M/S. Indian Oil Corporation Ltd vs Commissioner Of Central Excise, ...

[Arising out of Order-in- Appeal No. YDB/853/M-II/2010 dated 16/12/2010 passed by the Commissioner of Central Excise (Appeals)-II, Mumbai]

For approval and signature:

Honble Mr Ramesh Nair, Member(Judicial)

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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 : 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?

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M/s. Indian Oil Corporation Ltd. : Appellants

VS

Commissioner of Central Excise, Mumbai-II : Respondent

Appearance

Ms. Padmavati Patil, Advocate for the Appellants Shri. Rakesh Goyal, Add. Commissioner(A.R.) for the Respondent

CORAM:

Honble Mr. Ramesh Nair, Member (Judicial)

Date of hearing: 25/2/2015 Date of decision: 25/2/2015

ORDER NO.

Per : Ramesh Nair

The appeal is directed against Order-in- Appeal No. YDB/853/M-II/2010 dated 16/12/2010 passed by the Commissioner of Central Excise (Appeals)-II, Mumbai, wherein Ld. Commissioner(Appeals) has upheld the Order-in-Original No. 10/SK/ADC/M-II/09 dated 26/8/2009 and rejected the appeal filed by the appellant. The fact of the case is that the appellant, M/s. Indian Oil Corporation Ltd has availed Cenvat Credit on Education Cess paid on Basic Custom duty which was not admissible as Cenvat Credit. On pointing out by the audit officer appellant has suo-moto paid entire credit wrongly availed amounting Rs. 9,75,937/- and also paid interest on the said Cenvat Credit. Appellant intimated the said payment of Cenvat Credit alongwith interest vide their letter No. TRLC/AC/EA/2000 dated 19/5/2007 to the Superintendent of Audit.

2. Ms. Padmavati Patil, Ld. Counsel for the appellant submits that on pointing out by the audit team they admittedly paid Cenvat credit amount alongwith interest without any protest. The said payment was made before the issuance of show cause notice therefore in terms of Section 11A(2B) the show cause notice should not have been issued. She also submits that though the appellant has taken Cenvat Credit under a bonafide mistake and without any intention to evade payment of duty, therefore there is no suppression on their part. It is her submission that immediately on pointing out by the audit officer the appellant has deposited duty alongwith interest however the show cause notice was issued after two years from the date of payment therefore show cause notice is time bar. She placed reliance on Honble Supreme Court judgment in the case of Pushpam Pharmaceuticals[1995(78) ELT 401(SC)] according to which if commission and omission on the part of assessee is not to be noticed to assessee, extended period cannot be invoked. She submits that in the present case the show cause notice has not mentioned any commission or omission on the part of the appellant regarding invocation of extended period therefore demand is time bar and extended period cannot be invoked. As regard penalty under Section 11AC, she submits that since no intention to evade payment of duty is established, the penalty under Section 11 AC cannot be imposed. She also submits that appellant being public sector there can not be any intention to evade payment of duty it is only case of bonafide mistake in taking Cenvat Credit on education cess for this reason also penalty under Section 11 AC should not be imposed, In support of her submission she placed reliance on following judgments:-

(a) M/s. Cosmo Films Ltd. Vs. CCE, Aurangabad[2009-TIOL-1914-CESTAT-MUM]

(b) Jagdish Oil Mills Vs. CCE, Aurangabad[2010-TIOL-359-CESTAT-MUMBAI]

(c) CCE, Nashik Vs. Jai Bharat Re-rolling Mills[2010-TIOL-505-CESTAT-MUM]

(d) CCE, Aurangabad Vs. Concept Pharmaceticals[2010-TIOL-568-CESTAT-MUM].

3. On the other hand, Shri. Rakesh Goyal, Ld. Addl. Commissioner(A.R.) reiterates the findings of the impugned order. He further submits that though the appellant has paid Cenvat amount alongwith interest on 19/5/2007 but said payment was made only after detection by the audit party. It is his submission that while taking credit it is not brought to the notice of the department, hence there is suppression of fact. The show cause notice was issued within five years which is the time limit provided under proviso to Section 11A(1). He also submits that once demand is sustainable for extended period, penalty under Section 11 AC cannot be waived or reduced.

4. We have carefully considered the submissions made by both the sides.

5. The appellant has taken Cenvat credit in respect of education cess paid on basic custom duty which was not admissible. From the fact, it is clear that there is bonafide mistake in taking such credit on the part of the appellant. On pointed out by the audit, they paid Cenvat amount alongwith interest without raising any dispute of the said payment before issuance of show cause notice. In my considered view since the appellant without contesting and without protest paid wrongly availed Cenvat credit alongwith interest before issuance of show cause notice and intimated vide their letter dated 19/5/2007 the case is squarely covered by subsection (2B) of Section 11A of Central Excise Act,1944 according to which the Revenue should not have issued show cause notice. Therefore payment of Cenvat Credit alongwith interest attained finality. Since show cause notice was mot supposed to be issued, consequential penalty should not have been imposed. In view of this position, I set aside the penalty under Section 11AC invoking provision of subsection (2B) of Section 11A of Central Excise Act, 1944. It is made very clear that payment of Cenvat Credit and interest thereupon is held to be sustained. The appeal is partly allowed.

(Operative part pronounced in court)

Ramesh Nair Member (Judicial)

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