M/S. Hikal Limited vs Commissioner Of Central Excise & S.T., ...

(Arising out of OIA-BC/11/SURAT-II/2011 dated 08.03.2011, passed by Commissioner (Appeals) Central Excise, & S.T., Surat )

M/s. Hikal Limited : Appellant (s)

VERSUS

Commissioner of Central Excise & S.T., Surat : Respondent (s)

Appeal No. : E/675/2011

Commissioner of Central Excise & S.T., Surat : Appellant (s)

VERSUS M/s. Hikal Limited : Respondent (s) Represented by :

For Assessee (s) : Shri Jagdish Surti, Advocate For Revenue : Shri Alok Srivastava, Authorised Representative

For approval and signature :

Mr. P.K. Das, Honble Member (Judicial)

1 Whether Press Reporter 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 CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

No 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

CORAM :

Mr. P.K. Das, Honble Member (Judicial)

Date of Hearing / Decision : 29.05.2015

ORDER No. A/10722-10723/2015 Dated 29.05.2015

Per : Mr. P.K. Das;

The relevant facts of the case, in brief, are that the appellants were engaged in the manufacture of excisable goods classifiable under Chapter 38 of the Schedule to the Central Excise Tariff Act, 1985. They were availing CENVAT credit on inputs on the basis of Original for Buyers copy instead of Duplicate for Transporter copy, and credit was availed after one year from the date of invoice. During the CERA audit, it was pointed out that the appellants are not eligible to avail CENVAT credit. The appellants debited the amount of Rs. 12,21,418/- vide PLA Entry No. 25 dated 02.3.2005. By a letter dated 02.3.2005, they have also informed to the Range Superintendent that they have debited the said credit alongwith interest.

2. A show cause notice dated 12.6.2008 was issued proposing demand of CENVAT credit alongwith interest and to impose penalty and to appropriate the amount already deposited by them. The adjudicating authority confirmed the demand of credit alongwith interest and imposed penalty of equal amount of cenvat credit under Section 11AC of the Central Excise Act, 1944. By the impugned order, the Commissioner (Appeals) modified the adjudication order to the extent, granting benefit to pay penalty of reduced amount under Section 11AC of the Act. The assessee filed this appeal against the demand of cenvat credit alongwith interest and penalty. Revenue filed appeal against reduction of penalty.

3. Learned Advocate on behalf of the appellant submits that the demand of cenvat credit on both issues the show cause notices are not sustainable, in view of the following decisions of the Tribunal:-

(a) Steel Authority of India Limited vs. CCE, Raipur  2013 (287) ELT 321 (Tri. Del.) : it has been held by the Tribunal that no time limit is prescribed for taking credit under Rule 4(1) of the Cenvat Credit Rules, 2004.

(b) Collector of Central Excise, Allahabad vs. Ram Swarup Electricals Limited  2007 (217) ELT 12 (All.)  It has been held by the Hon'ble High Court that no limitation is provided for availing of modvat credit.

(c) Jagdamba Polymers Limited vs. CCE, Ahmd.  2010 (253) ELT 626 (Tri. Ahmd.)  It has been held by the Bench that it is not necessary to take credit immediately on receipt of inputs/ payment of service tax and it can be taken at any time.

It is his submission that the Commissioner (Appeals) rejected the appeal on the ground that appellants have not contesting the demand of CENVAT credit. He submits that they contested the demand of cenvat credit before the adjudicating authority.

4. Learned Authorised Representative for the Revenue submits that the adjudicating authority has already given option for payment of reduced penalty and therefore, Commissioner (Appeals) cannot grant such option. He further submits that the appellant knowingly availed the irregular CENVAT credit and penalty is rightly imposed.

5. After hearing both the sides and on perusal of the records, I find that the Commissioner (Appeals) observed that the appellant had admitted their mistake and willingly reversed the CENVAT credit alongwith interest. The appellant had not challenged the same before the original authority and has raised objection only on imposition of penalty. In this context, the submission of the appellant before the adjudicating authority is reproduced below:-

9. The assessee vide their letter dated 10.7.2008 had submitted that the amount of CENVAT credit which was wrongly availed for Rs. 12,21,418/- has been paid by them vide PLA E.No. 25 dated. 02.03.2005 and an interest of Rs. 2,78,336/- has also been debited in PLA vide E.No. 02 dated 30.11.2006 and requested for personal hearing in the matter. Further, vide letter dated 02.12.2008 the assessee had submitted that during CERA audit they had only original Excise invoice copy; that duplicate copy was not traceable; hence audit objection raised; that they debited Rs. 12,21,418/- vide PLA E.No.25 dated 02.03.2005; a letter confirming debit of Rs. 10,21,418/- was intimated to Range Superintendent on 02.03.2005 and an interest of Rs. 2,78,336/- has also been debited in PLA vide E.No. 02 dated 30.11.2006. They further requested to drop the show cause notice.

6. On plain reading of the above submission of the appellant, it is clearly evident that the appellant debited cenvat credit alongwith interest and intimated the Central Excise officer on 02.3.2005 and therefore, they requested to drop the show cause notice. The Section 11A (2B) of the Central Excise Act, 1944 provide that where any duty of excise has not been levied or paid or has been short levied or short paid, the person chargeable with the duty, may pay the amount of duty on the basis of his own ascertainment of such duty or on the basis of duty ascertained by a Central Excise officer before service of notice on him under sub-Section (1) in respect of the duty so paid and inform the Central Excise officer of such payment in writing, who on receipt of such intimation shall not serve any notice under Section 11A(1) in respect of the amounts so paid. In the present case, it is found that the appellant had paid the duty alongwith interest as per the amount ascertained by CERA audit and requested to drop the show cause notice. Hence, in my considered view, the show cause notice cannot be sustained.

7. The adjudicating authority observed that the appellant had availed cenvat credit on the basis of improper documents and it does not seem to be a case of bonafide clerical error of availing cenvat credit and imposition of penalty under Section 11AC is warranted. I am unable to accept such a findings of the lower authorities. There were various case laws on this issue as cited by the learned Advocate and the bonafide of the appellant can not be doubted. In any event, the appellant voluntarily reversed the credit alongwith interest and therefore, they have rightly contended that the show cause notice should be dropped. The submission of the learned Advocate that they have contested demand of duty, contrary to the stand taken before the adjudicating authority as stated hereinabove.

8. In view of the above discussion, I modify the impugned order to the extent the penalty imposed under Section 11AC is set-aside. Appeal filed by the assessee is allowed in above terms. Appeal filed by the Revenue is rejected.

(Order dictated and pronounced in the Court)

(P.K. Das) Member (Judicial) .KL

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