Custom, Excise & Service Tax Tribunal
M/S Kribhco Shyam Fertilizers Ltd vs Commissioner Of Central Excise & S.Tax, ... on 27 November, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL,
REGIONAL BENCH : ALLAHABAD
Ex. Appeal No.55800/14
Arising out of OIA No.119-CE/LKO/2014 dated 01.09.2014 passed by Commr. (Appeals) of Central Excise, & S.Tax, Lucknow
For approval and signature:
HONBLE MR. ANIL CHOUDHARY, MEMBER (JUDICIAL)
1. Whether Press Reporters 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 the
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not? : Yes
3. Whether His Lordship wishes to see the fair copy
of the Order? : Seen
4. Whether Order is to be circulated to the Departmental
Authorities? : Yes
M/s Kribhco Shyam Fertilizers Ltd.
APPELLANT(S)
VERSUS
Commissioner of Central Excise & S.Tax, Lucknow
RESPONDENT (S)
APPEARANCE Shri Kapil Vaish, C.A. for the Appellant (s) Shri Raj Kumar Maji, A.C. (A.R.) for the Department CORAM:
HONBLE MR. ANIL CHOUDHARY, MEMBER (JUDICIAL) DATE OF HEARING & PRONOUNCEMENT : 27. 11. 2015 ORDER NO.__________________________ Per Mr. Anil Choudhary :
The Appellant, M/s Kribhco Shyam Fertilizers Ltd., is in Appeal against Order-in-Appeal No. 119-CE/LKO/2014 dated 01.09.2014 passed by Commr. (Appeals) of Central Excise, & S.Tax, Lucknow.
2. The facts in brief are that the appellant is a manufacturer of Anhydrous Ammonia and Urea and is registered under the provisions of Central Excise Act. The appellant is procuring inputs namely, naptha and sulphuric acid duty free on CT2, under Bond, as per the provision of Central Excise (removal of goods at concessional rate of duty for the manufacture of excisable goods) Rules 2001. Under notification number 14 of 2009 read with notification number 4 of 2006 it is provided that naptha is a natural gas, only liquid form can be procured duty free for use in the manufacture of ammonia, provided that such ammonia is used in the manufacture of fertilisers and the fertiliser manufactured is cleared as such from the factory of production. The appellant after procuring naptah had utilised the same in the manufacture of ammonia which is an intermediate product. Further, part of ammonia was utilised in manufacture of urea fertilizer, thereby fulfilling the terms of the notification number 4 of 2006 read with notification 14 of 2009. However, part of the ammonia was cleared on payment of duty. It appeared to revenue that the exemption for procurement of naptha for the manufacture of ammonia, which was not used further used in the manufacture of urea, amounted in violation to the conditions under notification number 4 of 2006 read with 14 of 2009 and accordingly, the appellant was required to show cause vide notice dated 26/7/11, invoking extended period, that is July 2009 to March 2011 requiring to show cause as to why an amount of Rs.7,79,105/- being the duty on procurement of naptha, which on manufacture of ammonia was cleared as such without being subjected to further manufacture of fertiliser.
3. The appellant contested the show cause notice stating that at the time of procurement, they do not know with certainty which part of naptha for manufacture of ammonia (intermediate product) may be further utilised in the manufacture of fertiliser and which part will be cleared at the stage of intermediate product ammonia. It is further contended that the situation is wholly revenue neutral as duty is payable on the procurement of naptha, utilized in manufacture of ammonia cleared outside, the appellant will be entitled to Cenvat/modvat credit of the same and as such there being no loss of revenue, the show cause notice was fit to be dropped. Vide order dated 28/12/12, the same was confirmed demanding Rs.7,79,105/- under Section 11 (A)(i) along with interest and equal amount of penalty was imposed under section 11 AC of the Act. Being aggrieved the appellant preferred appeal before the Commissioner (Appeals).
4. The ld. Commissioner (Appeals) dismissed the appeal holding that the whole matter relates to exemption availed by the appellant for procurement of excisable goods duty-free for the specific purpose for which Bond was also executed. In terms of the bond, the appellant is liable to pay duty on the goods procured without payment of duty if it was not used for the purpose, it was procured. The plea of revenue neutrality was rejected and the demand was upheld.
5. Being aggrieved, the appellant is before this Tribunal.
6. The ld. Counsel for the appellant has reiterated the grounds before the Commissioner (Appeals). He further relies on the ruling of the Honourable Supreme Court in the case of Narmada Chematur Pharmaceuticals : 2005 (179) ELT 276 (SC). It was held that optional exemption of modvat/cenvat credit not availed in order to take Cenvat/modvat credit and such credit subsequently held to be wrongly availed. Under the circumstances, the amount of Cenvat/modvat availed is exactly equivalent to the amount of Excise duty paid, by not availing the exemption, the consequence is revenue neutral, hence demand for suc wrong availment of credit was rightly quashed by the Tribunal. So far as extended period of limitation is concerned, he relies on the ruling of Honourable Supreme Court in the case of Amco Batteries Ltd. Vs. Collector of Central Excise, Bangalore : 2003 (153) ELT 7 (SC), under the fact that waste and scrap of lead removed by the appellant and sent to the job workers without payment of duty, for recovery of metal from the scrap, and recovered metal in the form of lead ingots is returned by the job workers and the appellant uses the same for manufacture of batteries, that the entire movement of waste and scrap to the job worker and receipt of inputs manufactured by job workers is recorded in the books of account and proper documentation is maintained in form of delivery challan, it was also held that there is no suppression of facts on the part of Amco Batteries Ltd. as the appellant is entitled to get the facility of modvat scheme and accordingly extended period of limitation is not invocable. The ld. Counsel further states that there is no case of concealment on the part of the appellant as they have also recorded the transactions in the books of accounts ordinarily maintained and have admittedly cleared ammonia on payment of duty. The learned Counsel further relies on the Division Bench ruling of this Tribunal in the case of Electrometal Ltd. Vs. CCEx. Kol.I : 2001 (136) ELT 473 (Tri.-Kol.) wherein it was held that it is well settled in the case of subsequent demand of duty, the benefit of modvat credit should not be denied to the assessee. In this view of the matter, the issue being wholly revenue neutral, it is urged that the appeal may be allowed and the impugned order be set aside.
7. The ld. A.R. for revenue relies on the impugned order and he further states that the appellant had procured the raw material duty-free under the exemption notification on furnishing Bond. As such when admittedly part of the goods so procured were not utilised for the intended purpose, as per the notification, the Commissioner (Appeals) has rightly rejected and prays for dismissal of the appeal.
8. Having considered the rival contentions following the ruling of Honourable Supreme Court in the case of Amco Batteries (supra) and Chematur pharmaceuticals Ltd. (supra), I hold that the issue being wholly revenue neutral and admittedly there being no suppression of facts on the part of the appellant, I hold that extended period of limitation is not attracted. Further, in view of the fact that the whole issue is admittedly revenue neutral, I set aside the impugned order and allow the appeal with consequential benefit, if any.
(Dictated and pronounced in the open Court) Sd/ (ANIL CHOUDHARY) MEMBER (JUDICIAL) mm 6 Ex. Appeal No.55800/14