M/S Jain Products vs Commissioner Of Central Excise-Rajkot

[ Arising out of OIA-116/2007/COMMR-A-/RAJ dtd 30.5.2007 Passed by Commissioner of Central Excise-RAJKOT ]

M/s Jain Products - Appellant(s)

Vs

Commissioner of Central Excise-RAJKOT - Respondent (s)

Represented by For Assessee : Shri P V Sheth, Advocate For Revenue : Shri J Nair, Authorised Representative

For approval and signature :

Mr. P.K. Das, Hon'ble Member (Judicial) Mr. P.M. Saleem, Honble Member (Technical)

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, Hon'ble Member (Judicial) Mr. P.M. Saleem, Honble Member (Technical)

Date of Hearing / Decision : 8/9/2015

ORDER No. A/11369 / 2015 dtd 8/9/2015

Per : Mr.P.K. Das,

After hearing both sides and on perusal of records, we find that the appellants were engaged in the manufacture of Bright Bars classifiable under Chapter 72 of the Central Excise Tariff Act 1985. They were availing Cenvat Credit on the Inputs and Capital goods. During the period from 5.4.2002 to 14.6.2002, they had removed various Inputs as such under Rule 3(4) of the Central Excise Rules 2002 by reversing the amount equivalent to Cenvat Credit taken on such Inputs. Show cause Notice was issued proposing demand of duty on the transaction value of the said inputs under Rule 3(4) of the Central Excise Act 2002 as it stood during the relevant time. The Adjudicating authority confirmed the demand of Central Excise duty of Rs 2,17,157/- alongwith interest and imposed penalty of equal amount of duty. The Commissioner (appeals) upheld the Adjudication order.

2. The Learned Advocate on behalf of the appellant contested demand of duty on merits as well as on limitation. Both the sides cited case laws on merit and limitation. We find that the issue may be decided on limitation. The demand of duty by show cause notice dtd 13.5.2005 was issued for the period 5.4.2002 to 14.6.2002. On the identical issue, the Tribunal in the case of M/s Panasonic AVC Networks India Co Ltd vs CCE, Meerut  2014.301.ELT.625 (Tri.Del.) set aside the demand of duty for the extended period of limitation. The relevant portion of the said decision is reproduced below :

 7.?Next comes the issue of limitation. The removal of the cenvated inputs was during August and September, 2002, while the show cause notice has been issued on 28-4-2004. The fact of clearance of obsolete Cenvat credit availed inputs as waste on payment of duty on transaction value during August and September, 2002 came to the notice of the Department during audit sometime in January, 2003 and on being asked by the Department, the appellant submitted all the required information under their letter dated 17-6-2003. The extended period has been invoked by the department on the ground that the appellant were aware of different rules and procedure of availment of Cenvat credit but still chose to take the credit in spite of Boards instructions and thus it can be said that they have availed the credit knowing fully well that they were not entitled for the same and as such the extended period for demanding credit has been rightly invoked.

8.?In terms of Rule 15(2) of Cenvat Credit Rules, 2004, read with the proviso to Section 11A(1), extended period is invocable for recovery of wrongly availed Cenvat credit only when wrong Cenvat credit availment has happened due to fraud, collusion, wilful misstatement, suppression of fact or contravention of provision of Central Excise Act, 1944 or of the rules framed thereunder with intent to evade the payment of duty. Interpreting the provisions of Section 11A(1), the Apex Court in the case of Tamil Nadu Housing Board v. CCE, Madras (supra) has held that when the law requires an intention to evade the payment of duty, then this not mere failure to pay the duty but is something more that the assessee was aware that the duty was payable and he deliberately avoided paying it. On going through the order of the original Adjudicating Authority of the 1st Appellate Authority, I find that there are no findings as to how the appellant had deliberately short paid the amount payable under Rule 3(4). In fact the dispute here is related to interpretation of Rule 3(4) whether during the period prior to 1-3-2003 when the terms of the wordings of this rule on removal of cenvated inputs as such, an amount equal to the duty at the rate in force on the date of removal of inputs and on the value determined under Section 4, 4A or Section 3(2) of the Central Excise Act, 1944 as the case may be, was payable or the assessees liability was only restoring the Cenvat credit originally taken.

From the facts of this case, it is clear that the appellant have paid the amount strictly going by the wordings of Rule 3(4) during the period of dispute, according to which on removal of cenvated inputs as such, an amount equal to duty on the transaction value was payable. With regard to this issue, there were conflicting decisions and for this reason, this issue had been referred to Larger Bench till it was settled by the Larger Bench in the case of Eicher Tractors v. Commissioner reported in 2005 (189) E.L.T. 131 (Tri. - LB). Apex Court in the case of Continental Foundation Joint Venture v. CCE, Chandigarh-I reported in 2007 (216) E.L.T. 177 (S.C.) has held that when there is scope for entertaining doubt on account of conflicting judgments of the Tribunal, extended period under proviso to Section 11A(1) cannot be invoked. Therefore, from overall facts and circumstances of the case, I do not find anything from which it can be concluded that the short payment of the amount payable under Rule 3(4) of the Cenvat Credit Rules was a deliberate act on the part of the assessee. Therefore, I hold that the longer limitation period in this case is not invokable.

More so, when during visit of the audit team all the information had been made available by the assessee on the basis of which only the Department had detected this short payment and subsequently all the information for quantification of the duty has been furnished by the appellant under their letter dated 17-6-2003. Therefore, I hold that the extended period is not invokable, and as such, the impugned order is not sustainable on limitation.

3. In that above case, the Tribunal decided the issue on merit against the assessee and set aside the impugned order on limitation. The assessee filed appeal before the Honble Allahabad High Court against merit. The Honble Allahabad High Court upheld the order of the Tribunal on limitation as reported in 2015.316.ELT.A123 (All.). It has been observed that the reasoning of the Tribunal is that the matter was settled by the Larger Bench decision in M/s Eicher Tractor Vs CCE., Jaipur  2005.179.ELT.67 (Tri.Del.) they were conflicting judgments of the Tribunal as a result of which extended period of limitation could not be invoked. In holding so, the Tribunal has relied on the decision of the Supreme Court in M/s Continental Foundation Joint Venture vs CCE, Chandigarh I  2007.26.ELT.177 (SC).

4. In the present case, we find that the show cause notice was issued for the extended period of limitation. There are various Board Circulars on this issue, which was decided by the Larger Bench of the Tribunal in the case M/s Eicher Tractors (supra), as distinguished in the decision of M/s National Engg India Ltd Vs CCE Jaipur I  2010.258.ELT.97 (Tri. Del). Recently, the Tribunal in the case of M/s Panasonic AVC Networks India Co Ltd (supra) passed order on the identical issue following the decision of the Larger Bench which was upheld by the Honble High Court. Thus, the appellant acted on bonafide belief and the demand of duty alongwith interest for the extended period of limitation cannot be invoked. The Learned Advocate submits that the entire demand is barred by limitation.

5. In view of the above discussion, we set aside the impugned order on limitation without going into merit. The appeal filed by the appellant is allowed.

(Dictated and pronounced in the Court)

(P.M. Saleem) (P.K. Das) Member (Technical) Member (Judicial)

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