Custom, Excise & Service Tax Tribunal
Electronics Corporation Of India Ltd vs The Commissioner Of Central Excise, ... on 24 January, 2011
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH AT BANGALORE Stay & Appeal No: E/Stay/130/2010 in E/236/2010 (Arising out of Order-in-Original No: 18/2009-CE-HYD-III/ADJN. COMMR. dated 31.10.2009 passed by the Commissioner of Customs, Central Excise & Service Tax, Hyderabad-III Commissionerate, Hyderabad.) 1. Whether Press Reporters 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 the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes 3. Whether their Lordship wish to see the fair copy of the Order? Seen 4. Whether Order is to be circulated to the Departmental authorities? Yes Electronics Corporation of India Ltd. Appellant Vs. The Commissioner of Central Excise, Customs & Service Tax Hyderabad - III Commissionerate Hyderabad. Respondent
Appearance Shri V. J. Sankaram, Advocate for the appellant.
Shri D. P. Nagendra Kumar, JCDR for the revenue.
CORAM SHRI M. V. RAVINDRAN, HONBLE MEMBER (JUDICIAL) SHRI P. KARTHIKEYAN, HONBLE MEMBER (TECHNICAL) Date of Hearing: 24.01.2011 Date of decision: 24.01.2011 STAY ORDER No._______________________2011 FINAL ORDER No._______________________2011 Per Shri P. Karthikeyan (Oral) After hearing the parties on the stay application filed by the appellants Electronics Corporation India Ltd., a Central PSU, for some time, we note that the appeal proper can be disposed without a further hearing. Therefore, after dispensing with the requirement of pre-deposit, we take up the appeal proper.
2. The appellant was found to have taken credit of duty paid on common inputs used in the manufacture and clearance of both exempted and dutiable final products without maintaining separate accounts as envisaged under Rule 6 (3) (b) of Cenvat Credit Rules, 2004 (CCR). It was found that the appellant was liable to pay an amount of Rs.9,51,75,451/- being 10% of the sale price of exempted goods manufactured and cleared during the period of dispute, from September 2004 to March 2008. Another dispute decided by the Commissioner is eligibility to cenvat credit of Rs.1,64,34,699/- taken by the appellants during the material period on input services which had been exclusively utilized for manufacture of exempted final products. The Commissioner held that the appellant was liable to pay Rs.9,51,75,451/- as well as Rs.1,64,34,699/- along with applicable interest. As regards the inadmissible credit of Rs.1,64,34,699/-, the appellant accepted the irregularity found against it and reversed the disputed credit before adjudication. The impugned order demanded applicable interest on the above amount for the period which it had retained the credit in its account.
3. As regards the first issue relating to availment of credit on common inputs relatable to exempted final products, we find that vide Finance Act, 2010, the Government has prescribed a procedure for granting admissible credit in such cases. We note that this Bench has decided similar dispute vide our order in the case of Standard International Precision Engineers P. Ltd. Vs. CCE, Bangalore-II reported as 2010 (258) ELT 456 (Tri.-Bang.). We find that the relevant provisions are contained in the Eighth Schedule to Section 73 of the Finance Act, 2010. The said Eighth Schedule is reproduced below.
Sl. No. Provisions of CENVAT Credit Rules, 2004 to be amended Amendment Period of effect of amendment (1) (2) (3) (4) Rule 6 of the CENVAT Credit Rules, 2004 as published vide notification number G.S.R. 600(E), dated the 10th September, 2004 [23/2004-CENTRAL EXCISE (N.T.) dated the 10th September, 2004].
In the CENVAT Credit Rules, 2004, in rule 6, after sub-rule (6), the following sub-rule shall be inserted, namely : (7) Where a dispute relating to adjustment of credit on inputs or input services used in or in relation to exempted final products relating to the period beginning on the 10th day of September, 2004 and ending with the 31st day of March, 2008 (both days inclusive) is pending on the date on which the Finance Bill, 2010 receives the assent of the President, then, notwithstanding anything contained in sub-rules (1) and (2), and clauses (a) and (b) of sub-rule (3), a manufacturer availing CENVAT credit in respect of any inputs or input services and manufacturing final products which are chargeable to duty and also other final products which are exempted goods, may pay an amount equivalent to CENVAT credit attributable to the inputs or input services used in, or in relation to the manufacture of, exempted goods before or after the clearance of such goods :
Provided that the manufacturer shall pay interest at the rate of twenty-four per cent. per annum from the due date till the date of payment of the said amount.
Explanation. - For the purpose of this sub-rule, due date means the 5th day of the month following the month in which goods have been cleared from the factory..
10th day of September, 2004 to the 31st day of March, 2008 (both days inclusive).
In terms of this provision, the liability of the appellant shall stand completely discharged once the appellant has repaid or reversed the credit relatable to inputs used in the exempted final products along with applicable interest. We remand the dispute to the Adjudicating Authority for regularizing the payment in terms of these provisions of the Finance Act, 2010 reproduced hereinabove.
4. As regards the demand of interest payable on Rs.1,64,34,699/- found to have been taken as credit of Service Tax paid on input services exclusively used in the manufacture of exempted products paid by the appellant and appropriated vide impugned order, the challenge is only to demand of interest payable on the same. The appellant has submitted that the said amount remained as an entry in the cenvat account and the same was not utilized. Therefore, no liability to interest as ordered by the Adjudicating Authority arose in respect of the disputed credit. We find considerable merit in this submission by the learned Counsel. We find that this aspect is covered in favour of the assessee by the judgment of the Honble High Court of Punjab and Haryana in the case of Ind Swift Laboratories Ltd. Vs. UOI - 2009 (240) ELT 328 (P & H). However, the above relief would be admissible subject to verification of the claim of the appellants that the impugned amount remained as an entry in their cenvat account and was not utilized. We remand the liability to interest on this amount confirmed in the impugned order to the Adjudicating Authority for a fresh decision after hearing the appellants. Appeal and stay application are disposed of.
(Pronounced and dictated in open Court) (P. KARTHIKEYAN) Member (T) (M. V. RAVINDRAN) Member (J) //rv// 5