Custom, Excise & Service Tax Tribunal
Birla Century vs Bharuch on 2 March, 2026
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH : AHMEDABAD
REGIONAL BENCH, COURT NO. 2
EXCISE APPEAL NO. 10413 OF 2017
[Arising out of Order-in-Original No. BHR-EXCUS-000-COM-093-16-17 dated 30/11/2016
passed by Commissioner of Central Excise, Customs and Service Tax-Bharuch]
Birla Century .... Appellant
(a Division of Century Textiles & Industries Ltd)
Plot No. 826, GIDC Jhagadia,
Bharuch, Gujarat
Vs.
Commissioner, Central Excise & Customs-Bharuch .... Respondent
2nd Floor, R K Casta, Corporate House, Station Road, Bharuch - 392 001 Appearance:
Shri Manish Jain, Advocate for the Appellant Shri R K Agarwal, Superintendent (AR) for the Respondent CORAM:
HON'BLE Dr. AJAYA KRISHNA VISHVESHA, MEMBER ( JUDICIAL ) HON'BLE MR. SATENDRA VIKRAM SINGH, MEMBER ( TECHNICAL ) FINAL ORDER NO. 10223/2026 Date of Hearing : 03.09.2025 Date of Decision : 02.03.2026 Dr. AJAYA KRISHNA VISHVESHA This appeal is directed against the Order-in-Original dated 30.11.2016 passed by the learned Commissioner, Central Excise and Customs, Bharuch through which he confirmed the demand of Cenvat Credit wrongly availed Rs. 5,86,55,640/- and ordered to recover the amount from the appellants under Rule 14 of Cenvat Credit Rules, 2004 read with Section 11A (4) of the Central Excise Act, 1944 along with interest. He also imposed penalty of Rs. 5,86,55,640/- upon the appellant.2
Excise Appeal No. 10413 of 2017
2. The facts of the case in brief are that the appellants are holding registration for the manufacture of excisable goods falling under Chapter 52 and 63 of the First Schedule to the Central Excise Tariff Act, 1985. The appellant is availing the Cenvat Credit of capital goods under the Cenvat Credit Rules, 2004. During the course of CERA Audit, it was noticed by the Auditor from the records and information made available by the appellant that they had purchased 'Status Holder Incentive Scrips' (SHIS) from the market during the year 2013-14 and 2014-15 and utilized the 'Scrips' for debiting the duty on imported capital goods and simultaneously availed Cenvat Credit on the said capital goods. It was also noticed by CERA officers from the Balance Sheet made available by the appellant that they had availed benefit of Rs. 11.42 Crores under Technology Upgradation Fund Scheme (TUFS) of Ministry of Textile during the year 2013-14 and of Rs. 7.42 crores during the year 2014-
15. In chapter 3 para 3.16 of Foreign Trade Policy 2009-14, the Status Holders have been held entitled to incentive with certain conditions as mentioned in the policy document. As per the Notification No. 33/2012-CE dated 9th July, 2012, the Central Government exempted capital goods specified in the First Schedule and the Second Schedule to the Central Excise Tariff Act 1985 when cleared against a 'Status Holder Incentive Scheme Duty Credit Scrips' issued to a Status Holder by the Regional Authority in accordance with paragraph 3.16 of the Foreign Trade Policy.
2.1 The appellant was requested vide letter dated 22.07.15 to reverse credit of Rs. 5.46 crores along with interest for the period 2012-13 to 2014-15, but, they vide letter dated 30.07.2015 replied that they are not agreeing with the objection raised by CERA. The Range officer vide letter dated 4th May, 2016 requested the appellant to provide information regarding availment and utilization of 'Status Holder Incentive Scrips' for the period 2011-12 to 2015- 16 which the appellant provided vide letter dated 9th May, 2016 as per which, 3 Excise Appeal No. 10413 of 2017 they had availed and utilized Status Holder Incentive Script (SHIS) amounting to Rs. 5,86,55,640/-for the period from 2011-12 to 2015-16. However, the appellant has not availed benefit of 'Status Holder Incentive Scrips' during the period 2011-12 and 2012-13.
2.2 The department was of the view that the appellant has availed both the benefits / incentives namely Status Holder Incentive Scheme (SHIS) and Technology Upgradation Fund Scheme (TUFS) simultaneously in the same financial year, which is not correct as per Foreign Trade Policy, 2009-14 and Notification No. 33/2012-CE dated 09.07.2012. Therefore, the appellant has wrongly availed the benefit of SHIS and utilized the scrips for debiting the duty under licenses on imported capital goods and availed Cenvat credit on the said capital goods and the appellant did not bring to the notice of the department the availment of benefit of both the incentives SHIS and TUFS in the same year. The appellant never disclosed such information in periodical returns filed by them with the Range Office from time to time. The department was also of the view that the appellant suppressed material facts mentioned above consciously and deliberately from the department with intent to wrongly utilize such scrips to evade payment of duty and the appellants have contravened the provisions of Notification No. 33/2012-CE dated 09.07.2012 and Rule 3, 4, 6 and 8 of Cenvat Credit Rules, 2004.
3. In this background, Show Cause Notice dated 22.06.2016 was issued to the appellants for recovery of wrongly availed Cenvat Credit of Rs. 5,86,55,640/- as detailed in annexure-A attached to the notice under Rule 14 of Cenvat Credit Rules, 2004 read with Section 11A (4) of Central Excise Act, 1944; Interest at the appropriate rate should not be demanded from them under Rule 14 of the Cenvat Credit Rules, 2004 read with Section 11AA of the Central Excise Act, 1944 and penalty should not be imposed upon them under 4 Excise Appeal No. 10413 of 2017 Rule 15 (2) of the Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944.
3.1 The Show Cause Notice was adjudicated by learned Commissioner Central Excise & Customs, Bharuch who vide order dated 30.11.2016 disallowed Cenvat credit of Rs. 5,86,55,614/- wrongly availed by the appellant and confirmed the demand of above Cenvat credit and ordered it's recovery from the appellant along with interest and also imposed penalty of Rs. 5,86,55,614/- upon the appellant. Feeling aggrieved from the impugned Order-in-Original dated 30.11.2016, the present appeal has been preferred before this Tribunal.
4. Learned Counsel for the appellant submitted that the learned Commissioner has not dealt with various submissions made by him while passing the impugned order and he has not given findings in respect of the said submissions. He argued that Learned Commissioner has mechanically brushed aside the submissions and did not consider the case laws relied upon by them.
4.1 The main argument of the learned Counsel for the appellant is that the learned Commissioner has misinterpreted para 3.16.1 of the Foreign Trade Policy and incorrectly held that appellants have simultaneously availed the benefit of Status Holders Incentive Scrips (SHIS) and Technology Upgradation Fund Scheme (TUFS), hence, the impugned order passed by learned Commissioner is not sustainable. He also submitted that para 3.16.2 of the Foreign Trade Policy bars the benefit of Status Holders Incentive Scrips in respect of exports made during the year in which the Status Holder has also availed the benefit of Technology Upgradation Fund Scheme. The appellant in the present case have not availed the benefit of Status Holders Incentive 5 Excise Appeal No. 10413 of 2017 Scrips on the basis of exports made by them. They purchased the SHIS scrips from other license holders to whom these were issued on the basis of exports made by them during 2009-10 to 2012-13 and not on the basis of exports made by the appellant. Assuming that SHIS scrips were issued to the appellants even then, the appellants could not have availed the benefit of these Scrips for the period after 2012-13 since the benefit of the scheme is available only in respect of exports made during the years 2009-10, 2010-11, 2011-12 and 2012-13.
4.2 Learned Counsel also submitted that appellant utilized Status Holders Incentive Scrips for debit of duty in respect of capital goods imported during the period from 2013-14 to 2015-16. The appellant did not avail the benefit of SHIS on the basis of exports made by them during the period from 2013- 14 to 2015-16. The Commissioner is confused in availment of SHIS benefit with utilization of SHIS benefit and thereby, misinterpreted para 3.16.2 of Foreign Trade Policy. The appellant has availed the benefit of Technology Upgradation Fund Scheme (TUFS) in 2013-14 and in that year, they have not availed the benefit of Status Holders Incentive Scrips on the basis of exports made by them. In fact, as per scheme itself, the appellants could not have applied and obtained SHIS in their name against the exports made by them for the period after 2012-13.
4.3 The contention of the learned Counsel for the appellant is that the appellant have not availed the benefits of SHIS and TUFS simultaneously on the basis of exports made by them in a particular year whereas the entire case of the Revenue rests on the ground that appellants have availed benefit of SHIS and TUFS simultaneously which is factually incorrect. Therefore, the impugned order passed by the learned Commissioner is not sustainable and is liable to be set-aside.
6
Excise Appeal No. 10413 of 2017
5. Learned AR for the department reiterated the impugned order passed by learned Commissioner, and prayed that the impugned order may be upheld and the appeal of the appellant may be rejected.
6. We have heard the arguments from both the sides and perused the record. The issue involved in this appeal is whether the appellant have availed the benefit of Status Holders Incentive Scrips (SHIS) and Technology Upgradation Fund Scheme (TUFS) simultaneously which is in contravention of the Foreign Trade Policy. The appellant is a Status Holder falling within the category of "export House" and as per para 3.16.4 of Foreign Trade Policy, they are eligible to avail SHIS benefit under Textile and Jute Sector. However, the appellant never availed the benefit of SHIS on the basis of exports made by them. They purchased Status Holders Incentive Scrips from other license holders to whom these scrips have been issued on the basis of their exports during 2009-10 to 2012-13. The appellant have imported capital goods against such Status Holders Incentive Scrips on debit of duty (BCD, CVD and ACD) availing the benefit of Notification No. 104/2009-Cus dated 14.09.2009. The appellant took Cenvat credit of CVD and SAD leviable on such capital goods as the same is allowed in terms of Cenvat Credit Rules, 2004 read with condition 8 of Notification No. 104/2009-Cus dated 14.09.2009. Total Cenvat credit taken on capital goods is Rs. 4,25,63,600/-. The appellant utilized SHIS for debit of BCD, CVD and ACD amounting to Rs. 5,86,55,640/- in respect of capital goods imported during the period from 2013-14 to 2015-16 and no benefit was availed during the period 2011-12 and 2012-13. 6.1 We find that during the period in dispute, the appellant has also availed the benefit of Technology Upgradation Fund Scheme (TUFS) in respect of certain capital goods imported by them. As per DGFT letter dated 07.01.2014 7 Excise Appeal No. 10413 of 2017 and 14.10.2014, TUFS benefit is said to be availed in the year in which the loan has been sanctioned to the unit. The appellant has therefore availed benefit of TUFS in the year 2013-14 and in that year, benefit of SHIS has not been availed on the basis of exports made by them. In fact the appellant has never availed benefit of SHIS for exports made by them as the appellants are transferee license holder only.
6.2 The case of the department is that the appellant has availed both the incentives namely SHIS and TUFS simultaneously in the same Financial Year which is not permissible under Foreign Trade Policy and Notification No. 33/2012-CE dated 09.07.2012. We are of the view that the learned Commissioner has failed to interpret para 3.16.1 of the Foreign Trade Policy in its correct perspective and arrived at a wrong conclusion that the appellant have simultaneously availed the benefit of SHIS and TUFS. Para 3.16.2 of the FTP reads as under:-
"Status Holders availing Technology Upgradation Fund Scheme (TUFS) benefit, (under Ministry of Textiles) during a particular year shall not be eligible for Status Holders Incentive Scrips for exports of that year"
Therefore, para 3.16.2 of Foreign Trade Policy bars the benefit of SHIS in respect of exports made during the year in which the Status Holder has also availed the benefit of Technology Upgradation Fund Scheme (TUFS). 6.3 From the above, it is clear that appellant in the present case have not availed the benefit of SHIS on the basis of exports made by them. They purchased Status Holders Incentive Scrips from other license holders only to whom these SHIS were issued on the basis of exports made by them during the year 2009-10 to 2012-13 and not on the basis of exports made by the appellants. Even if the Status Holders Incentive Scrips would have been issued to the appellant, they could not have availed the benefit of SHIS for 8 Excise Appeal No. 10413 of 2017 the period after 2012-13 since the benefit of scheme is available only in respect of exports made during the years 2009-10, 2010-11, 2011-12 and 2012-13. The appellant utilized SHIS for debit of duty in respect of capital goods imported during the period 2013-14 to 2015-16 and they did not avail benefit of SHIS on the basis of exports made by them during the period 2013- 14 to 2015-16. The appellant have availed benefit of TUFS in 2013-14 but in the said year, the appellant have not availed the benefit of SHIS on the basis of exports made by them. In view of SHIS Scheme, the appellant could not have applied and obtained Status Holders Incentive Scrips in their name against the exports made by them for the period after 2012-13 therefore, it is clear that appellants have not availed benefit of SHIS and TUFS simultaneously on the basis of exports made by them in a particular year. Therefore, the foundation of the case of the Revenue is non-existent. 6.4 It is pertinent to note here that proviso to condition (iv) read with Serial No. 7 of the Table in Notification No. 104/2009-Cus dated 14.09.2009 makes it clear that if TUFS benefit is claimed by the Status Holder, the goods exported by such exporter cannot be counted for Status Holders Incentive Scrips purpose. The relevant provisions of Notification No. 104/2009-Cus dated 14.09.2009 are reproduced below:-
[Notification No. 104/2009-Cus., dated 14-9-2009] Status Holders Incentive Scheme -- Exemption to specified capital goods imported thereunder In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the capital goods when imported into India against a duty credit scrip issued under the Status Holders Incentive Scheme in accordance with paragraph 3.16 of the Foreign Trade Policy (hereinafter referred to as the said scrip),
(a) from the whole of the duty of customs leviable thereon under the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), and 9 Excise Appeal No. 10413 of 2017
(b) from the whole of the additional duty leviable thereon under section 3 of the said Customs Tariff Act, 1975, subject to the following conditions, namely :-
(i) that the said scrip has been issued by the licensing Authority to a status holder against exports of the products of the sectors, namely, leather (excluding finished leather), Textiles and Jute, Handicrafts, Engineering (excluding Iron and Steel, Non Ferrous Metals in primary or intermediate forms, Automobiles & Two wheelers, Nuclear reactors and parts and ships, Boats and Floating structures), plastic and basic chemicals (excluding Pharma Products) :
Provided that the exports of the products of the above said sectors, made during 2009-10 and 2010-11 shall only be considered for entitlement under the scheme :
Provided further that, the exports specified in the Table annexed to the notification shall not be considered for computation of entitlement under the scheme;
(ii) that the said scrip is produced before the proper officer of customs at the time of clearance for debit of the duties leviable on the goods, but for this exemption;
(iii) that the said scrip shall be non-transferable and shall be used for import of capital goods relating to the sectors specified in condition (i) :
Provided that, the capital goods specified in Appendix 37B of Hand Book of Procedures Vol. 1 shall not be allowed for import;
(iv) that the capital goods imported against the said scrip shall be subject to actual user condition and the importer at the time of clearance of the said capital goods, shall furnish an undertaking to this effect to the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, that in case of non compliance of the said condition, he shall pay on demand an amount equal to the duty leviable, but for the exemption contained herein together with interest at the rate of fifteen percent per annum from the date of clearance of the said materials;
(v) that the imports and exports are undertaken through seaports at Bedi (including Rozi-Jamnagar), Chennai, Cochin, Dahej, Dharamtar, Haldia (Haldia Dock complex of Kolkata port) Kakinada, Kandla, Kolkata, Krishnapatnam, Magdalla, Mangalore, Marmagoa, Muldwarka, Mumbai, Mundhra, Nagapattinam, Nhava Sheva, Okha, Paradeep, Pipavav, Porbander, Sikka, Tuticorin, Visakhapatnam and Vadinar or through any of the airports at Ahmedabad, Bangalore, Bhubaneswar, Chennai, Cochin, Coimbatore, Dabolim (Goa), Delhi, Hyderabad, Indore, Jaipur, Kolkata, Lucknow (Amausi), Mumbai, Nagpur, Rajasansi (Amritsar), Srinagar, Trivandrum and Varanasi or through any of the Inland Container Depots at Agra, Ahmedabad, Anaparthy (Andhra Pradesh), Babarpur, Bangalore, Bhadohi, Bhatinda, Bhilwara, Bhiwadi, Bhusawal, Chheharata (Amritsar), Coimbatore, Dadri, Dappar (Dera Bassi), Daulatabad (Wanjarwadi and Maliwada), Delhi, Dighi (Pune), Durgapur (Export Promotion Industrial Park), Faridabad, Garhi Harsaru, Gauhati, Guntur, Hyderabad, Jaipur, Jallandhar, Jamshedpur, Jodhpur, Kanpur, Karur, Kota, Kundli, Loni (District Ghaziabad), Ludhiana, Madurai, Malanpur, Mandideep (District Raisen), Miraj, Moradabad, Nagpur, Nasik, Pimpri (Pune), Pitampur (Indore), Pondicherry, Raipur, Rewari, Rudrapur(Nainital), Salem, Singanalur, Surat, Surajpur, Tirupur, Tuticorin, Udaipur, Vadodara, Varanasi, Waluj (Aurangabad) or through the Land Customs Station at Agartala, Amritsar Rail Cargo, Attari Road, Changrabandha, Dawki, Ghojadanga, Hilli, Jogbani, Mahadipur, Nepalganj Road, Nautanva (Sonauli), Petrapole, Ranaghat, Raxaul, Singhabad and Sutarkhandi or a Special Economic Zone notified under section 4 of the Special Economic Zones Act, 2005 (28 of 2005) :10
Excise Appeal No. 10413 of 2017 Provided that the Commissioner of Customs may within the jurisdiction, by special order, or by a Public Notice, and subject to such conditions as may be specified by him, permits import and export from any other seaport/airport/inland container depot or through any land customs station;
(vi) that where the importer does not claim exemption from the additional duty of customs leviable under section 3 of the said Customs Tariff Act, he shall be deemed not to have availed the exemption from the said duty for the purpose of calculation of the said additional duty of customs;
(vii) that the importer shall be entitled to avail of the drawback or CENVAT credit of additional duty leviable under section 3 of the said Customs Tariff Act against the amount debited in the said scrip.
TABLE Sl. Description No. 1 EOUs/EHTPs/BTPs who are availing direct tax benefits or exemption. 2 Export of imported goods covered under para 2.35 of the FTP. 3 Exports through transshipment, meaning thereby that exports originating in third country but transhipped through India.
4 Deemed exports.
5 Exports made by Special Economic Zone units or Special Economic Zone products exported through Domestic Tariff Area units. 6 Export of items, which are restricted or prohibited for export under Schedule-2 of Export Policy in ITC (HS).
7 The exports made by the Status Holders during a particular year, if benefits are availed under Technology Upgradation Fund scheme (TUFS) of Ministry of Textiles in that year.
8 The exports made under the Zero duty EPCG scheme w.e.f 1st April, 12010. Explanation, - For the purposes of this notification,-
(i) "Capital goods" means any plant, machinery, equipment or accessories required for manufacture or production, either directly or indirectly, of goods or for rendering services, including those required for replacement, modernization, technological upgradation or expansion. It also includes packaging machinery and equipment, refractories for initial lining, refrigeration equipment, power generating sets, machine tools, catalysts for initial charge, equipment and instruments for testing, research and development, quality and pollution control. Capital goods may be for use in manufacturing, mining, agriculture, aquaculture, animal husbandry, floriculture, horticulture, pisciculture, poultry, sericulture and viticulture as well as for use in services sector.
(ii) "Foreign Trade Policy" means the Foreign Trade Policy 2009-2014, published by the Government of India in the Ministry of Commerce and Industry vide notification No. 01/2009-14, dated the 27th August, 2009, as amended from time to time.
(iii) "Licensing Authority" means the Director General of Foreign Trade appointed under section 6 of the Foreign Trade (Development and Regulation ) Act, 1992 (22 of 1992) or an officer authorised by him to grant a licence under the said Act. 11
Excise Appeal No. 10413 of 2017 6.5 It is also pertinent to note that CBEC vide Circular No. 26/2009-Cus dated 30.09.3009 has also issued clarification in this regard. Relevant portion of the Circular is reproduced below:-
Status Holders Incentive Scrips (SHIS) "The scrips will be valid for a period of 2 years for import of capital goods with actual user condition. The status holders who avail the benefits under Technological Up gradation Fund Scheme (TUFS) (a scheme administered by the Ministry of Textiles. Government of India) or zero duty EPCG scheme in a particular year shall not be eligible for Status Holders Incentive Scrips for that"
6.6 It is also pertinent to mention here that the Commissioner while passing impugned order did not refer to Notification No. 104/2009-Cus dated 14.09.2009 which is relevant in the facts of the present case. It is not the case of Revenue that the appellant have imported capital goods against SHIS in contravention of the provisions of Notification No. 104/2009-Cus. dated 14.09.2009. Rather, the conditions for taking Cenvat credit of duty paid on capital goods by using SHIS stand satisfied in the present case. Para 3.17.6 of the Foreign Trade Policy provided that additional Customs/ Excise duty paid in cash or through debit under duty credit scrips shall be adjusted as Cenvat credit or duty-drawback, as per DoR Rules except under SHIS. Further, condition 8 of the Notification No. 104/2009-Cus dated 14.09.2009 provides that the importer shall be entitled to avail of the drawback or Cenvat credit of additional duty leviable under Section 3 of said Customs Tariff Act and against the amount debited in the said scrips. Relevant provisions of Cenvat Credit Rules, 2004 has been reproduced below.
Rule 3(1) of the Cenvat Credit Rules provides that :-
"A manufacturer or producer of final products is eligible to take Cenvat credit of the additional duty. leviable under Section 3 & 3(5) of the Customs Tariff Act, 1985, paid on any capital good received in the factory of manufacture of final product. Rule 4 of the said rules provides the conditions for allowing Cenvat credit. Rule 4(2) thereof provides that Cenvat credit in respect of capital goods may be taken on receipt of the capital goods in the factory of the manufacturer. It provides that 50% credit is to be taken in the financial year in which the capital goods are received and the balance 50% credit is to be taken in any of the subsequent financial years.12
Excise Appeal No. 10413 of 2017 Rule 9(1) lists the documents on the basis of which Cenvat credit can be taken. Clause (c) thereto provides that a manufacturer can take Cenvat credit on the basis of a Bill of Entry."
Thus, it is clear that benefit of SHIS is not available in respect of exports made during the year for which the Status Holder has also availed TUFS scheme. In other words, the benefit of both, Status Holders Incentive Scrips and Technology Upgradation Fund Scheme (TUFS) cannot be availed simultaneously but it is not the case here. The above restriction is applicable only to original license holder to whom the SHIS is issued on the basis of exports made by them and not to the transferee license holder. The above restrictions cannot be made applicable to an assessee availing the benefit of Technology Upgradation Fund Scheme (TUFS) as well as Status Holders Incentive Scrips (SHIS) by purchasing such SHIS license from the market. This fact is also clear from the provisions of para 3.16.2 of the Foreign Trade Policy.
6.7 Therefore, it is clear from the above that Foreign Trade Policy as well as Notification No. 104/2009-Cus dated 14.09.2009 does not bar taking of Cenvat credit of duties leviable on capital goods imported against SHIS duty credit scrips rather, they provide for it. Thus, for the purpose of Cenvat Credit Rules, the capital goods in question are to be treated as duty paid notwithstanding the exemption notification and condition-8 of the notification providing for taking of credit.
7. In view of above discussion, we have come to the conclusion that in the present case the Status Holders Incentive Scrips in question have not been originally issued based on their exports but they were issued to other Status Holder based on exports made by them from whom the appellant has procured such Status Holders Incentive Scrips and the appellant are transferee license holder of Status Holders Incentive Scrips. Therefore, findings of the learned 13 Excise Appeal No. 10413 of 2017 Commissioner in the impugned order that they have contravened Foreign Trade Policy by simultaneously availing the benefit of SHIS and TUFS is not sustainable and without any foundation. Therefore, the impugned order is liable to be set-aside and the appeal is liable to be allowed.
8. Consequently, the appeal is allowed.
(Order pronounced in the open Court on 02.03.2026) (Dr. Ajaya Krishna Vishvesha) Member ( Judicial ) (Satendra Vikram Singh) Member ( Technical ) KL