M/S. Bharat Seats Ltd vs Commissioner Of Central Excise

[Arising out of Order-in-Original No. 04/2006 dated 10.8.2006 passed by the Commissioner of Central Excise, Delhi III, Gurgaon].

For approval and signature:

Hon'ble Shri Ashok Jindal, Member (Judicial)

Hon'ble Shri B. Ravichandran, 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 should 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 Departmental authorities?

M/s. Bharat Seats Ltd. Appellants

Vs.

Commissioner of Central Excise Respondent

Delhi III, Gurgaon

Appearance:

Shri Rahul Tangri, CA for the Appellants

Shri Govind Dixit, DR for the Respondent

CORAM:

Hon'ble Shri Ashok Jindal, Member (Judicial)

Hon'ble Mr. B Ravichandran, Member (Technical)

Date of Hearing /decision: 03.09.2015

FINAL ORDER NO. 52846 /2015-EX(DB)

Per Ashok Jindal:

The appellant is in appeal against the impugned order for imposition of penalty of Rs.5 lakhs under Rule 13 of the Cenvat Credit Rules, 2004.

2. The facts of the case are that the credit on account of AED (GSI) was accumulated during the period April, 1998 to 28.2.2003 in the credit account of the appellant. As per Finance Act, 2003 with effect from 1.3.2003, the credit accumulated of AED(GSI) can be utilized for discharging liability of BED / SED on final products without specifying the period. The CBEC circular No. 701/16/2003-CX dated 6.3.2003 clarify that the said amendment under Finance Act, 2003 would apply to AED (GSI) which accrued prior to 1st March, 2003. In consequence to that, the appellant utilized the entire amount of cenvat credit accumulated on account of AED (GSI) during the period April, 2003 to May, 2003 for discharging their liability of BED/SED. Thereafter, a show cause notice was issued to the appellant alleging that appellant has wrongly utilized the cenvat credit of AED (GSI) in the month of April, 2003 and May, 2003 as amendment was prospective not retrospective. As per section 88 of the Finance Act, 2004, the Cenvat Credit Rules were to provide that cenvat credit of AED (GSI) accrued after 01.04.2000 would be allowed to be utilized and not the credit accrued prior to 01.04.2000. The Finance Act was enacted in September, 2004. In consequence of Section 88 of Finance Act, 2004, the appellant paid the excess amount utilized during the period April to May, 2003 on account of unutilized cenvat credit of AED (GSI) with interest during the period March, 2005 to June, 2005. In May, 2005, Section 88 of the Finance Act, 2004 was amended by Section 124 of the Finance Act, 2005 providing for recovery of wrongly taken credit accumulated for the period prior to 01.04.2000 by way of 36 installments starting from July, 2005. The impugned order was passed by learned Commissioner demanding the excess utilization of cenvat credit of AED (GSI) accumulated prior to 1.4.2000 along with interest and imposition of penalty of Rs.5 lakh under Rule 13 of the Cenvat Credit Rules, 2004. As the appellant has already reversed the cenvat credit which was wrongly utilized by the appellant along with interest, the said amount has been appropriated. The appellant is in appeal against the imposition of penalty of Rs.5 lakh on them. Hence, this appeal.

3. Heard the parties. Considered the submissions.

4. We have gone through section 88 of the Finance Act, 2004. Explanation provided that ..it is hereby declared that no act or omission on the part of any person shall be punishable as an offence which would not have been so punishable if this section had not come into force. Admittedly, in this case, the appellant has utilized the cenvat credit accumulated on account of AED(GSI) prior to amendment to section 88 of the Finance Act, 2004 i.e. during the period April to May, 2003. Therefore, the explanation to Section 88 of the Finance Act, 2004 is squarely applicable to the facts of this case as the appellant has already reversed the excess utilized cenvat credit along with interest. In that situation, imposition of penalty on the appellant was not warranted. In these circumstances, we set aside the impugned order qua imposing penalty on the appellant.

5. With these terms, the appeal is disposed of.

( Dictated and pronounced in the open court )

( Ashok Jindal ) Member(Judicial)

( B Ravichandran )

Member(Technical)

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