Custom, Excise & Service Tax Tribunal
Hindalco Industries Ltd vs Commissioners Of Central Excise, ... on 4 February, 2015
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Zonal Bench, Ahmedabad *****
Appeal No. : E/218/2006 Application No. : E/MA(EXTN)/15301/2014 [Arising out of OIO-07/VDR-II/DEMAND/2005 dtd 19.10.2005, Passed by Commissioners of Central Excise, Customs and Service Tax-VADODARA-II] Hindalco Industries Ltd Appellant(s) Vs Commissioners of Central Excise, Customs and Service Tax-VADODARA-II Respondent (s) Represented by :
For Assessee : Shri Anand Nainavati (Adv.) For Revenue : Shri Alok Srivastava (AR) For approval and signature :
Mr. P.K. Das, Hon'ble Member (Judicial) Mr. R.K. Singh, Honble 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? 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, Hon'ble Member (Judicial) Mr. R.K. Singh, Honble Member (Technical) Date of Hearing / Decision : 4/2/2015 ORDER No. A/10196 / 2015 dtd 4/2/2015 Per : Mr.P.K. Das, The relevant facts of the case, in brief, are that the appellants are engaged in the manufacture of Copper Cathodes and Continuous Cast Copper classifiable under Chapter 74 of the First Schedule to the Central Excise Tariff Act 1975. They availed Cenvat Credit on the inputs and capital goods under the Cenvat Credit Rules 2004. Show cause notice dtd 6.4.2005 was issued proposing an amount of Rs 1,34,07,353/- wrongly availed Cenvat Credit and paid by the appellant should not be appropriated in the Govt. account alongwith interest and imposition of penalty. By the impugned order, the Adjudicating Authority confirmed the demand of wrongly taken cenvat credit alongwith interest and appropriated the said amount as deposited by them and imposed a penalty of Rs 1,00,00,000/- under Rule 13(1) of Cenvat Credit Rule 2002/Rule 15(1) of Cenvat Credit Rule 2004.
2. The Ld Advocate on behalf of the appellant submits that they have not utilised the credit as evident from the record and therefore, payment of interest does not arise. He further submits that the appellant wrongly taken the credit, which was reversed before issue of the show cause notice and the imposition of penalty is not warranted. He relied upon the decisions of the Honble High court as under :
a) CCE vs Bill Forge Pvt Ltd 2012 (279)ELT 209 (Kar.)
b) ACCEE Vs Dipsi chemicals Pvt Ltd 1987(32)ELT 556 (Bom)
c) CCE vs Gokuldas Images (P) Ltd 2012(28)STR 214 (Kar.)
d) CCE vs Pearl Insulation Ltd 2012(281)ELT 192 (Kar.)
e) CCE vs Strategic Engineering (P) Ltd 2014-TIOL-466-HC-MAD-CE
3. On the other hand, the Ld Authorised Representative for Revenue submits that the Honble Supreme Court in the case of UOI vs Ind Swift Laboratories Ltd 2011(265)ELT.3(SC) held that interest is liable to be paid for irregular availment of credit, even it is not utilised. He further submits that the Central Excise Officers during audit detected wrong availment of credit and imposition of penalty is justified.
4. After hearing both the sides and on perusal of records, we find from the show cause notice that the appellant reversed the credit on being pointed out by the audit party. It is further seen from the show cause notice that the appellant by letter dtd 17.1.2005 informed that they have inadvertently due to human/accounting mistake taken the credit and reversed the credit prior to utilising the same towards payment of central excise duty and therefore interest on reversal of excess credit is not sustainable. It is noticed that the Adjudicating authority had not disputed the fact of non-utilization of credit by the appellant. The Ld Authorised Representative strongly relied upon the decision of the Honble Supreme court in the case of Ind-Swift Laboratories Ltd (supra) on the proposition that interest on irregular credit would arise from the date of availing of such credit. We find that the Honble Karnataka High Court in the case of Bill Forge Pvt Ltd (supra), after considering the decision of the Honble Supreme Court in the case of Ind-Swift Laboratories Ltd held as under :
In the instant case, the facts are not in dispute. The assessee had availed wrongly the Cenvat credit on capital goods. Before the credit was taken or utilized, the mistake was brought to its notice. The assessee accepted the mistake and immediately reversed the entry. Thus the assessee did not take the benefit of the wrong entry in the account books. As he had taken credit in a sum of Rs. 11,691-00, a sum of Rs. 154-00 was the interest payable from the date the duty was payable, which they promptly paid. The claim of the Revenue was, though the assessee has not taken or utilized this Cenvat credit, because they admitted the mistake, the assessee is liable to pay interest from the date the entry was made in the register showing the availment of credit. According to the Revenue, once tax is paid on input or input service or service rendered and a corresponding entry is made in the account books of the assessee, it amounts to taking the benefit of Cenvat credit. Therefore interest is payable from that date, though, in fact by such entry the Revenue is not put to any loss at all. When once the wrong entry was pointed out, being convinced, the assessee has promptly reversed the entry. In other words, he did not take the advantage of wrong entry. He did not take the Cenvat credit or utilized the Cenvat Credit. It is in those circumstances the Tribunal was justified in holding that when the assessee has not taken the benefit of the Cenvat credit, there is no liability to pay interest. Before it can be taken, it had been reversed. In other words, once the entry was reversed, it is as if that the Cenvat credit was not available. Therefore, the said judgment of the Apex Court has no application to the facts of this case. It is only when the assessee had taken the credit, in other words by taking such credit, if he had not paid the duty which is legally due to the Government, the Government would have sustained loss to that extent. Then the liability to pay interest from the date the amount became due arises under Section 11AB, in order to compensate the Government which was deprived of the duty on the date it became due. Without the liability to pay duty, the liability to pay interest would not arise. The liability to pay interest would arise only when the duty is not paid on the due date. If duty is not payable, the liability to pay interest would not arise.
5. The Honble Bombay High Court in the case of Dipsi Chemicals Pvt Ltd (supra) held that an interpretation (equally a misinterpretation) of the binding decision of the Supreme Court is itself binding subsequently on co-ordinate Courts and can be corrected only by a higher Court. We noticed that the Honble Madras High Court in the case of M/ Strategic Engineering Pvt Ltd (supra) after considering the decisions of Honble Supreme Court, dismissed the appeal filed by the Revenue. The credit taken but not utilized till reversal, could not compel the assessee to pay interest. So, the demand of interest on the unutilised cenvat credit cannot be sustained.
6. Regarding imposition of penalty, we find force in the submission of Ld Authorised Representative for Revenue. It is seen from the record that an amount of Rs 74,00,000/- was availed by the appellant in a number of cases, while the input cenvat credit should have been taken only on the duty on the goods as mentioned in the invoice but instead of this, the credit was taken on the full value of the goods. In some cases, credit taken on the basis of Central Excise invoices or bills of entry is more than the amount of Central Excise duty/CVD mentioned in the Central Excise Invoices/bills of entry. Further, cenvat credit amounting to Rs 28,00,000/- has been taken on cenvated capital goods/input some job work under Rule 4 of the cenvat credit rules, which had not sent back within the stipulated period, but still the cenvat credit had not been reversed. There is also some force in the submissions of he Ld Advocate that the cenvat credit amounting to Rs 40,72,151/- on the various components used in jetty, the Tribunal subsequently appears to be decided in favour of the assessee. We find that the amount Rs 74,00,000/- and Rs 28,00,000/- cannot be treated as a mere erroneous availment of credit. Hence imposition of penalty is warranted. However, considering the facts and circumstance of the case the quantum of penalty should be reduced.
7. Taking into account of overall facts and circumstance of the case, we modify the impugned order in so far as the demand of interest is set aside, penalty would be reduced Rs 10,00,000/-. The appeal is disposed of in the above terms. The application of extension of stay order filed by the appellant is disposed off.
(Dictated and pronounced in the Court)
(R.K. Singh) (P.K. Das)
Member (Technical) Member (Judicial)
swami
??
??
??
??
2