Dynamatic Technologies Ltd vs Commissioner Of Central Excise, ...

[Arising out of Order-in-Appeal No. 492-2014 dated 30/06/2014 passed by Commissioner of Central Excise , BANGALORE-II( Appeal) ]

For approval and signature:

HON'BLE SHRI B.S.V.MURTHY, 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? 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 Their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes

Dynamatic Technologies Ltd No.11, Ii Phase, Peenya Industrial Area, BANGALORE - 560058 KARNATAKA Appellant(s)

Versus

Commissioner of Central Excise, Service Tax And Customs Bangalore-ii PB 5400 CR BUIDING...QUEENS ROAD, BANGALORE, - 560001 KARNATAKA Respondent(s)

Appearance:

Shri Akbar Basha, Advocate HIRAGANGE & ASSOCIATES #1010, 1st floor(Above Corp.Bank) 26th Main, 4th T Block, Jayanagar, Bangalore Bangalore - 560041 Karnataka For the Appellant

Shri S. Teli, Deputy Commissioner(AR) For the Respondent

Date of Hearing: 06/03/2015

Date of Decision: 06/03/2015

CORAM:

HON'BLE SHRI B.S.V.MURTHY, TECHNICAL MEMBER

Final Order No. 20578 / 2015

Per : B.S.V.MURTHY

Appellant is engaged in the manufacture of hydraulic pumps and is availing the benefit of CENVAT credit of Central Excise duty paid on the inputs and service tax paid on the input services. During the course of audit, it was observed that the appellants had manufactured and cleared hand pumps by availing exemption Notification No.10/2003. The appellant was required to maintain separate accounts and should not have taken credit of the duty paid on common inputs and tax paid on input services. The appellant reversed the entire CENVAT credit attributable to the exempted products by calculating proportionate basis before issue of show-cause notice and submitted that they have fulfilled the obligation. However, show-cause notice was issued taking a view that procedure prescribed under the rules were not followed and in accordance with provisions of Rule 6(3)(b) of CENVAT Credit Rules (CCR), 2004, the appellant was required to pay 10% of the value of the handpumps cleared without payment of duty. Subsequently retrospective amendment was carried out and as a result of amendment, the appellants got an opportunity to pay the proportionate credit attributable with interest and thereafter the appellants, in accordance with the provisions of Section 73 of the Finance Act, 1994, paid the interest also and made an application to the Commissioner as per the provisions of law. The Commissioner was required as per the provisions of Section 72(3) to inform the appellant within two months if the amount paid by them was not correct. In the case of the appellant, no such intimation was received.

2. Subsequently, the Additional Commissioner adjudicated the show-cause notice which had already been issued to the appellant demanding 10% of the amount received in respect of hand-pumps and held that since the appellants have fulfilled the obligations caused on them under Section 73 and filed the application before the Commissioner, the show-cause notice is to be dropped and he dropped further proceedings.

3. Aggrieved by this decision, Revenue went in appeal before the Commissioner(Appeals) taking a stand that Additional Commissioner did not have the power to accept the payment made by them as per the provisions of Section 73 which gave retrospective effect to the provisions of Rule 6 and there is 6 months time to the assessees to file an application before the Commissioner after making the payment of credit attributable to exempted goods with interest. The Commissioner(Appeals) has allowed the appeal filed by the Revenue and therefore the assessee is before the Tribunal.

4. Learned counsel for the appellant reiterated the facts which have been narrated hereinabove and submitted that the stand taken by the Revenue that Additional Commissioner has no power is not correct. In this case, there was no question of Commissioner passing an order since statute did not require the Commissioner to pass an order or indicate acceptance of the amounts paid by the assessee as per the provisions of law. Therefore he submits that instead of considering the stay application, the appeal itself can be decided.

5. Learned AR supports the stand taken by the Revenue.

6. I have considered the submissions made by both the sides. For better appreciation, Section 73 is reproduced as under:-

Section 73. Amendment of rule 6 of CENVAT Credit Rules, 2004. - (1) In the CENVAT Credit Rules, 2004, made by the Central Government in exercise of the powers conferred by section 37 of the Central Excise Act, as published in the Official Gazette vide notification of the Government of India in the Ministry of Finance (Department of Revenue) number G.S.R. 600(E), dated the 10th September, 2004, rule 6 shall stand amended and shall be deemed to have been amended retrospectively, in the manner specified in column (3) of the Eighth Schedule, on and from and up to the corresponding date specified in column (4) of that Schedule against the rule specified in column (2) of that Schedule.

(2) Where a person opts to pay the amount in accordance with the provisions as amended by sub-section (1), he shall pay the amount along with interest specified thereunder and make an application to the Commissioner of Central Excise along with documentary evidence and a certificate from a Chartered Accountant or a Cost Accountant, certifying the amount of input credit attributable to the inputs used in or in relation to the manufacture of exempted goods, within a period of six months from the date on which the Finance Bill, 2010 receives the assent of the President.

(3) The Commissioner of Central Excise shall, on receipt of an application under sub-section (2), verify the correctness of the amount paid within a period of two months from the date of receipt of the application and in case the amount so paid is found to be less than the amount payable, he shall call upon the applicant to pay the differential amount along with interest, which shall be paid within a period of ten days from the date of receipt of the communication from the Commissioner in this regard.

7. It is quite clear from the above section that the assessee is required to file an application along with a Chartered Accountant certificate after making payment of the amount of duty with interest. If the Commissioner finds that the amount paid is not correct, he is required to ensure that the verification is done within two months and the shortfall, if any, is intimated to the assessee within two months and thereafter the assessee is required to make payment within 10 days of such communication. It is not the case of the Revenue that in this case, the appellant had not made the payment correctly and there was a shortfall and there was a communication of such shortfall to the assessee. The section nowhere requires the Commissioner to pass an order or communicate that the amount paid is correct in accordance with law. Once the Commissioner does not send any communication within two months, the matter has to be considered as finalised as per the provisions of Section 73 reproduced above. Under such circumstances, Additional Commissioner while adjudicating the show-cause notice earlier issued for demanding the amount as per the provisions of Rue 6(3)(b) of CCR has no option but to do what he has done in this case. Obviously, there is no case for the Department to demand 10% of the amount received by the appellant in respect of exempted hand-pumps once the assessee fulfilled the obligations caused on him under Section 73 giving retrospective effect to the provisions of Rule 6 of CCR 2004. Therefore I find that the litigation started by the Department was under a mis-conception and the first appeal itself should not have been filed. Since the appeal itself should not have been filed in the first place as the decision taken by the Additional Commissioner was in accordance with law. As a result, the appeal is allowed with consequential relief, if any, to the appellant.

(Order pronounced and dictated in open court)

B.S.V.MURTHY TECHNICAL MEMBER Raja.

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