Custom, Excise & Service Tax Tribunal
M/S. Raymond Ltd vs Cce, Bhopal on 9 January, 2013
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH, NEW DELHI.
Date of Hearing:13.12.2012
Date of decision:09.01.2013
Appeal No. E/1441/2010 [SM]
M/s. Raymond Ltd. Appellant
Vs.
CCE, Bhopal Respondent
Appearance: Ms. Rajeshwari K.G., Advocate for the appellant.
Shri B.B.Sharma, DR for the respondent.
Coram: Honble Shri Rakesh Kumar, Member (Technical) Final Order No. 55201 Dtd. 09.01.2013.
Per Rakesh Kumar The facts leading to filing of this appeal are, in brief, as under:-
1.1 The appellant are manufacturer of woolen yarn, woolen fabrics, manmade yarn, manmade fabrics and fabrics of blended yarn, chargeable to Central Excise duty. They are availing the benefit of Cenvat Credit of duty paid on the inputs and capital goods used in or relation to manufacture of their final products. In course of carding/combing of wool, Wool Waste emerges which is classifiable under sub-heading 510300 attracting Nil rate of duty. Since the appellant were availing Cenvat Credit in respect of inputs being used in manufacture of dutiable final products, in course of manufacture of which wool waste was emerging, which was an exampled goods, the appellant reversed Cenvat Credit of Rs. 5,41,805/- on 28.10.99 in respect of cenvated inputs contained in wool waste/used in manufacturer of wool waste and similarly reversed Cenvat Credit of Rs. 2,02,132/- on 28th & 29th December 1999 in respect of clearances of wool waste. This reversal of Cenvat Credit in respect of clearances of wool waste was without filing any protest, though the appellant claim that they had done so on the advice and instructions of the jurisdictional Central Excise Officers. Subsequently realizing that they were not required to reverse this credit in respect of clearances of wool waste, the appellant filed a refund claim for an amount of Rs.5,41,805/- on 20.12.2000 and since it was incomplete, revised claim complete with documents was filed on 15.03.01. Similarly they filed refund claim for the amount of Rs. 2,02,132/- on 15.01.01 and since it was incomplete, they filed revised and complete claim on 15.03.01. The refund claims were rejected by the Jurisdiction Assistant Commissioner vide order dtd. 31.08.01. On appeals being filed before the Commissioner of Central Excise(Appeals),he by an order-in-appeal dtd. 27.10.04 allowed the refund claim of Rs. 2,45,885/- and rejected the clause of the extant of Rs. 4,98,052/- as time barred.
1.2 The appellant filed an appeal before the Tribunal against Commissioner of Central Excise (Appeals)s order dtd. 27.10.04. The Tribunal vide a final order dtd. 13.03.06, remanded the matter to the original authority to consider the refund claim on the basis of Tribunals decision in the case of Patel Field Marshal Industries Vs. Commissioner of Central Excise Rajkot, reported in 2003 (158) E.L.T. 483.
1.3 In denovo proceedings the original adjudicating authority vide order dtd. 25.08.06, rejected the refund claims for the amount of Rs. 4,98,052/- as time barred. The order of the original adjudicating authority was upheld by Commissioner of Central Excise (Appeals) vide order-in-appeal dtd. 14.12.06. The Commissioner (Appeals) held that the judgment of the Tribunal in the case of Patel Field Marshal Industries (Supra) and Rule 57CC was not applicable, but the refund claim would be subject to the limitation period prescribed under Section 11B.
1.4 The appellant filed appeal before the Tribunal against the Commissioner (Appeal)s order dtd. 14.12.06 which was decided by the Tribunal vide final order No. 901/09 SM [BR] dtd. 24.07.09 by which the tribunal once again remanded the matter to Commissioner (Appeals) for deciding the question of limitation in the light of the judgment of Honble Allahabad High Court in the case of Collector of Central Excise Vs. Ram Swarup Electricals Ltd., reported in 2007 (217) E.L.T. 12.(All.).
1.5 The matter was again decided denovo by Commissioner (Appeals) vide order-in-appeal dtd. 18.03.12 by which the Commissioner (Appeals) held that the judgment of Honble Allahabad High Court in the case of Ram Swarup Electricals Ltd. (Supra),is not applicable and it is the judgment of High Court of Gujrat in the case of Indo-Nippon Chemicals Co. Ltd. Vs. Union of India reported in 2005(185) E.L.T.19 (Guj.), which would be applicable. The Commissioner (Appeals) again dismissed the appeals. Against this order of the Commissioner (Appeals), the present appeal has been filed.
2. Heard both the sides.
3. Ms. Rajeshwari K.G., Advocate, the learned counsel for the appellant, pleaded that the appellant had reversed Cenvat Credit on the instructions of the Departmental Officers, that in view of these circumstances, even if the Appellant did not filed formal protest, the reversal of the credit has to be treated as under protest and, therefore, the limitation period prescribed under section 11B would not apply, that in this regard she relies upon the judgment of the Tribunal in the cases of Opel Alloys Pvt. Ltd. Vs. Commissioner of Central Excise, reported in 2010 (249) E.L.T. 408, Laxmi Board & Papers Mills Ltd. Vs. Commissioner of Central Excise, Mumbai, reported in 2007 (208) E.L.T. 384 and Commissioner of Customs (Airport), Chennai Vs. Atlas Granites, reported in 2004 (173) E.L.T.25, wherein it was held that the amount deposited towards the duty during investigation on the directions of the Department has to be treated as paid under protest and hence the limitation period under section 11B for its refund would not be applicable, that in any case, in view of the judgment of Honble Allahabad High Court in the case of Commissioner of Central Excise Vs. Ram Swarup Electricals Ltd. (Supra), the limitation period prescribed under section 11B is not applicable for the refund of Cenvat Credit wrongly reversed and that in view of this, the impugned order is not correct.
3. Sh. B.B.Sharma,the learned departmental representative, defended the impugned order by reiterating findings of the Commissioner (Appeals) in it and relying upon the judgment of Honble Gujrat High Court in the case of of Indo-Nippon Chemicals Co. Ltd. Vs. Union of India reported in 2005(185) E.L.T.19 (Guj.), where in it has been held in clear terms that the refund of Cenvat/Modvat Credit is subject to the Provisions of section 11B, pleaded that the limitation period prescribed in 11B would be applicable, that since in this case the appellant had reversed the credit, in question, without any protest, on their own and without any instructions or advice from the department, the saving clause of 2nd proviso to section 11B(1) would not be applicable, that the judgment of the Honble Allahabad High Court in the case of Ram Swarup Electricals Ltd. (Supra), is on the question as to whether there is time limit for availing Cenvat Credit which, at the time of receipt of goods, was not availed or short availed and in that case Honble High Court has not been dealt with the question of applicability of Section 11B for refund of the Cenvat Credit which had earlier been wrongly reversed and that in view of the above submissions, there is no infirmity in the impugned order.
4. Ms. Rajeshwari K.G., the learned counsel for the appellant, in rejoinder pointed out to Para 33 on Honble Gujrat High Court judgment in the case of Indo-Nippon Chemicals Co. Ltd. (Supra), and pleaded that in Para 33 of the judgment of Honble Court has clearly observed that when the reversal of Modvat Credit was on instructions or insistence of the Departmental Officers and subsequently the assessee discovered that mistake and realized that reversal was not required, the Provision of Section 17 of the Limitation Act would become applicable and the limitation period for filing refund would start from the date on which the assessee discovered the mistake and that in this case if the date on which the appellant discovered their mistake is treated as the relevant date, both the refund claims would be within time. She also emphasized that the appellant in their reply to the Show Cause Notice had clearly stated that the reversal was on account of instructions of the Department.
5. I have considered the submissions from both the sides and perused the records. In this case the reversal of Cenvat Credit of Rs. 5,41,805/- had been made on 28.10.99 and reversal of Cenvat Credit of Rs. 2,12,132/- had been made on 28th & 29th December 1999. While the refund claim for the first amount of Rs. 5,41,805/- had been filed on 22.12.2000, the refund claim for the second amount of Rs. 2,21,132/- had been filed on 15.01.2001 and in both the cases, the complete and revised claims with all the documents had been filed on 15.02.01. Thus, If it is held that the claim for refund of wrongly reversed Cenvat Credit/Modvat Credit is subject to the limitation period prescribed under section 11B and the limitation period is counted from the date of reversal, both the refund claims would be time barred. However, according to the appellant, for refund of wrongly reversed Cenvat Credit, limitation period under section 11B is not applicable, while according to the Department, for refund or re-credit of wrongly reversed Cenvat Credit, the claim had to be filed under section 11B, and all the provisions of section 11B are applicable.
6. On going through the judgment of Honble High Court in the case of Ram Swarup Electricals Ltd. (Supra), cited by the appellant, the points decided by Honble High Court,as mentioned in first Para of the Judgment are as under:-
1. Whether the Tribunal was right in holding that in the absence of any provision at the material time against the availment, at the subsequent stage, of the amount of credit short availed originally at the time of receipt of the inputs, the respondent were entitled to take the differential higher notional credit under Rule 57B at a subsequent stage. In other words whether the full amount of admissible Modvat credit has to be taken in a single transaction or it could be taken in installments as done by the respondents in the present cases and allowed by the Tribunal?
2. Whether, even if, it is held that such subsequent taking of short availed credit is permissible, the Tribunal was correct in allowing such subsequent taking of credit beyond a period of six months from the date of the original taking of credit or the Tribunal should have restricted the credit so taken subsequently to the amounts relating to the immediately preceding six months period?
3. Whether subsequent taking of originally short availed Modvat credit will constitute a refund claim and accordingly subject to the time limit restriction laid down under Section 11B of the Act.?
4. Whether by filing the Gate Passes and RT-12 monthly returns the respondents can be said to have staked a claim at the original stage and hence the time limit of six months will not be applicable as held by the Tribunal? 6.1 From the perusal of the judgment it is clear Honble High Court in this case of has not considered the question of applicability of the provisions of Sec.11B for refund or re-credit of the Cenvat Credit which had earlier been wrongly reversal and whether the refund/re-credit of such wrongly reversed credit would be subject to the limitation period prescribed in Sec. 11B. In this judgment, what Honble High Court has held is that the provisions of Section 11B would not be applicable for taking Modvat Credit in respect of any inputs if the Modvat Credit had not been availed or short availed at the time of receipt of the goods. I find that it is the judgment of Honble Gujrat High Court in the case of Indo-Nippon Chemicals Co. Ltd. (Supra), which is exactly on the issue involved in this case and in this judgment, Honble High Court has held in clear terms that refund/re-credit of Cenvat Credit wrongly reversed, would be subject to the provisions of Section 11B, as Modvat/Cenvat Credit is nothing but a constituent of duty. In view of this, I hold that the refund/re-credit of the wrongly reversed Cenvat Credit would be subject to the provisions of Section 11B and the limitation period prescribed in Section 11B would be applicable for filing the refund claim for Modvat Credit.
7. The question, now, arises as to what would be the relevant date from which the limitation period has to be counted. I find Honble High Court in Para 33 of the judgment in the case of Indo-Nippon Chemicals Co. Ltd.(Supra), has held that when reversal of Modvat Credit was on insistence of Department and subsequently the reversal was found to be wrong, the provisions of Section 17 of Limitation Act. would be applicable and limitation period would run from the date on which the mistake was discovered by the appellant. However, for applying the above ruling of Honble High Court, it has to be ascertained as to whether the reversal was on the insistence or instructions of the Departmental Officers. On this point there is dispute, as while the Department claims that the reversal in both the cases had been made by the appellant on their own without any instructions in this regard to them, Contrary to this, the appellant in their reply dtd. 02.09.01 to the Show Cause Notice have made the following submissions:-
It is true that reversal of credit was done without any protest but on the context of wrong interpretation of rule by departmental officers advising reversal of such credit. Addressing the letter intimating reversal of credit earned on polyester tow contained in Wool Waste (R.C.Noil) to Superintendent (Prev.) and delivered during their presence at our unit on 29.12.98 proves that they have forcibly and illegally, levied and collected duty of excise without any authority of law. Therefore, the authority cannot retain illegally collected tax and refund should be allowed without imposing any condition as per Aapex Courts Judgment. 7.1 The learned DR had been asked file his written submissions on this point but the same have not been filed. In view of this notwithstanding the fact that this is the 3rd round of litigation, the matter has to be remanded once again to the Commissioner (Appeals). The Commissioner (Appeals) in remand proceeding should go through the entire records and ascertain as to whether the reversal was on advice or instructions of the Departmental Officers or whether the reversal of Modvat/Cenvat Credit had been made by the appellant on their own, as per their own interpretation of rules without any advice or any instructions, in this regard from the department. If the reversal of Cenvat Credit was on instructions or advice of the department, the observation of the Honble Gujrat High Court in para 33 of its judgment in the case of Indo-Nippon Chemicals Co. Ltd.(Supra),would be applicable and in that case the limitation period would run from the date of discovery of mistake. The date of discovery of mistake has to be ascertained on the basis of appellants correspondence on this issue with the department. If prior to the filing of incomplete refund claims on 22.12.2000 and 15.01.01, the appellant had made correspondence with the department on this issue, the date on which they claimed for the first time that the reversal was wrong, would be treated as date of discovery of mistake. If there is no such correspondence, the dates on which the refund claims were filed for the first time on 22.12.2000 and 15.01.01 would have to be treated as the date of discovery of mistake.
7.2 Accordingly the impugned order is set aside and the matter is remanded to the Commissioner (Appeals) for the de-novo decision. Keeping in view the observations made above. Since this is a very old matter, the Commissioner (Appeals) is directed to decide this matter within a period of three months from the date of receipt of certified copy of this order.
(Rakesh Kumar) Member (Technical) S.Kaur ??
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