Custom, Excise & Service Tax Tribunal
M/S. Zabatex Textiles India Pvt. ... vs Commissioner Of Central Excise & S.T., ... on 22 December, 2015
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Zonal Bench, Ahmedabad Appeal No. : E/10001/2013 (Arising out of OIA-SRP-143-VAPI-2012-13 dated 16.11.2012, passed by Commissioner (Appeals) Central Excise, & S.T.,Vapi) M/s. Zabatex Textiles India Pvt. Limited : Appellant (s) VERSUS Commissioner of Central Excise & S.T., Vapi : Respondent (s)
Represented by :
For Appellant (s) : Shri Prakash Shah and Shri Rahul Gajera, Advocates For Respondent (s) : Shri J. Nagori, Authorised Representative For approval and signature :
Mr. P.K. Das, Honble Member (Judicial) 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?
No 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 CORAM :
Mr. P.K. Das, Honble Member (Judicial) Date of Hearing / Decision : 22.12.2015 ORDER No. A/11872/2015 Dated 22.12.2015 Per : Mr. P.K. Das;
After hearing both the sides and on perusal of the records, I find that the appellant is engaged in the manufacture of Textile Articles, classifiable under Chapter 58 and 60 of the Schedule to the Central Excise Tariff Act, 1985. The adjudicating authority disallowed the CENVAT credit amounting to Rs. 12,01,233/- alongwith interest and imposed penalty of equal amount of CENVAT credit for the period 01.4.2006 to 06.9.2009.
2. The learned Advocate on behalf of the appellant fairly submits that they are not disputing the demand of CENVAT credit of Rs. 4,61,879/-, which is a calculation error. He submits that they have already debited an amount of Rs. 4,61,879/- alongwith interest and the penal provisions should not invoke. He further submits that the balance amount of demand is not sustainable in view of the following decisions of the Tribunal :-
(a) Jai Corp Limited vs. CCE & ST, Vapi 2015 (317) ELT 489 (Tri. Ahmd.)
(b) Sri Venkateshwara Precision Components vs. CCE, Chennai 2010 (258) ELT 553 (Tri. Chennai)
(c) Metaclad Industries vs. CCE, Mumbai 2013 (289) ELT 381 (Tri. Mumbai)
(d) CCE & ST, Ludhiana vs. Khanna Paper Mills Limited 2015 (326) ELT 167 (Tri. Del.)
3. Learned Authorised Representative for the Revenue reiterates the findings of the adjudicating authority. He submits that Cenvat Credit on Additional duty under sub-Section 5 of Customs Tariff Act has been allowed vide Notification No. 22/2009-CE (NT) dated 07.09.2009, which was inserted in the Rule 3(7) of the Cenvat Credit Rules. He submits that the decisions relied upon by the learned Advocate had not considered that there is no express provisions in the said amendment would be applicable retrospectively. He also relied upon the decisions of the Hon'ble Supreme Court in the case of Parle Exports (P) Limited 1988 (38) ELT 741 (SC) and Dharmendra Textile Processors 2008 (231) ELT 3 (SC).
4. I find that the issue involved in this case is as to whether the appellant has rightly taken CENVAT credit on the inputs received from 100% EOU, during the period 2006-07 to 2009 (i.e. August 2009). According to Revenue, as per amendment to Rule 3(7) of Cenvat Credit Rules, the appellant is eligible to avail credit on the Additional duty leviable under Section 3(1) of the Customs Tariff Act, which is equal to the duty of excise under Section 3(1) (a) of the Central Excise Act, on or after 07.09.2009. For the proper appreciation, relevant portion of the said Rule is reproduced below:-
(7) Notwithstanding anything contained in sub-rule (1) and (7) sub-rule (4), -
(a) CENVAT credit in respect of inputs or capital goods produced or manufactured, by a hundred per cent. export-oriented undertaking or by a unit in an Electronic Hardware Technology Park or in a Software Technology Park other than a unit which pays excise duty levied under section 3 of the Excise Act read with serial numbers 3, 5, 6 and 7 of notification No. 23/2003-Central Excise, dated the 31st March, 2003, [G.S.R. 266(E), dated the 31st March, 2003] and used in the manufacture of the final products or in providing an output service, in any other place in India, in case the unit pays excise duty under section 3 of the Excise Act read with serial number 2 of the notification No. 23/2003-Central Excise, dated the 31st March, 2003, [G.S.R. 266(E), dated the 31st March, 2003], shall be admissible equivalent to the amount calculated in the following manner namely :-
Fifty per cent. of [X multiplied by {(l+BCD/100) multiplied by (CVD/100)}], where BCD and CVD denote ad valorem rates, in per cent., of basic customs duty and additional duty of customs leviable on the inputs or the capital goods respectively and X denotes the assessable value.
[Provided that the CENVAT credit in respect of inputs and capital goods cleared on 1st March 2006 from an export oriented undertaking or by a unit in Electronic Hardware Technology Park or in a Software Technology Park, as the case may be, on which such unit pays excise duty under section 3 of the Excise Act read with serial number 2 of the Notification No. 23/2003-Central Excise dated 31st March 2003 [GSR 266(E), dated the 31st March, 2003] shall be equal to [X multiplied by [1+BCD/200) multiplied by (CVD/100)]:
[Provided further that the CENVAT credit in respect of inputs and capital goods cleared on or after 07th September 2009 from an export oriented undertaking or by a unit in Electronic Hardware Technology Park or in a Software Technology Park, as the case may be, on which such unit undertaking or unit has paid
(i) the additional duty leviable under sub-section (1) of section 3 of the Customs Tariff Act, which is equal to the duty of excise under Clause (a) of sub-section (1) of section 3 of the Excise Act;
5. It is seen that the issue is no more res-integra in view of the decision in the case of Metaclad Industries vs. CCE, Mumbai (supra), followed by the earlier decision of the Tribunal in the case of Sri Venkateshwara Precision Components vs. CCE, Chennai (supra). It is noticed that the Division Bench of this Tribunal in the case of Jai Corp. Limited vs. CCE & ST Vapi (supra) approved the decision of the Single Member Bench in the case of Metaclad Industries vs. CCE, Mumbai. Relevant portions of the decision in the case of Metaclad Industries (supra) are reproduced below:-
2. The main appellant, M/s. Metaclad Industries availed CENVAT credit of the excise duty paid on the goods procured from a 100% EOU. The said duty comprises of various components such as Basic Customs duty, Additional Customs Duty leviable under sub-section (1) and sub-section (5) of Section 3 of Customs Tariff Act, 1975, Education Cess and so on. The department was of the view that the appellant is not entitled to take CENVAT credit of the portion relating to Special Additional Duty of Customs leviable under sub-section (5) of the Section 3 of the Customs Tariff Act, 1975 and, accordingly, they denied the Cenvat credit and confirmed a demand of Rs. 4,09,379/- against the appellant. Apart from imposing a penalty of an equivalent amount on the main appellant, a penalty of Rs. 25,000/- was imposed on the co-appellant, Shri Suketu Vasant Jariwala, a partner of the appellant-firm. The appellants preferred appeals before the lower appellate authority who vide the impugned order rejected the appeals and hence the appellants are before me.
5.1 The levy on? the goods cleared from a 100% EOU to DTA is an excise duty as provided for in Section 3 of the Central Excise Act. For the purposes of arriving at the rate of duty, it has been prescribed in the said section that the rate of excise duty on goods cleared from an EOU shall be the aggregate of the customs duties leviable on like goods imported into India. Nevertheless, the levy is an excise levy and it does not in any way gets converted into a customs levy. Once this position in law is clearly understood, the issue becomes simples and clear. The excise duty levied under Section 3 of the Central Excise Act is an eligible duty for CENVAT credit under Rule 3 of the Cenvat Credit Rules, 2004, Similarly in the case of imported goods, the additional duty paid under sub-section (1) of Section 3 of the Customs Tariff Act as well as under sub-section (5) of the said section are duties specified for availment as credit under Rule 3 of the Cenvat Credit Rules. If that be so, irrespective of the nature of the components of duty which is contained in the excise duty paid by an EOU, credit should be available under Rule 3 of the Cenvat Credit Rules, 2004.
5.4 The clarification/amendment made in the said Rule in 2009 is only for the purpose of removal of doubts and not for any other reason. Therefore, the Revenues contention for restricting the credit has no rationale at all and has to be rejected outright.
6. I find that the above decisions of the Tribunal are squarely on the issue involved in this case. So, there is no need to look into the other decisions as cited by the learned Authorised Representative. I find that the demand of balance amount of CENVAT credit alongwith interest is not sustainable in view of the above decisions. It is noted that denial of Cenvat Credit of Rs. 4,61,871/- is related to calculation error, which the appellant has already paid alongwith interest and imposition of penalty is not justifiable.
7. In view of the above discussion, the impugned order is modified to the extent, denial of CENVAT of Rs. 4,61,871/- alongwith interest is upheld and the balance amount of demand alongwith interest and penalties are set-aside. Appeal filed by the appellant is disposed in the above terms.
(Order dictated and pronounced in the Court) (P.K. Das) Member (Judicial) .KL 6