Custom, Excise & Service Tax Tribunal
Inox India Pvt Ltd vs Vadodara-Ii on 7 August, 2018
In The Customs, Excise & Service Tax Appellate Tribunal
West Zonal Bench At Ahmedabad
Appeal No.E/11269/2017-DB
[Arising out of OIO-VAD-EXCUS-002-COM-66-16-17 dated 16.03.2017 passed by the Commissioner
(Appeals) - Vadodara-ii]
M/s Inox India Pvt. Ltd. Appellant
Vs
C.C.E. & S.T., Vadodara-ii Respondent
Represented by:
For Appellant: J.C. Patel (Advocate) For Respondent: Mr. J. Nagori (AR) CORAM:
HON'BLE MR. RAMESH NAIR, MEMBER (JUDICIAL) HON'BLE MR. RAJU, MEMBER (TECHNICAL) Date of Hearing:01.08.2018 Date of decision:07.08.2018 Final Order No. A/ 11677 /2018 Per: Ramesh Nair The brief facts of the case are that the appellant is engaged in manufacturing of cryogenic tank for liquefied gases, (Chapter 73110090), Domestic Vaporizer (Chapter 84195090), Piping and Miscellaneous Structures (Chapter 84196000), Cryogenic Tank for transportation of liquefied gas (Chapter 870490490), Cryo Container (Chapter 96170012) etc. of the First Schedule to the Central Excise Tariff Act, 1985. They are availing the facility of Cenvat Credit on inputs, capital goods and input service under the provision of Central Excise Rules, 2004. During the course of EA-2000 Audit and on verification of Cenvat Credit account/register it was observed that the appellant had availed cenvat credit total amounting to Rs. 4,95,51,795/- and Rs. 1,07,99,840/- in the months of February 2014 to March 2014. On scrutiny of cenvat register maintained by the appellant wherein certain
2|Page E/11269/2017-DB discrepancies noticed as in the column of type of document they made entries as B/L and B/E, in the column of number and date of document for certain entries they shown the name of the scheme as DEPB/FMS/ SHIS and in certain entries reflected the specific number of bill of entries. Further, in the column of type of supplier they have shown entry as exporter, manufacturer and first stage pertaining to the financial years 2007-2008 to 2013-2014. On further scrutiny, it was found that the appellant at the time of receipt of imported material i.e. during the period 2007-2008 to 2013-2014, on further scrutiny it was found that the appellant at the time of receipt of imported material i.e. during the period 2007-2008 to 2013-2014, did not avail the cenvat credit on the CVD, additional duty (import) and education cess debited in the various scrips of DEPB, FMS, SHIS license. Subsequently during the period 2009-2010 to 2013-2014 the said credit was availed. Department issued a SCN for disallowance of such credit on the ground that the credit was availed belatedly i.e. almost after 7 years, therefore it is time barred. The second allegation is that while taking the credit all details and particulars such as number and date of bill of entry, description of goods, date of receipt of goods etc. were not mentioned in the Cenvat register. The appellant filed detailed reply dated
02.01.2017. Thereafter, the Ld. Commissioner passed the order in original dated 16.03.2017 wherein demand of Cenvat Credit of Rs. 6,03,51,635/- was confirmed with interest and imposed equal penalty. In adjudication of the SCN the Ld. Commissioner relied upon verification report obtained by him from the jurisdictional range office in respect of records and bills of entry and goods receipt note submitted by the appellant along with reply. Being aggrieved by the said order in original which is impugned herein, the appellant filed the present appeal.
3|Page E/11269/2017-DB
2. Sh. J. C. Patel, Ld. Counsel appearing on behalf of the appellant submits that as regard the delay in taking the credit it is not intentional as earlier there was a board Circular whereby it was clarified that the credit in respect of duty debited in various duty credit scrips was not available under the same belief the credit was not taken however, subsequently when it was noticed that the credit is admissible on the duty debited under various duty credit scrips they have availed credit, hence, belatedly. Therefore, there is genuine reason for delay in taking credit. He further submits that during the relevant period no timeline prescribed under the Cenvat Credit Rules, 2004 for availment of credit. Therefore, on this ground, credit could not have been disallowed. He further, submit that the adjudicating authority decided the case mainly on the basis of verification report obtained from jurisdictional range office however, the said report was not provided to the appellant and case was decided, therefore, there is a clear violation of principles of natural justice. He submits that even though as per the verification report all the details related to availment of the said credit was found to be credit but the credit was disallowed only for want of Laurie Receipts which were only called for by the adjudicating authority. He submits that now the same are available and placed in compilation before this Tribunal at the time of hearing. He further submits that the Lorry Receipts details are mentioned in the goods receipt note, therefore, there is no discrepancy and the receipt of the goods in the factory has been established. He further submits that the demand is clearly time barred as the same was raised invoking the larger period of limitation. He submits that the credit was taken in February - March 2014 whereas the SCN was issued in 20.09.2016 which is beyond the normal period of limitation of 2 years prescribed under Section 11A(1) of Central Excise
4|Page E/11269/2017-DB Act, 1944. He submits that there was a correspondence between the department and the appellant with regard to the credit taken and the appellant vide letter dated 17.04.2015 explained the reason for not taking the credit at the time of import and receipt of the inputs and for taking the credit subsequently. Therefore, there is no suppression of fact on the part of the appellant. Hence, entire demand is time barred. In support of his above submission, he placed reliance on the following judgments:
Steel Authority of India Ltd. 2013 (287) ELT 321 SGS India P. Ltd. 2011 (270) ELT 115 Transformerls & Rectifiers 2010 (262) ELT 983 CCE vs Pierlite India Ltd. 2011 (273) ELT 535 CCE vs Lubi Electronics 2009 (245) ELT 551 Nila Baurat Engineering Ltd. 2016-TIOL-2550-CESTAT-MUM
3. Sh. J. Nagori, Ld. Additional Commissioner (AR) appearing on behalf of the Revenue reiterates the findings of the impugned order. He submits that as per the provision of Cenvat Credit Rules, 2004 the assessee is required to take credit 'immediately' on receipt of the inputs therefore, credit taken after 7 years cannot be permitted. As regard, the documents produced by the appellant, the Ld. Commissioner has recorded that the receipt of the goods was not established as the appellant had not submitted the LRs, therefore, the findings of the Ld. Commissioner is correct. Regarding limitation, he submits that the appellant did not disclose to the department regarding the credit taken by them is related to period 2007-2008 to 2013-2014 and the same is related to the duty debited in various duty credit scrips. Therefore, the
5|Page E/11269/2017-DB department was not aware of the facts and details related to such credit. Therefore, there is clear suppression of fact on the part of the appellant.
3. We have carefully considered the submission made by both the sides and perused the records. As regard the limitation for availing the cenvat credit, we find that during the relevant period as per the provision of Rule 4(1), it was merely provided that the Cenvat Credit in respect of inputs may be taken immediately on receipt of the inputs in the factory. However, there is no time limit prescribed for taking the credit. In our view if we draw the interpretation of the term 'may be taken immediately', it is a facility provided to the assessee that he needs not to wait for use of the material and removal of the finished goods on payment of duty for taking the credit, therefore, the intention of this provision is that after receipt of the inputs even though it is lying in the factory, not used in the manufacture of final product and final product was not cleared on payment of duty, the credit can be taken immediately on receipt of the inputs. There is no bar provided in the Cenvat Credit Rules that within how much period credit should be taken. The limitation was brought in the statute by way of 3rd Proviso to Rule 4(1) of Cenvat Credit Rules, 2004 only with effect from 01.09.2014 by Notification No. 21/2014 - CE(NT) dated 11.07.2014 by which the time limit of one year from date of issue of the duty paying document was prescribed. This prescription of time limit itself makes it clear that before this proviso there was no time limit prescribed for the earlier period, therefore, in our considered view merely because the credit was belatedly taken, the same cannot be disallowed. This issue has already been considered by this Tribunal in various judgmetns namely, Steel Authority of India Ltd. (supra), SGS India Pvt. Ltd. (supra), Transformers & Rectifiers (Supra), Pierlite India ltd. (supra), Lubi
6|Page E/11269/2017-DB Electronics (Supra). As regard, the fact of receipt of inputs, we find that in part of the cases it is a differential cenvat credit in respect of part of the duty debited under duty credit scrip, however part of the duty was paid in cash on which the credit was already taken at the time of receipt which was not disputed. In such cases there is no need to go into the issue that whether the inputs were received or otherwise. However, in those cases where the cenvat credit was taken first time belatedly the fact of receipt of inputs needs to be established. In this regard, the appellant had provided various records which were got verified from the Jurisdictional Range Officer, the adjudicating authority in para 15.1 satisfied with the documentary correlation of the reconstructed record except in case of two bill of entries. However, in para 15.2 he contended that in absence of original transport document namely, Lorry receipt it was not possible to ascertain the actual receipt of the goods/ inputs on which cenvat credit is under dispute. In this regard, the appellant submitted before this Tribunal all the copies of Lorry Receipts. The Ld. Counsel invited out attention to the goods receipt note which bears the detail of transport such as Lorry Receipt number etc. Since these records were not before the Adjudicating Authority, he did not verify regarding receipt of the inputs. We find that Ld. Commissioner gravely erred for the reason that if at all he wanted to see the LRs, he could have called for from the appellant which he failed to do so. Accordingly, Ld. Commissioner has grossly violated the principles of natural justice. Moreover, outcome of the verification report was not brought to the notice of the appellant. If this exercise would have been done by the Ld. Commissioner, the case could have been finally decided. Since the additional records such as LRs were produced before this tribunal and not before the Adjudicating authority, to this extent, the matter needs
7|Page E/11269/2017-DB to be remanded. As regard the issue of limitation, we find that since it is mixed question of law and fact, the same can be decided when the matter is decided afresh. Since we are remanding the matter to the adjudicating authority, the issue of limitation is also kept open. As per our above discussion, we set aside the impugned order and remand the matter to the adjudicating authority to pass a fresh denovo order, considering our above observation.
(Pronounced in the open court on 07.08.2018)
(Raju) (Ramesh Nair)
Member (Technical) Member (Judicial)
Neha