Custom, Excise & Service Tax Tribunal
M/S Raptakos Brett & Co. Ltd vs Commissioner Of Central Excise, ... on 16 December, 2016
IN THE CUSTOMS, EXCISE AND SERVECE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT NO. I APPEAL NO. E/1872/10-MUM (Arising out of Order-in-Appeal No. PKS/201/BEL/2010 dated 27.07.2010 passed by the Commissioner of Central Excise (Appeals), Mumbai-III.) For approval and signature: Honble Shri M V Ravindran, Member (Judicial) =====================================================
1. Whether Press Reporters may be allowed to see : No
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 : No CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy : Seen
of the order?
4. Whether order is to be circulated to the Departmental : Yes
authorities?
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M/s Raptakos Brett & Co. Ltd.
Appellant
Vs
Commissioner of Central Excise, Mumbai-III
Respondent
Appearance:
Shri Mehul Jivani, Chartered Accountant
for Appellant
Shri V K Shastri, Assistant Commissioner (AR)
for Respondent
CORAM:
HONBLE SHRI M V RAVINDRAN, MEMBER (JUDICIAL)
Date of Hearing: 16.12.2016
Date of Decision: 18.01.2017
ORDER NO.
Per: M V Ravindran:
This appeal is directed against Order-in-Appeal No. PKS/201/BEL/2010 dated 27.07.2010.
2. Heard both sides and perused the records.
3. The issue in this case is the appellants mentioned hereinabove have filed appeal against the Order in Original dated 09.01.2009 passed by the Assistant Commissioner, Central Excise, Wagle-I Division, Mumbai-III Commissionerate whereby he has confirmed the demand of Rs. 88,187/- under Section 11A of the Central Excise Act, 1944 (Act) read with Rule 14 of the CEVAT Credit Rules, 2004 along with interest under Section 11AB of the Act. He has also imposed penalty of Rs. 2,000/- under the provisions of Rule 15 of the said Rules. Briefly, the fact of the case is that the appellants are engaged in the manufacture of excisable goods and on 1st February, 2005, an incidence of fire has taken place in which some of the inputs and raw materials were destroyed. The credit of Rs. 88,187/- involved on such inputs was reversed on being pointed out by the Audit Party on 14.03.2006. Since they have not paid the interest on the said amount, a show-cause notice dated 02.02.2007 was issued for recovery. The said show-cause notice was adjudicated vide Order-in-Original No. 65/2007-08/AC dated 31.7.2007 whereby the deposit of Rs. 88,187/- was appropriated and recovery of interest amounting to Rs. 12,798/- under Section llAB of the Act was ordered. However, no penalty was imposed.
3.1 Being aggrieved by the impugned order, both the departments and appellants have filed appeals before the Commissioner (Appeals), who vide his Order-in-Appeal No. SRK/115-116/M-III/2008 dated 28.2.2008 has set aside the Order-in-Original and allowed the appeal filed by the appellants and the departmental appeal was rejected. In pursuance to the Order of the Commissioner (Appeals), the appellants took suo motu credit of the CENVAT credit. However, the department has not accepted the said Order-in-Appeal dated 28.2.2008 and has filed an appeal before the Tribunal on 27.5.2008. A Notice was issued to the appellants for recovery of the amount of credit taken suo motu and vide the impugned order, the amount has been confirmed along with the interest and penalty.
4. Aggrieved by such an order of denying the suo motu credit availed an appeal was preferred. The first appellate authority by the impugned order dismissed the appeal by recording as under.
5. I have gone through the facts of the case and the submissions made during the personal hearing. The limited issue to be decided is whether the appellants could have taken credit suo motu after the Order of commissioner (Appeals)? The issue in dispute has been answered by the Larger Bench in the case of BDH Industries Limited whereby It was held that all types of refund to be filed under Section 11B of Central Excise Act, 1944 and no suo motu refund/credit of the duty can be taken. Similarly, the Hon'ble Tribunal in the case of Comfit Sanitary Napkins (I) Pvt. Ltd. [2004 (174) E.L.T. 220] has held that Suo motu credit cannot be taken without applying for refund. The assessee should have followed the procedure laid down under Section 11B of the Central Excise Act, 1944.
6. The appellants have placed reliance upon the decision of the Hon'ble Tribunal in the case of Prempreet Textile Industries Ltd., wherein the Hon'ble Tribunal has held that the deposit made during the investigation as pre-deposit. In that case an amount of Rs. 20 lacs which was given by the appellants during the course of investigation was treated by the Tribunal as pre-deposit for the purpose of entertaining the appeal under Section 35F. However, in the case in hand no such order has been passed by Commissioner (Appeals) treating the said amount as pre-deposit.
7. Further, the judgment relied upon by the appellants in the case of Jindal Vijaynagar Steel Ltd. and Bajaj Auto Ltd., are mainly on the issue of limitation and as such, not directly applicable in the case in hand. In all case laws relied upon it was seen that in all the cases refund claim was filed whereas, in the present case the appellant had not filed the refund claim, and had taken suo-motu credit in their account. Hence the case laws relied upon by the appellants are not applicable in the present case.
5. I find that the issue is no more res integra and both the lower authorities have passed orders which are not in consonance with the law.
6. Hon'ble High Court of Karnataka in the case of Motorola India Pvt. Ltd. [2006 (206) ELT 90 (Kar.)] on the issue of availment of suo motu credit held as under.
The Tribunal, after noticing the material facts has chosen to allow the claim on the basis that the amount paid by mistake cannot be termed as duty in the case on hand. The Tribunal also stated that the time bar does not apply in such cases. Somewhat in similar circumstances, the Apex Court in India Cements Ltd. v. Collector of Central Excise - 1989 (41) E.L.T. 358 has chosen to accept the case of the assessee. The Madras High Court subsequently noticing the Judgment of the Supreme Court has also chosen to hold that the claim is reasonable on the facts of this case. In the light of the case laws, we are of the view that the order of the Tribunal does not require any interference by us. No question of law arises. The order is based on the law laid down by the Apex Court.
7. Hon'ble High Court of Madras in the case of ICMC Corporation Ltd. [2014-TIOL-121-HC-MAD-CX] on the issue of availing of suo motu credit held as under:-
11. The assessee are manufacturers of Mono Cartons and Printed Paper Labels. Evidently, the cartons are subjected to excise duty and the printed paper labels are exempted from payment of duty vide Notification No.10/2003 CE dated 01.03.2003. According to the Revenue, common inputs were utilized in the manufacture of exempted items as well as dutiable items. The allegation of the Revenue is that the assessee had not maintained a separate account in respect of input services. Thus for the period from September 2004 to February 2006, there was a demand of duty at Rs.1,29,09,931/- being 10% of the value of exempted goods cleared during the period. Admittedly, the assessee reversed the entire input as service credit availed by them during this period and based on the reversal of the entry, in the order dated 04.12.2007 in E/Appeal No.432/2007, the Customs, Excise and Service Tax Appellate Tribunal accepted the assessee's case and set aside the order of adjudication. The service tax credit taken by the assessee, which was subsequently reversed represented the amount of Rs.5,49,854/-. Consequent on the reversal of the entry, the assessee took service tax credit on Rs.3,21,308/- in the Cenvat account on its own, without making a formal application. This was objected to by the Revenue by contending that the assessee should have filed a refund application as required under Section 11B of the Central Excise Act, 1944. Thus, according to the Revenue, the amount of Rs.3,21,308/- being the ineligible service tax credit taken and utilized for payment of duty on the clearance of finished goods attracted once again duty under Rule 14 of the Cenvat Credit Rules, 2004 r/w Section 11A of the Central Excise Act, 1944. The assessee countered this by placing reliance on Rule 6(5) of the Cenvat Credit Rules, 2004 as clarified by the Board. According to the Revenue (sic), it being one of accounted entry reversal alone, there being no factory out flow of funds as by way of payment of duty, the question of going by the provisions under Section 11B of the Central Excise Act, 1944 does not arise.
12. Section 11B of the Central Excise Act, 1944 relates to claim for refund of duty, which reads as under:
(1) Any person claiming refund of any [duty of excise and interest, if any, paid on such duty] may make an application for refund of such [duty and interest, if any, paid on such duty] to the [Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise] before the expiry of [one year] [from the relevant date] [in such form and manner] as may be prescribed and the application shall be accompanied by such documentary or other evidence (including the documents referred to in Section 12-A as the applicant may furnish to establish that the amount of [duty of excise and interest, if any, paid on such duty] in relation to which such refund is claimed was collected from or paid by him and the incidence of such [duty and interest, if any, paid on such duty] had not been passed on by him to any other person:
Provided that where an application for refund has been made before the commencement of the Central Excises and Customs Laws (Amendment) Act, 1991 (40 of 1991), such application shall be deemed to have been made under this sub-section as amended by the Act and the same shall be dealt with in accordance with the provisions of sub-section (2) as substituted by that Act:] [Provided further that] the limitation of [one year] shall not apply where any [duty and interest, if any, paid on such duty] has been paid under protest.
[(2) If, on receipt of any such application, the [Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise] is satisfied that the whole or any part of the [duty of excise and interest, if any, paid on such duty] paid by the applicant is refundable, he may make an order accordingly and the amount so determined shall be credited to the Fund:
Provided that the amount of [duty of excise and interest, if any, paid on such duty] as determined by the [Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise] under the foregoing provisions of this sub-section shall, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable to - (a) ... (b) ... (c) ... (d) ... (e) ... (f) ... ..."
The objection of the Revenue herein is that even for a reversal of an entry, the assessee should have followed Section 11B of the Central Excise Act, 1944 lest there would be unjust enrichment. Consequently, there could be no such thing as suomotu reversal, except through a petition made under Section 11 B of the Central Excise Act, 1944.
13. 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. The contention of the Revenue that even in reversal of the entry there is bound to be an unjust enrichment has no substance or based on any legal principle, since, what is availed off by the assessee is only a credit on the duty paid on the services rendered. Further, the assessee is entitled to take note of as per Rule 6(5) of the Cenvat Credit Rules, 2004, as there is no dispute of the fact that a sum of Rs. 3,21,308/- available as Cenvat Credit was in respect of input services, which are given under Rule 6(5) of the Cenvat Credit Rules, 2004. When that being the case, in respect of those services specifically mentioned under Rule 6(5) of the Cenvat Credit Rules, 2004 as it existed during the relevant period viz., 2004-2006 getting the reversal of the entry is in tune with its stand taken, which was accepted by the Tribunal in the earlier round of litigation.
14. We do not find any good ground to hold that it was a case of refund of duty falling under Section 11B of the Central Excise Act, 1944 and that the assessee was to comply with the provisions of Section 11B of the Act. The view of the Tribunal that the assessee should seek reversal in the appropriate judicial forum, if the assessee was aggrieved by the earlier order herein does not arise at all.
15. Even a cursory reading of the order of the Tribunal in the earlier round of litigation would show that it accepted the assessee's case of suomotu reversal of the entry. That being the case, the subsequent conduct of the assessee for a follow up action on an amount of Rs.3,21,308/-, which is only an account entry adjustment, technically speaking cannot be taken exception to either by Tribunal or for that matter by the Revenue. For this, we do not find any need for a finding to be given in the order of the Tribunal in the earlier round of litigation.
16. We do not for a moment deny the fact that a sum of Rs.3,21,308/- for which suomotu credit was taken by the assessee was forming part of Rs.5,38,796/-, which was earlier reversed by the assessee. On the admitted fact, Rs.3,21,308/- represented the enumerated input services as given under Rule 6(5) of the Cenvat Credit Rules, 2004, we have no hesitation in accepting the plea of the assessee that on a technical adjustment made, the question of unjust enrichment as a concept does not arise at all for the assessee to go by Section 11B of the Central Excise Act, 1944.
17. In the circumstances, we set aside the order of the Tribunal and allow the appeal filed by the assessee and hold that legally speaking there is no impediment in the asseessee taking suomotu credit of the sum of Rs.3,21,308/-. In the light of the above, we allow the appeal.
18. We may also note that in ground (C) of the appeal grounds, the assessee had specifically pointed out that what they debited in the Cenvat Account was not at all made towards any duty payment, which would require a refund claim. The assessee made a specific claim that they had re-credited only the credit reversed on those services mentioned under Rule 6(5) of the Cenvat Credit Rules, 2004 and nothing beyond.
19. On this aspect, we specifically posed the question to learned counsel appearing for the assessee, who re-affirmed the same and given the fact that re-credit of the credit reverse was only in respect of those enumerated services under Rule 6(5) of the Cenvat Credit Rules, 2004 on which there is no dispute from the Revenue, we have no hesitation in accepting the assessee's case.
8. The above said ratio is followed by the Tribunal in the following decisions.
(i) Sopariwala Exports Pvt. Ltd. Vs Commissioner of Central Excise, Vadodara-I [2013 (291) ELT 70 (Tri.-Ahmd.)]
(ii) Jayaswal Neco Industries Ltd. Vs Commissioner of Central Excise, Nagpur Final order no.- A/3930-3931/15/SMB dated 30.11.2015.
It can be seen from the above reproduced ratio of judgments, that on merits appellant has made out a case in his favour.
9. In view of the foregoing and following judicial pronouncements, I set aside the impugned order and allow the appeal with consequential relief, if any.
(Pronounced in Court on 18.01.2017) (M V Ravindran) Member (Judicial) Sp E/1872/10 2