Custom, Excise & Service Tax Tribunal
M/S. Empee Sugars & Chemicals Ltd vs Commissioner Of Central Excise, ... on 26 November, 2013
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
E/MISC/41723/2013 E/S/40038/2013 and E/40048/2013
[Arising out of Order-in-Original No.11/CE/COMMR/2012-13, dated 28.09.2012 passed by the Commissioner of Central Excise, Tirunelveli]
FOR APPROVAL AND SIGNATURE:
Honble Shri Pradip Kumar Das, Judicial Member :
Honbe Shri Mathew John, Technical Member :
1. Whether Press Reporters may be allowed to see the Order
for publication as per Rule 27 of the CESTAT
(Procedure) Rules, 1982? :
2. Whether it should be released under Rule 27 of the
CESTAT (Procedure) Rules, 1982 for publication in
any authoritative report or not? :
3. Whether the Members wish to see the fair copy of
the Order? :
4. Whether Order is to be circulated to the Departmental
Authorities? :
M/s. Empee Sugars & Chemicals Ltd.
Appellant
Versus
Commissioner of Central Excise, Tirunelveli
Respondent
Appearance:
Shri J. Shankar Raman, Adv. Shri M. Rammohan Rao, DC(AR) For the Appellant For the Respondent CORAM:
Honble Shri Pradip Kumar Das, Judicial Member Honbe Shri Mathew John, Technical Member Date of hearing : 25-11-2013 Date of decision : 25-11-2013 FINAL ORDER NO. 40592 / 2013 Per Mathew John:
The appellant has filed an application for recall of the ex parte Miscellaneous Order No.41966/13, dated 07.08.2013 directing the appellant to pre-deposit the entire tax dues as a condition for hearing the appeal on the ground that the order was passed ex parte. The learned Counsel for the appellant submits that as the Counsel engaged by the appellant for hearing on 07-08-2013 was held up in the Karnataka High Court, he could not appear on that date and the submissions could not be made before the Tribunal. Since there are substantial matters involved in the appeal and stay petition, it is prayed that the order may be recalled and the appellant may be given, in the interest of justice, a chance to make submissions on merits. After hearing the Ld A.R for Revenue we consider it proper to recall the said order in the interest of justice and the order is recalled and the stay petition is re-stored to its original number.
2. After hearing both sides, we have come to the conclusion that both the stay petition and appeal can be disposed of together and both the parties were heard accordingly after waiving the requirement of pre-deposit.
3. The appellant is a manufacturer of sugar and molasses. During the year 2010, they set up a co-generation plant for generating electricity. They took Cenvat credit of duty paid on the capital goods used for setting up such plant. They also took Cenvat credit of duty paid on inputs used in running such plant and also Cenvat credit on various input services like Erection, Commissioning, Maintenance and Repair etc., in relation to the said plant. It was noticed by Revenue that about 87% of the electricity generated by the plant was sold to TNEB and only about 13% was used captively by the factory producing sugar and molasses. Therefore, Revenue was of the view that the Cenvat Credit taken in relation to the co-generation plant was not proper and Revenue initiated recovery of such credits taken. After adjudication of the Show Cause Notices issued in this regard, there is a confirmed demand of Rs.6,07,85,042/- for the period Apr.10 to Dec 11. against the appellant along with interest and penalty. Aggrieved by the order, the appellant has filed this appeal along with stay petition.
4. The learned Counsel for the appellant submits that as per Rule 6(4) of the Cenvat Credit Rules, credit is deniable only in respect of capital goods used exclusively in the manufacture of exempted goods. Since it is conceded that 13% of the electricity generated is used in the manufacture of excisable product, it is argued that the order denying the credit on capital goods is not maintainable.
5. As regards the credit on inputs, the counsel submits that the entire credit taken on inputs has been reversed by them.
6. As regards credit of the service tax paid on input services, he submits that the credit was in respect of services covered by the Rule 6(5) of the Cenvat Credit Rules, where 100% of the credit could be taken irrespective of the fact that the services were utilized in respect of both dutiable products and other products. Such position continued till 31.03.2011. For the period after 31.03.2011, they have reversed the credit attributable Cenvat credit on input services which is only about Rs.1,36,801/-. He submits that in respect of credit taken during the earlier period, Credit was legally taken and it could not have been denied.
7. He submits that though these facts were urged before the adjudicating Commissioner, the Commissioner has not given any clear finding on this issue and also has not quantified the amount into distinct heads, namely, those attributable to capital goods; those attributable to inputs; and those attributable to input services. He points out that such break up is available in the Show Cause Notice. It is his submission that since merits of the issue has not been examined with reference to the Cenvat Credit Rules, 2004 that was existing at the relevant time, the order is not maintainable.
8. He also points out that the decision of the Allahabad High Court in the case of Gularia Chini Mills & ohers Vs Union of India and Others reported in 2013-TIOL-568-HC-ALL-CX. and submits that it only proper that this matter is remanded to the adjudicating authority for fresh consideration.
9. Opposing the prayer, the learned Authorized Representative for the Revenue submits that the generation of electricity in this case has been done using coal and not using baggasse, as was the case in Gularia Chini Mills (supra) and, therefore, that decision will have no bearing on the matter before us. On other issues, he reiterated the findings of the Commissioner in the adjudication order.
10. We have considered the submissions of both sides, we find that the order has not considered all the submissions made by the appellant with regard to eligibility of Cenvat Credit on capital goods and input services as specified in Rule 6 (4) and Rule 6(5) of the Cenvat Credit Rules. Therefore, we set aside the impugned order and remit the matter back to the adjudicating authority for fresh consideration, keeping all issues open.
11. The Misc Petition and Stay application also are disposed of.
(Dictated and pronounced in open court)
(MATHEW JOHN) (PRADIP KUMAR DAS)
TECHNICAL MEMBER JUDICIAL MEMBER
ksr
DRAFT
Remarks
I
II
III
Date of dictation
25.11.2013
Draft Order - Date of typing
26.11.2013
27.11.2013
Fair Order Typing
27.11.2013
Date of number and date of dispatch
2
E/MISC/41723/2013 and E/40048/2013