Custom, Excise & Service Tax Tribunal
Nova Petrochemicals Ltd vs Commissioner Of Central Excise on 15 May, 2015
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Zonal Bench, Ahmedabad *****
Appeal No. : E/959/2011 Application No. : E/MA(EXTN)/14607/2014 [ Arising out of OIA-219/2011-AHD-II-CE/PKJ/COMMR-A-/AHD dtd 20.7.2011 Passed by Commissioner of Central Excise(Appeals) -AHMEDABAD-II ] Nova Petrochemicals Ltd - Appellant(s) Vs Commissioner of Central Excise-
AHMEDABAD-II - Respondent (s)
Represented by :
For Assessee : Shri P P Jadeja, Consultant
For Revenue : Shri G P Thomas, Authorised Representative
For approval and signature :
Mr. P.K. Das, Hon'ble Member (Judicial)
1
Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No 2 Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
No 3 Whether their Lordships wish to see the fair copy of the Order?
Seen 4 Whether Order is to be circulated to the Departmental authorities?
Yes CORAM :
Mr. P.K. Das, Hon'ble Member (Judicial) Date of Hearing / Decision : 15/5/2015 ORDER No. A/10953 / 2015 dtd 15/5/2015 Per : Mr.P.K. Das, The relevant facts of the case, in brief, are that the appellant were engaged in the manufacture of Polyester Chips, Polyester Yarn etc., classifiable under Chapter 39 and 54 to the Schedule of Central Excise Tariff Act 1985. The appellants erroneously availed cenvat credit of Rs 23,30,228/- which was reversed by them vide RG 23A Part II Entry No 2803 dtd 29.2.2008 before its utilization. The appellant by letter dtd 6.3.2008 informed the jurisdictional Central Excise Officer of reversal of the cenvat credit. The Central Excise Officers during the verification of records in the month of May, 2008 noticed the reversal of credit.
2. A show cause notice dtd 25.3.2009 was issued proposing to appropriate the cenvat credit reversed by the appellant alongwith interest and to impose penalty. The Adjudicating Authority confirmed the recovery of the amount and appropriated, as paid by them alongwith interest and also imposed penalty equal amount of Cenvat Credit. The Commissioner (Appeals) upheld the adjudication order.
3. The Learned Counsel on behalf of the appellant submits that the demand of duty for the extended period of limitation cannot be sustained. But, they are not contesting the demand of duty, which they have already paid. He also submits that the appellant reversed the credit before the audit and issue of show cause notice and therefore, the demand of interest under Section 11AB and imposition of penalty cannot be sustained. He relied upon various decisions of the Honble Courts and Tribunals as under :
a) CCE Vs M J Pharmaceutical Industries Ltd 210.258.ELT.38 (Guj.)
b) CCE Vs Bill Forge Pvt Ltd 2012.26.STR.204 (Kar.)
c) CCE vs Gokaldas Immages Pvt Ltd 2012.28.STR.214 (Kar.)
d) CCE vs Strategic Engg Pvt Ltd 2014.310.ELT (Mad.)
e) CCE vs Rana Sugar Ltd 2010.253.ELT.366(All.)
f) Rana Sugar Ltd 210.249.ELT.247 (Tri. Del.)
g) Final Order No A/10196/2015 dtd 4.2.2015 of CESTAT, Ahmd -
h) Hindalo Industries Ltd Vs CCE
4. Learned Authorised Representative on behalf of Revenue reiterates the findings of the Commissioner (Appeals). He submits that the Honble Supreme Court in the case of UOI vs Indo-Swift Laboratories - 2011.265.ELT.3.SC held that the demand of interest would sustain even the credit was not utilized. He also relied upon the various decisions as under:
a) CCE&ST Hyderabad vs Dr Reddys Laboratories 2013.293.ELT.81 (Tri.Bang)
b) CCE, Pune ii vs Kay Bouvei Engg P Ltd 2014.301.ELT.100 (Tri.Mumbai)
c) CC&CE Hrderabad vs BHEL 2014.303.ELT.139 (Tri. Bang)
d) CCE&ST Pune iii vs Vodafone Essar Cellular Ltd 2013.30.STR.81 (Tri.Mum)
e) Idea Cellular Ltd vs CCE&ST, Cochin 2014.34.STR.761.(Tri.Bang.)
5. The Learned Authorised Representative for Revenue submits that the appellant is an organized sector and they have wrongly taken cenvat credit in respect of electricity charges and retained more than one-and-half years and reversed the credit before the audit. It is clear that the conduct of the appellant is not bonafide and submitted that the imposition of penalty and the demand of interest are justified.
6. After hearing both the sides and on perusal of the records, I find that the appellant by its letter dtd 6.3.2008 addressed to the Superintendent of Central Excise, informed as under:
It is bring to your notice that we had inadvertently taken Cenvat Credit amount to Rs 23,30,228/- (Rs 22,884,537 + Rs 45,000 Ed Cess) which is reversed or debited from our cenvat credit account (RG 323A part II) vide entry No 2003 dated 29/2/2008 before its utilization, the credit so taken pertaining to electricity duty. Such credit had remanded in books of account and it was never utilized for payment of any duty of Excise or Service Tax. We notice inadvertent cenvat credit on our own and we have reversed the said wrongly taken cenvat credit.
7. A show cause notice dtd 25.3.2009 was issued proposing to appropriate amount, as reversed by the appellant on 29.2.2008 alongwith interest and penalty. It has been alleged that during the course of audit, it was found that the appellant had taken the credit on electricity charges and utilized the same in the month of April 2007 as per ER1 return filed by them. The Adjudicating Authority observed that the appellant is liable to pay interest even they have not utilized the credit.
8. In view of the findings of the adjudicating authority, the allegation in the show cause notice is that the appellant utilized the credit cannot be sustained. The adjudicating authority confirmed the demand of interest only on the ground that they have taken the credit and they are liable to pay interest. The Learned Authorised Representative heavily relied upon the decision of the Honble Supreme Court in the case of Indo-Swift Laboratories (supra). The said decision was against the decision of the Honble Punjab and Haryana High Court in the case of Indo swift Vs UOI [2009.240.ELT.328 (P&H)]. The facts of the case of Indo Swift Laboratories (supra) are that the petitioner during 1.11.2011 to 31.3.2012 received invoices. On the basis of such invoices, the petitioner claimed cenvat credit of Rs 6,50,44,412/-. Out of the said amount, the petitioner utilized the credit of Rs 5,71,47,138/- only. In this contest, it was held that the appellant/petitioner is liable to pay interest from the date of availing credit and not from the date of utilization. I find that the Honble Madras High Court in the case of Strategic Engg Pvt Ltd (supra) after considering the decision of the Honble Supreme Court in the case of Indo Swift Laboratories Ltd (supra) held that mere taking credit itself would not compel the assessee to pay interest as well as penalty. It is also observed that subsequent amendment Rule 14 of cenvat credit would make it clear.
9. The Counsel cited various decisions of Tribunals, High Courts and Supreme Court. I find that the appellant had noticed the irregularity and reversed the credit. Learned Counsel contented that demand is not sustainable on limitation. On perusal of show cause notice, I find that the appellant shown credit in their ER1 return. The appellant vide its letter dtd 26.3.2008 informed the jurisdictional Superintendent, Central Excise, that they reversed credit on 29.2.2008. This fact was not disputed by the Revenue. Hence, the demand of duty for the extended period of limitation cannot be sustained. In any event, the appellant is not disputing the demand which has already been paid by them. The Learned counsel categorically stated that they are not contesting the demand of duty, even it is for extended period of limitation, as they have already paid. In my considered view, the payment of interest under Section 11AB to the Central Excise Act as they have not utilised such credit and the imposition of penalty under Section 11AC of the said Act, cannot be sustained.
10. In view of the above discussions, the demand of interest and penalty are set aside. The appeal filed by the appellant is allowed. The appellant filed Application for extension of the stay order, is dismissed as infructuous.
(Dictated and pronounced in the Court) (P.K. Das) Member (Judicial) swami ??
??
??
??
2