Custom, Excise & Service Tax Tribunal
M/S. Madras Cements Ltd vs Cce, Trichy on 23 June, 2010
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
E/596/2009
(Arising out of Order in Appeal No. 114/2009 dated 18.08.2009, passed by the Commissioner of Central Excise (Appeals), Trichy).
For approval and signature
Honble Ms. JYOTI BALASUNDARAM, Vice President
_________________________________________________________
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M/s. Madras Cements Ltd : Appellants
Vs.
CCE, Trichy : Respondents
Appearance Shri R. Parthasarathy, Consultant, for the appellant Ms. Indira Sisupal, JDR, for the respondent CORAM Honble Ms. JYOTI BALASUNDARAM, Vice President Date of hearing: 23.06.2010 Date of decision: 23.06.2010 Final ORDER No._______________ Per: Jyoti Balasundaram The assessees herein received inputs from the manufacturer M/s. Industrial Filters and Fabrics Pvt. Limited. Credit was initially taken on the strength of invoices under which the goods were classified under Chapter Heading 59.11. Show Cause Notice was issued to the manufacturer proposing re-classification under Chapter Heading 70.19 and proposing recovery of differential duty, applying proviso to Section 11A of the Central Excise Act, 1944. The supplier issued three supplementary invoices showing the classification of the goods under Chapter Heading 70.19 and on payment of differential duty and the assessees herein took the credit, which is disputed by the department on the ground that additional duty became recoverable from the manufacturer as a result of fraud, suppression etc. and therefore, the assessees were hit by the restrictions/conditions stipulated under Rule 9 (1)(b) of Cenvat Credit Rules, 2004, which reads as under:-
the Cenvat Credit may be taken by a manufacturer on the basis of a Supplementary invoice issued by a manufacturer of inputs or capital goods in terms of the provisions of Central Excise Rules, 2002 from his factory or depot of the said manufacturer or from any other premises from where the goods are sold by or on behalf of the said manufacturer, in case additional amount of excise duties, has been paid, except where the additional amount of duty became recoverable from the manufacturer of inputs or capital goods on account of any non levy or short levy by reason of fraud, collusion or any willful misstatement or suppression of facts or contravention of any provision of the Excise act, or the rules made there under with intent to evade payment of duty. On this basis, Show Cause Notice was issued proposing recovery of duty of Rs. 4,05,960/- representing credit wrongly taken on the strength of the supplementary invoices together with interest and penalty was proposed under Rule 15 of Cenvat Credit Rules,2004. The notice was adjudicated by lower appellate authority and demand was confirmed together with interest for cenvat credit wrongly taken based on the supplementary invoices and penalty of Rs.5,000/- was imposed on the assessees. The Commissioner (Appeals) having upheld the order of the adjudication, the assessees are in appeal before the Tribunal.
2. I have heard both sides. There is no dispute that the additional duty demand was confirmed against the supplier manufacturer only well after the assessees had taken the credit on the strength of the supplementary invoices issued by the manufacturer on which the correct classification of the goods was shown. Therefore, supplementary invoices on the strength of which the disputed credit was taken cannot be considered as in-eligible document. The expression used in Rule 9 (1) (b) viz., where the additional amount of duty became recoverable from the manufacturer of inputs or capital goods on account of any non levy or short levy by reason of fraud, collusion or any willful misstatement is attracted when the additional duty demand is to be confirmed against the manufacturer. In the present case, since the additional amount of duty became recoverable from the supplier manufacturer only subsequent to the taking of credit by the assessees on the strength of three supplementary invoices, the restriction contained in under Rule 9 (1) (b) is not attracted against the assesses so as to sustain the duty. I, therefore set aside the impugned order and allow the appeal.
(Order pronounced and dictated in the open Court) (JYOTI BALASUNDARAM) VICE PRESIDENT BB 4