Custom, Excise & Service Tax Tribunal
M/S. Canara Traders & Printers P. Ltd vs Commissioner Of Central Excise, ... on 10 June, 2014
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
E/00030/2010
[Arising out of Order-in-Original No.03/2009, dated 05.11.2009 passed by the Commissioner of Central Excise, Chennai-IV]
FOR APPROVAL AND SIGNATURE:
Honble Shri Pradip Kumar Das, Judicial Member :
Honbe Shri R. Periasami, Technical Member :
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 the Members wish to see the fair copy of
the Order? :
4. Whether Order is to be circulated to the Departmental
Authorities? :
M/s. Canara Traders & Printers P. Ltd.
Appellant
Versus
Commissioner of Central Excise, Chennai-IV
Respondent
Appearance:
Shri N. Viswanathan, Adv.
Ms. Indira Sisupal, AC(AR) For the Appellant For the Respondent CORAM:
Honble Shri Pradip Kumar Das, Judicial Member Honbe Shri Periasami, Technical Member Date of hearing : 10-06-2014 Date of decision : 10-06-2014 FINAL ORDER NO. 40473 / 2014 Per Pradip Kumar Das:
The relevant facts of the case, in brief, are that the appellants were engaged in the manufacture of Cartons and Labels classifiable under Chapter 48 of the Schedule to the Central Excise Tariff Act, 1985 and aviling Cenvat credit on inputs and capital goods used in the manufacture of excisable goods. They availed Cenvat credit of Rs.70,20,724/- on capital goods on two machines, namely, Heidelberg Speed Master SM 74-4 Color Offset Printing Press with accessories and Polar Cutting Machine with accessories. They availed 50% of credit on 01.07.2007 and the balance amount on 01.04.2008. In the month of May, 2008, the Central Excise officers visited the factory of the appellant and found that the said two machines were shifted to the next building, outside the registered premises. But the appellants had not reversed the credit availed on capital goods. However, at the instance of the Central Excise Officers, the appellant reversed the Cenvat credit in their RG 23A Part II Sl.No.113, dated 27.05.2008. A Show-cause notice was issued proposing demand of Cenvat credit of Rs.70,20,724/- along with interest and penalty and to appropriate the amount already paid by them. By the impugned order, the Commissioner of Central Excise confirmed the demand of Cenvat credit of Rs.70,20,724/- along with interest and imposed penalty of equal amount of Cenvat credit under Rule 15(2) of Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944 an also appropriate the amount of Rs.70,20,724/- as paid by the appellant.
2. The learned Counsel for the appellant contested the impugned order to th extent of demand of interest and imposition of penalty under Section 11AC of the Act. He submits that they have not utilized the credit as evident from the Adjudication Order and, therefore, no interest is payable. In this context, he relied upon the decision as under:-
(i) Commissioner of Central Excise, Mumbai-I Vs Bombay Dyeing & Mfg. Co. Ltd. reported in 2007 (215) E.L.T.3 (S.C.).
(ii) Commissioner of Central Excise & Customs, Vadodara-II Vs Dynaflex Pvt. Ltd. reported in 2012 (25) S.T.R.277 (Guj.).
(iii) Commissioner of Central Excise, Bangalore-II Vs Pearl Insulation Ltd. reported in 2012 (281) E.L.T.192 (Kar.).
(iv) Sandvik Asia Ltd. Vs Commissioner of Central Excise, Pune reported in 2003 (159) E.L.T.828 (Tri.-Mumbai).
(v) Commissioner of Central Excise, Delhi-III Vs Maruti Udyog Ltd. reported in 2007 (214) E.L.T.173 (P&H), approved by the Honble Supreme Court as reported in the case of Commissioner Vs Maruti Udyog Ltd. reported in 2007 (214) E.L.T.A50 (S.C.).
3. He also submits that the capital goods was shifted to next building for lack of space and which was subsequently registered with the Central Excise authorities and the registration certificate was enclosed in the appeal paper book. Consequently, the entire credit as reversed by the appellant was availed by the said Unit-II, which was informed to the Assistant Commissioner of Central Excise by letter dated 07.10.2008. Therefore, penalty imposed under Section 11AC cannot be sustained.
4. On the other hand, the learned Authorised Representative on behalf of the Revenue submits that admittedly, the appellant shifted the machines without informing the department and the same was detected by the Central Excise Officers during their visit. The Central Excise registration of Unit-II is a subsequent event, which has no relevant with the shifting of the machineries without informing the department and, therefore, penalty under Section 11AC was rightly imposed. She relied upon the decision of the Honble Supreme Court in the case of Union of India Vs Rajasthan Spinning and Weaving Mills reported in 2009(238) E.L.T.3 (S.C.).
5. After hearing both the sides and on perusal of the records, we find that the appeal relates to demand of the interest and imposition of penalty under Section 11AC. We find that it is a case of inter Unit transfer of the capital goods. We agree with the submission of the learned Authorised Representative that at the time of shifting of two machines to other two Units, it was not registered with the Central Excise Authorities. It is also noted that the appellants reversed the credit upon detection by the Central Excise Officers during their visit. The main contention of the learned Counsel is that the other Unit was subsequently registered with Central Excise department and availed the entire amount of credit. The learned Counsel fairly submits that the availement of Cenvat credit on the said two machines by Unit-II was not placed before the Adjudicating authority. The Honble Supreme Court in the case of Rajasthan Spinning and Weaving Mills (supra) held that the imposition of penalty under Section 11AC would depend upon the incidence or otherwise of the condition stated in the said Section.
6. In our considered view, as it is a case of inter Unit transfer and the availement of credit by Unit-II is required to be verified by the lower authorities before taking into decision of the imposition of penalty under Section 11AC of the Act, 1944. It is also required to be considered the non-utilisation of credit as contended by the learned Counsel and the case laws cited by him.
7. In view of the above discussion, we set aside the impugned to the extent of demand of interest and penalty. The Adjudicating Authority is directed to examine the demand of interest and imposition of penalty, after considering the submissions of the appellant in the light of the above decisions. We make it clear that we do not pass any opinion regarding the demand of interest and imposition of penalty on merit. Needless to say that the adjudicating authority shall give an opportunity of hearing to the appellants. Appeal is allowed by way of remand.
(Dictated and pronounced in open court)
(R. PERIASAMI) (PRADIP KUMAR DAS)
TECHNICAL MEMBER JUDICIAL MEMBER
ksr
DRAFT
Remarks
I
II
III
Date of dictation
10.06.2014
Draft Order - Date of typing
11.06.2014
Fair Order Typing
28.06.2014
Date of number and date of dispatch
2
E/00030/2010