Custom, Excise & Service Tax Tribunal
M/S.Dee Sons Silk Mills (P) Ltd vs C.C.E., Chandigarh on 12 February, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.2, R.K. PURAM, NEW DELHI-110066
BENCH-SM
COURT IV
Excise Appeal No. E/1455/2009-EX [SM]
[Arising out of Order-in-Appeal No.43/CE/APPL/JAL/2009 dated 26/02/2009 passed by the Commissioner (Appeals), Customs, Central Excise and Service Tax, Chandigarh]
For approval and signature:
HONBLE MR. S.K. MOHANTY, MEMBER (JUDICIAL)
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.Dee Sons Silk Mills (P) Ltd. Appellant
Vs.
C.C.E., Chandigarh Respondent
Present for the Appellant : Ms.Priyanka Goel, Advocate
Present for the Respondent: Mr. R.K. Gupta, D.R.
Coram: HONBLE MR. S.K. MOHANTY, MEMBER (JUDICIAL)
Date of Hearing : 19/08/2015
Date of Pronouncement: 12/02/2016
FINAL ORDER NO. 50194/2016
PER: S.K. MOHANTY
Brief facts of the case are that the appellant is engaged in the manufacture of man-made fabrics falling under Chapter 55 of the First Schedule to the Central Excise Tariff Act 1985. The appellant availed Cenvat Credit facility in respect of duty paid on inputs used in or in relation to manufacture of final products. During the course of audit of the books of accounts for the period April, 2003 to July, 2004, it was observed by the Central Excise Officers that the appellant had availed cenvat credit on Basic Excise Duty (BED), AED (ST) and AED ( T & TA) paid on different types of yarns, used in the manufacture of man-made fabrics. Since cenvat credit taken on AED ( T & TA) were utilized towards payment of BED leviable on manmade fabrics, the Audit Officers of the Central Excise Department objected to such utilization of credit in terms of the provisions of Rule 3 (6) (b) of the Cenvat Credit Rules, 2002. The reason assigned for such objection is that cenvat credit of AED (T & TA) taken on inputs can only be utilized towards payment of AED (T & TA) and not towards payment of BED leviable on the final product. Accordingly, show cause notice dated 04.03.2008 was issued to the appellant proposing for recovery of the cenvat credit taken on AED ( T & TA) utilized towards basic excise duty under Rule 12 of the Cenvat Credit Rule, 2002 read with Section 11A of the Central Excise Act, 1944 by invoking the extended period of limitation. The said show cause notice was adjudicated vide order dated 12.11.2008 by the ld. Joint Commissioner of Central Excise in confirming cenvat demand of Rs.11,24,156/- alongwith interest and also imposing equal amount of penalty. In appeal, the ld. Commissioner (Appeals) vide the impugned order dated 26.02.2009 has upheld the adjudged demand. Hence, the present appeal before the Tribunal.
2. Ms. Priyanka Goyal, the ld Advocate appearing for the appellant submitted that the appellant was not aware of the legal position regarding restriction in using cenvat credit taken on AED (T&TA) for payment of basic excise duty on clearance of the final product from the factory. She further submitted that the appellant had maintained proper records for taking of cenvat credit on inputs and utilization towards payment of Central Excise Duty on the final product. Thus, according to the ld. Advocate, since there is no willful suppression, fraud, collusion etc. on the part of the appellant in defrauding the Government revenue, the proceedings initiated for recovery of the cenvat demand by invoking the extended period of limitation is not maintainable, and thus, the demand is liable to be set aside. To support her stand that show cause notice issued is barred by limitation of time, the ld. Advocate has relied on the following judgment/decisions rendered by the judicial forums:-
1. Gopal Zarda Udyog vs. CCE, New Delhi reported in 2005 (188) E.LT. 251 (S.C.)
2. Pushpam Pharmaceuticals Co. vs. CCE, Bombay reported in 1995 (78) E.L.T. 401 (S.C.)
3. CCE vs. Chemphar Drugs & Liniments reported in 1989 (40) E.L.T. 276 (S.C.)
4. CCE & Cus., Aurangabad Vs. Swastic Auto Products reported in 2008 (222) E.L.T. 200 (Bom.)
5. K.G. Denim Ltd. vs. CCE, Salem reported in 2008 (222) E.L.T. 464 (Tri. Chennai)
6. Sterlite Telelink Ltd. vs. CCE, Vapi reported in 2014 (312) E.L.T. 353 (Tri. Ahmd.)
3. On the other hand, Shri R.K. Gupta, ld. D.R. appearing for the respondent submitted that the appellant had intentionally utilized the AED (T & TA) for payment of basic excise duty, knowing fully well that such utilization is prohibited under Rule 3 (6) (b) of the Cenvat Credit Rules, 2002. Thus, according to the ld. D.R., initiation of proceedings for recovery of wrongly availed cenvat demand alongwith interest and imposition of equal amount of penalty by invoking the extended period of limitation is proper and justified.
4. I have heard the ld. Counsel for both sides and perused the records.
5. It is an admitted fact on record that the appellant had used AED (T&TA) for payment of basic excise duty leviable on removal of final product from the factory. Such utilization is not permissible in law in view of the embargo created in rule 3 (6) (b) of the Cenvat Credit Rules, 2002. Thus, I am of the considered opinion that there is no merit in the case of the appellant towards utilization of cenvat credit taken on AED ( T& TA) for payment of BED. However, I find that taking of cenvat credit of AED (T&TA) and utilization towards payment of BED is not attributable to fraud, collusion or any willful misstatement with intent to evade payment of Central Excise Duty, for the reason that the appellant had maintained proper records showing availment and utilization of cenvat credit on such disputed duty. Therefore, in absence of those ingredients, issuance of show cause notice should be confined to a period of one year from the date of utilization of such wrongly availed credit. It is not in dispute that the appellant has not complied with the statutory provisions in not filing the returns in time and that the credit particulars were not reflected therein. Since, the information regarding taking of cenvat credit on the disputed duty amount and utilization thereof for clearance of the finished products was within the knowledge of the Department, the show cause notice issued on 04.03.2008, proposing recovery of cenvat credit for the period April 2003 to July, 2004, in my opinion, is barred by limitation of time. I find that this Tribunal in the case of K.G. Denim Ltd. vs. CCE, Salem reported in 2008 (222) E.L.T. 464 (Tri. Chennai), in an identical set of facts though have held that AED (T & TA) cannot be utilized for payment of basic excise duty, but has allowed the appeal of the appellant on the ground of limitation.
6. Therefore, I am of the view that proceeding initiated by Department for recovery of wrongly availed cenvat credit alongwith interest and imposition of penalty by invoking the extended period of limitation is not justified. Thus, I do not find any merits in the impugned order. Hence, the same is set aside and the appeal is allowed in favour of the appellant on the ground of limitation alone.
[Pronounced in the Open Court on 12.02.2016] (S.K. MOHANTY) MEMBER (JUDICIAL) Anita ??
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5E/1455/2009-EX [SM]