Custom, Excise & Service Tax Tribunal
M/S Mafatlal Industries Ltd vs Cce Daman on 19 December, 2014
In The Customs, Excise & Service Tax Appellate Tribunal West Zonal Bench At Ahmedabad Appeal No.E/497/2008-SM [Arising out of: OIA No.KKS/23/DAMAN/2008, dt.29.01.2008, passed by: Commissioner of Central Excise & Customs (Appeals),Vapi] M/s Mafatlal Industries Ltd Appellant Vs CCE Daman Respondent
Represented by:
For Assessee: Shri Dhaval Shah, Adv.
For Revenue: Shri Anil Gidwani, A.R. For approval and signature:
Mr. P.K. Das, Honble Member (Judicial)
1. Whether Press Reporters may be allowed to see the No 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 Seen the order?
4. Whether order is to be circulated to the Departmental Yes authorities?
CORAM:
MR. P.K. DAS, HONBLE MEMBER (JUDICIAL) Date of Hearing/Decision:19.12.14 Order No. A/12297 / 2014, dt.19.12.2014 Per: P.K. Das
1. The relevant facts of the case, in brief, are that the appellants are engaged in the manufacture of Cotton Yarn, Non Cellulosic Spurn Yarn, Processed Man Made Fabrics, 100% Cotton Fabrics, and Mixed Cotton Fabrics classifiable under Chapter 52, 54, and 55 of Central Excise Tariff Act, 1985. They received duty paid Yarn under Basic Excise duty and Additional Excise Duty (Textile and Textile Articles) and availed CENVAT Credit. A show cause notice dt.18.05.2004 was issued by the Additional Commissioner, Central Excise & Customs, Daman, proposing to recover CENVAT Credit of Rs.29,16,687.00 along with interest and penalties for the period June 2003 to February 2004 on the ground that the appellant utilized the AED(T&TA) CENVAT Credit for the payment of Basic Excise Duty and Additional Excise Duty (Sales Tax). It has been alleged that as per Rule 3(6)(b) of CENVAT Credit Rules, 2002, the appellant is not eligible to utilize the AED (T&TA) for payment of Basic Excise Duty. The Adjudicating authority disallowed CENVAT Credit of Rs.29,16,687.00 along with interest and also imposed penalty of equal amount under Rule 13 of CENVAT Credit Rules, 2002 read with Section 11AC of Central Excise Act 1944. The Commissioner (Appeals) rejected the appeal filed by the appellant.
2. Ld.Advocate on behalf of the appellant submits that both the authorities below failed to appreciate the Boards circular F.No.345/2/2003-TRU, dt.16.04.2003. He drew the attention of the Bench to the said circular and submits that the Board clarified that AED(T&TA) is in the nature of duty of Excise and CENVAT Credit can be utilized for payment of any duty of Excise, which would include the Basic Excise Duty. He submits that when the Board has accepted AED (T&TA) as duties of Excise, and therefore, the appellant is eligible to utilize credit on payment of Basic Excise duty. He also submit that the Tribunal in the case of CCE & C Vadodara Vs Modern Petrofils Ltd 2004 (175) ELT 497 (Tri-Mum), held that the credit of specified duties can be utilized for payment of any one of specified duties. He relied upon the decision of the Tribunal in the case of Prag Bosimi Synthetics Ltd Vs CCE Dibrugarh 2007 (216) ELT 254 (Tri-Kolkata).
3. On the other hand, learned Authorised Representative for the Revenue reiterates the findings of the Commissioner (Appeals). He submits that the issue is no more res-integra in view of the decision of the Tribunal in the case of Raymond Ltd Vs CCE Mumbai III 2014-TIOL-267-CESTAT-MUM. He further submits that the Boards circular was rightly interpreted by the Commissioner (Appeals). He submits that the Boards circular is applicable in the case of yarn manufacturer who received the duty paid inputs and capital goods and credit can be utilized for payment of AED (T&TA), while clearance of the yarn from their factory.
4. Ld.Advocate, in rejoinder, submits that the decision of the Tribunal in the case of Raymond Ltd is per incuriam in so far as Boards circular was not considered. He submits that the Board has accepted AED (T&TA) as duty of Excise and therefore, CENVAT Credit can be utilized any duty of Excise.
5. After hearing both the sides and on perusal of the records, I find that the provisions of Rule 3 of CENVAT Credit Rules, 2002 may be reproduced as under:
Rule 3. CENVAT Credit (1).....
(iv) the additional duty of excise leviable under Section 3 of the Additional Duties of Excise (Textile & Textile Articles) Act, 1978 (40 of 1978);
(6)...
(a)....
(b) CENVAT credit in respect of
(i) the additional duty of excise leviable under Section 3 of the Additional Duties of Excise (Textile & Textile Articles) Act, 1978;
(ii) the additional duty of excise leviable under Section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1987;
(iii) the National Calamity Contingent duty leviable under Section 136 of the Finance Act, 2001; and
(iv) the additional duty leviable under Section 3 of the Customs Tariff Act, equivalent to the duty of excise specified under clauses (i), (ii) and (iii) above, shall be utilized only towards payment of duty of excise leviable under the said Additional Duties of Excise (Textile & Textile Articles) Act, or under the said Additional Duties of Excise (Goods of Special Importance) Act, or the National Calamity Contingent duty leviable under Section 136 of the Finance Act, 2001 respectively, on any final products manufactured by the manufacturer or for payment of such duty on inputs themselves if such inputs are removed as such or after being partially processed;
6. On plain reading of Rule 3(6)(b) of the said Rules, it is clear that the CENVAT Credit in respect of AED (T&TA) shall be utilized only towards payment of duty of Excise leviable under AED(T&TA) Act. It is noted that with effect from 09.07.2004, AED(T&TA) was exempted in respect of clearance of the final product. Therefore, the appellant cannot utilize credit of AED(T&TA) in respect of payment of basic duty for clearance of final product. Ld.Advocate heavily relied upon the Boards circular. Boards circular dt.16.04.2003 was issued in respect of utilization of CENVAT Credit of Basic Excise Duty towards payment of Additional Duties of Excise (GSI) Act, 1957. The Boards circular clarified respect of utilization of credit of Basic Excise Duty for payment of AED (T&TA). But, in the present case, the appellant utilized the AED (T&TA) for payment of Basic Excise Duty which is not covered by the Boards circular. I find that the CENVAT Credit Rules, 2002 has clearly imposed restriction of utilization of AED(T&TA) in respect of other duties. So, the appellant cannot utilize credit of AED (T&TA) for payment of Basic Excise Duty. The Tribunal in the case of Raymond Ltd (supra) held that the accumulated credit of AED (T&TA) cannot be utilized for payment of duty relating to AED (GSI) and for payment of Basic Excise Duty.
7. It is seen from the impugned order that the appellant also contended that the accumulated credit of AED (T&TA) would be eligible for refund. The Tribunal in the case of Century Rayon Ltd Vs CCE Thane I 2007 (217) ELT 99 (Tri-Mum) held that even if held to be entitled to take credit of such duty paid in excess by them, would not be able to utilize the credit, the assessee is entitled to cash refund. I agree with the findings of Commissioner (Appeals) that appellant cannot be allowed to utilize AED(T&TA), they can take a refund, if permitted under the law.
8. Regarding imposition of penalty under Section 11AC, it is seen from the show cause notice that while examining the records, the officers detected utilization of AED(T&TA) for payment of Basic Excise Duty. There is no allegation of suppression of facts with intent to evade payment of duty. It is a case of interpretation of provisions of law. There is no material available on records to invoke the ingredients as mentioned in Section 11AC of the Central Excise Act 1944. Hence, imposition of penalty under Section 11AC cannot be warranted.
9. In view of the above discussion, I modify the impugned order in so far as demand of duty along with interest are upheld. Penalty is set aside. The appeal is disposed of in above terms.
(Dictated & Pronounced in Court) (P.K. Das) Member (Judicial) cbb 6