Custom, Excise & Service Tax Tribunal
M/S Goodyear India Ltd vs Cce, Delhi Iv on 14 January, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Principal Bench, New Delhi COURT NO. III DATE OF HEARING : 14/01/2015. DATE OF DECISION : 14/01/2015. Excise Appeal No. 2185 of 2005 [Arising out of the Order-in-Original No. 01/RH/Adj./2005-06 dated 19/04/2005 passed by The Commissioner of Central Excise, Delhi IV, Faridabad.] For Approval and signature : Honble Shri Rakesh Kumar, Member (Technical) Honble Shri S.K. Mohanty, Member (Judicial) 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 : Department Authorities? M/s Goodyear India Ltd. Appellant Versus CCE, Delhi IV Respondent
Appearance Shri B.L. Narasimhan, Advocate for the Appellant.
Shri Pramod Kumar, Authorized Representative (Jt. CDR) for the Respondent.
CORAM : Honble Shri Rakesh Kumar, Member (Technical) Honble Shri S.K. Mohanty, Member (Judicial) Final Order No. 50178/2015 Dated : 14/01/2015 Per. Rakesh Kumar :-
The appellant are manufacturers of Tyres. The tyres attract only the basic excise duty and Special Excise duty and as such there is no Additional Excise Duty [Goods of Special Importance] Act, 1957 (hereinafter referred to as AED (GSI). For manufacture of tyres, the appellant procured duty paid tyre cord fabrics on which basic excise duty and AED (GSI) had been paid and took Cenvat credit of the same. During the period prior to 01/03/03, AED (GSI) credit could be utilised only for payment of AED (GSI) and could not be utilised for payment of Basic Excise Duty (BED), or Special Excise Duty (SED) or other duties of excise. Since there is no AED (GSI) on tyres, during the period prior to 01/03/03, the Tyre manufacturers had accumulated AED (GSI) credit. In the budget of 2003, by amendment to Rule 3 (6) of Cenvat Credit Rules, 2002, utilisation of AED (GSI) credit for payment of basic excise duty or special excise duty on the final product, was permitted, but this provision did not specify the cut of date i.e. the AED (GSI) credit accrued upto which date prior to the date of amendment could be utilised for payment of Basic Excise Duty and Special Excise Duty. Immediately after the amendment to Rule 3 (6) of the Cenvat Credit Rules, 2002 appellant utilised the AED (GSI) credit of Rs. 13.27 crores out of total AED (GSI) credit of Rs. 15.43 crores lying with them for payment of Basic Excise Duty and Special Excise Duty on the tyres. The credit utilised also included the credit of Rs. 8,71,12,812/- which had accrued during period prior to 01/04/2000. In 2004, Section 88 of the Finance Act, 2004 amended the Rul3 3 (6) of the Cenvat Credit Rules, 2002, retrospectively to provide that only the AED (GSI) credit accrued after 01/4/2000 could be utilised for payment of Basic Excise Duty and Special Excise Duty on the finished products and not the credit accrued during the period prior 01/04/2000. Sub-Section (4) of Section 88 provided for recovery of the pre 01/4/2000 AED (GSI) credit utilised for payment of Basic Excise duty or Special Excise duty, alongwith interest thereon under Section 11AB of the Central Excise Act, 1944. In the year 2005, Section 88 of the Finance Act, 2004 was amended by Section 124 of the Finance Act, 2005 by adding sub-Section (5) and (6) of Section 88 of the Finance Act, 2004 which provided a new mode of recovery of the AED (GSI) credit for the period prior to 01/04/2000 which had been wrongly utilised for payment of Basic Excise Duty and Special Excise Duty and as per this provision, this wrongly utilised AED (GSI) credit could be paid back by the manufacturers in 36 instalments starting from July, 2005 alongwith the interest chargeable at the rate and for the period specified therein.
2. In this case, as mentioned above, the Appellant immediately after amendment to Rule 3 (6) of Cenvat Credit Rules, 2002 in 2003 had utilised the AED (GSI) credit of Rs. 8,71,12,812/- which had accrued during the period prior to 01/04/2000 for the payment of Basic Excise Duty and Special Excise Duty and this utilisation became wrong utilisation in terms of the provisions of Section 88 (1) of the Finance Act, 2004 and the credit became recoverable from them alongwith interest in terms of sub-Section (4) of Section 88 of the Finance Act, 2004. In view of this, the Commissioner by the impugned order-in-original No. 01/RH/Adj./2005-06 dated 19/04/05 confirmed the AED (GSI) credit demand of Rs. 8,71,12,812/- against the Appellant by invoking the provisions of Section 88 (4) of Finance Act, 2004 and beside this, also demanded interest on this credit under Section 11AB of Central Excise Act, 1944, as Section 88 (4) of Finance Act, 2004 provided for recovery of this credit in terms of Rule 12 of the Cenvat Credit Rules, 2002 which, in turn, makes the provisions of Section 11A and Section 11AB of the Central Excise Act, 1944 applicable for this purpose. Against this order of the Commissioner, this appeal has been filed.
3. Heard both the sides.
4. Both the sides agreed that in view of the provisions of Section 88 of the Finance Act, 2004 retrospectively amending Rule 3 (6) of the Cenvat Credit Rules, 2002, the AED (GSI) credit accrued during period prior to 01/04/2000 could not be utilised for payment of Basic Excise Duty and Special Excise Duty and as such the utilisation of this credit to the extent of Rs. 8,71,12,812/- by the appellant for payment of Basic Excise Duty and Special Excise Duty on the tyres is wrong. Both the sides also agree that the Appellant had reversed this credit in December, 2004. However, the dispute is only as to whether interest under Section 11AB as ordered by the Commissioner would be chargeable or the interest liability is to be determined in terms of Clause (V) of Section 88 (4) of the Finance Act, 2004, introduced by Section 124 of the Finance Act, 2005.
5. On the question of levy of interest under Section 11AB on the wrong utilisation of AED (GSI) credit, Shri B.L. Narasimhan, Advocate, the learned Counsel for the Appellant, pleaded that when this credit had been utilised during 2003 after amendment Rule 3 (6), the utilisation was in terms of the provisions of Rule 3 (6) of Cenvat Credit Rules, 2002, as amended by the Central Government, that it is only by Section 88 of Finance Act, 2004 that a restriction was put with retrospective effect that AED (GSI) credit accrued during the period prior to 01/04/2000 could not be used for payment of Basic Excise Duty and Special Excise Duty and as such the AED (GSI) credit of Rs. 8,71,12,812/- pertaining to the prior to 01/4/2000 and utilised for payment of BED and SED became recoverable, that the appellant, in view of the provisions of Section 88 of the Finance Act, 2004 reversed the entire disputed amount of AED (GSI) credit in December 2004, that Section 88 (4) of the Finance Act, 2004 provided for recovery of interest on the wrongly utilised AED (GSI) credit only from the date on which the Finance Act, 2004 receives the assent of the President, that in view of this, the interest could be charged only from 10/09/04, that in the year 2005, Section 124 of Finance Act, 2004 amended Section 88 of the Finance Act, 2004 by adding sub-Sections (5) and (6) to Section 88 of the Finance Act, 2004, that sub-Section (5) added to Section 88 by the Section 124 of Finance Act, 2005 provided a new mode of payment of the wrongly utilised AED (GSI) credit in 36 instalments starting from July 2005, that sub-Section (5) of Section 88, added by Section 124 of the Finance Act, 2005, is effective not notwithstanding anything contained in sub-Section (4) and thus the provisions of sub-Section (5) would have an over-riding effect over the provision of sub-Section (4) of Section 88, that in terms of Clause (V) of sub-Section (5), the interest on the amount of pre 01/04/2000 AED (GSI) credit utilised for paying basic excise duty and special excise duty, shall be @ 13% per annum for the period beginning and from the day when each time the amount of credit was so utilised and ending on the 10th day of September, 2004, that in view of this, the interest on the wrongly utilised AED (GSI) credit could be charged only @ 13% per annum specified in this Clause for the period from the date of utilisation of the credit till 10/09/04, that as such Section 11AB is not applicable for levy of interest in view of the provisions of Section 124 of the Finance Act, 2005, that since the appellant had paid the entire credit in cash in December 2004, there is no question of charging of interest, as the appellant paid the amount much before the re-payment in 36 instalments was to starts in July 2005 in terms of the provisions of sub-Section (5) of Section 88 of Finance Act, 2004, introduced by Section 124 of the Finance Act, 2005 and that in view of the above submissions, the Commissioners order charging interest under Section 11AB readwith Section 88 (4) of the Finance Act, 2004 is not correct.
6. Shri Pramod Kumar, the learned Jt. CDR, defending the Commissioners order with regard to levy of interest, pleaded that the provisions of Section 88 of the Finance Act, 2004 had been amended by adding sub-Section (5) and sub-Section (6) only by Section 124 of the Finance Act, 2005 w.e.f. 10/09/04, and this amending provision is not retrospective, that sub-Section (4) of the Section 88 of the Finance Act, 2004 provided for recovery of the wrongly utilised AED (GSI) credit in terms of the provisions of Cenvat Credit Rules, 2002 relating to recovery of wrongly taken/utilised credit alongwith interest, and that since the appellant had paid the entire amount in December 2004, itself it is the provisions of Section 88 (4) of the Finance Act, 2004 which would apply and not the provisions of Section 124 of the Finance Act, 2005. He also pleaded that the provisions of Section 124 of the Finance Act, 2005 prescribing mode of recovery of the wrongly utilised AED (GSI) credit in 36 instalment was subject to a procedure being followed in this regard as prescribed in this Section and since the appellant had not followed that procedure, the provisions of this Section 124 of the Finance Act, 2005 would not be applicable. He, therefore, pleaded that the Commissioner has rightly ordered levy of interest on the wrongly utilised under Section 11AB.
7. We have considered the submissions from both the sides and perused the records.
8. The Appellant immediately after amendment to Rule 3 (6) of Cenvat Credit Rules, 2002 had utilised the AED (GSI) credit of Rs. 8,71,12,812/- pertaining to the period prior to 01/04/2000 for payment of Basic Excise Duty and Special Excise Duty on tyres. However, Section 88 of the Finance Act, 2004 retrospectively amended Rule 3 (6) of the Cenvat Credit Rules, 2002 to provide that the AED (GSI) credit accrued prior to 01/04/2000 could not be used for payment of Basic Excise Duty and Special Excise Duty and sub-Section (4) of this section provided for recovery of the pre 01/4/2000 AED (GSI) credit wrongly utilised for payment of BED and SED. Sub-Section (4) of Section 88 is reproduced below :-
Provided that, recovery shall be made of all such CENVAT credit of additional duty of excise leviable under section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957) which has been availed but which would not have been availed if the amendment made by sub-Section (1) was in force at all material times and the provisions of CENVAT Credit Rules, 2002 relating to the recovery of CENVAT credit, alongwith interest, shall apply for the recovery made under this sub-section subject to the modification that the relevant date defined in Section 11A of the Central Excise Act, 1944 (1 of 1994), shall, for the purposes of recovery under this sub-Section, be deemed to be date on which the Finance (No. 2) Bill, 2004 receives the assent of the President.
9. Thus in terms of Section 88 (4) of the Finance Act, 2004 in the cases of utilisation of AED (GSI) credit pertaining to the period prior to 01/04/2000 for payment of Basic Excise Duty and Special Excise Duty, its recovery could be made in terms Rule 12 of Cenvat Credit Rules, 2002 readwith Section 11A and interest on the same would be leviable under Section 11AB and for this purpose, the relevant date would be 10/09/04. This relevant date is obviously for the purpose of counting limitation period for the issue of show cause notice for recovery under Section 11A (1) not for counting the period for levy of interest. The interest under Rule 12 of Cenvat Credit Rules, 2002 would be leviable under Section 11AB and would start from 1st day of the month succeeding the month in which the credit was wrongly utilised for payment of BED and SED.
10. The provisions of Section 88 of Finance Act, 2004 were amended by adding sub-Section (5) and sub-Section (6) by Section 124 of the Finance Act, 2005. Sub-Section (5) of the Finance Act, 2005 starts with the words notwithstanding anything contained in sub-Section (4) of Section 88 and prescribes a procedure for payment of the wrongly utilised AED (GSI) credit pertaining to period prior to 01/04/2000 in 36 instalments starting from July, 2005. Clause (V) of sub-Section (5) provides that the amount of interest on the amount of credit utilised for paying Cenvat duty shall be @ 13% per annum for the period beginning on and from the day when each time the amount of credit was so utilised and ending on the 10th day of September, 2004. Though, sub-Section (5) added to Section 88 of the Finance Act, 2004 by Section 124 of the Finance Act, 2005 is a non-obstinate provision and would override the provisions of sub-Section (4) of Section 88 of the Finance Act, 2004, this would be applicable only in those cases, where the wrongly utilised AED (GSI) credit had not been paid as on the date of the enactment of Finance Act, 2005, as it is not a retrospective provision and does not replace the sub-Section (4) of Section 88 with retrospective effect. In this case, the appellant had paid the entire amount of wrongly utilised AED (GSI) in December 2004 and, therefore, in our view, the provisions of Section 124 of the Finance Act, 2005 would not be applicable and as such their interest liability would be governed by sub-Section (4) of Section 88 of the Finance Act, 2004. Since, in this case the wrong utilisation of the AED (GSI) credit pertaining to period prior to 01/04/2000 has taken place in 2003 immediately after amendment to Rule 3 (6) of the Cenvat Credit Rules, 2002, the interest liability under Section 11AB would start from 1st day of the month succeeding the month in which the wrong utilisation had taken place till the payment of wrongly utilised credit. Shri Narasimhan, at this stage pleads that sub-Section (5) added to Section 88 of Finance Act, 2004 by Section 124 of Finance Act, 2005 permitted an assessee who had wrongly utilised the AED (GSI) credit accrued during the period prior to 01/04/2000 for payment of BED and SED credit to pay back the same in 36 instalments starting from July 2005 and that his interest liability was restricted only from the date of wrong utilisation till 10/09/04 and the appellant who paid the entire amount of wrongly utilised credit prior much before the enactment of Finance Act, 2005, should not be in a position worse than the position of the assessees who did not comply with the provisions of Section 88 (4) of the Finance Act, 2004 and were given much liberal terms for repayment of the wrongly utilised AED (GSI) credit and interest therein. We do not agree with this plea as, as discussed above, the provisions of Section 124 of the Finance Act, 2005 amending Section 88 of Finance Act, 2004 by adding sub-Section (5) and sub-Section (6) to it, though non-obstinate provisions, do not have retrospective effect and would not apply to those assessees who had paid the wrongly utilised AED (GSI) credit before the enactment of Finance Act, 2005 and the liberal repayment terms introduced by Section 124 of the Finance Act, 2005 would not apply to them.
11. In view of the above discussion, we do not find any infirmity in the impugned order. The appeal is dismissed.
(Dictated and pronounced in open court.) (Rakesh Kumar) Member (Technical) (S.K. Mohanty) Member (Judicial) PK ??
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