Custom, Excise & Service Tax Tribunal
Sandvik Asia Pvt.Ltd. vs Cce Pune I on 1 October, 2018
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
COURT NO.
APPEAL No.E/1759/2010
(Arising out of Order-in-Appeal No.PI/RKS/104/2010 dated
19/07/2010 passed by the Commissioner of Central Excise (Appeals),
Pune)
Sandvik Asia Pvt. Ltd. : Appellant
VS
CCE, Pune-I : Respondent
Appearance Ms.Anjali Hirawat, Advocate for Appellant Shri.D.s. Chavan, Supdt. (A.R) for respondent CORAM:
Hon'ble Shri S K Mohanty, Member (Judicial) Date of hearing : 01/10/2018 Date of decision : 01/10/2018 ORDER NO. A/87788 / 2018
1. Brief facts of the case are that the appellant is engaged in the manufacture of excisable goods, falling under Chapter 82 & 84 of the First Schedule to the Central Excise Tariff Act, 1985. The appellant avails Cenvat Credit facility in respect of inputs received and used for the manufacture of excisable goods. During the disputed period, the appellant had removed crushing and screening machinery and plants to its Bhosari go-down on payment of appropriate Central Excise duty.
However, due to certain reason, the said godown returned the goods 2 Appeal No.E/1759/2010 to the appellant's factory. On receipt of such goods in the factory, the appellant had availed the entire Cenvat Credit on Central Excise duty paid on the goods, when the same were initially removed from the factory. The goods so received from the godown were subsequently removed to the buyer's premises on payment of Central Excise duty at the transaction value. During the course of audit of records, the Central Excise officers observed that the amount of Central Excise duty paid on removal of goods to the buyer was less than the amount re- credited in the Cenvat register at the time of receipt of the goods from the godown. Thus, the department contended that the appellant is liable to pay/reverse the Cenvat Credit in terms of Rule 16 (2) of the Central Excise Rules, 2002. Accordingly, show-cause proceedings were initiated against the appellant, which culminated into the adjudication order dated 05/03/2010, wherein Cenvat demand of Rs.4,79,991/- was confirmed along with interest and also equal amount of penalty was imposed on the appellant. On appeal, Ld. Commissioner (Appeals) vide impugned order dated 19/07/2010 has upheld the adjudged demand confirmed by the original authority. Feeling aggrieved by the impugned order, the appellant has preferred this appeal before the Tribunal.
2. By referring to the statement of duty payment particulars placed at page 95 in the appeal memo, the Ld. Advocate for the appellant submits that out of 13 nos. of consignments of excisable goods cleared from the factory, the appellant had paid excess Central Excise duty in respect of 8 consignments and in respect of remaining 5 consignments, lesser amount of duty has been paid. Thus, she 3 Appeal No.E/1759/2010 submits that the overall effect in respect of the clearances made during the period is that the appellant had paid excess Central Excise duty of Rs.15,94,434/-. Accordingly, it is contended by the Ld. Advocate that there is no short payment of duty by the appellant and accordingly, the adjudged demand cannot be confirmed against it. To support her stand that the proceedings initiated by the department cannot be sustained, the Ld. Advocate has relied on the decisions of this Tribunal in the case of Ajay Poly Pvt. Ltd., Vs. CCE, Pune - 2007 (213) ELT 270 (T) and Essar Steel India Ltd., Vs. CCE, Raipur - 2017 (345) ELT 139 (Tri-Del).
3. On the other hand, the Ld. DR appearing for the Revenue reiterates the findings recorded in the impugned order and further submits that since on receipt of goods from godown, the appellant had re-credited the entire amount of duty initially paid by it, on removal of the said goods in as it is condition, the appellant was required to reverse the equal amount of credit from the Cenvat account. Thus, he contended that since at the time of removal of goods, the appellant had paid lesser amount of duty, the balance amount has rightly been confirmed by the department on the appellant. He further contended that since levy of Central Excise duty relates to clearance of each consignment, it cannot be said that the excess paid duty in respect of some other consignments can be adjusted against removal of goods under sub-rule (2) of Rule 16 of the Central Excise Rules, 2002. He further submits that the appellant is exposed to the penal consequences provided in the statute.
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4. Heard both sides and perused the case records.
5. Rule 16 of the Central Excise Rules, 2002 deals with the situation of taking of credit of duty on the goods brought to the factory. Sub- rule (2) of the said rules provides that if the process does not amount to manufacture in respect of the receipted goods in the factory, then on removal of the same goods again from the factory, equal amount of credit taken should be reversed. The case of the appellant falls under the provisions of sub-rule (2) of the Rule 16 of the Rules, inasmuch as the goods removed from its godown were not subjected to any manufacturing process and the goods were removed to the buyers in as it is condition. Since on receipt of the goods in the factory, the appellant had availed Cenvat Credit of the duty amount indicated in the original invoices issued to the godown, the appellant was required to pay/reverse the equal amount of Cenvat Credit so availed, at the time of removal of the same goods from the factory to the buyer's premises. Thus, I do not find any infirmity in the impugned order, so far as it confirmed equal amount of duty liability on the appellant. The contention of the appellant that since they had paid excess Central Excise duty in respect of some consignments, which can be adjusted against the disputed consignments, I am of the considered view that such contentions are not in agreement with the statutory provisions inasmuch as the Central Excise statute recognizes removal of each consignment of excisable goods from the factory for the purpose of determination of the Central Excise duty liability. There is no specific mandate in the statute that in case of short payment of duty, the same can automatically be adjusted from the clearances made at the 5 Appeal No.E/1759/2010 higher price previously. Separate provisions in the Central Excise statute has been made for claim of refund of such excess duty paid by the assessee. The decisions relied upon by the Ld. Advocate for the appellant are distinguishable from the facts of the present case, for the reason that the issues involved in those decided cases were not the subject matter of dispute, concerning the payment made in terms of sub-rule (2) of Rule 16 of the Central Excise Rules, 2002. Thus, as per the explicit provisions contained in the statute, the appellant is liable to pay duty/reverse equal amount of Cenvat credit, in respect of goods removed to its customers. However, considering the fact that during the relevant period, the appellant had paid excess duty of about 15 lakhs in respect of clearances of the goods, it cannot be said that short payment of duty in respect of the disputed consignment was attributable to the reason of fraud, collusion, suppression of facts etc., with intent to defraud Government revenue. Therefore, I am of the considered view that the provisions of Rule 25 of the Central Excise Rules, 2002 read with Section 11 AC of the Central Excise Act, 1944 cannot be invoked, in the circumstances of the case, for imposition of penalty on the appellant.
6. In view of the foregoing discussion and analysis, the impugned order sustains, so far as it upheld the Central Excise duty liability confirmed in the original order. However, the same is set aside and the appeal is allowed in favour of the appellant, to the extent, it has upheld imposition of penalty.
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7. In the result, the appeal is partly allowed in setting aside the penalty imposed on the appellants.
(Pronounced and dictated in court) (S K Mohanty) Member (Judicial) PJ