M/S Astral Pharmaceuticals Industries vs Commissioner, Central Excise & Service ...

Appeal No.E/1121/2011-SM [Arising out of OIA No.Commr(A)/234/VDR-II/2011, dt.22.06.2011, passed by Commissioner (Appeals), Central Excise & Customs, Vadodara]

M/s Astral Pharmaceuticals Industries Appellant

Vs

Commissioner, Central Excise & Service Tax, Vadodara-II Respondent

Represented by:

For Appellant: Shri Rahul Gajera, Advocate For Respondent: Shri G. Jha, Authorised Representative

For approval and signature:

Honble Mr. H.K. Thakur, Member (Technical)

1. Whether Press Reporters may be allowed to see the No Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

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

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

CORAM:

HONBLE MR. H.K. THAKUR, MEMBER (TECHNICAL)

Date of Hearing/Decision:23.07.2015

Order No. A/11096 / 2015 dt.23.07.2015

Per: H.K. Thakur

This appeal has been filed by the Appellant against OIA No.Commr(A)/234/VDR-II/2011, dt.22.06.2011, under which the First Appellate Authority has allowed the appeal filed by the Revenue with respect to imposition of penalty under Rule 15 of CENVAT Credit Rules, 2004 read with Section 11AC of Central Excise Act, 1944.

2. Shri Rahul Gajera (Advocate) appearing on behalf of the Appellant argued that the issue involved before the Adjudicating authority was admissibility of CENVAT Credit on Plastic Crates used for carrying the materials in manufacture of goods inside the factory. That amount involved with respect to CENVAT Credit on Plastic Crates was Rs.1,43,180.00. That the remaining amount was with respect to inputs used in relation to manufacture of dutiable and exempted goods. That Appellant did not agitate the issue on merit and paid the entire amount alongwith interest. It was his case that penalty under Section 11AC of Central Excise Act, 1944 is not imposable because CENVAT Credit on plastic crates used in the manufacture of finished goods has been held to be admissible as per Larger Bench judgment of Banco Products (India) Ltd Vs CCE Vadodara-I [2009 (235) ELT 636 (Tri-LB)]. That amount required to be paid as per Rule 6 of the CENVAT Credit Rules 2004 was also paid by the Appellant. That once on merits, CENVAT Credit on plastic crates was held to be admissible by the Larger Bench, then it cannot be held that there was any intention to evade payment of duty even if Appellant opted to reverse the entire CENVAT Credit to buy peace.

3. Shri Govind Jha (AR) appearing on behalf of the Revenue argued that the period involved in the demand was more than one year, therefore, by making payment Appellant has admitted invocation of extended period. Once extended period is held to be applicable, then there is no discretion with any authority to reduce the penalty as per the law laid down by Honble Supreme Court in the case of CCE Hyderabad-II Vs Prudential Spinners Ltd [2011-TIOL-45-SC-CX] relied upon by the First Appellate Authority in Para 9.1 of Order-in-Appeal, dt.22.06.2011.

4. Heard both the sides and perused the case records. The issue involved is whether penalty under Rule 15(2) of CENVAT Credit Rules 2004 read with Section 11AC of Central Excise Act, 1944, is imposable upon the Appellant in the present proceedings or not. It is observed that CENVAT Credit denial was pertaining to admissibility of credit with respect to plastic crates used in the manufacturing of the finished goods and also on account of reversal required to be done as per Rule 6 of CENVAT Credit Rules 2004. Majority of the demand was pertaining to CENVAT Credit on plastic crates. It is observed from the case law decided by Larger Bench in the case of Banco Products (India) Ltd Vs CCE Vadodara-I (supra). That credit of such plastic crates was held to be admissible. Inspite of the issue being decided subsequently in favour of assessee, Appellant preferred to reverse the entire amount to buy peace when pointed out. Reversal of amount involving larger period cannot be considered to hold that element of fraud, mis-statement and suppression etc with intention to evade payment of duty, are established. Majority of demand with respect to plastic crates was disputable and was decided in favour of the assessee subsequently by Larger Bench in the case of Banco Products (India) Ltd Vs CCE Vadodara-I in the year 2009, after the issue of show cause notice and payment made by the Appellant. Under the circumstances, it cannot be held that there was any intention to evade payment of duty or taking wrong CENVAT Credit. Therefore, it is held that penalty under Rule 15(2) of CENVAT Credit Rules 2004 read with Section 11AC of Central Excise Act, 1944 is not imposable. Based on the above observations, appeal filed by the Appellant is allowed by setting aside Order-in-Appeal, dt.22.06.2011 passed by the First Appellate Authority.

(Dictated and pronounced in Court)

(H.K. Thakur) Member (Technical)

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