Commissioner Of Central Excise, Nashik vs Ms Supernova Electromech Pvt. Ltd

IN THE CUSTOMS, EXCISE AND SERVECE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT NO. IV

APPEAL NO. E/670/10  MUM

(Arising out of Order-in-Appeal No. AKP/44/NSK/2010 dated 03.02.2010 passed by the Commissioner of Central Excise & Customs (Appeals), Nashik.)

For approval and signature: Honble Shri Anil Choudhary, Member (Judicial)

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1. Whether Press Reporters may be allowed to see : No 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 : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether their Lordships wish to see the fair copy : Seen of the order?

4. Whether order is to be circulated to the Departmental : Yes authorities? =====================================================

Commissioner of Central Excise, Nashik

: Appellant Versus

Ms Supernova Electromech Pvt. Ltd.

: Respondent Appearance Shri Ashutosh Nath, Asst. Commissioner (A.R.) : For Appellant Ms. Aparna Hirandagi, Advocate : For Respondent

CORAM: HONBLE SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL)

Date of Hearing : 07.04.2015 Date of Decision: 07.04.2015

ORDER NO.......................................................

Per: Anil Choudhary:

The revenue is in appeal against Order-in-Appeal No. AKP/44/NSK/2010 dated 03.02.2010 passed by the Commissioner of Central Excise & Customs (Appeals), Nashik.

2. The brief facts are that the respondent-assessee is engaged in the manufacture of parts and equipments of tube lights, florescent lamps. A show-cause notice was issued alleging that the appellant for the period January, 2009 to May, 2009, have taken CENVAT credit of an amount of Rs. 88,361/- being on the common inputs utilized in the manufacture of exempted as well as taxable goods. The show-cause notice was issued on 25.6.2009 requiring the appellant to pay 10% of the value of the goods, being the value of the exempted goods cleared, in terms of Rule 6(3)(i) of the CENVAT Credit Rules. The appellant immediately on receipt of the show-cause notice, reversed the CENVAT credit so availed in July, 2009 and further out of the total amount, the utilised amount was Rs. 3,297/- which was repaid with interest @ 15% per annum on 27.07.2009. The appellant contested the show-cause notice mainly on the ground that Rule (6)(3)(i) was not applicable as the appellant have reversed the total amount of CENVAT credit on the common inputs. The show-cause notice was adjudicated by the Joint Commissioner who confirmed the demand of Rs. 8,48,342/- being the amount payable @ 10% on the exempted goods cleared along with interest, under Rule 14 and further imposed a penalty of Rs. 42, 342/-.

3. Being aggrieved the appellant preferred appeal before the Commissioner (Appeals). The Commissioner (Appeals) in the impugned order, taking notice of the fact that the appellant have reversed the amount of credit taken and also relying on the CBEC Circular No. 858/16/2007CX dated 8.11.2007, which provides that if the credit is reversed before utilization, it would amount to no credit having been taken. The Counsel also places reliance on the ruling of this Tribunal in the case of HPCL Vs. CCE reported in 2009 (240) ELT 134 wherein the Tribunal have held that where the appellant have already reversed the CENVAT credit, following the ruling of the Hon'ble Supreme Court in terms of the Chandrapur Magnet Wires Pvt. Ltd. Vs. CCE - 1996 (81) ELT 3 (SC) reversal of credit amounts to not taking credit at all. Being aggrieved the Revenue is in appeal before this Tribunal on the ground that in the facts of this case the appellant have reversed the credit after utilisation in part and accordingly the order of the Commissioner is wrong. Accordingly the revenue prays for setting aside the impugned order and restoration of the Order-in-Original.

4. In reply the learnedly Counsel for the respondent-assessee brings to my notice that there been amendment in the provisions of Rule 6, vide the Finance Act, 2010 with retrospective effect. Section 73 of the Finance Act provides for amendment of Rule 6 of CENVAT Credit Rules, 2004 providing that it shall be deemed to have been amended retrospectively, in the manner specified in column 3 of the schedule, on and from and up to the corresponding date specified in column 4 of that schedule, against the specified in column 2 of that schedule. The schedule further provides insertion of sub Rule 7 which reads  where the dispute relating to adjustment of credit on inputs or input services used in or in relation to the period beginning on 10.09.2004 and ending with 31st March, 2008, is pending on the date on which the finance bill 2010 received the assent of the President, then, notwithstanding anything contained in sub rules (1) and (2), the clauses (a) and (b) of sub Rule 3, a manufacturer availing CENVAT credit in respect of any inputs or input services and manufacturing final products which are chargeable to duty and also other final products which are exempted goods, May pay an amount equivalent to CENVAT credit attributable to the inputs or input services used, in relation to the manufacture of exempted goods before or after the clearance of such goods. Further provided that the manufacturer shall pay interest at the rate of 24% per annum from the due date till the date of payment of the said amount. Due date is explained, meaning the 5th day of the month following the month in which goods are cleared from the factory.

5. Having considered the rival contentions, I find that the issue is fully covered by the amended Rule 6 of the CENVAT Credit Rules. The issue herein is squarely covered under sub Rule (7) of Rule 6. The appellant have reversed the amount of credit and only a small part of it, that is, Rs. 3,297/- was utilised which also had been reversed. I find that sub Rule (7) provides for payment of interest @ 24% per annum whereas the interest has been paid @ 15% per annum. Accordingly, the appeal of the Revenue is dismissed. The respondent-assessee is directed to pay the balance amount of interest that is 24% - (15% already paid) within 4 weeks from receipt of a copy of this order.

6. That the appeal stands dismissed.

(Pronounced in open Court)

(Anil Choudhary)

Member (Judicial)

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