Custom, Excise & Service Tax Tribunal
M/S Pankaj Oxygen Ltd vs Cce, Raipur on 7 January, 2010
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Block No.2, R. K. Puram, New Delhi COURT-I Date of hearing/decision: 07.01.2010 Excise Appeal No. 4023 of 2006-SM [Arising out of order in appeal No. 172/RPR-I/2006 dated 13.09.2006 passed by the Commissioner (Appeals), Central Excise, Raipur-I] For approval and signature: Honble Shri Justice R.M.S. Khandeparkar, President 1. Whether Press Reporters may be allowed to see 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 CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3 Whether Their Lordships wish to see the fair copy of the Order? 4 Whether Order is to be circulated to the Departmental authorities? M/s Pankaj Oxygen Ltd., Appellants Vs. CCE, Raipur Respondent
AND Excise Appeal No. 3212/07-SM [Arising out of order in appeal No. 115/RPR-I/2004 dated 21.05.2007 passed by the Commissioner (Appeals), Central Excise, Raipur-I] M/s Pankaj Oxygen Ltd., Appellants Vs. CCE, Raipur Respondent Appearance:
Appeared for the Appellant None - Written submission Appeared for the Respondent Shri I. Baig, SDR Coram: Honble Shri Justice R.M.S. Khandeparkar, President Oral Order Per Shri Justice R.M.S. Khandeparkar:
Since common questions of law and facts arise in both these appeals, they were taken up for hearing together and are being disposed of by this common order.
2. The appellants under their submissions dated 16.09.2008 has informed the Tribunal that the Tribunal may decide the matters on the basis of the factual position as revealed from the records and it is not possible for the appellants to arrange personal appearance at the time of hearing of the matter. The matters were accordingly taken up for hearing and I have heard learned DR and perused the records with the assistance of the learned DR.
3. As far as Appeal No. 4023/06 is concerned, the same arises from the order dated 13.09.2006 passed by the Commissioner (Appeals) whereby the appeal filed by the appellants against the order dated 23.06.2006 by the Assistant Commissioner was dismissed. By order dated 23.06.2006, the Assistant Commissioner had held that the appellants were liable to pay interest amounting to Rs. 5788/- for having utilized the credit unilaterally and without prior sanction, besides an amount of Rs.3859/- was due to the revenue in terms of Order-in-appeal No.84/RPR-I/2005 dated 10..08.2005 and, therefore, some of Rs. 5788 + Rs. 3859/- should be deducted from the amount of Rs. 2,50,000/- refundable to the appellants.
4. The Appeal No. 3212/07 arises from the order dated 21.05.2007 passed by the Commissioner (Appeals) whereby the order of the Assistant Commissioner dated 23.06.2006 was modified at the instance of the department whereby the facility extended to the appellants to pay the duty in monthly installment under sub-rule (1) of Rule 8(3A) for a period of two months was forfeited and the appellants were directed to pay the duty on each consignment of the goods from the account current in terms of Rule 8(3A) of the Central Excise Rules, 2002, besides imposing penalty of Rs. 10,000/- under rule 25 of the said rules.
5. The appellants are engaged in manufacture of oxygen and dissolved acetylene gases falling under Chapter heading 28 & 29 of the Central Excise Tariff Act, 1985. During the period from January 2002 to March 2003, the appellants had collected transportation charges from their buyers to the tune of Rs.38,48,340/- in addition to price indicated in their invoices but had not included the same in the transaction value for the purpose of computation of excise duty and, therefore, they were accused of short payment of duty amounting to Rs.5,99,735/- and the same was demanded under show cause notices which came to be confirmed pursuant to the adjudication proceedings. Being aggrieved, the appellants had filed appeal alongwith application for stay to dispense with the requirement of pre-deposit of duty and penalty. Under the stay order dated 29.06.2005 passed by the Commissioner (Appeals) Raipur, the appellants were directed to deposit an amount of Rs. 2,50,000/-. In compliance with the said order the appellants paid Rs. 2,50,000/- under TR-6 challan No. 05/05 dated 11.07.2005. The appeal before the Commissioner (Appeals) Raipur was ultimately allowed in favour of the appellants under order dated 12.08.2005. Under letter dated 22.09.2005, the appellants intimated that the deposit of Rs.2,50,000/- made through TR challan could be utilized by crediting in PLA in entry No. 18 dated 22.09.2005. It was revealed that the appellants had suo-moto taken credit of Rs.2,50,000/- without prior sanction from competent authority. Further, the appellants applied for refund of the amount of Rs.2,50,000/- under their letter dated 31.08.2005. A show cause notice dated 07.02.2006 came to be issued to the appellants requiring the appellants to show cause as to why the refund should not be rejected on the ground that they had taken the credit of the said amount suo-moto and had again applied for refund of the amount, that why the amount of the credit utilized by them in excess of actual balance in their account should not be recovered, that why the facility of monthly payment of duty should not be withdrawn, that why the penalty under Rule 25 should not be imposed and that why the interest at the appropriate rate should not be recovered.
6. The appellants contested the proceedings on the ground that the amount of Rs. 2,50,000/- was deposited as pre-deposit in terms of the said order passed by the Commissioner (Appeals) and ultimately they had succeeded in the appeal and, therefore, it was required to be refunded unconditionally. The CBEC vide Circular dated 02.01.2002 stipulated that the refund of pre-deposit could be claimed by making of simple request. Though the order of the Commissioner (Appeals) was challenged before the CEGAT, the department could not obtain stay of the order passed by the Commissioner (Appeals). The appellants, therefore, prayed for refund of the amount.
7. The Assistant Commissioner, Raipur after hearing the parties held that though the appellants had taken suo moto credit, it was reversed by making fresh deposit of Rs. 2,50,000/- against TR-6 challan No. 10/05 dated 26.11.2005 and therefore claim for refund could not be rejected. It was further held that as to whether they were entitled to take credit suo-moto or not was a matter of interpretation of provision of law and, therefore, there is no case for action under Rule 8(3A). For the same reason, there was no case for imposition of penalty. It was however held that it was undisputed fact that the appellants had taken credit of Rs. 2,50,000/- on 22.09.2005 which was reversed by them on 26.11.2005. Therefore, the credit of Rs. 2,50,000/- was utilized by the appellants during the period from 22nd September to 26th November 2005 and, therefore, they were liable to pay interest amounting to Rs. 5788/- under Rule 8(3A) read with Section 11AB of the Central Excise Act, 1944. It was also noted that in terms of the report by the Superintendent, Central Excise Range-IV dated 12.09.2005 an amount of Rs. 3859/- was due and payable by the appellants to the department in terms of order dated 10.08.2005 in an appeal and the same needed to be appropriated from the amount refundable. Accordingly, the Assistant Commissioner directed appropriation of an amount of Rs. 5788/- and Rs. 3859/- from the total amount of Rs. 2,50,000/- refundable to the appellants.
8. Aggrieved by the said order, the appellants as well as the respondent preferred the appeals which came to be disposed of by separate orders as stated above. As far as the appeal by the appellants is concerned, same was disposed of by the order dated 13.09.2006 confirming the finding arrived at by the Assistant Commissioner while observing that it is evident from the facts on record that the appellants had taken suo moto credit of Rs. 2,50,000/- without sanction from proper officer and Circular dated 02.01.2002 nowhere permits any such refund suo-moto. It merely stated that pre-deposit amount is liable to be returned on a simple request. It was also observed that adjustment of confirmed demand which was pending against the appellants was justifiably adjusted by the original authority in consonance with Section 11 of the said Act.
9. As regards the appeal by the department, the Commissioner (Appeals) by his order modified the order of the Assistant Commissioner as stated above while holding that it is on record that the appellants had a closing balance of Rs.91,553/- in the month of September 2005 and they took credit of Rs. 2,50,000/- on their own volition and utilized the same for payment of duty on the goods cleared during the said month. In the absence of aforesaid credit, the appellant did not have sufficient balance in their account current to discharge the duty liability on the goods cleared during the month of September 2005. Considering the decision of the Tribunal in the matter of M/s Jai Bhawani Concast vs. CCE, Jaipur in Excise appeal No. 385/2005 reported in 2007-TIOL- 592 CESTAT (Del.) it was observed that the Tribunal therein had clearly held that the suo-moto availment of credit was erroneous and though the said decision was in relation to the availment of suo-moto credit in modvat account of the duty paid erroneously ratio thereof was held to be squarely applicable to the facts of the case and, therefore, the department was held to be justified in contending that the appellants had defaulted in payment of duty by due date and hence the facility to pay the duty in monthly installment was liable to be forfeited for a period of two months and they were to be directed to pay the duty on each consignment of goods from current account in terms of Rule 8(3A) of the said rules and accordingly the order of the Assistant Commissioner in that regard was modified, apart from imposing penalty of Rs.10,000/-.
10. The appellants have sought to challenge both the orders passed by the Commissioner (Appeals) on the following grounds:-
1. For that it is the accepted principle of law that any Pre-deposit required to be made by any Appellant in terms of the Stay Order of the Appellate Authority is liable to be refunded without any pre-condition on completion of the Appellate proceedings in favour of the Appellant.
2. For that in compliance with the Interim Stay Order No.08/RPR-1/2005 dated 29.06.2005 the amount of pre-deposit of Rs.2,50,000/- was made which became unconditionally refundable when the Appeal itself was disposed of in favour of the Appellant with consequential relief.
3. For that vide Order-in-Appeal No.91/RPR-1/2005 dated 12.08.2005 the Appeal was allowed with consequential relief duly ratified by Honble CESTAT, Principal Bench, New Delhi.
4. For that when the appeal was allowed unconditionally with consequential relief the question of withholding refund of pre-deposit cannot arise.
5. For that if there is any delay beyond three months from the date when letter requesting for refund of the pre-deposit amount was made, any delay in payment of pre-deposited amount will attract interest in terms of Section 11AB of CE Act.
6. For that there are umpteen number of decisions on the subject of pre-deposit refund and if there is delay to pay the amount it becomes payable with interest at the rate prescribed.
7. For that the CE Authorities have gone beyond its competence and jurisdiction to adjust some other disputed demand and also interest charges on unfounded reasons, from out of the pre-deposit amount.
8. For that it has been very clearly clarified by the CBEC that the pre-deposit is liable to be refunded against partys request through a simple letter which the lower Authority ought to have abided by.
9. For the impugned purported Order is not only vague but also not in consonance with the facts or merit of the case in as much as neither the Original Authority nor the lower Appellate Authority took into account that pre-deposit amount was deposited twice and hence not a case of any suo-moto utilization of pre-deposit amount through PLA in as much as there is absolutely no merit in the instant Order-in-Appeal, being not a speaking Order and hence having no merit, liable to be quashed and /or set aside.
11. Only point which arises from the above grounds of the challenge to the orders is whether the amount deposited in terms of stay order, on having succeeded in the appeal, can be retained by the department or should it be unconditionally refunded to the appellants?
12. It is pertinent to note that the records placed before me clearly justify the findings of facts arrived at by the lower authorities. It is a matter of record that the appellants availed the credit suo-moto without waiting for sanction by the authority for necessary order in that regard. It is also a matter of record that amount of Rs.3859/- was due and payable by the appellants to the department in terms of Order-in-appeal No. 84/RPR-I/2005 dated 10.08.2005.
13. Rule 8(3A) of the Central Excise Rules 2002 as was in force during the relevant period stipulated thus:-
If the assessee defaults in payment of duty by the date prescribed in sub-rule (2) and the same is discharged beyond a period of thirty days from the said date, then the assessee shall forfeit the facility to pay the duty in monthly installments under sub-rule (1) for a period of two months, starting from the date of communication of the order passed by the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, in this regard or till such date on which all dues including interest thereof are paid, whichever is later, and during this period notwithstanding anything contained in sub-rule (4) of rule 3 of CENVAT Credit Rules, 2004, the assessee shall be required to pay excise duty for each consignment by debit to the account current and in the event of any failure, it shall be deemed that such goods have been cleared without payment of duty and the consequences and penalties as provided in these rules shall follow.
14. Perusal of the order passed by the Commissioner (Appeals) clearly discloses that the authority had taken note of undisputed facts as well as provisions of law and had applied the same to the established facts.
15. Section 11 of the said Act clearly empowers the department to adjust the refundable amount towards amount due from the party. Once it is not in dispute that in terms of order dated 10.08.2005 passed in an appeal, an amount of Rs. 3859/- was due and payable by the appellants to the department and the said dues were outstanding even on the date of the order of the refund, certainly the authority was justified in adjusting the said refundable amount towards the amount due from the appellants.
16. As the law comprised under Rule 8(3A) of the said rules clearly empowers and justifies certain action by the department in case of non compliance of the obligation by the assessee and thus non compliance of obligation having been established from the facts on record, no fault can be found with the impugned order taking appropriate action in terms of the said provisions of law.
17 Being so, it cannot be disputed that once the assessee succeed in appeal, the amount which was required to be deposited by the party in the said proceedings becomes refundable to the party. At the same time, bearing in mind the statutory provision referred to above, the department would be entitled to adjust the amount due and outstanding to the department from such party. Being so, no fault can be found with the impugned order. Hence, there is no case for interference in the impugned order. The appeals fail and are hereby dismissed.
(Justice R.M.S. Khandeparkar) President /Pant/ ??
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