Custom, Excise & Service Tax Tribunal
Cce, Jaipur Ii vs M/S Bsl Ltd on 28 May, 2014
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Principal Bench, New Delhi COURT NO. I DATE OF HEARING/DECISION : 28/05/2014. Excise Appeal No. 3238 of 2005 with C.O. No. 116 of 2006 and Excise Appeal No. 490 of 2008 [Arising out of the Order-in-Appeal No. 451 (HKS)/CE/JPR-II/ 2005 dated 05/08/2005 and No. 580 (RKS) CE/JP-II/2007 dated 30/11/2007 passed by The Commissioner (Appeals-II), Customs & Central Excise, Jaipur.] For Approval and signature : Honble Shri Justice G. Raghuram, President Honble Shri Rakesh Kumar, Member (Technical) 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 would be released under Rule 27 of : the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair : copy of the order? 4. Whether order is to be circulated to the : Department Authorities? CCE, Jaipur II Appellant Versus M/s BSL Ltd. Respondent
and vice-versa Appearance Ms. Sweta Bector, Authorized Representative (DR) for the appellant/respondent.
Shri Amit Jain, Advocate for the Respondent/appellant.
CORAM : Honble Shri Justice G. Raghuram, President Honble Shri Rakesh Kumar, Member (Technical) Final Order No. 52455-52456/2014 Dated : 28/05/2014 Per. Rakesh Kumar :-
The facts leading to filing of these appeals are, in brief, as under.
1.1 M/s BSL Ltd., Mandapm, Bhilwara, Rajasthan [hereinafter referred to as appellant] are engaged in manufacture of Woolen Yarn, Polyester Yarn, Polyester wool blended yarn and Poly/Viscose/Wool Blended Fabrics chargeable to Central Excise duty. The period of dispute in this case is from 01/04/03 to 31/03/04. During this period the appellant sent the grey fabrics manufactured by them to their job workers for processing and got back the processed fabrics from the job workers and the processed fabrics were sold by them. The duty on the grey fabrics sent by them to job workers had been paid on provisional basis in terms of a provisional assessment order dated 11/03/03 passed by the Deputy Commissioner in terms of Rule 7 of the Central Excise Rules, 2002. The reason for the provisional assessment was that the appellant in respect of the grey fabrics sent to job worker for processing were required to pay duty in terms of Rule 8 of the Central Excise Valuation Rules, 2000, i.e. 115%/110% of the cost of production and the cost of production could be determined only after finalization of their balance sheet, and the same, in terms of the Boards Circular No. 692/08/03-CX dated 13/02/03, was required to be determined in CAS-4 format of ICWAI. Accordingly, there was provisional assessment in respect of grey fabrics cleared by the appellant to the job workers for the period from April 2003 to March 2004. The provisional assessment was finalized by the Deputy Commissioner vide order-in-original dated 11/03/05. The Deputy Commissioner in his order finalizing the provisional assessment determined the short paid duty as Rs. 14,60,053/-. However, he also found that during certain period of the provisional assessment there was excess payment of duty to the tune of Rs. 3,54,467/-. However, the Deputy Commissioner held that the duty excess paid cannot be adjusted against the short payment of Rs. 14,60,053/- and that in respect of the excess payment of Rs. 3,54,467/-, the appellant would be required to file a refund claim in terms of the provisions of Section 11B before the Deputy Commissioner. Against this order of the Deputy Commissioner, the appellant filed an appeal before the Commissioner (Appeals) challenging the part of the Deputy Commissioners order by which the adjustment for excess payment of duty against the short payment was denied. The Commissioner (Appeals) vide order-in-appeal dated 05/08/05 allowed the appeal holding the Adjudicating Authority has erred in not adjusting the amount of excess paid duty against the amount of duty short paid during finalization of the provisional assessment. Against this order of the Commissioner (Appeals), the Revenue is in appeal and in respect of Revenues appeal, M/s BSL Ltd. have filed a cross objection.
1.2 The Jurisdictional Commissioner of Central Excise reviewed the Deputy Commissioners order dated 11/03/05 finalizing the provisional assessment and directed him to file an appeal before the Commissioner (Appeals), as he was of the view that the Deputy Commissioner while finalizing the provisional assessment should not have permitted the adjustment of excess payment of duty during a month against the short payment during the same month. According to the Commissioner, the Deputy Commissioner while finalizing the provisional assessment was required to ask assessee to pay the duty short paid on that quantity of fabrics which was cleared on lower value as compared to the correct transaction value and the duty paid in excess by the assessee on the fabrics cleared on higher value could not be allowed to be adjusted against the short payment during the same month. In other words, according to the Commissioner while finalizing the provisional assessment, the duty short paid should have been quantified invoice wise in the cases where the goods were cleared to job worker on value lower than the correct transaction value and similarly the duty excess paid also should have been quantified invoice wise, without adjusting the excess payment against short payment during a month and that if the short payment is determined in this manner, the actual short payment would be Rs. 20,86,877/-. Accordingly, a review appeal was filed before the Commissioner (Appeals) against the Deputy Commissioners order. The Commissioner (Appeals) vide order-in-appeal dated 30/11/07 allowed the review appeal and held that an amount of Rs. 6,26,782/- is recoverable from the appellant. Against this order of the Commissioner (Appeals), the appellant have filed appeal No. E/490/2008-EX.
2. Heard both the sides.
3. Ms. Shweta Bector, the learned DR, assailed the order dated 04/08/05 of the Commissioner (Appeals) by reiterating the grounds of appeal and pleaded that in view of Larger Bench judgment of the Tribunal in the case of Excel Rubber Ltd. vs. CCE, Hyderabad reported in 2011 (268) E.L.T. 419 (Tri. LB), while finalizing provisional assessment, the excess payment of duty cannot be adjusted against the short payment, as the principles of unjust enrichment is applicable to finalization of provisional assessment and if on finalization of provisional assessment, there is any excess payment of duty for same period, the assessee is required to file an application under Section 11B before the Assistant/Deputy Commissioner for its refund and the excess payment cannot be adjusted against short payment, that as regards the appeal filed by the assessee against order-in-appeal dated 30/11/07 passed by the Commissioner (Appeals), there is no infirmity in the Commissioner (Appeals)s order, as in view of Larger Bench judgment of the Tribunal in the case of Excel Rubber Ltd. vs. CCE, Hyderabad (supra) any excess payment of duty determined in course of finalizing a provisional assessment cannot be adjusted against short payment.
4. Shri Amit Jain, Advocate, the learned Counsel for the assessee, pleaded that as regards the appeal No. 490/2008-EX against the order-in-appeal dated 30/11/07 passed by the Commissioner (Appeals), the impugned order dated 30/11/07 of the Commissioner (Appeals) has been passed after the order-in-appeal dated 04/08/05 passed by the Commissioner (Appeals) in respect of appeal filed by the appellant against the Deputy Commissioners order dated 11/03/05, that once appeal against the Deputy Commissioners order dated 11/03/05 has been decided by the Commissioner (Appeals) and the appeal has been allowed, the order-in-original dated 11/03/05 passed by the Deputy Commissioner gets merged with the Commissioner (Appeals)s order dated 04/08/05 and, hence, subsequent order-in-appeal dated 30/11/07 in respect of the Revenues appeal against the same order dated 11/03/05 of the Deputy Commissioner is invalid, that in this regard he relies upon the Apex Courts judgment in the case of Kunhayammed vs. State of Kerala reported in 2001 (129) E.L.T. 11 (S.C.), that in view of this, the Commissioner (Appeals)s order dated 30/11/07 allowing the Revenues appeal being an invalid order, is not sustainable, that as regards the Revenues appeal against order-in-appeal dated 04/08/05 passed by the Commissioner of Central Excise (Appeals) by which the Commissioner (Appeals) had allowed the adjustment of excess paid duty against the duty held to be short paid while finalizing the provisional assessment, there is no infirmity in the impugned order, that the basic issue involved in this appeal is as to whether while finalizing a provisional assessment, the excess payment of duty can be adjusted against the short payment, that though on this point the decision of the Larger Bench of the Tribunal in the case of Excel Rubber Ltd. vs. CCE, Hyderabad (supra) is against the assessee, recently Honble Karnataka High Court in the case of Toyota Kirloskar Auto Parts Pvt. Ltd. vs. CCE, LTU, Bangalore reported in 2012 (276) E.L.T. 332 (Kar.) has held that while finalizing provisional assessment the excess payment of duty can be adjusted against short payment, that the judgment of Honble Karnataka High Court is binding on the Tribunal and that in view of this, there is no merit in the Revenues appeal.
5. We have considered the submissions from both the sides and perused the records.
6. Coming first to the appeal No. E/490/2008 filed by the appellant against order-in-appeal No. 580 (RKS)/CE/JPR-II/2007 dated 30/11/07 passed by Commissioner of Central Excise (Appeals), Jaipur, we find that this order of the Commissioner (Appeals) has been passed in respect of Departments review appeal against order-in-original dated 11/03/05 and by this order, the Commissioner (Appeals) has held that the finalization of the assessment should have been done invoice wise and no adjustment of excess duty paid during a month against short payment during the same month should have been allowed. However, we find that against the same order dated 11/03/05 of the Deputy Commissioner by which he had disallowed the adjustment of excess payment of duty of Rs. 3,54,467/- during certain period of provisional assessment against the short payment during other period of Rs. 14,60,053/-, the assessee had filed an appeal before the Commissioner (Appeals) and in respect of that appeal, the Commissioner (Appeals) vide order-in-appeal dated 05/08/05 had reversed the part of the Deputy Commissioners order refusing the adjustment of excess payment against the short payment and, as such, had allowed the adjustment of excess payment against the duty demand during finalizing the provisional assessment. Once the Commissioner (Appeals) passed this order in respect of appeal against the order-in-original dated 11/03/05 of the Deputy Commissioner, in accordance with the law laid down by the Apex Court in the case of Kunhayamed vs. State of Kerala (supra), the Deputy Commissioners order dated 11/03/05 ceases to exist and merges with the Commissioner (Appeals)s order dated 05/08/05 and what remains is the Commissioner (Appeals)s order dated 05/08/05. In view of this, subsequent to passing of the order-in-appeal dated 05/08/05 of the Commissioner (Appeals), the Revenues appeal against the same order dated 11/03/05 of the Deputy Commissioner could not be entertained by the Commissioner (Appeals) and, as such, the Commissioner (Appeals)s order dated 30/11/07 is invalid and, hence, is not sustainable. Therefore, the appeal No. E/490 of 2008 filed by the assessee is allowed.
7. As regards the Revenues appeal against order-in-appeal dated 05/08/05 of the Commissioner (Appeals), while on this issue, the judgment of the Larger Bench of the Tribunal in the case of Excel Rubber Ltd. vs. CCE, Hyderabad (supra) is in favour of the Department, Honble Karnataka High Court in the case of Toyota Kirloskar Auto Parts Pvt. Ltd. vs. CCE, LTU, Bangalore (supra) has taken a contrary view on the same issue holding that while finalizing a provisional assessment, the excess payment of duty can be adjusted against the short payment. This judgment is with regard to the provisions of Rule 7 of the Central Excise Rules, 2002. In our view the judgment of Honble Karnataka High Court is binding on the Tribunal. In view of this, there is no illegality or impropriety in Commissioner (Appeals)s order dated 05/08/05. The Revenues appeal No. 3238 of 2005 is accordingly dismissed. The C.O. also stands disposed of.
(Operative part of the order pronounced in the open court.) (Justice G. Raghuram) President (Rakesh Kumar) Member (Technical) PK ??
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