Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, ... vs M/S Greaves Cotton Ltd on 5 November, 2009
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. I Appeal No. E/1154/07 & E/1300/07 E/CO/241/07 (Arising out of Order-in-Appeal No. RKR(93)82/07 dated 28.5.2007 passed by the Commissioner of Central Excise & Customs (Appeals), Aurangabad ). For approval and signature: Honble Shri P.G. Chacko, Member (Judicial) ======================================================
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 : of the order? 4. Whether order is to be circulated to the Departmental : Yes authorities? ====================================================== Commissioner of Central Excise, Aurangabad M/s Greaves Cotton Ltd. Appellants Vs. M/s Greaves Cotton Ltd. Commissioner of Central Excise, Aurangabad Respondents Appearance: Shri H.B. Negi Shri D.S. Indani SDR Advocate for Appellants Shri D.S. Indani Shri H.B. Negi Advocate SDR for Respondents CORAM: SHRI P.G. CHACKO, MEMBER (JUDICIAL) Date of Hearing: 05.11.2009 Date of Decision: 05.11.2009 ORDER NO. WZB/MUM/2009 Per: P.G. Chacko
There are two appeals before me, one filed by the assessee and the other by the department, both against the same order of the Commissioner (Appeals). In adjudication of a show-cause notice, the original authority had denied certain CENVAT credit on inputs and capital goods to the assessee and asked them to pay interest thereon. It also imposed a penalty of Rs.1,91,826/- (equal to amount of CENVAT credit) on the party under Section 11AC of the Central Excise Act,1944. In an appeal filed by the assessee, learned Commissioner (Appeals) reduced the penalty to Rs.25,000/- while sustaining the order of adjudication. In the present appeal of the assessee, the challenge is against the denial of CENVAT credit and also against the penalty and demand of interest. In the Revenues appeal, the appellant wants the penalty to be enhanced.
2. After examining the records and hearing both sides, I find that the assessee had taken CENVAT credit on inputs and capital goods totaling to Rs.1,91,826/- during the material period. On verification of records, it appeared to the department that this credit had been wrongly taken. The department repeatedly asked the party to reverse it. Ultimately the assessee reversed the entire credit. Subsequently, a show-cause notice was issued for recovery of interest and for imposition of penalty. These proposals were not contested. However, the adjudicating authority gave the assessee an opportunity of being heard, which was made use of only to request for some more time for filing a reply to the show-cause notice. But no replies were ever filed. In this scenario, the original authority confirmed the demand of duty against the assessee and appropriated the reversal of credit towards such demand. Penalty equal to duty was also imposed under Section 11AC. Interest on duty was also ordered to be recovered under Section 11AB. The appellate authority sustained this decision but with reduction of the quantum of penalty.
3. At present, the assessees appeal says that availment of CENVAT credit on inputs to the extent of Rs.21,686/- was correct inasmuch as the inputs were utilized in the manufacture of excisable goods, which were cleared on payment of duty. However, it appears from the SCN that any CENVAT credit on any inputs was not denied on the ground that such input was not utilized in the manufacture of excisable goods. The show-cause notice only denied the excess credit taken by the party. This aspect has been conveniently ignored in the appeal. With regard to the capital goods, I find that the assessee has claimed the benefit of Rule 2(a)(A)(iii) of the Cenvat Credit Rules, 2004. In other words, it is contended that the capital goods in question were components, spares and accessories of the goods specified in the preceding clauses of Rule 2. The goods so specified are (a) goods falling under Chapter 82, 84, 85 and 90 of the Central Excise Tariff Schedule, and (b) pollution control equipment. In the present appeal, the assessee has not cared to specify the capital goods of which the goods in question were claimed to be components, spares or accessories. Thus, the claim of the appellant under Rule 2(a)(A)(iii) of the Cenvat Credit Rules, 2004 stands unsubstantiated. It is also seen from the records that the entire credit was reversed by the party at the instance of the department. There is nothing on record to indicate that this reversal was made under protest. Another ground raised in this appeal is that the entire credit was reversed prior to the issuance of show-cause notice and therefore no penalty was imposable under Section 11AC and no interest was recoverable under Section 11AB.
4. With regard to interest, the assessee has also cited a judgment 2006 (205) ELT 24. The citation is not complete, nor has a copy of the judgment been produced by the Counsel. With regard to penalty, the assessee has relied on 2006 (196) ELT 285 (Tri-Bang), any copy of which is not available. The Counsel has not argued with reference to the above case law. In the result, the appeal filed by the assessee gets dismissed.
5. In the Revenues appeal, I come across a prayer for enhancement of penalty to an amount equal to duty under Section 11AC. There is also a prayer for recovery of interest on duty. According to the learned SDR, as the assessee deliberately took inadmissible CENVAT credit by contravening Rule 4 of the Cenvat Credit Rules with intent to evade payment of duty, the maximum penalty prescribed under Section 11AC of the Act read with sub-rule (2) of Rule 15 is to be imposed on them. In the written submissions filed by the assessee, it is submitted that any concrete evidence of evasion of duty was not given by the Revenue and, therefore, Section 11AC is not applicable in the absence of mens-rea. I find that the show-cause notice invoked Rule 15 of the Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act. In any case involving wrong availment of CENVAT Credit, the relevant provisions of Rule 15 can be invoked, depending on the circumstances of wrong availment of credit. Wrong availment, simpliciter, of CENVAT credit can attract sub-rule (1 ) of Rule 15, in which case the penalty cannot exceed the amount of duty or Rs.2000/-, whichever is greater. Where the CENVAT credit in question is shown to have been taken or utilized wrongly on account of fraud, willful statement, collusion or suppression of facts or any contravention of any provisions of the Central Excise Act or the Rules made thereunder with intention to evade payment of duty, a harsher penalty is attracted under sub-rule (2) of Rule 15. This is because in the stated circumstances, sub-rule (2) of Rule 15 expressly invokes Section 11AC. Nobody has argued with reference to any other sub-rule of Rule 15. The question before me is whether, on the facts of this case, sub-rule (1) or sub-rule (2) of Rule 15 would be applicable. In the show-cause notice, there is no allegation of fraud, willful suppression, collusion or mis-statement. Though there is mention of intention to evade duty by the noticee, there is no specific allegation as to whether they contravened any specific provision of law with such intention. In this scenario, applicability of sub-rule (2) of Rule 15 is ruled out. Only sub-rule (1) can be applied to the facts of this case. In this situation, the penalty cannot exceed the amount of duty or Rs.2000/- whichever is greater. Impliedly, a lesser penalty can also be imposed. The provision, in other words, confers discretion on quasi judicial authority. It was this discretion, which, in the facts of the case, was correctly exercised by the Commissioner (Appeals). The Revenues appeal also gets dismissed.
6. Cross objection filed by the assessee also gets disposed of.
(Dictated and pronounced in Court) (P.G. Chacko) Member (Judicial) Vks/ 1