Custom, Excise & Service Tax Tribunal
M/S Acc Ltd vs Commissioner Of Central Excise & ... on 2 April, 2012
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. I Appeal No. ST/502/10 (Arising out of Order-in-Original No. 04/COMMR(KAP)/LTU/2010 dated 29.6.2010 passed by the Commissioner of Central Excise & Service Tax, LTU, Mumbai) For approval and signature: Honble Shri Sahab Singh, Member (Technical) ======================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair copy : Seen of the order? 4. Whether order is to be circulated to the Departmental : Yes authorities? ====================================================== M/s ACC Ltd. Appellant Vs. Commissioner of Central Excise & Service Tax, LTU, Mumbai Respondent Appearance: Shri Harish Sharma, ACA for Appellant Shri V.K. Singh, Addl. Commissioner (AR) for Respondent CORAM: SHRI SAHAB SINGH, MEMBER (TECHNICAL) Date of Hearing: 22.03.2012 Date of Decision: .03.2012 ORDER NO. Per: Sahab Singh
This is an appeal filed by M/s ACC Ltd. (hereinafter referred to as appellants) against Order-in-Original No. 04/COMMR(KAP)/LTU/2010 dated 29.6.2010.
2. Appellants are manufacturer of cement and clinker falling under Chapter 25 of the Central Excise Tariff Act, 1985 and they are availing CENVAT Credit of duty paid on inputs, capital goods and Service Tax paid on various input services. During the course of audit, it was observed by the officers that assessee had availed CENVAT Credit of Service Tax paid on inputs services amounting to Rs.1,33,48,031/- vide entry No. 767 dated 22.1.2007 on the strength of the Invoice No. 004 dated 16.5.2006 issued under Rule 4A(2) of the Service Tax Rules, 1994 by an input service distributor. On actual verification of the said invoice, it was observed that input service credit was distributed for an amount of Rs.13,34,831/- and not for the amount of Rs.1,33,48,031/-. Thus, there was an excess availment of CENVAT Credit than what they were actually eligible to avail on the strength of said invoice. Thus, there was an excess availment of CENVAT Credit to the tune of Rs.1,20,13,200/- (1,33,48,031 13,34,831/-). It was also observed by the officers that the assessee had utilized the said excess availed credit for the payment of Central Excise duty on the final products cleared by them. On being pointed out by the Audit, the appellant reversed the amount of Rs.1,20,13,200/- in their CENVAT Credit account vide debit entry No. 491 dated 12.9.2007. The officers informed the appellant that since they have availed excess credit of Rs.1,20,13,200/- and utilized the same, they were required to pay interest amounting to Rs.9,96,331/- also. The appellant did not pay the interest on the plea that they had always maintained credit balance of more than Rs.1,20,13,200/- and as there was no wrong utilization of CENVAT Credit, payment of interest does not arise. Accordingly a show-cause notice was issued to the appellant on 9.11.2009 proposing the appropriation of Rs.1,20,13,200/- already reversed by them and demanding of interest of Rs.9,96,331/- under Rule 14 of CENVAT Credit Rules, 2004 read with Section 11AB of the Central Excise Act, 1944 and imposition of penalty on the appellant. The show-cause notice was adjudicated by the Commissioner vide impugned order confirming the interest amount and imposing penalty of Rs.2000/- under Rule 15(3) of the Cenvat Credit Rules, 2004. Appellants filed this appeal against the impugned order.
3. Learned authorized representative appearing for the appellants submitted that since credit taken was not utilized by them, demand of interest is not justified and he relied on the decision of Hon'ble Karnataka High Court in the case of Commissioner of Central Excise, LTU, Bangalore Vs. Bill Forge Pvt. Ltd., wherein it was held by Hon'ble High Court that liability to pay interest will not arise if credit taken has been reversed before utilization. He forcefully argued his case on limitation and stated that audit was conducted for 2007 and on 30.10.2007, audit has written to the appellant for payment of interest. Appellants informed the department that since credit has not been utilized, question of payment of interest does not arise. Department issued show-cause notice only in November, 2009 much after audit report and since there was no suppression of fact and non-payment of interest was in the knowledge of department since 2007, demanding interest in 2009 is hit by time limitation. He specifically refers to the following decisions, wherein it was held by that demand is hit by time bar, if not raised within normal period from date of receipt of audit report: -
(i) Trinity Auto Components Ltd. Vs. Commissioner of Central Excise, Pune-III 2010 (257) ELT 548 (Tri-Mum)
(ii) Agro Pack Vs. Commissioner of Central Excise, Surat 2009 (240) ELT 135 (Tri-Ahmd)
(iii) Patton Ltd. Vs. Commissioner of Central Excise, Kolkata-V 2006 (206) ELT 496 (Tri-Kol)
(iv) Commissioner of Central Excise, Ahmedabad Vs. Midco Ltd. 2011 (274) ELT 463 (Tri-Ahmd)
4. Learned Addl. Commissioner (A.R.) appearing for the Revenue submitted that when assessee takes credit, they are required to take reasonable steps under Rule 9(3) for correct availment of CENVAT Credit and if credit is wrongly taken, Rule 14 of the Cenvat Credit Rules provides recovery of credit taken or utilized with interest read with provision of Section 11A and Section 11AB of the Central Excise Act. Since credit was wrongly taken, department has rightly demanded interest from the assessee. He stated that Hon'ble Supreme Court in the case of Union of India Vs. Ind-Swift Laboratories Ltd. 2011 (265) ELT 3 (SC) has settled the issue holding that interest is payable from date of taking credit. Countering the argument of appellant, he submitted that Hon'ble Supreme Court and the Tribunal have held that bona fide belief is not blind belief and suppression of fact can be involved even if matter is in knowledge of the department as concept of knowledge of department is entirely absent under proviso to Section 11A of the Act. He relied on the following case law in support of his contention: -
(i) Commissioner of Central Excise, Aurangabad Vs. Bajaj Auto Ltd. 2010 (260) ELT 17 (SC)
(ii) Commissioner of Central Excise, Delhi-III Vs. Maruti Udyog Ltd. 2007 (214) ELT 173 (P&H)
(iii) VNK Menon & Co. Vs. Commissioner of Central Excise, Coimbatore 2010 (257) ELT 427 (Tri-Chennai)
5. Heard both sides. The dispute involved in the appeal is whether the appellant is liable to pay interest in terms of Rule 14 of the Cenvat Credit Rules, 2004 and as to whether show-cause notice is hit by time limitation.
6. I find that this is undisputed fact that the appellant had taken credit wrongly. Under Rule 14 of Cenvat Credit Rules, if credit is taken or utilized wrongly, duty and interest can be demanded under Rule 14 of Cenvat Credit Rules, 2004 read with Section 11A andr 11AB of the Central Excise Act. The issue stands settled in view of Hon'ble Supreme Courts decision in the case of Ind-Swift Ltd. (supra). Therefore, finding of Commissioner with regard to demand of interest under Rule 14 read with Sections 11A and 11AB cannot be faulted with.
7. The appellants have challenged the order on ground of limitation and cited various case laws in support of their contention. On going through the impugned order, I find that the Commissioner has not given any finding on point of limitation. I, therefore, set aside the impugned order and remand the matter back to the original authority for deciding the case afresh on point of limitation and consequently on penalty after giving an opportunity of being heard to the appellants.
8. Appeal is allowed by way of remand.
(Pronounced in Court on .) (Sahab Singh) Member (Technical) Sinha 1