Custom, Excise & Service Tax Tribunal
M/S Hindalco Industries Ltd vs Cce, Allahabad on 22 August, 2014
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No.2, R. K. Puram, New Delhi, Court No. III Date of hearing/decision: 22.08.2014 For Approval and Signature: Honble Ms. Archana Wadhwa, Member (Judicial) Honble Mr. Rakesh Kumar, Member (Technical) 1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 26 of the CESTAT (Procedure) Rules, 1982? No 2 Whether it should be released under Rule 26 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? yes 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 Excise Appeal No.423 of 2010 (Arising out of order in original No. MP (Dem-58/2009, 59/2009 & 60/2009) 73075 of 2009 dated 30.11.2009 passed by the Commissioner of Central Excise, Allahabad) M/s Hindalco Industries Ltd. Appellant Vs. CCE, Allahabad Respondent
Appearance:
Shri B. L. Narasimhan, Advocate for the appellant Shri Pramod Kumar, Jt. CDR for the Respondent Coram: Honble Ms. Archana Wadhwa, Member (Judicial) Honble Mr. Rakesh Kumar, Member (Technical) Final Order No. Per: Archana Wadhwa:
The appellant is a unit engaged in the manufacture of aluminium and aluminium products and are availing the benefit of cenvat credit of duty paid on the raw material and inputs received from various input supplier. They were also receiving the said inputs from M/s Guwahati Carbon Limited and M/s Brahmaputra Carbon Limited, units located in the area of North East and engaged in the manufacture of Calcined Petroleum Coke. The said two units were availing the area based exemption Notification No. 32/99-CE dated 08.07.1999. In terms of the said Notification an assessee located in the area of North East is required to first discharge duty from the accumulated cenvat credit at the end of the month and if balance duty is required to be paid, the same would be paid through PLA. The duty paid through PLA is refunded to the said unit in terms of the procedure elaborated in the said Notification.
2. The said two units i.e. M/s Guwahati Carbon Limited and M/s Brahmaputra Carbon Limited cleared their product to the appellant under the cover of Central Excise invoices after discharge of duty in terms of the said notification. The duty paid by the said two firms was availed as credit by the present appellant. There is no dispute about the above facts.
3. Subsequently, the jurisdictional Central Excise authorities of M/s Guwahati Carbon Limited and M/s Brahmaputra Carbon Limited entertained a view that the said two units have actually paid excise duty, inasmuch as they have included the freight charges as also insurance charges in their assessable value. Accordingly, proceedings were initiated against the said units for re-determination of their assessable value. The said proceedings resulted in passing of the orders by the authorities vide which it was held that freight charges and insurance charges were not required to be included in the assessable value and consequently the said units have paid excess duty. The matter travelled upto the Tribunal, who vide their decision reported as CCE, Shillong vs. Guwahati Carbon Ltd. -2009 (243) ELT 307 (Tri. Kolkata) held that freight and insurance charges would not form part of the assessable value and the duty on the goods manufactured by the said units is required to be recalculated in terms of Notification No. 32/99-CE. For better appreciation we reproduce para 8 of the said decision:
8. Accordingly, we hold that the Respondents are not entitled to include freight and insurance charges in the assessable value and the duty on the impugned goods requires to be re-calculated accordingly. The Respondents would be entitled to the refund of duty paid on such re-calculated value in terms of the Notification No.32/99-CE and their customers would only be entitled to duty credit of that amount, provided it has been paid in cash, as stipulated under the said Notification. The Respondents are also entitled to refund of the excess duty paid on the remaining portion representing freight and insurance charges as such duty in the first place is not required to be paid by them. Their customers would also not be eligible for taking credit of that portion of the duty on freight and insurance charges paid by the Respondents. The appeals of the Department are allowed in the above terms. Cross-objection filed by the Respondents also stands disposed off.
4. As is seen from above, the Tribunal observed that M/s Guwahati Carbon Limited is entitled to refund of the excess duty paid on the remaining portion representing freight and insurance charges, as such duty in the first place is not required to be paid by them. However, the Tribunal also went ahead and observed about the eligibility of their customers to avail the cenvat credit, even though the customers were neither before the Tribunal nor were part of the adjudication proceedings, which were assailed before the Tribunal.
5. Based upon the above observation of the Tribunal in the case of M/s Guwahati Carbon Limited, the Commissioner, vide his impugned order, denied the cenvat credit to the appellant to the extent of Rs. 2.46 crores approximately along with imposition of penalty of identical amount under Section 11AC of Central Excise Act. In addition, penalty of Rs. 5 lakhs stand imposed in terms of Rule 15(1) of the Cenvat Credit Rules.
6. Learned Advocate appearing for the appellant draws our attention to the fact that M/s Guwahati Carbon Limited was supplying their products, as raw materials, to various other manufacturers also. Proceedings were initiated against the other manufacturers also for denial of the excess credit on identical ground of payment of excess duty by M/s Guwahati Carbon Limited by including the freight and insurance charges. One such matter reached the Tribunal & vide its decision reported as CCE, Jalandhar vs. DCM Engg., Products 2009 (245) ELT 785 (Tri. Del.), it was held that the recipient of the input is entitled to the credit of the duty paid by the input supplier. As such by rejecting the Revenues contention that even if the excess duty was paid by the input supplier by including the freight element in the assessable value, the input recipient would be entitled to the credit of the full duty paid by the input supplier & by holding so revenues appeal was rejected. The said order of the Tribunal was challenged by the Revenue before the Honble High Court of Punjab and Haryana High Court, reported as CCE vs. Guwahati Carbons Ltd. -2010-TIOL-609-HC-P&H-CX. The relevant part of the said decision is reproduced below:-
2. The respondent-assessee made purchases from M/s Guwahati Carbons Ltd. and paid excise duty. The cost of goods was paid by the said firm, but on the excise duty so paid MODVAT credit was claimed. The stand of the Revenue is that the duty paid was more than due and to that extent, credit could not be availed. The Adjudicating Authority required the Assessee to reverse the Modvat Credit availed by it and also imposed penalty. On appeal, the said view was reversed. It was held that once the duty was paid, higher CENVAT Credit could be availed and there was no justification for effecting recovery or ever imposing penalty. Further appeal of the Revenue before the Tribunal failed. It was observed:
..... The record reveals that the only charges levelled by the revenue was that the freight was added to the basic price at the time of clearance, which has boosted the excise liability. Other than this charge, there is no evidence brought to show that both parties are intentionally doing any act which was caused an evasion to the revenue. No intention of the parties has been proved to bring them to charge. Therefore, duty paid by M/s D.C.M. Engineering Ltd. having gone into the treasury through M.s Guwahati Carbons Ltd, the respondent, D.C.M. Engineering Ltd. should not be debarred to take credit of the same in the absence of any questionable conduct. Finding no material against both the respondents, revenue fails in both these appeals. Accordingly, both these appeals of the revenue are dismissed. In view of the above dismissal, cross objection in appeal No.3728 is also disposed.
3. We have heard learned Counsel for the parties.
4. Learned Counsel for the appellant submits that the duty paid was more than due in as much as freight charges were wrongly included in the assessable value of goods. However, learned counsel for the Revenue is unable to show any law that even if duty paid was in excess of the amount due, without excess amount being refunded, the assessee will be debarred from availing of the CENVAT Credit.
5. On the other hand, learned Counsel for the Assessee relies on judgments of this Court in CCE v. Ranbaxy Labs Ltd. [2006] 203 ELT 213 = 2006 TIOL 438 HC P&H CX and CCE vs. Swaraj Automotives Ltd. [2002] 139 ELT 504 = 2005 TIOL 32 HC MAD CX and also circular issued by the Central Board of Excise and Customs, New Delhi being Circular No.877/15/2008-CX, dated 17.11.2008 to submit that credit could be availed to the extent of duty paid..
7. As is seen from the above, the identical issue between the same input suppliers was the subject matter of Tribunals decision, which stand upheld by Honble Punjab & Haryana High Court. As such we fully agree with the ld. Advocate that the issue stand exclusively decided by the above referred decision and the observations made by the Tribunal in the case of C.C.E., Shillong vs. M/s Guwahati Carbons Ltd. 2009 (243) ELT 307 (Tri.-Cal.), as regards the entitlement of credit by the input recipient cannot be adopted. We also agree with the ld. Advocate that such observations are general in nature and are not relatable to the issues before the Tribunal. The Tribunal was required to decide the lis between the Revenue and M/s Guwahati Carbons Limited and not the entitlement of credit by the recipient of the inputs from M/s Guwahati Carbons Limited. The said recipients were not before the Tribunal and as such the grievance of the learned Advocate is well appreciated.
8. Inasmuch as we are allowing the appeal on merits, we are not dealing with the appellant contention of the demand, in respect of the show cause notices being barred by limitation.
9. Appeal is allowed in above terms.
(Archana Wadhwa) Member (Judicial) (Rakesh Kumar) Member (Technical) Pant 6