Custom, Excise & Service Tax Tribunal
M/S N.R. Ispat & Power Pvt. Ltd vs Cce, Chhattisgarh on 27 January, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
West Block No. 2, R.K. Puram, New Delhi 110 066.
Date of Hearing/Order : 27.1.2016
Appeal No. E/52183/2015-EX.(SM)
(Arising out of Order-in-Original No. BSP/EXCUS/000/COM/015-14-15 dated 27.2.2015 passed by the Commissioner (Appeals), Central Excise, Customs & Service Tax, Chhattisgarh)
For Approval & Signature :
Honble Mr. R.K. Singh, 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?
2.
Whether it would 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 Department Authorities?
M/s N.R. Ispat & Power Pvt. Ltd. Appellant
Vs.
CCE, Chhattisgarh Respondent
Appearance Shri Piyush Kumar, Advocate - for the appellant Shri V. Bhatnagar, DR for the respondent CORAM: Honble Mr. R.K. Singh, Member (Technical) Final Order No. 50130/2016 Per R.K. Singh:
Appeal is filed against order-in-original dated 27.2.2015 in terms of which Cenvat credit of Rs.12,50,458/- was disallowed and ordered to be recovered along with interest; equal mandatory penalty was also imposed.
2. The break up of the impugned Cenvat credit is as below:
S.No. Description of head of Cenvat credit availed Amount (Rs.)
1.
Supporting structures 11,74,206/-
2. Procurement of supporting structures 48,000/-
3. Welding electrodes 28,252/-
Total 12,50,458/-
2. The appellant has contended that:
(i) amount of Rs.11,74,206/- appearing in the above table is Cenvat credit on 255.300 MT and 131.930 MT of steel which was alleged to have been used for supporting structure.
255.300 MT of structural steel was procured under non-cenvatable invoices and no credit was taken in respect thereof and it has been confirmed by Supdt., Central Excise, Raigarh vide letter dated 20.12.2014 cited in para 5.5. of the impugned order. It has also been certified by C.A. certificate also. Regarding Cenvat credit on 131.930 MT of steel used for supporting structure, the appellant has contended that there was confusion during the relevant period and therefore extended period cannot be invoked which will make the demand of Cenvat credit relating thereto time-barred.
Regarding welding electrodes, ld. Advocate for the appellant stated that some of the welding electrodes have been used for manufacture of capital goods also although he admitted that he has no evidence to that effect. He conceded the component of Rs.48,000/- mentioned in the above table. The ld. Advocate for the appellant also pleaded that option to pay reduced mandatory penalty (25% of the duty) should be extended as it was not extended by lower authorities.
3. Per contra, the ld. DR supported the impugned order and added that the benefit of reduced mandatory penalty cannot be extended by CESTAT as has been held by Bombay High Court in the case of CCE, Raigad Vs. Castrol India Ltd. 2012 (286) ELT 194 (Bom.) wherein it has been held as under:
28.?In the present case, the applicability of Section 11AC is not in dispute. It is also not in dispute that the assessee has paid the duty sought to be evaded as also the interest payable thereon under Section 11AB before the passing of the adjudication order. Admittedly, the assessee has not paid 25% of the penalty imposed under Section 11AC within thirty days from the date of the communication of the order of Central Excise Officer determining the duty sought to be evaded under Section 11A(2) of the Act which is the mandatory requirement under Section 11AC. Instead of paying 25% of the penalty within the stipulated time, the assessee has chosen to file an appeal against imposition of penalty under Section 11AC and the Tribunal has permitted the assessee to pay 25% penalty beyond the time prescribed under the proviso to Section 11AC which is not permissible in law.
4. I have considered the contentions of both sides. I find that the Supdt. Central Excise vide letter dated 20.12.2014 has taken note of the intimation of the appellant that it had not availed Cenvat credit on 255.300 MT of steel items used for the supporting structures as it purchased the same under non-cenvatable documents. The Supdt., Central Excise has not disputed this fact. The adjudicating authority has stated that in the absence of any supporting documents it cannot be ascertained whether the appellant had availed Cenvat credit on 255.300 steel or not. I do not find the said reasoning sufficient to disallow credit in relation to 255.300 MTs of steel particularly when the appellant categorically stated that the said steel was obtained under non-cenvatable documents and the same has at no stage been controverted by Revenue. The Supdt. , Central Excise in its letter dated 20.12.2014 has noted the appellants submission in this regard and has not disputed the same.. In addition Chartered Engineers certificate given at page 73 of the appeal papers also certifies that Cenvat credit on 255.300 MTs of steel was not taken. Therefore the demand relating to this quantum of steel which works out to Rs.8,01,724/- is not sustainable. However, regarding 131.930 MTs of steel items eg. beams, joists, channels, angles, flat etc. used for supporting structures, the appellant is only claiming the benefit on the ground of time bar and not on merit. There is no confusion or ambiguity that steel used for supporting structures would neither fall under the category of capital goods nor inputs as defined under Cenvat Credit Rules and therefore the credit thereon is not admissible, because the definition of capital goods or inputs by any stretch of imagination could not be understood to include steel used supporting structures within their ambit. Bona fide belief is a belief of reasonable person operating in an appropriate environment. Thus the contention of the appellant regarding bonafide belief that credit on 131.930 MT was admissible is untenable. The appellant has conceded inadmissibility of Cenvat credit of Rs.48,000/- As regards the welding electrodes it has been held by CESTAT in the case of Vikram Cement Vs. CCE, Indore - 2009 (242) ELT 545 (T) that credit on welding electrodes is not available when used for repair. The appellant has only stated that some of these electrodes may have been used for manufacturing capital goods but has conceded that it has no evidence thereof. Therefore the demand relating to welding electrodes is also sustainable.
However, I find that Gujarat High Court in the case of CCE Vs. Ratnamani Metals and Tubes Ltd. 2013-TIOL-1124-HC-AHM-CX has clearly stated that if the option of 25% penalty has not been given expressly at lower levels the same can be extended at the stage of CESTAT also. Also we find that the Bombay High Court in the case of CCE Raigad Vs. Castrol India has observed that though various High Courts and CBDT have directed adjudicating authority to make it expressly clear in adjudication order regarding option to pay 25% penalty, it does not mean that the statute cast obligation on the adjudicating authority to do so and that section 11AC has to be construed strictly. If the reasoning/ratio of Bombay High Court judgement is logically extrapolated then it could be argued that mandatory penalty under Section 11AC would follow when wilful misstatement or suppression of facts is upheld by the adjudicating authority even if it has not been expressly imposed by the adjudicating authority because non imposition of mandatory penalty by adjudicating authority cannot eclipse the vitality of the statutory provision regarding that. In the given circumstances I am not inclined to follow the ratio of Bombay High Court judgement in the case of Castrol India (supra) and would like to follow the reasoning of Gujarat High Court in the case of Ratnamani Metals (supra) which is also in conformity with the reasoning adopted by Delhi High Court in the case of K.P. Pouches Vs. Union of India 2008 (228) ELT 31 (SC) and Punjab & Haryana High Court in the case of CCE, Rohtak Vs. J.R. Fabrics (P) Ltd. - . 2009 (238) ELT 209 (P&H).
5. In the light of the foregoing, I pass the following order.
(i) The appeal is partly allowed in as much as the amount of Cenvat credit disallowed (and ordered to be recovered along with interest) is reduced to Rs.4,48,734/-.
(ii) Penalty under Section 11AC is reduced to Rs.4,48,734/-.
However, the penalty will be 25% of Rs.4,48,734/- if the revised amount of Cenvat credit demand (Rs.4,48,734/-) along with interest and reduced penalty (i.e. 25% Rs.4,48,734/-) is paid within 30 days of receipt of this order.
(R.K. Singh) Member (Technical) RM 1