Custom, Excise & Service Tax Tribunal
M/S.Exide Industries Ltd vs Commissioner Of Central Excise, ... on 5 April, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, KOLKATA
EASTERN ZONAL BENCH: KOLKATA
Appeal No.EA-730/11
(Arising out of Order-in-Appeal No.174/Kol-III/2011 dated 04.05.2011 passed by the Commissioner(Appeal-I) of Central Excise, Kolkata.)
FOR APPROVAL AND SIGNATURE
HONBLE SHRI H.K.THAKUR, 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
Authorative report or not?
3. Whether Their Lordship wishes to see the fair copy
of the Order?
4. Whether Order is to be circulated to the Departmental
Authorities?
M/s.Exide Industries Ltd.
Applicant (s)/Appellant (s)
Vs.
Commissioner of Central Excise, Kolkata-III
Respondent (s)
Appearance:
Miss S.Chatterjee, Advocate for the Appellant Shri K.Chowdhury, Supdt.(AR) for the Revenue CORAM:
Honble Shri H.K.Thakur, Member(Technical) Date of Hearing/Decision :- 05.04.2016 Date of Pronouncement :- 05.04.2016 ORDER NO.FO/A/75245/2016 Per Shri H.K.Thakur.
This Appeal has been filed by the Appellant against Order-in-Appeal No.174/Kol-III/2011 dated 04.05.2011 passed by Commissioner(Appeal-I) of Central Excise, Kolkata under which Order-in-Original No.51/Addl.Commr./CE/KOL-III/08-09 dated 12.01.2009, passed by the Adjudicating Authority, has been upheld. Under Order-in-Original dated 12.01.2009 the Adjudicating Authority disallowed CENVAT Credit of Rs.13,29,917/- to the Appellant under Rule 12 of CENVAT Credit Rules, 2002 and Rule 14 of CENVAT Credit Rules, 2004 and also imposed equivalent penalty under Section 11AC of the Central Excise Act, 1944 along with interest.
2. Miss S.Chatterjee (Advocate) appearing on behalf of the Appellant argued that CENVAT Credit has been denied to the Appellant with respect to inputs found short in the Appellants stock as per Statutory Audit undertaken by the Appellant. It is the case of the Appellant that the said shortages were written off and accordingly no demand of duty can be made because the period of demand is 2002-03 to 2005-06 and the provisions for reversal of CENVAT Credit with respect to shortages in inputs and capital goods on writing off was introduced as per Notification No.26/2007-CE(NT) dated 11.05.2007 under which Rule 5B was inserted in Rule 3 of the CENVAT Credit Rules, 2004. The Ld.Advocate relied upon the following case laws in support of her argument that reversal of CENVAT Credit is only required to be done after 11.05.2007.:-
(i) Electronics Corpn. Of India Ltd. v. CCE, Hyderabad-III [2015 (330) ELT 657(Tri.-Bang.)]
(ii) Philips Electronics India Ltd. v. Commissioner of C.Ex, Pune [2011 (274) ELT 311(Tri.-Bang.)]
(iii) Commissioner of C.Ex., Navi Mumbai v. Hindalco Industries Ltd.
[2011 (272) ELT 161 (Bom.)]
(iv) Commr. of Central Excise v. Indian Petrochemicals Corpn. Ltd.
[2008 (226) ELT 339 (Bom.)]
(v) Ray Ban Sun Optics India Ltd. v. Commr. of Central Excise, Jaipur [2012 (283) ELT 276 (Tri.-Del.)]
(vi) Commissioner of Central Excise Pune-III v. Bharat Forge Ltd.
[2015 (317) ELT 111 (Tri.-Mumbai)]
(vii) ADC India Communications Ltd. vs. Commr. of C.Ex., Bangalore [2012 (283) ELT 415 (Tri.-Bang.)]
3. It was also strongly argued by the Ld.Advocate appearing on behalf of the Appellant that shortage of inputs detected was never cleared from the factory, therefore, no CENVAT Credit is required to be paid by the Appellant.
4. Shri K.Chowdhury, Supdt.(AR) appearing on behalf of the Revenue argued that there is no evidence on record that the shortages detected, for which Show Cause Notice had been issued, were lying anywhere in the factory as unfit inputs etc..That all the case laws relied upon by the Advocate are for situations where the inputs were available in the factory, but were not usable. The ld.AR relied upon the case law of ASCO (India) Ltd. v. CEGAT, Chennai [2009 (238) ELT 397(Mad.)]. It was his case that in this case Honble Madras High Court has held that when there are shortages then CENVAT Credit is required to be reversed.
5. The Ld.Advocate appearing on behalf of the Appellant as a counter argued that even if on merit the issue is decided against them, then also no demand can be confirmed as extended period of five years is not applicable.
6. Heard both sides and perused the case records.
7. The issue involved in the present proceedings is whether CENVAT Credit is required to be reversed with respect to inputs found short in the factory premises of the Appellant. The stand taken by the Appellant is that the shortages found in the factory premises were written off by the Appellant as per Cost Accounting System and no CENVAT Credit is required to be reversed. The Ld.Advocate appearing on behalf of the Appellant relied upon the amendment carried out under Notification No.26/2007-CE(NT) dated 11.05.2007 which only made reversal of CENVAT Credit where inputs are written off. It is thus the case of the Appellant that since the period of the demand is prior to 11.05.2007, therefore, no reversal of CENVAT Credit on written off inputs is required to be done. In this regard Appellant has relied upon several case laws to argue that demand is not sustainable. It is observed from the case law Electronics Corpn. Of India Ltd. v. CCE, Hyderabad-III (supra), relied upon by the Appellant, that CESTAT Bangalore has made following observations when holding that written off provisions and reversal of credit will be applicable after 11.05.2007 when Notification No.26/2007-CE(NT) dated 11.05.2007 was issued.:-
3. We find considerable force in the arguments and submissions of the counsel. Prior to amendment of Rule 5B of the Cenvat Credit Rules on 11.05.2007, there was no provision requiring reversal of the credit when the inputs were partially or fully written off but no removal. In view of the precedent decision, cited by learned counsel and also other submissions which were made, we find that this demand is not sustainable and accordingly, is set aside.
8. It is observed that there was no removal of inputs in the case before CESTAT Bangalore. Similarly in all other cases relied upon by the Appellant, the inputs were lying in the factory which were written off because of unsuitability of their use in the manufacturing process. However, in the present case the shortages written off by the Appellant were never found available in the factory premises of the Appellant. Therefore the ratio of the case laws relied upon by the Appellant is not applicable. On the contrary Honble Madras High Court in the case of ASCO (India) Ltd. v. CEGAT, Chennai (supra) held under similar situations that there was no question of law arising of the facts to direct Tribunal to draw a statement of facts. On merits, therefore, Appellant does not have the case.
9. It is also the case of the Appellant that the demand is barred by limitation. However, it is observed that writing off amount and the shortages were detected by the departmental officers during audit and scrutiny of the Cost Audit Reports, accordingly extended period is applicable. However, it is observed that option of payment of 25% reduced penalty under Section 11AC of the Central Excise Act, 1944 is not extended to the Appellant. The same is extended to the Appellant subject to the condition that the entire demand along with interest and 25% reduced penalty is paid within 1(one) month from the date of receipt of this Order.
10. Based on the above observations Appeal filed by the Appellant is dismissed, except extending option of 25% reduced penalty under Section 11AC of the Central Excise Act, 1944.
(Operative part of the order was pronounced in the open court.)
SD/
(H.K.THAKUR) MEMBER(TECHNICAL)
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Appeal No.EA-730/11