M/S. Iol Chemicals And Pharmaceuticals ... vs Commissioner Of Central Excise

[Arising out of Order-In-Appeal No. JAL-EXCUS-000-APP-068-13-14 dated 19.08.2013 passed by Commissioner of Central Excise (Appeals), Chandigarh II ]

For approval and signature:

Honble Mr Ashok Jindal, Member (Judicial)

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. Iol Chemicals and Pharmaceuticals Ltd. Appellants

Vs.

Commissioner of Central Excise Respondent

& ST, Chandigarh II

Appearance:

Shri T R Rastogi, Advocate for the Appellants

Shri D Singh , AR for the Respondent

CORAM:

Hon'ble Shri Ashok Jindal, Member (Judicial)

Date of Hearing /decision: 28.4.2015

FINAL ORDER NO. A/ 51629/2015-Ex(SM)

Per Ashok Jindal :

The appellants is in appeal against the impugned order denying the Cenvat credit on the services namely insurance, audit and transportation etc. on the premise that the appellant being the job worker and doing the work under exemption Notification No. 214/86 and cleared the goods without payment of duty to the principal manufacturer.

2. The facts of the case are that during the period April, 2007 to May, 2010, the appellant was availing Cenvat credit on insurance, transportation and auditing services received by them doing job work who is working under notification No. 214/1986 and clearing the goods to the principal manufacturer without payment of duty. The show cause notice was issued on 21/09/2011 to deny the Cenvat credit on the services availed by them. The show cause notice was adjudicated and Cenvat credit was denied along with interest, equivalent amount of penalty was also imposed. Same was adjudicated by the Commissioner and it was held that Cenvat credit is not entitled to them.

3. Learned Counsel for the appellant submits that in this case, the appellant has already reversed the Cenvat credit, therefore, they have not contested the availment of Cenvat credit before the lower authorities but he prayed that out of Rs.1,58,775/- the appellant has utilized only Rs.48,386/- and if any interest is payable by them, that is to be payable only on Rs.48,386/- during the intervening period as per the decision of Honble Madras High Court in the case of CCE Madurai vs. Strategic Engineering (P) Ltd. [2014 (310) ELT 509 (Mad)]. He further submits that although the appellant is not contesting the merits of the case but penalty cannot be imposed on the appellant as per the decision of M/s. Atul Ltd. vs. CCE, Surat [2012-TIOL-1384-CESTAT-AHM]. In these circumstances, he prayed that impugned order be set aside and appeal be allowed by directing the appellant to pay interest on Rs.48,386/- for the intervening period.

4. On the other hand, the contention of the learned counsel was opposed by the learned AR who submits that as per the decision of Apex Court in the case of Ind-Swift Laboratories Ltd. as reported in [2014 (310) ELT 509 (Mad)], the appellant is liable to pay interest on whole of the inadmissible Cenvat credit amount availed. He further submits that the appellant was clearing the goods on non-duty paid challan and knowing that they are not entitled to take Cenvat credit and this fact was only revealed to the Revenue during the course of audit. Therefore, it is a case of suppression of facts by the appellant. In this case, penalty is imposable on the appellant.

5. Heard the parties. Considered the submissions.

6. It is admitted fact that appellant has not challenged the admisibility of Cenvat credit to them and have reversed the Cenvat credit sought to be denied by the adjudication order before issuance of show cause notice. The only dispute before me is that whether the appellant is liable to the interest on Rs.1,58,775/- or Rs.48,386/- during the intervening period. I have gone through the decision of Ind-swift Laboratories (supra) and decision of Strategic Engineering (supra) wherein the decision of Ind-swift Laboratories was considered and thereafter relying on the decision of Bill Forge Pvt. Ltd. [2012 (26) STR 204 (Kar)] wherein the Honble High Court have considered the decision of Apex Court in the case of Ind-Swift Laboratories Ltd. [2011 (265) ELT 3(SC)] and held that if the Cenvat credit availed by the assessee wrongly but same has been reversed before utilization of the same, no interest is payable by the assessee. In these circumstances, relying on the decision of Strategic Engineering P Ltd. (supra), I hold that appellant is required to pay interest only on Rs.48,386/- during the intervening period. Further, I find that in the impugned order, the observation has been made by the learned Commissioner (Appeals) that the appellant is entitled to take Cenvat credit on input/ input services used in the manufacture of goods in the light of decision of Sterlite Industries Ltd. [2005 (183) ELT 353 (T)] which has been affirmed by the Honble High Court of Bombay. Therefore, if the appellant is not contesting the merits of the case, the penalty is not imposable on the appellant in the light of M/s. Atul Ltd. vs. CCE, Surat [2012-TIOL-1384-CESTAT-AHM]. Therefore, I hold that penalty on the appellant is not imposable. With these terms, Appeal is disposed of.

(Dictated and pronounced in the open court )

( Ashok Jindal ) Member(Judicial)

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