Custom, Excise & Service Tax Tribunal
Yes vs Represented By : Shri Anand Nainawati ... on 16 June, 2014
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Zonal Bench, Ahmedabad COURT Appeal No. : E/500 & 525/2009-DB Arising out of : OIO No.45/Demand/Commr.I/2008, dt. 30.12.2008. Passed by : Commissioner, Central Excise, Customs & Service Tax, Vadodara-I. For approval and signature : Mr. M.V. Ravindran, Honble Member (Judicial) Mr. H.K. Thakur, Honble 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 should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 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 Appellant (s) : M/s. Indian Petrochemicals Corporation Ltd., M/s. Indian Oil Corporation Ltd. Represented by : Shri Anand Nainawati (Advocate) Respondent (s) : C.C.E. & S.T. Vadodara-i
Represented by : Shri S.K. Mall (A.R.) CORAM :
Mr. M.V. Ravindran, Honble Member (Judicial) Mr. H.K. Thakur, Honble Member (Technical) Date of Hearing: 28.04.2014 Date of Decision: 16.06.2014 ORDER No. A/11098 11099/2014, dt. 16.06.2014 Per: Mr. H.K. Thakur;
Appeal No. E/500/2009-DB has been filed by M/s. Indian Petrochemicals Corporation Limited (presently known as M/s. Reliance Industries Ltd.), and Appeal No. E/525/2009-DB has been filed by M/s. Indian Oil Corporation Limited against common Order-in-Original No. 45/Demand/Commr.I/2008, dt. 30.12.2008 passed by the Commissioner, Central Excise & Customs Commissionerate, Vadodara-I.
2. As both the appeals are based on same set of facts, therefore, these are being disposed of through this common order.
3. Briefly stated the facts of the case are that during the period March, 1994 to September, 1998, Indian Oil Corporation Ltd. (IOCL) cleared Xylene Reformate to Indian Petrochemical Corporation Ltd (IPCL) on payment of duty. The duty paid by IOCL @ 10% and 15% was taken by IPCL as MODVAT Credit. Show Cause Notice was issued by invoking extended period of time limitation to re-classify the Xylene Reformate and to demand duty @ 20% and 18% from the IOCL. Order dated 25.08.1999 confirming demand of duty of Rs. 14,36,74,091/- from IOCL, imposing penalty under Section 11AC of the Central Excise Act and ordering interest under Section 11AB of the Act was passed by the Commissioner. The Committee of Disputes (CoD) permitted IOCL to only contest the Order-in-Original dated 25.08.1999 in so far as it related to imposition of penalty and interest, but (CoD) did not allow the appellant to contest duty demand. Thus on 09.02.2000, IOCL paid the entire demand of differential duty of Rs. 14,36,74,091/-. However, IOCL challenged the imposition of penalty and interest by way of an appeal before the CEGAT on the ground that there was no suppression of facts, mis-statement etc. on their part. The CEGAT vide Final Order No. 36/2001-C & S.O. No. 15/2001-C dated 23.03.2001 decided the appeal against IOCL so far as the imposition of penalty under Section 11AC of the Central Excise Act on IOCL for the period after 28.09.1996 was concerned. IOCL filed an appeal before the High Court of Gujarat against the Order of the CEGAT. The High Court of Gujarat set aside the said CEGAT Order dated 23.03.2001 and directed the CEGAT to consider the issue of imposition of penalty under Section 11AC of the Act for the period after 28.09.1996 afresh. The CEGAT pursuant to the High Courts Order heard the matter afresh and passed Final Order dated 17.05.2005 by accepting the contentions of IOCL that there was no suppression of facts or mis-statement etc. and, therefore, penalty under Section 11AC could not be imposed on them. IOCL intended to issue document for payment of differential duty to enable IPCL to take credit. IOCL sought opinion from their legal Counsel in this regard, who opined that it was possible for IOCL to issue certificates as well as supplementary invoices for the differential duty paid to enable IPCL to take credit of duty paid by IOCL. Accordingly, IOCL issued 83 supplementary invoices, all dated 13.04.2006, to IPCL covering the differential duty of Rs.13,99,12,911/- (out of Rs.14,36,74,091/-) paid by IOCL on 09.02.2000 in respect of Xylene Reformate cleared by IOCL to the IPCL during August, 1994 to August, 1997. IOCL also issued certificate dated 18.09.2006 to the effect that the differential duty amount of Rs.13,99,12,911/- was paid on the quantity of Xylene Reformate manufactured and cleared to IPCL during August, 1994 to August, 1997. This certificate was duly signed and endorsed by the Superintendent of Central Excise having jurisdiction over the factory of IOCL. Under these circumstances, based on the supplementary invoices and the certificate, IPCL took credit of differential duty of Rs.13,99,12,911/- in the month of November, 2006. ER-1 Return for November 2006 was filed by IPCL providing such details. A show cause notice dated 07.12.2007 was issued to IPCL proposing to deny credit of differential duty paid on Xylene Reformate by IOCL and for imposition of penalty on IPCL and IOCL. Vide the impugned Order-in-Original the Commissioner confirmed the demand of Rs.13,99,12,911/- against IPCL along with interest under Section 11AB & imposing penalty of fifty lakh rupees under Rule 15(1) of CENVAT Credit Rules, 2004 and another penalty of fifty lakh rupees under Rules 25(1) of the Central Excise Rules, 2002 on them. The Commissioner also imposed penalty of one crore rupees on IOCL under Rule 173Q(1)(bbb) of erstwhile Central Excise Rules, 1944.
4.1 Shri Anand Nainawati (Advocate) appearing on behalf of the appellant, submitted that the adjudicating authority passed the impugned Order-in-Original holding that:
(i) The issue regarding availability of MODVAT Credit has attained finality inasmuch as request for credit was rejected by the Tribunal vide its earlier Order dated 23.03.2001.
(ii) The differential duty of Rs.14,36,74,091/-, paid by IOCL as per Order-in-Original dated 28.05.1998 on 09.02.2000, was originally not paid by IOCL.
(iii) The supplementary invoices were not proper documents for taking credit.
(iv) Certificates in terms of Rule 57E could not have been issued for the reason that differential duty was originally not paid by IOCL due to suppression of facts etc.
(v) Penalty was imposable on IPCL under Rule 15 of the CENVAT Credit Rules, 2004 as IPCL always knew that differential duty paid by IOCL could not be passed on as credit by virtue of Rule 57E(3) of Central Excise Rules, 1944 and exclusion clause of Rule 9(1)(b) of CENVAT Credit Rules, 2004.
(vi) Penalty was imposable on IPCL under Rule 25(1) of the Central Excise Rules, 2002 as the IPCL had taken credit incorrectly and utilized the same for payment of duty, which amounted to clearance of final product without payment of duty.
(vii) Penalty was imposable on IOCL under the provisions of rule 173Q(1)(bbb) of the Central Excise Rules, 1944 for wrongfully facilitating IPCL to avail credit of Rs.13,99,12,911/-.
(viii) Penalty was imposable on IOCL under Rule 27 of the Central Excise Rules, 2002 for issuance of invalid supplementary invoices in contravention of Rule 11 of the said Rules of 2002.
4.2 Further, Ld. Advocate argued as follows:
(i) That the issue before the Honble CESTAT, when Order dated 23.03.2001 was passed, was whether penalty under Section 11AC of the Central Excise Act was imposable on IOCL for when extend period differential duty of Rs.14,36,74,091/-, confirmed against IOCL due to misclassification of goods cleared during March 1994 to September 1997, was paid. The issue as to whether the differential duty paid by IOCL on 09.02.2000 can be passed on by IOCL to its buyers like IPCL as credit in terms of Rule 57E was not the issue involved in those proceedings. Thus the question of adjudicating such issue could not arise. The plea of IOCL before the Honble High Court of Gujarat, when order dated 13.02.2004, was passed, was also with reference to the intent to evade payment of duty and not with reference to any prayer for passing the differential duty paid as MODVAT Credit to IPCL.
(ii) That the CESTAT held vide its Final Order dated 17.05.2005 [2005 (192) ELT 907 (Tri. Del.)] in the case of IOCL that there was no suppression of facts or willful mis-statement on the part of IOCL during the period from March 1994 to September, 1997.
(iii) That when there is no reason to invoke the provisions of Section 11AC, there is no reason to apply the exception provided in Rule 9(1)(b) of the CENVAT Credit Rules, 2004 or Rule 57(E)(3) of the erstwhile Central Excise Rules, 1944.
(iv) That the supplementary invoices issued by IOCL are valid documents for availing CENVAT Credit as per Rule 9 of the CENVAT Credit Rules, 2004 inasmuch as differential duty paid on 09.02.2000 was finally held to be without suppression of facts or willful mis-statement etc. on 17.05.2005 by the Honble CESTAT when the CENVAT Credit Rules, 2004 were in force. In this context he cited the following case laws:
(a) Andhra Petrochemicals Ltd. Vs. CCE [2005 (183) ELT 377 (Tri. Bang.)];
(b) Eicher Ltd. Vs. CCE [2003 (156) ELT 485 (Tri. Chennai)];
(c) CCE Vs. Ucal Systems Ltd. [2004 (171) ELT 70 (Tri. Chennai)];
(d) Century Rayon Vs. CCE [2005 (191) ELT 216 (Tri. Mumbai)];
(e) Jindal Vijayanagar Steel Ltd. Vs. CCE [2004 (174) ELT 189 (Tri. Bang.)]; and
(f) Jindal Iron & Steel Company Vs. CCE [2004 (164) ELT 294 (Tri. Mumbai)].
(v) That there is no time limit for issuing certificate or supplementary invoice and also no time limit for taking credit of differential duty paid on inputs. In this context, he cited the case laws CCE Vs. Raghuvar India [2000 (118) ELT 311 (S.C.)], Philips India Limited Vs. CCE [2007 (213) ELT 584 (Tri. Mumbai)], and Para 10 of CBEC Circular No. 345/2/2000-TRU dated 29.08.2000.
(vi) On the point of imposition of penalty on IPCL under Rule 15 of the CENVAT Credit Rules, 2004 he argued that Commissioners findings that IPCL always knew that differential duty paid by IOCL could not be passed on as credit by virtue of Rule 57E(3) and Rule 9(1)(b) were factually incorrect and without any evidence whatsoever. In fact when the CESTAT in the case of IOCL held vide its decision dated 17.05.2005 that there was no suppression of facts etc. on the part of IOCL in clearing the goods to IPCL, it was a bona fide belief that Rule 57E(3) or exception to Rule 9(1)(b) were not attracted. Moreover, taking of credit after six months from the date of supplementary invoices was not a contravention of the provisions of Rule 4(1) of the CENVAT Credit Rules, 2004.
(vii) That penalty under Rule 25 (1) of the Central Excise Rules, 2002 was not imposable on IPCL as the finding of the Ld. Commissioner as to clearance of final product without payment of duty of duty was misplaced.
(viii) That penalty could not be imposed on IOCL under Rule 173Q(1)(bbb) of erstwhile Central Excise Rules, 1944 as the same was not in force during the period in question.
(ix) That the appellants case was squarely covered by the case law Commissioner of Central Excise, Raigad Vs. Oil and Natural Gas Corporation Ltd. [2012 (282) ELT 513 (Tri. Mumbai).
5. On the other hand Shri S.K. Mall, Ld. A.R. for the Revenue, argued as under;
(i) That the issue as to whether IOCL was eligible to pass on credit as per the provisions of Rule 57E was raised by the appellant before the Tribunal, but the Honble Tribunal negatived the appellants contention in Para 6 of CEGAT Final Order dated 23.03.2001. Thus the Tribunals findings that M/s IOCL was not eligible to pass on the credit under Rule 57E has attained finality and cannot be reopened.
(ii) The confirmation of duty vide OIO dated 25.08.1999 was accepted by the appellants and the differential duty paid by them on 09.02.2000. The confirmation of duty for the extended period from March 1994 to September, 1998 on the grounds of suppression of facts etc. was never challenged by IOCL. Thus the issue of suppression etc. as regards the demand of differential duty has become final. He cited the case law Collector of Central Excise, Kanpur Vs. Flock (India) Pvt. Ltd. [2000 (120) ELT 285 (S.C.)] in this regard. The CEGAT dropped vide its order dated 23.03.2001 the penalty of Rs.13,90,86,359/- for the period prior to 28.09.1996 only on the grounds that Section 11AC was not in the statute book before 28.09.1996.
(iii) When differential duty was paid on 09.02.2000, the statutory provisions of Rule 57E of Central Excise Rules, 1944 for passing of credit prevailing at that time ought to have been followed by the appellant. He contended that IPCL did not have any Certificate under Rule 57E when they took credit in Nov. 2006. Instead, IPCL took Credit on the basis of 83 supplementary invoices of IOCL. Moreover, the demand of differential duty was confirmed on the ground of suppression of facts etc., and hence Certificate under Rule 57E could not be issued by virtue of Rule 57E(3). He cited the following case laws in this regard:
(a) Spenta International LTd. Vs. CCE, Thane [2007 (216) ELT 133 (Tri. LB)];
(b) Tamil Nadu Petro Products Ltd. Vs. Commissioner of Central Excise, Chennai-I [2009 (241) ELT 529 (Tri. Chennai)]; and
(c) Tractors & Farm Equipment Ltd. Vs. Collector of Customs, Madras [1997 (91) ELT 254 (S.C.)].
(iv) That the appellant IPCL were not eligible for the credit on the additional ground that the supplementary invoices dated 13.04.2006 were issued much beyond the period of six months from the date of payment of additional duty on 09.02.2000. Moreover, IPCL took credit on the basis of these invoices in November, 2006 i.e. after a period of six months from the date of the invoices. During the relevant time when credit became due i.e. on 09.02.2000, Rule 57G was in operation which provided for a limitation of six months for taking credit. He cited the following case laws in this context:
(a) Mangalore Refinery & Petrochemicals Ltd. Vs. CCE, Mangalore [2012 (278) ELT 289 (Kar)];
(b) Brakes India Ltd. Vs. CCE, Madras [1997 (96) ELT 434 (Tri. LB)]; and
(c) G. O. I. Vs. Citadel Fine Pharmaceuticals [1989 (42) ELT 515 (S. C.)].
(v) That the ratio of the case law CCE, Raigadh Vs. ONGC Ltd. [2012 (282) ELT 513 (Tri. Mumbai)], heavily relied upon by the appellants, was not applicable to the case in hand as the facts of that case were entirely different. First of all in the case of ONGC (supra), the period of demand was within normal period of one year, while in the present case demand has been confirmed invoking extended period of time limitation. Secondly, in that case confirmation of demand was also challenged though not pressed by the counsel, while in the present case confirmation of demand for extended period has not been challenged by the appellants. Thirdly, in the case of ONGC (supra), differential duty was paid in November-December 1999, Range officer issued 57E certificate on 23.12.1999, while in the present case no 57E certificate was issued and credit was taken on the basis of supplementary invoices after more than six years from the date of payment of differential duty.
6. Heard both sides and perused the records. The issues to be decided by us are:
(i) Whether IOCL was eligible to pass on credit as per the provisions of Rule 57E of the Central Excise Rules, 1944.
(ii) If answer to point (i) above is yes, whether the IOCL could issue 83 supplementary invoices on 13.04.2006 or the same could issue Certificate dated 18.09.2006 under Rule 57E of erstwhile Central Excise Rules, 1944 in respect differential duty liability of Rs.13,99,12,911/- pertaining to the period under Order-in-Original (August 1994 to August 1997) to IPCL for duty paid by IOCL on 09.02.2000.
7. On the first issue we find that Para 6 of Tribunals Order dated 23.03.2001 reads as under:
6. Learned Representative tried to put forth an argument that there was no evasion of duty disentitling claim for Modvat under Rule 57E of the Rules. This argument is not open to him because the legality of imposition of duty is not open to challenge before this tribunal by virtue of the limited scope of the appeal as expressed by the Committee of Disputes. A perusal of the above Para of the Tribunals Order does not suggest that the issue of passing of credit as per the provisions of Rule 57E, though raised by the appellant, was adjudicated by the Tribunal and have thus attained finality. This para only conveys Tribunals observation that the issue could not be taken up by the Tribunal in view of limited scope of appeal filed by the appellant on the issue of imposition of penalty. Therefore, we agree with the Ld. Advocate of the appellant that this issue was not adjudicated by the Tribunal and thus the question of attaining its finality does not arise. It has thus to be held that impugned credit was admissible to IPCL.
8. On the second issue outlined at paragraph 6(ii) above, we find that in the case of Commissioner of Central Excise, Raigad Vs. ONGC Ltd. [2012 (282) ELT 513 (Tri. Mumbai)] the Tribunal while dealing with identical case held as follows in paragraph nos.32 to 35:
32. The decision of this Tribunal in the case of Bell Ceramics (supra) appears to be in their favour. M/s. Bell Ceramics (supra) had received certain inputs during the period from November 1991 to March 1994. Those inputs were not duty-paid. A dispute arose as to dutiability of the inputs and the same came to be settled against the input-manufacturer who, thereupon, paid the duty sometime in 1996 and requested for a certificate from the Superintendent under Rule 57E. There was considerable delay in the issuance of this certificate, which was issued in the year 2000, by which time Rule 57E had disappeared as a result of amendment of the MODVAT Rules. The new rules did not prescribe the certificate as a document on the basis of which MODVAT credit could be taken. The question considered by this Tribunal was whether the party could take MODVAT credit on the inputs on the basis of Rule 57E certificate which was issued to the input-manufacturer after the rule was repealed. The Tribunal held that Section 38A of the Central Excise Act protected the action taken under the erstwhile rule and therefore the certificate issued to the input manufacturer under Rule 57E would be a valid document for the manufacturer of final product to take MODVAT credit even after the change of law.
33. Before 1-4-2000, a certificate issued under Rule 57E by the Superintendent of Central Excise having jurisdiction over the manufacturer of inputs/capital goods, was one of the documents prescribed under Rule 57G(3) for the purpose of taking MODVAT credit of the duty paid on the Inputs/capital goods. Rule 57AE, which replaced Rule 57G(3) with effect from 1-4-2000, did not prescribe such certificate as one of the documents for the purpose of MODVAT credit. The corresponding provision of the CENVAT Credit Rules, 2001, the CENVAT Credit Rules, 2002 and the CENVAT Credit Rules, 2004 also did not prescribe such certificate as a document for the purpose of taking CENVAT credit on inputs or capital goods. The latest provision, which was referred to by the learned JCDR and is still in force, is Rule 9 of the CENVAT Credit Rules, 2004, which prescribes a supplementary invoice issued by the manufacturer of input/capital goods, for the manufacturer of the final product to avail CENVAT Credit of any additional amount of duty paid on the input/capital goods by the manufacturer thereof subsequent to clearance of these goods. Learned JCDR has argued that these provisions are mandatory and have to be strictly construed and, therefore, no document other than a supplementary invoice could be used after 1-4-2000 by a manufacturer of final product (like RIL in the instant case) for taking CENVAT Credit of any additional amount of duty paid on inputs by the manufacturer of input (like ONGC in the present case). In this connection, he has claimed support from a plethora of decisions vide para 20(a) and (d). According to learned counsel for RIL, the benefit of MODVAT credit is not liable to be denied on procedural grounds. According to him, the provisions of Rule 57E were only procedural as held by the Honble Madras High Court and the Honble Supreme Court in the case of Home Ashok Leyland Ltd. (supra). The learned counsel has also relied oh the Tribunals decision in the case of EBG India Pvt. Ltd. (supra) wherein MODVAT credit of an additional amount of duty paid by the input manufacturer was allowed to the manufacturer of final product on the strength of Rule 57E certificate coupled with supplementary invoice for the period from 1-4-2000 to 28-8-2000.
34. After examining the submissions, we find that, in the case of Home Ashok Leyland Ltd., the Honble Madras High Court held that the procedure laid down under Rule 57E could not reduce the width of Rule 57A which dealt with the substantive right to take MODVAT credit. It was held that Rule 57E required to be harmonized with Rule 57A and the object of the MODVAT scheme and that the right of a manufacturer to take credit of the duty paid on his inputs could not be cut down by reason of procedure. By holding Rule 57E to be procedural and clarificatory, the Honble High Court upheld the Tribunals view on the point and allowed MODVAT credit to the assessee. The High Courts decision was upheld by the Honble Supreme Court after holding that Rule 57E was procedural and clarificatory and therefore would not affect the substantive right of the manufacturer of final product to claim MODVAT credit of the additional amount of duty paid on his inputs subsequent to the date of receipt of such inputs. This ruling was applied by this Tribunal in the case of EBG India Pvt. Ltd. (supra) for a period subsequent to the repeal of Rule 57E. Nobody has claimed before us that the Tribunals decision in the said case was not accepted by the department. It is equally noteworthy that the Tribunals decision in the case of Bell Ceramics case was not challenged by the department. In the result, we hold that RIL is entitled to MODVAT/CENVAT credit of the differential duty paid by ONGC.
35. We have also noted that principles of equity were applied by the Supreme Court in the customs case of Priyanka Overseas Pvt. Ltd. (supra) and the excise case of Kuil Fire Works Industries (supra). Restitution is one such principle, which, in our view, is applicable in an appropriate case like this. When Rule 57E was repealed, any provision recognizing certificate of Superintendent as a valid document for availment of MODVAT/CENVAT credit was not incorporated in the new rules. The new rules prescribed a supplementary invoice in lieu of such certificate. In the absence of a transitional provision enabling a manufacturer of final product, who obtained Rule 57E certificate prior to 1-4-2000, to use the certificate for taking MODVAT credit on his inputs after the said date, the principle of restitution embodied in Section 144 of the Code of Civil Procedure and applied by the Supreme Court in both customs and excise cases can, in our opinion, be invoked to dispense justice in the present case. An apparent omission of the rulemaking authority to make such transitional provisions cannot be allowed to work irreparable injustice to the party. The principle of restitution is a tool which could be used to eliminate such injustice. This is what was done by the Honble Supreme Court in the case of Shah Sadiq and Sons (supra) and by the House of Laws in the case of Plewa v. Chief Adjudication Officer (supra). However, where the relevant provisions of law - correctly interpreted - provides a remedy especially in taxation matters, that remedy has to be enforced without recourse to any principle of equity. We have already held that the right which accrued to IPCL (RIL) under Rule 57A for taking MODVAT credit of the differential duty paid by ONGC, on the strength of Rule 57E certificates which were prescribed documents for availment of such credit, was protected by Section 38A of the Central Excise Act. The substantive right, so protected, could be enforced by quasi-judicial or judicial process for dispensing justice to the party, unfettered by the rigour of procedure. It is not the case of the Revenue that the inputs supplied by ONGC was not used by IPCL in, or in relation to, the manufacture of final products, nor is it their case that the differential duty on such inputs was not paid by ONGC. In other words, the Revenue would agree that the essential conditions under Rule 57A for claiming the substantive benefit of MODVAT credit of the differential duty paid on the inputs stood satisfied. When the Superintendent issued the certificates evidencing payment of differential duty by ONGC, these documents were valid under Rule 57G(3) for taking MODVAT credit of the duty. It is not in dispute that IPCL took the credit in their MODVAT account when these rules were very much in force. When these rules were replaced by a new set of rules (57AA to 57AK), the substantive provision for MODVAT/CENVAT credit did not change and only the procedural provisions came to be amended with the result that a supplementary invoice issued by the manufacturer of input/capital goods was substituted for a certificate of the Superintendent. The limited case of the department for denying MODVAT credit to IPCL (RIL) is based on this procedural change. Such a case cannot succeed in view of judicial pronouncements to the effect that a substantive right cannot be defeated on the plank of strict construction of procedural provisions. We are of the view that the case law cited by the learned JCDR on mandatory nature of certain rules and on application of principles of equity is not applicable to the above matrix of facts. The revalidation and reissue of the certificates by the Superintendent in the wake of the Tribunals decision in favour of ONGC on the question whether they had indulged in any fraud, collusion or suppression or misstatement of facts or contravention of law with intent to evade payment of duty must be seen as restitution of their right to have such certificates under Rule 57E. It goes without saying that IPCL could also claim restitution of their right to take MODVAT credit on the strength of such certificates. We may contextually state that this Tribunal is empowered to safeguard the legal consequences of its own earlier order which was accepted by both the sides which cannot be termed grant of equitable relief. 8.1 In the light of the above legal interpretation, we find that in the present case, on the date of payment of differential duty on 09.02.2000, and also during the period of demand, erstwhile Central Excise Rules, 1944 were in force. The differential duty liability was cast on IOCL vide Order dated 25.08.1999 along with interest under Section 11AB and penalty under Section 11AC. Therefore, on receipt of the said order-in original dated 25.08.1999, also IOCL could not issue certificate in terms of Rule 57E of the Central Excise Rules, 1944 in force during material time on account of exception clause contained in the prevailing Rule 57E(3) of the Central Excise Rules, 1944 because penalty on account of suppression etc. under Section 11AC was imposed on IOCL by the adjudicating authority. IOCL paid differential duty of Rs.14,36,74,091/- on 09.02.2000 against OIO dated 25.08.1999 but filed an appeal with the CEGAT against imposition of interest and penalty. The CEGAT vide Final Order No.36/2001-C & S.O. No.15/2001-C dated 23.03.2001 decided the appeal against IOCL so far as the imposition of penalty under Section 11AC of the Central Excise Act on IOCL was concerned for the period after 28.09.1996. But the fact remained that there could be a suppression of facts etc. on the part of the IOCL for the period prior to 28.09.1996. Therefore, even after the said order dated 23.03.2001, the IOCL could not issue any certificate under Rule 57E to enable IPCL to avail credit of additional duty liability paid by IOCL on 09.02.2000 by virtue of exception contained in Rule 57E(3). IOCL filed an appeal before the High Court of Gujarat against the Order dated 23.03.2001 of the CEGAT. The Honble Gujarat High Court set aside the said CEGAT Order dated 23.03.2001 and directed the CEGAT to consider the issue of imposition of penalty under Section 11AC of the Act for the period after 28.09.1996 afresh. The CESTAT pursuant to the High Courts Order heard the matter afresh and passed Final Order dated 17.05.2005 by accepting the contentions of IOCL that there was no suppression of facts or mis-statement etc. and, therefore, penalty under Section 11AC could not be imposed on them. Thus only on 17.05.2005, it was held by appropriate Court that there was no suppression of facts etc. on the part of IOCL in non-payment of differential duty liability of Rs.14,36,74,091/- for the period from March 1994 to September 1997 and that no penalty is imposable. Thus it was on or after 17.05.2005 that IOCL was absolved by CESTAT of the charge of suppression of facts etc. with intention to evade payment of duty. It was thus on or after 17.05.2005 the IOCL could issue Certificate under Rule 57E to enable IPCL or other buyers to take credit of the differential duty paid on 09.02.2000 by virtue of saving of erstwhile Central Excise Rules, 1944 by Section 38A of the Central Excise Act, 1944. The appellants have placed on record (Page 86-87 of appeal) a copy of Certificate dated 18.09.2006 issued by IOCL duly verified and signed by the jurisdictional Superintendent of Central Excise certifying that M/s IOCL had paid duty of Rs.14,36,74,091/- with reference to adjudication order No.6/BRC/MP/99, dated 25.08.1999, and that out of which Rs.13,99,12,946/- pertained to IPCL as per Annexure enclosed to the said certificate dated 18.09.2006. We find that the certificate dated 18.09.2006 contains all details required for the purpose of issuing 57E Certificate and for taking credit etc. The MODVAT Rules did not contain any time limit for issuance of such Rule 57E Certificates and the Cenvat Credit Rules do not restrict taking of credit within a specified. In the present, the Certificate was issued by IOCL on 18.09.2006, and MODVAT Credit was taken by IPCL in November, 2006 as a result of prolonged litigation which ended only on 17.05.2005 as per the final order passed by CESTAT in the case of the appellant IOCL. In view of the above observations and the case law of CCE Vs. Oil & Natural Gas Limited (supra) we hold in the peculiar facts and circumstances of these appeals that IOCL has correctly issued certificate dt. 18.09.2006 and IPCL has correctly taken credit. So far as imposition of penalties upon the appellants are concerned it is held that once on merit credit has been held to be admissible there is no point of imposition of penalties upon the appellants.
9. Appeals filed by the appellants are allowed.
(Pronounced on 16.06.2014) (M.V. Ravindran) (H.K. Thakur) Member (Judicial) Member (Technical) AVSP 1