Custom, Excise & Service Tax Tribunal
Kanoria Chemicals And Industries Ltd vs Commissioner Of Central Tax ... on 6 December, 2023
(1)
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH AT HYDERABAD
Single Member Bench
Court - I
Excise Appeal No. 30324 of 2023
(Arising out of Order-in-Appeal No.VIZ-EXCUS-001-APP-215-22-23 dt.24.03.2023 passed
by Commissioner of Central Excise & Customs, Visakhapatnam)
Kanoria Chemicals & Industries Ltd .... Appellant
Plot No.32, JN Pharma City, Parawada Mandal,
Visakhapatnam, AP - 531 019
VERSUS
Commissioner of Central Tax .... Respondent
Visakhapatnam - GST Port Area, Visakhapatnam, Andhra Pradesh - 530 035 Appearance Shri P. Venkata Prasad, CA for the Appellant.
Shri Chittaranjan Wagh Prakash, AR for the Respondent.
Coram:
HON'BLE Mr. ANIL CHOUDHARY, MEMBER (JUDICIAL) FINAL ORDER NO. A/30416/2023 Date of Hearing: 06.12.2023 Date of Decision: 06.12.2023 [Order per: ANIL CHOUDHARY] Heard the parties.
2. The issue involved in this Appeal is whether the Appellant/Assessee has rightly taken Cenvat credit, after payment of Additional Customs Duty (ACD) & SAD on the demurrage charges, at the insistence of Revenue.
3. The brief facts are that the Appellant is engaged in manufacture of chemicals for which they import certain raw materials. In the course of import, the Appellant also incurred some demurrage charges in the process of clearing the goods/inputs. Initially the Appellant paid applicable Basic Customs Duty (BCD) plus Additional Customs Duty (ACD) plus SAD and thereafter, taken credit of the BCD, ACD & SAD as per rules. The imports were made during the period December 2010 to June 2015. According to the Appellant, at the instance of Revenue (DRI), with respect to four bills of entry, wherein total demurrage was Rs.1,25,98,498/-, calculated the BCD, ACD & SAD (Special Additional Duty) on the amount of demurrage incurred and deposited the same (2) in order to close the matter. The Appellant, upon payment of BCD+ACD & SAD on the demurrage charges, took Cenvat credit. Subsequently, pursuant to SCN dated 03.04.2017, the Appellant also deposited amount of penalty of Rs.3,44,031/- (15% of duty), which fact is recorded in the OIO dated 18.07.2017, wherein in Para 10, it is recorded that Appellant has paid the differential duty and interest as well as 15% penalty and has also requested for closure of the proceedings. Accordingly, the matter stood closed as concluded, vide the said OIO.
4. Subsequently, vide SCN dated 02.07.2019, Appellant was required to show cause, inter alia, as to why Cenvat credit taken on the challans for deposit of duty on demurrage charges be disallowed, as the said credit was hit by Rule 9(1)(b) of CCR. The Appellant contested the SCN. However, the said amount of Rs.17,27,781/- (CVD+ACD+SAD) was confirmed along with equal penalty.
5. Being aggrieved, the Appellant preferred an Appeal before the Commissioner (Appeals), who vide the Impugned Order, was pleased to uphold the disallowance of credit.
6. Being aggrieved, the Appellant is in Appeal before this Tribunal.
7. Assailing the disallowance of credit, learned Counsel for the Appellant urges that the Appellant has admittedly taken credit on the basis of Challan, which is an eligible document under Rule 9(1)(e) and as per Rule 9(1)(c), credit can also be taken on bill of entry. Further Rule 9(1)(b) provides that credit can be taken also on the basis of a supplementary invoice issued by a manufacturer or importer of inputs/capital goods in terms of provisions of Central Excise Rules, in case additional amount of excise duty or additional duty leviable under Sec 3 of Customer Tariff Act, has been paid, except where the additional amount of duty became recoverable from the manufacturer or importer of inputs or capital goods on account of non levy or short levy by reason of fraud, collusion or any wilful misstatement or suppression of facts or contravention of any provisions of the Central Excise Act or the Customs Act or the rules made thereunder, with intent to evade payment of duty.
8. Learned Counsel further urges that admittedly, the issue is wholly interpretational. Further, he relies on the following judgments:
a) Tata Steel Ltd vs UOI [2019 (370) ELT 100 (Ori.)]
b) CC vs MGM International Exports Ltd [2022 (380) ELT 3 (SC)]
c) CC vs Essar Steel Ltd [2015-TIOL-63-SC-CUS] (3)
d) CCE, Mangalore vs Mangalore Refinery & Petrochemicals Ltd [2015 (325) ELT 214 (SC)]
e) Wipro Ltd vs Asst. Collector of Customs [2015-TIOL-79-SC-CUS]
9. In the aforementioned judgments, it has been categorically held that Customs Duty is not applicable on the demurrage charges.
10. It is further urged that issue boils down to - that Appellant has taken credit on challans, which are eligible documents for taking credit under Rule 9 of CCR. Accordingly, he prays for allowing the Appeal with consequential benefits.
11. Learned AR for Revenue relies on the Impugned Order.
12. Having considered the rival contentions, I find that the whole demand of Customs Duty on demurrage is misconceived. I further find that Appellant had rightly taken Cenvat credit on the basis of challans and bills of entry. Further, I hold that there is no element of fraud, suppression, etc., involved and the issue is wholly interpretational in nature. Accordingly, the Impugned Order is set aside so far disallowance of Cenvat credit on the issue of demurrage is involved along with penalty imposed.
13. Thus, the Appeal is allowed with consequential benefits, in accordance with law.
(Dictated and pronounced in the open Court) (ANIL CHOUDHARY) MEMBER (JUDICIAL) Veda