Indrox Global Pvt. Ltd vs Commissioner Of Central Excise

IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI

COURT No. II

APPEAL No.E/1564/10

(Arising out of Order-in-Appeal No.SB/137/Th-II/10 dated 10/06/2010 passed by Commissioner of Central Excise (Appeals), Mumbai-I)

For approval and signature:

Honble Mr. Anil Choudhary, Member (Judicial)

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? ========================================

Indrox Global Pvt. Ltd., Appellant Vs. Commissioner of Central Excise, Respondent Thane-II

Appearance: Shri.B.P.Singh, Advocate with Rajeev Ravi, Advocate for appellant Shri.Sanjay Hasija, Supdt. (AR), for respondent

CORAM: Honble Mr.Anil Choudhary, Member (Judicial)

Date of Hearing : 15/09/2015 Date of Decision : 15/09/2015

ORDER NO

Per: Anil Choudhary

1. The appellant assessee is in appeal against Order-in-Appeal No.SB/137/Th-II/10 dated 10/06/2010 passed by Commissioner of Central Excise (Appeals), Mumbai-I by which rejection of their refund claim have been upheld.

2. The brief facts are that the appellant defaulted in payment of duty in the month of December 2006 and March 2007 and according to the provisions of Rule 8 (3A) of the Central Excise Rules, they were required to pay the duty by cash instead of PLA and was not allowed to utilise the Cenvat credit. However, the appellant paid the duty by debiting the Cenvat Credit for the month of April Rs.97,467/- + in May Rs.36,895/- and in June Rs.46,994/- totalling to Rs.1,81,356/-. It is an admitted fact that on being so pointed out and are being advised, the appellant again paid the said amount of Rs.1,81,356/-with interest by separate challans on 24/09/2007 and on 01/10/2007. Thereafter the appellant filed a refund claim on 12/05/2008 claiming the refund of amount earlier paid by way of debit to Cenvat account.

3. A show-cause notice dated 21/08/2008 was issued observing therein that subsequent to filing of refund the appellant have also filed a letter dated 15/05/2008. The contents of the letter are as follows:

Sub: Grant of Refund of Rs.1,81,365/- (Time bar case) and setting aside of penalty case in the SCN as above Please refer to the SCN No.V.Adj.(SCN)15-170/Indrox/Bsr-07/372 dated 4th April 2008 and subsequent your personal representation and request in the matter of waiver of Penalty imposed by the Superintendent (Tech) vide his SCN under reference above for penalty imposed in the matter of late payment of Central Excise dues for the period Dec, 2006 to June 2007 is hereby set aside. Your request for refund of time bar case of Rs.1,81,365/- is also hereby admitted under the extraordinary circumstances and the court cases described by you and this refund may be had from The Office of the Supdt. (Tech), Boiser-I DN in the shape of Refund order/cheque. However, you are admonished to file your returns in time in future to avoid heavy penalty and other statutory punishments Thanking you, Yours faithfully, Sd/-

Asst. Commissioner (Tech)Central Excise, Boiser-I DN, Thane-I.

4. It appeared to Revenue that the above letter was never issued and the assessee have intentionally forged and fabricated the above mentioned letter to mislead the department. The department issued a show-cause notice asking as to why the refund should not be rejected on the ground that the claimant has submitted documents with an intention to mislead the department, that the refund claim has been admitted and also on the ground that part of the claim for the amount of Rs.97,467/- being the tax paid for the month of April 2007, appeared to be time barred.

5. The show-cause notice was adjudicated vide order-in-original dated 12/05/2009. After considering the submissions of the appellant and their reply to show-cause notice, so far the contention of the appellant that the mischief was committed by the Excise clerk who have committed fraud with the company (appellant) which resulted in the default in the monthly payment and the aforesaid letter was fabricated by the said employee by way of attempt to safe guard himself. The appellant is not aware and not involved in obtaining and/or forgery of the said letter. However, the adjudicating authority rejected the refund claim on the ground that the claim of Rs.97,467/- for the month of April 2007 is time barred and further the appellant does not deserved any refund in view of the malpractice of their excise clerk. Aggrieved with the order, the appellant preferred appeal before the Commissioner (Appeals) who vide impugned order dated 10/06/2010 rejected the appeal, upholding findings of the adjudicating authority. Aggrieved by the order of the Commissioner (Appeals), the appellant is before this Tribunal.

6. The learned Counsel for the appellant submits that the company is not involved in any fraud. It have nowhere come on record that the appellant or any of its partners have involved in the fraudulent obtaining of the said letter dated 15/05/2008. Further there is no categorical findings with regard to the allegation of fraud against the appellant as stated in the order-in-original. It is further pointed out that refund claim for the month of April 2007 also is not time barred as the refund arose pursuant to payment made through PLA on 24/09/2007 and on 01/10/2007 and as such the relevant date under Section 11B of the CEA, 1944 for calculation of period of 12 months will be from 24/09/2007 and the learned Commissioner have erred and held that refund claim for the month of April 2007 is time barred. Accordingly, he prayed for allowing the refund being fully allowable. He further states that in the case of total payment (in cash) as in the present case, the assessee is entitled to take suo motu credit of the amount earlier debited in Cenvat account. The appellant relies on the ruling of this Tribunal in the case of CCE Chandigarh Vs. Ralison Carbon Black Ltd., - 2008 (229) ELT 113 (Tri-Del) wherein the case of default in monthly payment, facility to pay by Cenvat credit under Rule 8 (3A) of Central Excise Rules, 2002 was restricted, whereas the credit utilised was earned during subsequent period.

Demand in cash was sustainable and it was further held that assessee is entitled to take Cenvat credit of the corresponding amount paid earlier through Cenvat account. The appellant also relies on the ruling of the Honble Madras High Court in the case of ICMC Corporation Ltd., Vs. CESTAT, Chennai  2004 (302) ELT 45 (Mad). Whereas the issue before the Honble High Court was that the assessee had taken suo motu credit of the Cenvat reversed earlier. The question of law framed was that Whether the Tribunal is right in dismissing the appeal on the ground that the appellant ought to have filed an appeal against the earlier order of the Revenue for the purpose of claiming re-credit, when there is no dispute on the fact of appellants entitlement for the said credit as held by the Revenue. The said issue have not been reviewed/appealed against by the Revenue and whether the Tribunal is right in dismissing the assessees appeal on the ground that instead of suo motu re-credit credit taken, the appellant ought to have filed refund claim under Section 11B of the CEA, 1944 as proposed in the show-cause notice.

Answering the question in favour of the assessee, the Honble High Court held as follows:

13.We do not subscribe to the view expressed by the? Revenue. Admittedly, the assessee originally availed the Cenvat credit on Service Tax for discharging its liability. However, for sound reasons, it reversed the credit. Strictly speaking, in this process, there is only an account entry reversal and factually there is no outflow of funds from the assessee to result in filing application under Section 11B of the Central Excise Act, 1944 claiming refund of duty. The contention of the Revenue that even in reversal of the entry there is bound to be an unjust enrichment has no substance or based on any legal principle, since, what is availed off by the assessee is only a credit on the duty paid on the services rendered. Further, the assessee is entitled to take note of as per Rule 6(5) of the Cenvat Credit Rules, 2004. as there is no dispute of the fact that a sum of Rs. 3,21,308/- available as Cenvat credit was in respect of input services, which are given under Rule 6(5) of the Cenvat Credit Rules, 2004. When that being the case, in respect of those services specifically mentioned under Rule 6(5) of the Cenvat Credit Rules, 2004 as it existed during the relevant period viz., 2004-2006 getting the reversal of the entry is in tune with its stand taken, which was accepted by the Tribunal in the earlier round of litigation.

? 14.We do not find any good ground to hold that it was a case of refund of duly falling under Section 11B of the Central Excise Act, 1944 and that the assessee was to comply with the provisions of Section 11B of the Act. The view of the Tribunal that the assessee should seek reversal in the appropriate judicial forum, if the assessee was aggrieved by the earlier order herein does not arise at all.

15.Even a cursory reading of the order of the Tribunal? in the earlier round of litigation would show that it accepted the assessees case of suo motu reversal of the entry. That being the case, the subsequent conduct of the assessee for a follow up action on an amount of Rs. 3,21,308/-, which is only an account entry adjustment, technically speaking cannot be taken exception to either by Tribunal or for that matter by the Revenue. For this, we do not find any need for a finding to be given in the order of the Tribunal in the earlier round of litigation.

16.We do not for a moment deny the fact that a sum of? Rs. 3,21,308/- for which suo motu credit was taken by the assessee was forming part of Rs. 5,38,796/-, which was earlier reversed by the assessee. On the admitted fact, Rs. 3,21,308/- represented the enumerated input services as given under Rule 6(5) of the Cenvat Credit Rules, 2004, we have no hesitation in accepting the plea of the assessee that on a technical adjustment made, the question of unjust enrichment as a concept does not arise at all for the assessee to go by Section 11B of the Central Excise Act, 1944.

17.In the circumstances, we set aside the order of the? Tribunal and allow the appeal filed by the assessee and hold that legally speaking there is no impediment in the assessee taking suo motu credit of the sum of Rs. 3,21,308/-. In the light of the above, we allow the appeal.

7. Learned Counsel further submitted that the assessee could have been even taken suo motu credit on the second payment made through PLA of the earlier amount debited to Cenvat Credit instead of filing the refund claim as held by the Honble High Court. The appellant also relies on the ruling of the Honble Madras High Court in the case of Natraj & Venkat Associates Vs. Asst. Comm. Of Service tax, Chennai  2010 (249) ELT 337 (Mad) wherein the assessee had erroneously deposited the service tax on 04/07/2005 and thereafter filed refund claim on 20/09/2006 and the same was rejected by the Revenue on the ground of time barred. Relying on the ruling of the Honble Supreme Court in the case or UOI Vs. ITC Ltd.  1993 (67) ELT 3 (SC), held that money realized in excess of what is permissible in law is outside the provisions and such money is not covered under duty of excise. Limitation under Section 11B of Central Excise Act, 1944 is not applicable to the amount paid which cannot be taken as duty of excise. The issue of unjust enrichment in such case does not arise where the assessee furnished proof of non-collection of service tax from the customers.

8. The learned DR relies on the impugned order and further states that the aforesaid case laws relied upon by the appellant are not applicable as the facts are different.

9. Having considered the rival submissions, I find that the Revenue has simply alleged fraud/forgery but the same has not been conclusively held nor any inquiry initiated into the same. In view of the fact that the amount in default for the month of April, May and June 2007 was paid on 24/09/2007 and on 01/10/2007, I hold that the relevant date, for the claim of refund under the provisions of Section 11B is 24/09/2007 I hold that the learned Commissioner was in error for rejection of refund on the ground of limitation and the balance on the ground of mischief on the part of the appellant or its staff. Thus, the impugned order is set aside and it is held that the appellant is entitled to take Cenvat credit of the amount of Rs.1,81,356/- which is admittedly paid through PLA, the second time along with interest. Thus the appeal is allowed.

(Dictated in Court)

(Anil Choudhary) Member (Judicial)

pj

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Appeal No.E/1564/10