Custom, Excise & Service Tax Tribunal
M/S. Harish Dyeing & Printing Works vs Commissioner Of Central Excise & S.T., ... on 30 December, 2014
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Zonal Bench, Ahmedabad Appeal No. : E/1643/2008 [Filed by the Assessee] E/1480/2008 [Filed by the Revenue] (Arising out of OIA-RKA/648/SRT-I/2008 dated 04.09.2008, Passed by Commissioner (Appeals) Central Excise, Surat) M/s. Harish Dyeing & Printing Works : Appellant (s) Commissioner of Central Excise & S.T., Surat Vs. Commissioner of Central Excise & S.T., Surat : Respondent (s)
M/s. Harish Dyeing & Printing Works Represented by :
For Assessee : Shri P.M. Dave & Shri Paritosh Gupta, Advocates For Revenue : Shri Anil Gidwani, A.R. For approval and signature :
Mr. P.K. Das, Hon'ble Member (Judicial) 1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No 2 Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
No 3 Whether their Lordships wish to see the fair copy of the Order?
Seen 4 Whether Order is to be circulated to the Departmental authorities?
Yes CORAM :
Mr. P.K. Das, Hon'ble Member (Judicial) Date of Hearing / Decision : 30.12.2014 ORDER No. A/12344-12345/2014 Dated 30.12.2014 Per : Mr. P.K. Das;
The relevant facts of the case, in brief, are that the assessee is engaged in the processing of Man Made fabrics from grey fabrics. From 01.4.2003, Rule 12B was inserted in Central Excise Rules, 2002 and the merchant supplier of the grey fabrics as the primary person who is required to take registration but also gave option to the job worker to undertake registration as independent manufacturer or as agent of the merchant. The Central Excise Rules, 2002 was also amended to enabling taking of credit by registered unit against the invoices in favour of merchant as consignee/ buyer but endorsed by such merchants. The assessee availed CENVAT credit on the basis of the invoices of grey fabrics issued by the merchants during the month of February 2003 to March 2003 and September 2003. Subsequently, during investigation it was found that the supplier of grey fabrics who issued the invoices are not traceable and /or non-existent. A show cause notice dated 23.3.2006 was issued proposing to deny CENVAT credit of Rs. 23,19,610/- along with interest availed by the appellant during the period February 2003 to March 2003 and September 2003 on the basis of invoices issued by the suppliers of grey fabrics. Adjudicating authority confirmed the demand of CENVAT credit of Rs. 23,19,610/- along with interest and also imposed penalties under Rule 13(2) of Cenvat Credit Rules, 2002 read with Section 11AC of the Central Excise Act, 1944. Commissioner (Appeals) modified the adjudication order to the extent the penalty was reduced to Rs. 5,79,903/- under Rule 13(1) of the Cenvat Credit Rules, 2002. The assessee filed appeal against denial of CENVAT credit and imposition of penalty. Revenue is also filed appeal for reduction of penalty.
2. After hearing both the sides and on perusal of the records, I find that the main contention of the learned Advocate is that the demand of CENVAT credit for the extended period of limitation would not sustain in view of the decision of the Hon'ble Gujarat High Court in the case of Prayagraj Dyeing & Printing Mills Pvt. Limited vs. UOI 2013 (290) ELT 61 (Guj.).
3. There is no dispute to the fact that the assessee availed the credit on the basis of invoices issued by certain suppliers of grey fabrics. They are eligible to avail credit on the basis of said invoices as per Rule 7 of Cenvat Credit Rules, as it stood at the relevant period. Commissioner (Appeals) observed that the evidences are not sufficient to conclude that the appellant are party to fraud. I find that the identical issue stands decided by the Tribunal in the case of M/s. Bhagwati Silk Mills & Others vide final order No. A/55-185/WZB/AHD/2011 dated 19.4.2011, remanded the matters with certain directions and to decide the matter on limitation. In that case, the assesses challenged the order of the Tribunal before the Hon'ble Gujarat High Court. In the case of Prayagraj Dyeing & Printing Mills Pvt. Limited, the issue involved, amongst others, as to whether the Tribunal committed substantial error of law in holding that the demand in question is not barred by limitation in the facts of the present case and that the larger period of limitation is applicable. The Hon'ble High Court answered the question in affirmative and against the Revenue. In that case, the assessees were processing house registered under Rule of Central Excise Rules, 2002 and holding a valid license for the processing of grey fabrics received from traders/merchants on job-work basis since several years and were enjoying the deemed credit facility for the grey fabrics received from the traders/merchants up to March 31, 2003 and were paying duty after availing deemed credit granted in accordance with the notifications issued from time to time. The assessees were served with a show cause notice on the ground that during the month of June 2004 and July 2004, the credit taken by the appellant on the basis of the endorsed invoices were not correct as the invoices issued by the grey manufacturers registered under Rule 12B/ Dealers were not in existence and fake, as declared in respective Alert Circulars issued after cessation of the scheme. The demand was made invoking extended period under proviso to Section 11A (1) of the Act.
4. The Hon'ble High Court observed that on consideration of the entire materials on record, documents and invoices in question, issued by the registered licensee being genuine and in the absence of any allegations against the appellants of fraud, the Tribunal should not have remanded the matter back as the claim was totally barred by limitation.
5. In the present case, it is noticed that Commissioner (Appeals) has clearly observed that the assessee is not part to the fraud committed by the grey fabric suppliers. In this case also the grey fabric suppliers issued invoices. So, the present case is squarely covered by the decision of the Hon'ble High Court in the case of Prayagraj Dyeing & Printing Mills Pvt. Limited (supra). So, the demand of inadmissible CENVAT credit is clearly barred by limitation and is not sustainable and the penalty is also not imposable.
6. In view of the above discussion, the impugned order is set-aside and appeal filed by the assessee is allowed with consequential benefits. Appeal filed by the Revenue is rejected.
(Dictated and pronounced in the Court) (P.K. Das) Member (Judicial) ..KL 3