Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, ... vs Stumpp, Schuele & Somappa Pvt Ltd on 5 June, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Final Order No. 21714 / 2014 Appeal(s) Involved: E/46/2008-SM [Arising out of OIA No.24-2007 dated 26/10/2007 passed by CCE&ST(Appeals), Bangalore.] Commissioner of Central Excise, Customs and Service Tax BANGALORE-LTU NULL 100 FT RING ROAD JSS TOWERS, BANASHANKARI-III STAGE, BANGALORE, - 560085 KARNATAKA Appellant(s) Versus STUMPP, SCHUELE & SOMAPPA PVT LTD 139/2, HOSUR ROAD, KORAMANGALA, BANGALORE Respondent(s)
Appearance:
Shri S. Teli, Deputy Commissioner(AR) For the appellant Shri J.S. Bhanumurthy, Advocate For the respondent CORAM:
HON'BLE SHRI S.K. MOHANTY, JUDICIAL MEMBER Date of Hearing: 05/06/2014 Date of Decision: 05/06/2014 Order Per : S.K. MOHANTY This appeal has been filed by the appellant-Revenue against the impugned order dated 26.10.2007 passed by the Commissioner of Central Excise & Service Tax (Appeals), Large Tax Payer Unit, Bangalore.
2. The facts of the case, in brief, are that the respondent took Cenvat credit of Rs.28,55,142/- on the inputs, for which it could not produce the supporting documents before the internal audit wing of the Central Excise department. On being pointed out regarding such irregularities, the respondent voluntarily reversed such credit during March 2006 and duly intimated the department. However, during July 2006, the respondent again took the said credit on the ground that the duty paid documents were all along available with it. Taking of such suo moto credit was sought to be disallowed by issuance of show cause notice on the ground that no provisions exist in the Cenvat Credit Rules, 2004 (for short, referred to as CCR), which calls for self refund of the amount already reversed. The show cause notice was adjudicated in favour of the respondent vide Order dated 04.05.2007. Feeling aggrieved with the said adjudication order, the Revenue had preferred appeal before the Commissioner (Appeals), which was disposed of by upholding the adjudication order. Hence, the present appeal before this Tribunal.
3. The learned A.R. appearing for the appellant has reiterated the grounds of appeal recorded in the appeal memorandum and further submitted that the system of taking self refund is not authorized by law and to substantiate such stand, he has relied on the decision of Tribunal in the case of BDH Industries Limited, reported in 2008 (229) ELT 364 (Tri.-LB).
4. The learned Chartered Accountant appearing for the respondent submitted that at the time of taking initial as well as subsequent Cenvat credit, the relevant duty paid documents were available with the respondent; that reversal of credit on account of non-availability of documents at that particular moment, does not amount to payment of duty and thus, Section 11B cannot be made applicable to such situation. To defend the case of respondent, the learned counsel has cited the judgment delivered in the case of ICMC Corporation Ltd. Vs. CESTAT, Chennai [2014 (302) ELT 45 (Mad.)], NOCIL Vs. CCE, Belapur [2014-TIOL-203-CESTAT-MUM], CCE, Pune-II Vs. S.B. Reshellers Pvt. Ltd. [2006 (200) ELT 440 (Tri. Mumbai)], CCE, Surat-II Vs. Vardhman Acrylics Ltd. [2013 (292) ELT 558 (Tri.- Ahmd.)] and Bayer Crop Science Ltd. Vs. CCE, Surat II [2013 (298) ELT 260 (Tri. Ahmd.)].
5. Heard the learned counsel for the parties and perused the relevant records.
6. Sub-rule (1) of Rule 3 of the CCR entitles a manufacturer to take Cenvat credit of the duties and taxes paid on the inputs or capital goods received in the factory of manufacture of final product. Sub-rule (4) of Rule 3 provides the conditions for utilisation of such credit. One of the conditions itemized in the said rule is towards utilization of credit for payment of any duty of excise on the final product. In the present case, it is an admitted fact on record that the inputs on which credit has been taken by the respondent have suffered duty and the said inputs have been received under the cover of prescribed invoices in the factory of manufacture; and that the credit taken on the inputs have not been utilized for payment of duty of excise on the final product manufactured by the respondent. Since, the disputed Cenvat credit has not been utilized for payment of duty on clearance of finished product from the factory, the said credit cannot be considered as payment of duty, for which filing of refund application is inconsistent with the provisions of statute. Rather, the credit entry in the Cenvat record, without its utilisation, can be considered just as a mere book entry; and its reversal cannot be equated with the case of self refund as claimed by the appellant-revenue in the present appeal.
7. The issue involved in the present case as to whether suo motu re-credit of the credit already reversed is permissible and no refund claim is required to be filed, is no more res-integra in view of the judgment of Hon'ble Madras High Court in the case of ICMC Corporation (referred supra). Paragraph 13 in the said judgment , relevant for the issue, is extracted below :-
" We do not subscribe to the view expressed by the Revenue. Admittedly, the assessee originally availed the Cenvat credit on Service Tax for discharging its liability. However, for sound reasons, it reversed the credit. Strictly speaking, in this process, there is only an account entry reversal and factually there is no outflow of funds from the assessee to result in filing application under Section 11B of the Central Excise Act, 1944 claiming refund of duty.............."
8. The crux of the subject decided in the cases relied on by the respondent is that reversal of Cenvat credit is not payment of duty and therefore, provisions of Section 11B of the Central Excise Act, 1944 are not applicable; and as such, there is no irregularity, if the assessee takes the credit on its own. In view of above, I concur with the findings recorded by the authorities below that taking of credit on the basis of available documents, without disputing their genuineness, cannot be equated with the case of self refund.
9. There is no stipulation in the CENVAT statute that an assessee is required to obtain prior permission from the jurisdictional Central Excise authorities for making any debit entry in the Cenvat records. Hence, in absence of any specific prohibition to that effect, it is not appropriate to disallow the Cenvat benefit, to which the respondent is statutorily entitled to. This Tribunal in the case of Visakhapatnam Steel Plant Vs. CCE [2002 (149) ELT 708 (Tri.- Bang.)] has held that correction of errors and omissions in the entries would not require permission of the Department.
10. I find that the reliance placed by the learned A.R. in the case of BDH Industries Ltd. (supra) does not carry the case of the revenue in context with the present case, in as much as, the issue decided by the larger bench of the Tribunal was in respect of duty paid in excess and taking of the said excess credit suo motu by the assessee, avoiding the refund route. The case of the present respondent is squarely covered by the decision of the Honble High Court of Madras in the case of ICMC Corporation Ltd. (supra), wherein it has been held that refund claim under Section 11B of the Central Excise Act, 1944 cannot be insisted upon for making a reverse entry in the Cenvat account, especially when there is no outflow of fund from the assessee.
11. In view of above, the appeal filed by the appellant-revenue against the impugned order has no merit and accordingly, the same is dismissed.
(Operative portion of the order has been pronounced in open court) S.K. MOHANTY JUDICIAL MEMBER Raja.
6