Custom, Excise & Service Tax Tribunal
M/S. Sri Venkateshwara Precision ... vs Cce, Chennai on 9 August, 2010
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
E/133/2010
(Arising out of Order in Appeal No. 107/09 (M-I) dated 18.12.2009, passed by the Commissioner of Central Excise(Appeals), Chennai).
For approval and signature
HONBLE SHRI M. VEERAIYAN, TECHNICAL MEMBER
_________________________________________________________
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M/s. Sri Venkateshwara Precision Components : Appellant
Vs.
CCE, Chennai : Respondent
Appearance Shri M. Karthikeyan, Consultant, for the appellant Shri C. Rangaraju, SDR, for the respondent CORAM Shri M. Veeraiyan, Technical Member Date of hearing : 09.08.2010 Date of decision : 09.08.2010 ORDER No._____________ This is an appeal against the order of the Commissioner (Appeals) No. 107/09 (M-I) dated 18.12.2009.
2. Heard both sides.
3. The relevant facts, in brief, are that the appellants are manufacturers of Industrial electrical equipments, Cluster Assembly etc. They procured some of the inputs like Copper Plates/ Sheets in Coil etc., from a 100% EOU. The supplying unit being a 100% EOU, has paid duties of excise in terms of proviso to Section 3 of Central Excise Act, being an amount equal to the aggregate of the duties of customs which would be leviable under the Customs Act or any other law for the time being in force on like goods produced or manufactured outside India if imported into India. Thus, the supplying unit has paid excise duty which included amounts equal to the basic customs duty, additional duty leviable under Section 3 (1) of the Customs Tariff Act, 1975 and additional duty to counter balance sales tax and other local levies leviable under Section 3 (5) of the Customs Tariff Act. The appellants have taken credit of excise duty paid on the said inputs received from the 100% EOU, in terms of Rule 3 (7) of the Cenvat Credit Rules, 2004. The appellants have taken credit of additional duty leviable under Section 3 (1) and also additional duty leviable under Section 3 (5) on the ground that from 1.3.05 additional duty of customs leviable under 3 (5) has also been made eligible for taking credit. The original authority held that the term CVD referred to in the formula provided under Rule 3 (7) is only additional duty leviable under Section 3(1) and accordingly, held that the appellants have taken irregular credit and confirmed demand of Rs. 2,95,053/- relating to the period July06 to Juyly07, along with interest and imposed equal amount of penalty in terms of Rule 15 of Cenvat Credit Rules read with Section 11AC of the Central Excise Act, 1944.
4. Ld. Consultant for the appellants submits that the term CVD is not mentioned either in Section 3 (1) or in Section 3 (5) of the Customs Tariff Act, 75, but the levy is referred as additional duty of customs in both the sub-sections. Prior to 1.3.05, the Cenvat Credit Rules permitted credit of all additional customs duties leviable under Section 3 of the Customs Tariff Act equivalent to the duty of excise irrespective of the sub-clause under which they were levied. With effect from 1.3.05, additional duty leviable under 3 (5) of the Customs Tariff Act has also been made eligible for credit. The customs Circular 18/06-Cus dated 5.6.06 also refers the levy of 4% as CVD/special CVD. Therefore, he submits that they are eligible for the cenvat credit and the demand is not sustainable.
5. Alternatively, he also submits that the dispute involves interpretation of legal provisions and there is no suppression of any relevant information or mis-statement on the part of the appellants and therefore, part of the demand is time barred as the show cause notice was issued on 11.01.08. He also submits that, on the same ground, no penalty can be imposed.
6. Ld. SDR reiterates the findings and reasoning of the Commissioner (Appeals).
7. I have carefully considered the submissions from both sides and perused the records. In the present case, the unit which has supplied the inputs is a 100% EOU and the duties leviable on goods cleared from such units is as per proviso to Section 3 of the Central Excise Act, 1944, which reads as under:-
Provided that the duties of excise which shall be levied and collected on any [excisable goods which are produced or manufactured,-
(i) in a free [trade zone [or a special economic zone]] and brought to any other place in India; or
(ii) by a hundred per cent export oriented undertaking and [brought to any other place in India], shall be an amount equal to] the aggregate of the duties of customs which would be leviable[under the Customs Act, 1962 (52 of 1962) or any other law for the time being in force] on like goods produced or manufactured outside India if imported into India, and where the said duties of customs are chargeable by reference to their value, the value of such excisable goods shall, notwithstanding anything contained in any other provision of this Act, be determined in accordance with the provisions of the Customs Act, 1962 and the Customs Tariff Act, 1975 (51 of 1975). In other wards, the duties leviable on goods manufactured in a 100% EOU is on par with like goods imported into India. Rule 3 of the Cenvat Credit Rules allows a manufacturer to take credit of :-
(vii) the additional duty leviable under section 3 of the Customs Tariff Act, equivalent to the duty of excise specified under clauses (i), (ii), (iii), (iv), (v) [(vi) and (via)];
(viia) the additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act .
In respect of inputs procured from 100% EOU, and Cenvat Credit Rules provides for taking credit based on a formula prescribed under Rule 3(7) of the Cenvat Credit Rules, 2004. The dispute is whether the term CVD used in the said sub-rule 3(7) refers only to additional duty leviable under Section 3(1) of the Customs Tariff Act or that the same also includes the additional duty leviable under sub-section 3(5) of the Customs Tariff Act. Undoubtedly, from 1.3.05, if the inputs were imported, the manufacturer would be eligible for cenvat credit of duties paid under section 3(1) and section 3(5) of the Customs Tariff Act, 1975. Under the circumstances, there is no warrant to treat the term CVD referred to in Rule 3 (7) of the Cenvat Credit Rules as applicable only to additional duty leviable under Section 3(1) of the Customs Tariff Act. The term CVD has not been specifically defined in the Cenvat Credit Rules, but it has been explained that BCD & CVD denote advelorm rates in per cent, of basic customs duty and additional duty of customs leviable. Therefore, taking into account that from 1.3.05, the additional duty levied under Section 3(5) has also been made eligible for credit, it would be proper to hold that the term CVD referred to in the formula would refer to both varieties of additional duties leviable under Section 3(1) and 3(5) of the Customs Tariff Act, 1975. As per the General Clause Act, when the context requires the word used in singular can mean in plural and, therefore, the term CVD can mean the two CVDs. In view of the above, I hold that there is merit in the contentions of the Ld. Advocate for the appellants. Incidentally, the alternative submissions of the Ld. Advocate that in the facts and circumstances of the case, there is no justification for invoking extended period for demand and that there is no justification for imposing penalty are acceptable. However, as the appeal itself is allowed on merits, this finding has no significance to the relief being granted
8. The order of the Commissioner (Appeals) is set aside and the appeal is allowed with consequential relief as per law.
(Order dictated pronounced in the open Court) (M. VEERAIYAN) TECHNICAL MEMBER BB 7