Custom, Excise & Service Tax Tribunal
Cce, Panchkula vs M/S. Yamuna Gases & Chemicals Ltd on 7 April, 2010
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Block No. 2, R.K. Puram, NEW DELHI COURT NO. II CENTRAL EXCISE APPEAL NO. 479-480 OF 2006 [Arising out of Order-in-Appeal No. 406/GRM/RTK/2005 & 405/GRM/RTK/2005 both dated 21.11.2005 passed by the Commissioner (Appeals), Central Excise, Delhi-III, Gurgaon] Dated of hearing/decision: 7th April, 2010 For approval and signature: Honble Mr. D.N. Panda, Judicial Member; Honble Mr. S.K. Gaule, Technical Member 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 would 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? CCE, Panchkula Appellant Vs. M/s. Yamuna Gases & Chemicals Ltd. Respondent
Appearance:
Shri Vijay Kumar, Authorised Representative (DR) for the Revenue;
Shri B.L. Narasimhan, Advocate for the Respondents Coram:
Honble Mr. D.N. Panda, Judicial Member; Honble Mr. S.K. Gaule, Technical Member ORDER NO._________________ dated __________ Per S.K. GAULE:
Heard both sides.
2. Revenue is in appeal in the case against Order-in-Appeal No. 405/GRM/RTK/2005 and 406/GRM/RTK/2005 both dated 21.11.2005. Since the issue involved in these appeals is common, they are taken up for disposal together. Briefly stated facts of the case are that the Respondents were engaged in making of the Cable Jointing Kits (hereinafter referred to as CJK). The Respondents paid duty on CJK despite the fact that CEGAT in their own case vide Final Order No. 408/2000-B dated 15.3.2000 held CJK as non-excisable commodity. But they have not paid the duty on intermediate products. Proceedings were initiated against them and duty of Rs. 47 lakhs was demanded along with interest and penalty was proposed under Rule 25 of Central Excise Rules, 2002 for contravention of various rules (ibid). The proceedings were also initiated for recovery of Cenvat credit taken on bought out items which were used in CJK. The lower authorities confirmed the demand of duty along with interest and imposed penalty of Rs. 1 lakh on the Respondents (in appeal No. 480/2006) and confirmed the demand of Rs. 20,50,911/- of Cenvat credit and imposed penalty of Rs. 50,000/- (in appeal No. 479/2006). The respondents filed appeals before the Commissioner (Appeals) who upheld the order of the lower Adjudicating Authority confirming the duty liability along with interest. However, the Commissioner (Appeal) allowed the adjustment of duty paid on CJK and set aside the penalty of Rs. 1 lakh in appeal No. 479/2006 vide order-in-appeal No. 406/GRM/RTK/2005. Learned Commissioner (Appeal) upheld the Order of the lower adjudicating authority disallowing Cenvat credit of Rs. 20,50,991/, however, waived the demand of interest and penalty in case of appeal No. 480/2006 vide order-in-appeal No. 405/GRM/RTK/2005. Hence, these appeals.
3. The contention of the respondents is that since CJK is not excisable item thus the Respondents are not required to pay duty and, even if duty has been paid the same should remain with the department as per provision of Section 11D of Central Excise Act, 19454 and that the same should not be considered as duty but as deposit. The contention is that allowing adjustment will be contrary to sanction of refund without following the procedure prescribed under Section 11B (ibid) and the same will get covered under the doctrine of unjust enrichment. They also placed reliance on the following decisions:-
(i) M/s. Sahakari Khand & Udyog Ltd. 2005 (181) ELT 328 (SC)
(ii) CCE, Hyderabad vs. M/s. Divya Enterprises Ltd. -
2003 (153) ELT 497 (SC)
(iii) M/s. Bhilwara Synthetics Ltd. vs. CCE, Jaipur 2000 (124 (ELT) 277 (Tribunal) The contention of the appellants is that the plea taken by learned Counsel for the Respondents that they have paid excess amount on final product compared to duty liability at intermediate stage and the entire exercise of department is revenue neutral. The amount is not correct. The contention is that the adjustment allowed by the Commissioner (Appeals) while relying upon the Honble Supreme Courts decision in the case of Divya Enterprises Ltd., reported in 2003 (153) ELT 497 (SC) relates to availment of benefit of notification.
4. The respondents filed cross objection. The contention of the Respondents is that plea of the appellant that duty wrongly paid is required to be deposited with Central Government in terms of Section 11D of Central Excise Act, 1944 and the plea that the appellant allowing the adjustment of duty paid on CJK against the duty demand confirmed on intermediate goods, there is not even a remote allegation made in the show cause notice regarding the above pleas. The contention is that they have discharged the excise duty on such manufactured item at the time of clearance of CJK by paying full excise duty on full selling price of CJK which include the value of manufactured item and bought out items. They placed reliance on the decision of the Honble Supreme Court in the case of M/s. Sidhyartha Tubes Ltd. vs. Collector of Central Excise, reported in 2000 (115) ELT 32 (S.C.). The contention is that if excise duty is demanded on manufactured items by them on stage which is prior to the stage on which the respondents paid excise duty on CJK the duty paid on CJK is duty adjusted against the duty demanded on manufactured items. They placed reliance on Honble Supreme Courts decision in the case of Divya Engerprises Ltd. (supra). The contention is that they have paid Rs. 55 lakhs (Rs. 34 lakhs credit on inputs used in intermediate products + Rs. 21.25 lakhs paid through PLA) whereas the duty liability comes to Rs. 47 lakhs on the intermediate goods and thus they paid Rs. 8 lakhs more. The learned Advocate submitted that they will not claim refund if later on it is found that they have paid excess duty.
5. We have considered the submissions from both sides and perused the records. It is not in dispute that the respondents did not pay the duty at the intermediate stage. We find that the appellants have paid duty amounting to Rs. 75.40 lakhs on CJK despite the fact that CJK are not excisable, in view of the Tribunals decision in their own case. Out of Rs. 75.40 lakhs Rs. 20.51 lakhs were paid through credit on bought out items.
6. Both the lower authorities have given concurrent finding and confirmed the demand of duty of Rs. 47 lakhs on the goods manufactured by the respondents at the intermediate stage and on the recovery of wrongly availed Cenvat credit of Rs. 20,50,911/- on the bought out items used in the manufacture of CJK.
7. The departure is that the learned Commissioner (Appeals) in case of appeal No. E/480/2006 on the plea of the respondents for the adjustment of duty paid on CJK their liability of duty on the intermediate goods before the original authority the learned Commissioner has directed the lower adjudicating authority to allow the adjustment in duty along with interest after verifying the records and set aside the penalty of Rs. 1 lakh imposed under Rule 25 of Central Excise Rules. Para 3 of Honble Supreme Courts decision in the case of Divya Enterprsies read as under:-
Under this Notification Terry toweling was exempted. However the terry-towelling fabric was not exempted. Respondents have paid duty on the exempted item i.e. on towels but duty has not been paid on the fabric. As the notification does not exempt fabrics, duty has to be paid on the fabric under the Heading 5802.12. We, however, direct that the respondent will be given adjustment for the duty paid on the towels. If on calculation of duty, it is found that a higher amount has been paid than what is due on the fabric, then the claim for refund will be allowed. If on the other hand it is found that some duty has still to be paid then the respondent shall pay the duty.
7. Keeping in view the Honble Supreme Courts decision in totality we do not find any infirmity in the order of the learned Commissioner (Appeals) directing the lower adjudicating authority to allow the adjustment of duty and interest after verifying the records. Therefore, the Commissioner (Appeals) order is upheld in to-to and appeal is dismissed. However, in the interest of justice respondents will be at liberty to claim refund, if it is found that a higher amount has been paid then what is due on the goods manufactured at intermediate stage and then the claim for refund should be allowed as per the provision of law irrespective of respondents gesture that they will not claim refund if later on it is found that duty has been paid in excess.
8. So far as the case of Order-in-appeal No. 406 is concerned the learned Commissioner (Appeals) has erred in relying upon the decision of the Honble Supreme Court in the case of Divya Enterprises (supra) since the instant case relates to recovery of wrongly availed Cenvat credit amounting to Rs. 20,50,911/- and not demand of duty which is an admitted fact that they have wrongly utilized the Cenvat credit on the bought out items for payment of duty on CJK. The credit for which the appellants are not eligible, cannot be utilized for payment of demand of wrongly availed credit. A wrong canot be remedied by another wrong. Therefore, learned Commissioner (Appeals) has erred in modifying the impugned order-in-original. The lower adjudicating authority has imposed reasonable penalty. Therefore, the lower adjudicating authority order is restored in to-to and the order of the Commissioner (Appeals) is set aside. Appeal is dismissed.
9. Cross objections are also disposed of accordingly.
(D.N. PANDA) JUDICIAL MEMBER (S.K. GAULE) TECHNICAL MEMBER RK ??
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