M/S. Ellenbarrie Industrial Gases Ltd vs Commr. Of Central Excise, Kolkata-Iii

(Arising out of the Order-in-Appeal No.56-57/Kol-III/2011 dated-01/03/2011 passed by the Commissioner of Central Excise (Appeal-I), Kolkata)

For approval and signature of:

DR.D.M. MISRA, HONBLE JUDICIAL MEMBER

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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. Ellenbarrie Industrial Gases Ltd. APPELLANT(S) VERSUS Commr. of Central Excise, Kolkata-III RESPONDENT(S)

APPEARANCE

Sri B.N. Chattopadhyay, Consultant FOR APPELLANT(S) Sri A.K. Biswas, Supdt. (A.R.) FOR THE RESPONDENT(S) CORAM: DR.D.M. MISRA, HONBLE JUDICIAL MEMBER

DATE OF HEARING & DECISION : 07/08/2015

ORDER NOFO/A/75431/2015 Per DR.D.M. MISRA

This is an appeal filed against order-in-appeal No. 56-57/Kol-III/2011 dated-01/03/2011 passed by the Commissioner of Central Excise (Appeals).

2. Briefly stated the facts of the case are that the appellant had availed CENVAT Credit on cylinders used in transporting various gases during the relevant period i.e. 2003-2004 and 2004-2005 claiming it as capital goods. Show Cause cum demand Notice was issued to them on 29/04/2004 for recovery of CENVAT Credit of Rs.4,84,260/- availed on the Cylinders. On adjudication, the demand was confirmed and the matter travelled upto this Tribunal.

3. By its order No. S-915/A-1252/KOL/2008 dated- 12/12/2008, this Tribunal remanded the matter to adjudicating authority for de novo adjudication considering the argument of the appellant that that CENVAT credit on cylinders could be admissible treating the same as input if not capital goods. Neither side filed Appeal against the said Order.

4. On de novo adjudication, after production of necessary documents, the Ld. Adjudicating authority dropped the demand to the tune of Rs.3,59,920/- accepting the contention that the cylinders were used in the transportation of dutiable gases and confirmed Rs.1,24,340/- wherever the same were used in transporting exempted gases, imposed penalty of equal amount in terms of Rule 13 of CENVAT Credit Rules read with Section 11AC of CEA, 1944.

5. Aggrieved by the said order-in-original dated 30th March, 2010, Revenue as well as the appellant filed Appeals before the Ld. Commissioner (Appeals). After considering the arguments advanced by both sides, the Ld. Commissioner (Appeals) dismissed both the appeals .Hence, the present appeal is filed by the assesse/appellant.

6. At the outset, the Ld. Consultant Shri B.N. Chattopadhyay submitted that the Appellant in the present Appeal are not disputing the recovery of CENVAT Credit of Rs.1,24,340/- and the interest liability; their challenge to the Order is limited to the imposition of penalty of Rs.1,24,340/- under Section 11AC of CEA, 1944 read with Rule 13 of CENVAT Credit Rules, 2002. Ld. Consultant submits that under a bonafide belief, they have availed CENVAT Credit on cylinders used in transferring/transporting of gases from the factory to the customers premises as capital goods. All these facts were informed and within the knowledge of the department. Later, when it was realized during the appellate proceeding that CENVAT Credit on cylinders would be admissible as input and not as capital goods, such a claim was advanced. In the remand proceeding, they have placed necessary evidences before the Ld. Assistant Commissioner establishing the use of cylinders in transferring the dutiable gases. Wherever, the cylinders were used for transferring the exempted goods, they accepted their liability and reversed total credit of Rs.1,21,340/-. In these circumstances, imposition of penalty under Section 11AC equivalent to the credit confirmed in the de novo proceeding is erroneous and untenable in law. It is his submission that the Ld. Commissioner (Appeal) ought to have set aside the penalty under Section 11AC of CEA, 1944.

7. Per contra, Ld. A.R. for the Revenue submits that the applicant had availed CENVAT Credit in contravention of Rule 3 of CENVAT Credit Rules on cylinders which were used for transporting gases exempted from payment of duty. It is his submission that therefore, the penalty is imposable under Rule 13 of CENVAT Credit Rules read with Section 11AC of CEA, 1944.

8. Heard both sides and perused the records. I find that undisputedly the applicant had been availing CENVAT Credit on the cylinders used in transferring gases, which are dutiable as well as exempted, from their factory premises to the customers place. Also, it is not in dispute that they have initially availed CENVAT Credit on these cylinders claiming it as capital goods. But later when the case was remanded by this Tribunal they have accepted that cylinders are used are inputs and not capital goods. Consequently, they have placed necessary evidences and established before the adjudicating authority that the entire CENVAT Credit was not in relation to transfer of exempted gases only but both dutiable as well as exempted gases. Analyzing the evidences, the Ld. Asst. Commissioner has dropped a major portion of the demand and wherever they could not place evidences that cylinders were used in transporting dutiable gases , he has confirmed recovery of the CENVAT Credit, which was to the extent of Rs.1,24,687/-. The dispute in the present appeal is in relation to the imposition of penalty under Rule 13 of CEA, 1944. The relevant Rules reads as follows:

Rule 13-Confiscation and penalty : (1) If any person , takes CENVAT Credit in respect of inputs or capital goods, wrongly or without taking reasonable steps to ensure that appropriate duty on the said inputs or capital goods has been paid as indicated in the document accompanying the inputs or capital goods specified in rule 7, or contravenes any of the provisions of these rules in respect of any inputs or capital goods, then, all such goods shall be liable to confiscation and such person, shall be liable to a penalty not exceeding the duty on the excisable goods in respect of which any contravention has been committed, or ten thousand rupees, whichever is greater.

(2) In a case, where the CENVAT credit has been taken or utilized wrongly on account of fraud, willful mis-statement, collusion or suppression of facts, or contravention of any of the provisions of the Act or the rules made thereunder with intention to evade payment of duty, then, the manufacturer shall also be liable to pay penalty in terms of the provisions of section 11AC of the Act.

(3) Any order under sub-rule (1) or sub-rule (2) shall be issued by the Central Excise Officer following the principles of natural justice.

7. On analysis of the facts, I find there is no allegation of suppression of facts in availing CENVAT Credit on the cylinders during the relevant period. Needless to mention that the appellant while claiming CENVAT Credit on these cylinders as capital goods, disclosed all the facts to the Department. Hence, imposition of penalty under sub-rule (2) of Rule 13 of CENVAT Credit, in my opinion is unwarranted. However, it cannot be denied that they have contravened the provisions of CENVAT Credit Rules in availing the CENVAT credit on cylinders. Hence, the present facts fall under the category of sub-rule (1) of rule 13 of CENVAT Credit Rules, 2002. Consequently, the appellant is liable to pay penalty under the said rules and the maximum penalty imposable is Rs.10,000/-. Consequently, the impugned order is set aside to the extent of imposition of equivalent penalty, however, Rs.10,000/- is imposed as penalty under Rule 13(1) of Cenvat Credit Rues,2004. Appeal is disposed off as above.

(Dictated and pronounced in the open court)

Sd/- 14/08/2015

(D.M.MISRA) MEMBER(JUDICIAL)

k.b/-

Excise Appeal No. E/589/2011

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