Custom, Excise & Service Tax Tribunal
M/S.Grasim Bhiwani Textiles Ltd vs Cce, Rohtak on 7 October, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066.
DIVISION BENCH
Court No.III
Appeal No.E/2181/2008-EX(DB)
(Arising out of OIO No.23/Commr/SU/08/CE dt.15.7.2008 passed by the CCE, Rohtak.)
Date of Hearing/Decision 07.10.2015
For approval & Signature:
Honble Smt.Sulekha Beevi C.S., Member (Judicial)
Honble Mr.B.Ravichandran, Member (Technical)
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 would be released under Rule 27 of the 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 Department Authorities?
yes
M/s.Grasim Bhiwani Textiles Ltd. Appellant
Vs.
CCE, Rohtak Respondent
Appearance:
Present for the Appellant: Shri Amit Jain, Advocate Present for the Respondent: Shri R.K.Mishra, DR Coram: Honble Smt.Sulekha Beevi C.S., Member (Judicial) Honble Mr.B.Ravichandran, Member (Technical) Final Order No.53150/2015 Per: Sulekha Beevi C.S. The issue involved in the above appeal is the admissibility of credit of service tax paid on input service used in the manufacture of exempted as well as dutiable goods.
2. The appellants are engaged in the manufacture of polyester viscose blended yarn and man made fabrics. They were operating under Notification No.29/2004-CE and 30/2004-CE both dated 9.7.2004. The appellants were clearing dutiable as well as exempted products from their unit and were also availing credit of service tax paid on input service. The appellants did not maintain separate account as provided under Rule 6 of Cenvat Credit Rules, 2004 and the department therefore observed that the credit availed on the input service was not admissible to the appellants. The Range Superintendent vide letter dated 9.8.2007 informed the same to the appellants. On pointing out the defects, the appellants reversed the credit amount of Rs.65,21,123/- pertaining to the period January, 2007 to March, 2007 under protest on 17.10.2007. In view of protest by the appellant against reversal of proportionate credit, a show cause notice dated 24.1.2008 was issued to the appellants. The notice culminated in the Order-in-Original which confirmed the demand of inadmissible credit of Rs.64,60,537/- along with interest, ordered appropriation of the same and also imposed equal amount penalty. Aggrieved the appellant is before us.
3. At the time of hearing, learned Counsel Shri Amit Jain submitted that though inadmissible credit is also challenged in the appeal, he presently confines his argument with regard to the demand of interest and imposition of penalty. He submitted that the appellant has reversed the credit on pointing out the same by the department. He placed reliance on the details of credit balance for the respective months and argued that the credit has been reversed prior to utilization and therefore such reversal would amount to not taking credit. The demand of interest is therefore unsustainable. Learned Counsel relied upon the following judgements:-
1. CCE vs. Bill Forge Pvt.Ltd. -2012 (279) ELT 209 (Kar.)
2. CCE vs. Gokaldas Images Pvt.Ltd.-2012 (278) ELT 590 (Kar.)
3. CCE vs.Pearl Insulation Ltd-2012 (27) STR 337 (Kar.)
4. CCE vs. Strategic Engineering (P) Ltd.-2014-TIOL-466-HC-MAD-CX.
5. LG Electronics Pvt.Ltd. vs. CCE -2014-TIOL-1981-CESTAT-DEL
4. With regard to the imposition of penalty, learned Counsel submitted that there was no suppression or wilful mis-statement on the part of the appellants. He drew our attention to the letter dated 4.7.2006 issued by the appellant to the department informing the department the intention of the appellant to make clearance under Notification No.29/2004-CE and 30/2004-CE both dated 9.7.2004. In this letter, the appellants also informed the department the manner of taking credit on inputs, capital goods and input service. Further, on request of the department, the appellants furnished month wise details of credit availed by them during the disputed period. He urged that there was no suppression of facts or wilful mis-statement and the imposition of penalty is totally unjustified.
5. Against this, learned DR Shri R.K.Mishra, reiterated the findings in the impugned order. He argued that the appellant is liable to pay interest from the date of availing credit and also liable to pay penalty.
6. Arguments advanced having been narrowed to the issue of demand of interest and imposition of penalty, we do not enter into the merit of the case. The demand of interest is countered by the learned Counsel by putting forward the contention that the credit was reversed prior to the utilization. Opening and closing balance of the credit amount pertaining to the respective months substantiates this contention put forward by the appellant. The judgements relied upon by the learned counsel analyses the issue of payment of interest in the case of reversal of credit. Honble Karnataka High Court in the case of CCE, ST and LTU, Bangalore vs. Bill Forge Pvt.Ltd.-2012 (279) ELT 209 (supra), held that before utilization of credit, if the same has been reversed it would amount to not taking credit and would not attract liability of interest. Similar view has been taken in the other judgements cited and placed before us. Following the principle laid in these judgements, we hold that as the credit has been reversed before utilization, the demand of interest is unsustainable.
7. Next question to be considered is imposition of penalty. Interestingly, it is seen stated in the show cause notice that the same is issued invoking the extended period of limitation. As per records, the department has come to know about wrongful availment of credit and informed the appellants the same on 9.8.2007. The show cause notice is dated 24.1.2008 which in our view is within the period of limitation. We do not find any ground necessary for invoking the extended period of limitation. Be that as it may, the contention of the appellant that there was no suppression of facts or wilful mis-statement is not without force. On 4.7.2006, the appellants have written letter explaining the manner of availing the credit of inputs, capital goods and input service. Further, when the department called for to furnish the details regarding availment of credit, the appellants had furnished the same. On such score, we hold that the respondent have miserably failed to establish suppression or mis-statement with intention to evade payment of duty on the part of the appellants. Pursuant to the above reason, we are of the considered view that the imposition of penalty is unwarranted.
8. In the result, the impugned order is modified to the extent of setting aside the demand of interest and imposition of penalty. The appeal is partly allowed in the above terms.
(pronounced in open court) (B.Ravichandran) (Sulekha Beevi C.S) Member (Technical) Member (Judicial) mk 5