Custom, Excise & Service Tax Tribunal
Hindustan Copper Ltd vs Commissioner Of Central Excise, ... on 30 April, 2012
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. I Appeal Nos. E/565/12 (Arising out of Order-in-Appeal No. BC/265/BEL/2011 dated 20.01.2012 passed by Commissioner of Central Excise (Appeals), Mumbai III.) For approval and signature: Honble Mr.S.S. Kang, Vice President ======================================================
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 : Seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
====================================================== Hindustan Copper Ltd Appellant (Represented by: Mr. V.S. Sejpal, Advocate) Vs Commissioner of Central Excise, Belapur Respondent (Represented by: Mr. A.K. Prabhakar, Superintendent (A.R) ) CORAM:
Honble Mr.S.S. Kang, Vice President Date of Hearing : 30.04.2012 Date of Decision: 30.04.2012 ORDER NO..
Per: S.S. Kang
1. Heard both sides.
2. Appellant filed this appeal against the impugned order whereby the Commissioner (Appeals) upheld the demand of Rs 3,51,507/-, interest and penalty of equal amount.
3. Brief facts of the case are that the appellants are engaged in the manufacture of excisable goods falling under Chapter 74 of the Central Excise Tariff Act and were availing the benefit of Cenvat credit on the duty paid on capital goods. Appellants availed credit in respect of capital goods which are required for maintenance of the plant and machinery. Appellant availed on such capital goods and subsequently after a lapse of time the capital goods which were kept as stores were written off as the same were not put to use for more than five years. A Show Cause Notice was issued asking the appellants to reverse the credit in respect of the capital goods which were written off. The adjudicating authority confirmed the demand and imposed penalty. After the adjudication order was passed, the appellant reversed the credit alongwith interest and also paid 25% of the penalty. In the present appeal appellants are not challenging the demand of duty and are only challenging the demand of interest and penalty.
4. The contention of the appellant is that the provision for reversal of credit in respect of written off capital goods and inputs were introduced by Notification No. 26/2007-CE (NT) dated 11.5.2007. The present period is prior to the amendment. Appellant relies on the decision of the Honble Bombay High in the case of Commissioner of Central Excise vs Hindalco Industries Ltd 2011 (272) ELT 161 (Bom). The contention is that the Honble High Court held that prior to the amendment by notification 7-7-2009, a manufacturer is not required to reverse the credit in respect of the capital goods which were written off.
5. In view of the above decision, the contention of the appellant is that they are not liable to pay any interest and penalty.
6. The contention of the Revenue is that as the capital goods on which credit has been taken are not put to use in the factory, therefore, the appellants are not entitled for credit and the demand is rightly made.
7. I find that as per the allegations in the Show Cause Notice, the appellants in the Financial Year 2005-06 and 2006-07 written off certain quantity of capital goods on which credit has been availed. The reversal of credit in respect of inputs and capital goods written off fully were introduced by Notification No. 26/2007-CE (NT) dated11.5.2007. In the present case, the capital goods were written off prior to the amendment made in the Rules. In this situation, the Honble Bombay High Court in the case of CCE vs Hindalco Industries Ltd (supra) held as under:
4. Sub-rule (5B) was inserted by an amendment with effect from 7 July 2009, while sub-rule (5C) was inserted into Rule 3 by an amendment on 7 September 2007. Under sub-rule (5B) as amended, if the value of any input or capital goods before being put to use on which Cenvat credit has been taken is written off fully or where any provision to write off fully has been made in the books of account, then the manufacturer or service provider is required to pay an amount equivalent to the cenvat credit taken in respect of the said input or capital goods. Under sub-rule (5C), where on any goods manufactured or produced by an assessee, the payment of duty is ordered to be remitted under Rule 21 of the Central Excise Rules, 2002, the cenvat credit taken on the inputs used in the manufacture or production of the said goods shall be reversed. Rule 21 of the Central Excise Rules, 2002 deals with a situation where the goods have been lost or destroyed by natural causes. A provision has been made in Rule 21 for the remission of duty payable on such goods.
5. The period involved in the present appeal is prior to the insertion of sub-rules (5B) and (5C) in Rule 3.
6. In Commissioner of Central Excise vs Indian Petrochemicals Corporation Ltd, 2008 (226) ELT 339 a Division Bench of this Court had noted that the Tribunal in a long line of judgments had taken the view that where the goods have been shown as written off goods, the benefit is available. In the present case, as already noted earlier, the period to which the dispute relates is prior to the insertion of sub-rules (5B) and (5C) in Rule 3. The Tribunal held that the case of the assessee was covered by several of its judgments which have been adverted to in para 11 of the judgment. Counsel appearing on behalf of the Revenue has not submitted before the Court that any of those judgments have been overruled by any decision of this Court or of the Supreme Court. This case relates to a period prior to the amendment of Rule 3 by the insertion of sub-rules (5B) and (5C). In that view of the matter and for the reasons already noted, the Appeal would not raise any substantial question of law and shall accordingly stand dismissed. There shall be no order as to costs.
8. The admitted facts of the case are that the period involved in the appeal is prior to the amendment made with effect from 7.7.2009. In view of the above decision, I find merit in the contention of the appellants. The appellants are not challenging the reversal of duty. In these circumstances, the demand of interest and penalty is set aside and the appeal is allowed as indicated above.
(Dictated in Court.) (S.S. Kang) Vice President rk 5