Custom, Excise & Service Tax Tribunal
Commercial Engineers & Body Builders vs C.C.E. Bhopal on 10 November, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI COURT NO. III Excise Appeal No. E/3287/2009-EX [DB] [Arising out of Order-In-Appeal No. 339/BPL/2009 dated 02.09.2009 passed by Commissioner of Central Excise (Appeals), Bhopal] For approval and signature: HON'BLE MR. S.K. MOHANTY, MEMBER (JUDICIAL) 1 Whether Press Reporters may be allowed to see 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 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? 4 Whether Order is to be circulated to the Departmental authorities? Commercial Engineers & Body Builders ...Appellant(s) Vs. C.C.E. Bhopal ...Respondent(s)
Appearance:
Shri. Shaswat Advocate for the Appellant Shri R.K Mishra, A.R. for the Respondent CORAM:
HON'BLE MR. S.K. MOHANTY, MEMBER (JUDICIAL) Date of Hearing/ Decision. 10.11.2016 Final Order No. 55712 /2016 PER S. K. MOHANTY:
This appeal is directed against the impugned order dated 02.09.2009 passed by the Commissioner (Appeals), Customs, Central Excise & Service Tax, Bhopal.
2. Brief facts of the case are that the appellant is engaged in the manufacture of body built motor vehicles, falling under Chapter 87 of the Central Excise Tariff Act, 1985. The appellant avails cenvat credit on various inputs, input services, and capital goods used in or in relation to manufacture of the said final product. The appellant receives Chassis from the supplier for undertaking the activity of body building. The duty paid by the supplier on the chassis is taken as cenvat credit by the appellant. During the disputed period, the chassis received from the supplier were cleared by the appellant to its sister unit at Jabalpur for carrying out certain activities. However, due to oversight, the appellant did not reverse the cenvat credit taken on such chassis removed to the sister concern, on the reasonable belief that no duty is required to be paid when the goods sent to ones own Unit. Non-payment of duty / reversal of cenvat credit was objected to by the Audit Wing of the Central Excise Department. Immediately thereafter, the appellant had reversed the cenvat credit of Rs.39,79,719/- from its cenvat account on 15.11.2007. Subsequently, the Department issued the show cause notice on 03.01.2008 to the appellant for recovery of the interest on delayed reversal of cenvat credit and for imposition of penalty. The said show cause notice was culminated into the adjudication order dated 23.03.2009, wherein the amount reversed in the cenvat account was appropriated and interest amount of Rs.2,67,476/- was confirmed against the appellant under Rule 14 of Cenvat Credit Rules, 2004 read with Section 11AB of the Central Excise Act. Besides, penalty of Rs.2,50,000/-was imposed under Rule 15(1) of the Cenvat Credit Rules. In appeal, the ld. Commissioner (Appeals) vide the impugned order dated 02.09.2009 has upheld the adjudged demand. Hence, the present appeal before the Tribunal.
4. Shri Shaswat, the ld. Advocate appearing for the appellant submits that due to oversight cenvat credit taken on the chassis was not reversed while clearing the same to the sister unit. He further submits that had such credit been reversed, the sister unit would have been eligible to avail the same amount as fresh cenvat credit; thus, the situation is revenue neutral. He has relied on the decision of this Tribunal in the case of Paper Products Ltd. vs. CCE, Vapi reported in 2013 (292) E.L.T. 389 (Tri.-Ahmd.) to state that no interest is payable since the cenvat amount was reversed before issuance of the show cause notice and non-reversal of cenvat credit at the material time was not due to any malafide intention to defraud the Government Revenue. He further submits that penalty imposed under Rule 15 (1) ibid is not applicable to the present case inasmuch as taking of irregular cenvat credit on the chassis is not the subject matter of the present dispute.
5. Shri R.K. Mishra, the ld. A.R. appearing for Revenue on the other hand reiterates the findings recorded in the impugned order.
6. I have heard the ld. Counsel for both sides and examined the case records. It is an admitted fact that the appellant had not reversed the cenvat credit taken on chassis, when the same were removed to its sister unit for carrying out the job work. However, on pointing out the irregularity by the Audit Wing, since the cenvat amount was promptly reversed by the appellant before issuance of show cause notice, I am of the view that in terms of the decision of this Tribunal in the case of Paper Products Ltd. (Supra), no interest is payable by the appellant. The relevant paragraph of the said decision is extracted below:-
The assessee having paid the duty liability before issuance of show cause notice and there being no malafide attached to such under-valuation, the interest liability that has been confirmed by the lower authorities also needs to be set aside and we do so.
7. I also find that the situation in this case is revenue neutral inasmuch as had the cenvat credit been reversed, the same would have been eligible for credit to the sister unit. Since sufficient balance was all along availbe in the cenvat account and on pointing out the mistake by the Audit Wing, the same was promptly reversed, I am of the view that there is no loss of Revenue to the Government Exchequer, and as such, there is no question of compensating the Government for loss of any Revenue.
8. The ld. Adjudicating authority in this case has imposed penalty under sub-rule (1) of Rule 15 ibid. The said Rule deals with the situation, where credit has been wrongly taken by the assessee. In this case, since the authorities below have not specifically allege that wrong cenvat credit has been availed by the appellant, I am of the view that sub-rule (1) of Rule 15 ibid cannot be invoked in the facts and circumstances of this case for imposition of penalty.
9. In view of above, I do not find any merits in the impugned order and allow the appeal in favour of the appellant.
(Dictated and pronounced in open court) (S. K. MOHANTY) MEMBER(JUDICIAL) Anita 4