Custom, Excise & Service Tax Tribunal
Parvatiya Plywood Pvt Ltd vs Commissioner, Cgst-Dehradun on 30 August, 2024
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
New Delhi
PRINCIPAL BENCH - COURT NO. 1
Excise Appeal No. 52149 Of 2022
[Arising out of Order-in-Appeal No. DDN/EXCUS/000/APP/44-45 dated 16.03.2022
passed by the Commissioner (Appeals) of Central Goods & Service Tax, Dehradun]
M/s Parvatiya Plywood Private Limited : Appellant
Village Shivlalpur, Ramnagar
Distt. Nainital (Uttrakhand)
Versus
Commissioner of Central Goods,
Service Tax, : Revenue
Nehru Colony, Avas Vikas, Dehradun
Uttrakhand-248001
with
Excise Appeal No. 51759 Of 2022
[Arising out of Order-in-Appeal No. DDN/EXCUS/000/APP/44-45 dated 16.03.2022
passed by the Commissioner (Appeals) of Central Goods & Service Tax, Dehradun]
Shri Akhilesh Pratap Saraswat : Appellant
Director of M/s Parvatiya Plywood Private
Limited, Village Shivlalpur, Ramnagar
Distt. Nainital (Uttrakhand)
Versus
Commissioner of Central Goods,
Service Tax, : Revenue
Nehru Colony, Avas Vikas, Dehradun
Uttrakhand-248001
APPEARANCE:
Shri Alok Arora, Advocate for the Appellant
Shri Bhagwat Dyal, Authorized Representative for the Department
CORAM :
HON'BLE MR. JUSTICE DILIP GUPTA, PRESIDENT
HON'BLE MS. HEMAMBIKA R. PRIYA, MEMBER (TECHNICAL)
FINAL ORDER No. 58113-58114/2024
Date of Hearing:24.06.2024
Date of Decision:30.08.2024
2
Excise Appeal No. 51759 of 2022
Excise Appeal No. 52149 of 2022
HEMAMBIKA R. PRIYA
Excise Appeals Nos. 52149 of 2022 and 51759 of 2022 have
been filed by M/s Parvatiya Plywood Private Limited (hereinafter
referred to as the appellant) and Shri Akhilesh Pratap Saraswat,
Director of the appellant respectively, to assail the order dated
16.03.2022passed by the Commissioner (Appeals), Central Goods & Service Tax, Dehradun1 for remanding the matter back to the original authority for the re-working the duty liability after extending the cum- duty value benefit. As the impugned order is common, both the appeals are being considered in one common order.
2. The brief facts of the case are that the appellant was registered with the Central Excise Department and were engaged in manufacture of Plywood, Block Board, Flush Door etc. The appellant at the material time was availing the benefit of the area based exemption under the provisions of the Notification No. 50/2003-CE dated 10.06.2003. On scrutiny of the records of the appellant, the department alleged that the khasra numbers on which the appellant unit is situated, is not notified in the Annexure II or III appended to the said Notification dated 10.06.2003 and thus, was not entitled to avail exemption from payment of excise duty.
2.1. A show cause notice dated 11.12.2020 was issued to the appellant demanding central excise duty of Rs. 1,67,53,510/- along with interest and penalty under the provisions of Section 11AC was 1 Commissioner (Appeals) 3 Excise Appeal No. 51759 of 2022 Excise Appeal No. 52149 of 2022 also proposed on the appellant. The notice also proposed penalty under the provisions of Rule 26 of the Central Excise Rules, 2002 on the Director of the Appellant.
2.2. The said show cause notice was adjudicated by the Joint Commissioner, CGST, Dehradun2 and the demand was confirmed alongwith interest, and penalty equal to duty was imposed on the appellant, and penalty of Rs. 2,00,000/- on the Director of the appellant.
2.3. Aggrieved by the said order, the appellants preferred appeals before the Commissioner (Appeals), who upheld the adjudication order while extending the cum duty benefit. Aggrieved by the said order, the appellant is before the Tribunal.
3. Learned counsel for the appellant submitted that the appellant unit had made substantial expansion (more than 25% of installed capacity) in plant & machinery and claimed exemption from excise duty initially under Notification No. 49/2003-CE and subsequently under Notification No.50/2003-CE as amended. He contended that as the nearby units of the area had been granted the exemption under Notification No. 50/2003-CE, therefore, the appellant had also claimed the said exemption. The learned counsel further submitted that they had contested the matter regarding their eligibility to exemption upto the Hon'ble Supreme Court. From December 2009 onwards, the appellant had not charged excise duty from their customers as they were under the bonafide belief that they were eligible for the exemption under Notification No. 50/2003-CE dated 10.6.2003. However, the Hon'ble Supreme Court dismissed their plea for grant of 2 the Adjudicating Authority 4 Excise Appeal No. 51759 of 2022 Excise Appeal No. 52149 of 2022 area based exemption. Consequently, he contended that as the appellant has to pay duty on final product for which Cenvat Credit on inputs as admissible needs to be allowed.
3.1 Learned counsel further submitted that during the relevant period, the appellant had used duty paid inputs in manufacture of final product. However, as the appellant had been denied the exemption under Notification No. 50/2003-CE, a plea was made before the Commissioner (Appeals) to allow cum- duty benefit and Cenvat Credit on the inputs used in manufacture of final product to be permitted. In support of his submissions, the learned counsel relied upon the decision of the Hon'ble Supreme Court in the case of Commissioner of Central Excise vs. Mahavir Aluminium Limited3 and Siddhartha Tubes Limited vs. Commissioner of Central Excise Indore (M.P.)4. The learned counsel stated that the issue had already been decided by the Principal Bench of the Tribunal in the appellant's own case vide Final Order No. A/51158-51167/2022-EX (DB) dated 8.12.2022.
3.2 As regards the imposition of penalty under Section 11AC of the Act, the learned counsel submitted that this was a case of interpretation of exemption benefit which had been finally denied by the Apex Court. Therefore, in facts and circumstances of the case, the provisions of Section 11AC were not applicable. He submitted that for imposition of penalty under Section 11AC 'mens- rea' is an essential ingredient. As there is no mens-rea involved, as such there is no justification to impose penalty under Section 11AC (1) (a) of the Act. 3 2007 (212) ELT 3 (S.C.) 4 2006 (193) ELT 3 (S.C.) 5 Excise Appeal No. 51759 of 2022 Excise Appeal No. 52149 of 2022 He prayed that the penalty under Section 11AC (1) (a) of the Act may be set-aside. He relied on the following judgments:-
(a) Commissioner of Central Excise, Chandigarh versus Pepsi Foods Ltd.5
(b) Commissioner of Central Excise, Delhi-III versus Vee Gee Faucets Pvt. Ltd. reported in 2015 (329) E.L.T. 76 (P & H)6
(c) Jaiswal Steel Processing versus Commissioner of Central Excise reported in 2014 (306) E.L.T. 159 (Chhattisgarh)7 3.3 As regards the imposition of penalty on the Director, the learned counsel submitted that the appellant Director was under the bonafide belief that the appellant was entitled to area based exemption. As the eligibility to the benefit of the notification was being contested, the appellant had not charged any duty from their customers.
Consequently, there is no mens-rea on the part of the Director, hence, the penalty should be set-aside.
4. The learned authorized representative for the Revenue supported the impugned order and submitted that:-
a) There is no evidence on the record that the inputs claimed to be used, were duty paid as no invoices were produced before the authority.
(b) There is no evidence that the tax element has not been included in the cost of inventory.
(c) No evidence has been placed on record that in the books of account, duty paid on inputs were shown as recoverable from Government.
5 2010 (260) ELT 481 (S.C.) 6 2015 (329) ELT 76 (P&H) 7 2014 (306) ELT 159 (Chhattisgarh) 6 Excise Appeal No. 51759 of 2022 Excise Appeal No. 52149 of 2022
(d) Ledgers pertaining to duty paid on inputs were not placed before the adjudicating authority.
The learned authorized representative submitted that the impugned order has correctly held that the CENVAT credit on inputs cannot be allowed.
4.1 As regards the issue of cum-duty price and recalculation of duty, the learned authorized representative submitted that the Commissioner (Appeals), has remanded the matter to the adjudicating authority. In the light of the above submission, learned Authorized Representative submitted that the appeals may be dismissed and the impugned order may be upheld.
5. We have heard the learned counsel for the appellant and the learned authorized representative for the Department.
6. We note that the learned counsel has submitted that an identical issue pertaining to the previous period has been decided by the Division Bench of this Tribunal vide Final Order No. 51158-51167/2022 dated 08.12.2022. The relevant paragraphs are reproduced hereinafter:-
"11. Having considered the rival contentions, we hold that the appellant is entitled to the benefit of recalculation of demand on cum- duty basis in accordance with explanation to Section 4(1)(b) of the Central Excise Act. We find that admittedly appellant have not collected Central Excise duty in addition to the sale price, in view of their claim of Area based exemption. Thus, the appellant shall be entitled to benefit of calculation of duty on cum-duty-price.
12. We further hold in the facts and circumstances that the appellant shall be entitled to the benefit of Cenvat credit on inputs and input services and the demand payable shall be re- calculated accordingly, in view of the clear mandate of the Central Excise Act r/w Cenvat Credit Rules.
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14. So far, penalty under Section 11AC is concerned, we hold 7 Excise Appeal No. 51759 of 2022 Excise Appeal No. 52149 of 2022 that there is no case of mis-representation, misstatement, suppression or fraud on the part of the appellant. The appellant were under bona fide belief in claiming the Area based exemption from Central Excise duty, as several other manufacturers located in the same locality, where also extended the benefit of Area based exemption. Under such undisputed facts, we set aside the penalty under Section 11AC both on the appellant-company and its Managing Director Mr. Akhilesh Pratap Singh."
7. We also note that the impugned order has allowed the benefit of cum-duty and has denied the benefit of CENVAT credit on inputs.
8. In view of the aforesaid final order in the appellant's own case, we remand the matter to the original authority for verifying the claim for availing Cenvat credit on the duty paid inputs, giving an opportunity to the appellant to produce all relevant invoices/ledgers and other relevant documents before the adjudicating authority to substantiate their claim for CENVAT credit.
9. Accordingly, we partially modify the impugned order to the extent indicated above. The appeals are allowed to this extent.
(Order pronounced in the open Court on 30.08.2024) (JUSTICE DILIP GUPTA) PRESIDENT (HEMAMBIKA R. PRIYA) MEMBER (TECHNICAL) G.Y.