excise Rules and penalty of Rs. 2,63,509/- was imposed under Rule 57-I(4) as well as Rule 173Q and Rule 226 of the Central Excise Rules. The show-cause notice as well as the order-in-original both were issued after the 23.7.1996, the date on which, the new Rules 57-I(4) and 57-I(5) were introduced. The Honble High Court in its order specifically observed that In these circumstances, the Tribunal was not justified in deleting the imposition of penalty and interest merely on the ground the said Rules came into force w.e.f.23.7.1996 . This is a fact that the invoice in question on which the credit has been taken were issued by M/s. Tara Re-rolling Mills and on investigation, it was found that M/s. Tara Re-rolling Mills had not taken any manufacturing activity in their factory and issued fabricated invoices by manipulating statutory records. Therefore the credit availed by the appellant was not admissible to them and this has been confirmed by the Tribunal in its order. Therefore, following the observation of the High Court as well as taking into consideration, the fact that the invoices based on which the credit was taken were fabricated ones the appellants are liable to penalty as well as interest. I, therefore, dismiss the appeal filed by the appellants and uphold the order-in-appeal restoring the order-in-original. Appeal is dismissed (Pronounced in Court on ..) (Sahab Singh) Member (Technical) Sm 5