Custom, Excise & Service Tax Tribunal
M/S. Nalvetha Cast Steels Pvt. Ltd vs Cce, Madurai on 6 December, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
Appeal No. E/516/2012
(Arising out of Order-in-Appeal No. 193/2012 dated 4.9.2012 passed by the Commissioner of Central Excise (Appeals), Madurai)
For approval and signature:
Honble Shri P.K. Das, Judicial 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. Nalvetha Cast Steels Pvt. Ltd. Appellant
Vs.
CCE, Madurai Respondent
Appearance Shri M.N. Bharathi, Advocate, for the Appellant Shri K.S.V.V. Prasad, JC (AR) for the Respondent CORAM Honble Shri P.K. Das, Judicial Member Date of Hearing: 06.12.2013 Date of Decision: 06.12.2013 Final Order No. 40618/2013 The appellants are engaged in the manufacture of iron castings classifiable under Chapter 73 of the First Schedule to CETA, 1985. They availed CENVAT credit on capital goods namely, MS Angles, Channels and Plates used for fabricating the support structure for overhead cranes under CENVAT Credit Rules, 2004. A show-cause notice dated 18.3.2010 was issued to deny the CENVAT credit of Rs.1,58,874/- on the above items availed during the period from December 2007 to April 2009. The adjudicating authority confirmed the demand of duty of Rs.1,58,874/- along with interest and also imposed penalty of equal amount under Rule 15(2) of CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944. Commissioner (Appeals) by Order-in-Appeal dated 30.3.2011 set aside the adjudication order and the appeal filed by the appellant was allowed. Revenue filed appeal before this Tribunal. By Final Order dated 4.11.2011, the Tribunal following the decision of the Larger Bench in the case of Vandana Global Ltd. Vs. CCE 2010 (253) ELT 440 (Tri. LB) and the decision of the Honble Supreme Court in the case of Saraswati Sugar Mills Vs. CCE 2011 (270) ELT 465 (SC) held that the appellants are not entitled to avail CENVAT credit on MS angles, channels, plates used for fabricating the fixed supporting structure and allowed the appeal of the Revenue on merits. But the Tribunal remanded the matter to the Commissioner (Appeals) on the ground of limitation. By the impugned order, the Commissioner (Appeals) in remand proceedings held that the demand of duty is not barred by limitation insofar as the extended period of limitation would apply and upheld the adjudication order.
2. The learned counsel on behalf of the appellant drew the attention of the Bench the ER 1 returns showing that the appellant had mentioned the availment of CENVAT credit on angles, channels, plates etc. with the suppliers name. He submits that there is no suppression of fact with intent to evade payment of duty. He further submits that the issue is still debatable insofar as the Tribunal in the case of CCE Vs. A.P.P. Mills Ltd. 2013 (291) ELT 585 allowed the credit on these items used as supporting structure for machinery would be treated as capital goods. He further submits that the Tribunal in the case of CCE Vs. Orion Ferro Alloys Pvt. Ltd. 2010 (259) ELT 84 dropped the demand of the extended period of limitation on the same items. He further relied upon the decision of the Honble Allahabad High Court in the case of CCE Vs. Sudarshan Cables Industries 2012 (276) ELT 300 (All.) wherein penalty was set aside for wrong availment of CENVAT credit.
3. On the other hand, the learned AR on behalf of Revenue submits that the appellant had not disclosed in the return that these items were used for supporting structure of the machinery and therefore it is a clear case of suppression of fact with intent to evade payment of duty. He submits that during the internal audit, the officers detected the wrong availment of CENVAT credit. He relied upon the following decisions:-
(a) Sree Rayalaseema Hi-Strength Hypo Ltd. Vs. CCE 2012 (278) ELT 167 (AP)
(b) Cosmos Ispat Pvt. Ltd. Vs. CCE 2012 (284) ELT 721
(c) Ratnamani Metals & Tubes Ltd. Vs. CCE 2012 (285) ELT 274
(d) Century Tiles Ltd. Vs. CCE 2009 (236) ELT 583
4. After hearing both sides and on perusal of the records, it is seen that the Commissioner (Appeals) observed that the appellant have not informed the end-use of the cenvatable account and only by the verification of the internal audit of the Department, it was detected the irregular availment of the credit. It is observed that the ER-1 return are not merely statement of account but it is a proof of having complied with the statutory obligations imposed on the appellant-manufacturer regarding discharge of duty liability on the goods manufactured by them. It is further observed that ER-1 returns filed by the appellant do not contain any details with regard to usage of impugned cenvatable goods.
5. The learned AR on behalf of the Revenue relied upon the decision of the Honble Andhra Pradesh High Court in the case of Sree Rayalaseema Hi-Strength (supra), wherein it has been held that once the assessee availed credit under Rule 2(k) of the Rules, 2004 without entitlement it amounts to contravention of the rule with the intention of evading payment and the extended period of limitation would be available to the Revenue. In the case of Cosmos Ispat (supra), the Tribunal observed that admittedly, the appellant has not informed the Department about the use of these items in question for construction of office and shed. As such, it is a clear case of suppression of material fact with intent to evade eligibility of excise duty. In the case of Ratnamani Metals & Tubes (supra), dealing with Rule 6(2) of CENVAT Credit Rules, 2002, the Tribunal observed that the extended period of limitation would apply as the assessee have never declared to the Department that they are availing CENVAT credit of the duty paid on HR coils which were exclusively used for the manufacturing of pipes by availing exemption notification. In the case of Century Tiles (supra), the Tribunal rejected the appeal filed by the appellant on penalty and interest as it is self-assessment procedure.
6. On perusal of the ER-1 returns, it is seen that the appellant had mentioned availment of the CENVAT credit on angles, channels, plates etc. with the suppliers name. It is noted that the appellant availed the credit during the period December 2007 to April 2009, when there was a dispute regarding the eligibility of CENVAT credit on these items, which was decided by the Larger Bench of the Tribunal in the case of Vandana Global Ltd. (supra). The Tribunal in the case of Orion Ferro Alloys (supra) dropped the demand of duty for the extended period of limitation as under:-
8.?However, the finding of the original authority that extended period of limitation can be invoked as the respondents have wrongly claimed the disputed items as capital goods when they are not capital goods cannot be upheld. The view taken by the respondents that these items are capital goods, undisputedly was also being taken by the Tribunal in some of the decisions, therefore, their belief that the impugned items were capital goods was bona fide belief. From the show cause notice and from the order of the original authority, no material is available to show that the respondents failed to furnish any relevant information which was required under the law. Therefore, the question of suppression or misstatement justifying invocation of extended period does not arise. On the same ground, the question of imposition of penalty does not arise. The Tribunal in the case of APP Mills Ltd. (supra) allowed the credit on these items used for structural support of machinery could be treated as capital goods. In the present case, it is clearly apparent that there was a dispute of eligibility of credit on the items and the appellant declared these items in their ER-1 return. In my considered view, the case of Orion Ferrro Alloys (supra) would apply herein. It is noted that the Honble Allahabad High Court in the case of Sudarshan Cables Industries (supra) held that if there is a conflicting opinion of Benches of Tribunal due to which it cannot be said that CENVAT credit wrongly taken or in contravention of provision of rules, no penalty can be imposed under Section 11AC. The case laws relied upon by the learned AR would not apply in the present facts of the case.
7. In view of that, I modify the impugned order insofar as the demand of duty for the extended period of limitation and the penalty are set aside and the demand of duty for the normal period is upheld.
8. The appeal filed by the appellant is partly allowed in the above terms.
(Dictated and pronounced in open court) (P.K. Das) Judicial Member Rex 6