M/S. Prism Cement Unit-Ii vs C.C.E. & S.T. Bhopal

[Arising out of Order-In-Appeal No. BPL-EXCUS-000-APP-036-13-14, dated 19.05.2014 passed by Commissioner (Appeals) Bhopal]

For approval and signature:

Hon'ble Mr. S.K. Mohanty, 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. Prism Cement Unit-II ...Appellant

Vs.

C.C.E. & S.T. Bhopal Respondent

Appearance:

Mr. Anurag Kapur (Advocate) for the Respondent

Mr. M.R. Sharma, DR for the Appellants

CORAM:

Hon'ble Mr. S.K. Mohanty, Member (Judicial)

Date of Hearing.23.06.2015

Final Order No. 53143 /2015_

Per S K Mohanty:

The brief facts of the case are that during the disputed period, the appellant had availed cenvat credit on angles, beams, Purlin & Roof Sheeting, Wall Panel etc., treating the same as input for manufacture of capital goods i.e. Steel Structural of Pre Fabricated Steel Building inside the factory premises. Taking of such cenvat credit was objected to by the audit wing of the Central Excise Department. Immediately the appellant reversed the irregularly availed cenvat credit. However, the appellant did not pay the interest amount for late reversal of cenvat credit. For recovery of interest amount and for imposition of penalty, the Central Excise Department issued the SCN, which culminated in the Adjudication order dated 25.03.2013, wherein interest liability of Rs. 2,67,983/- was confirmed against the appellant and the penalty of Rs. 1,33,751/- was imposed under Section 11A(6) of the Central Excise Act, 1944, read with Rule 15(1) of Cenvat Credit Rules, 2004. Appeal filed against the said adjudication order was upheld by the Commissioner (Appeals) by relying on the judgment of Honble Supreme Court, in the case of UOI vs Ind Swift Laboratories Ltd. reported in 2011 (265) ELT 3 (SC). Hence, the present appeal before this Tribunal.

2. Heard the Ld. Counsel for both the sides and perused the records.

3. I find that the irregularly availed cenvat credit was reversed by the appellant upon detection of mistake by the Audit Wing of the Central Excise Department and before issuance of the SCN. It is an admitted fact that the irregularly availed cenvat credit has not been utilized by the appellant for payment of Central Excise duty. In other words, the credit taken by the appellant was all along remained in the books of the appellant un-utilized. Interest is compensatory in character and the same is due for payment only when the principal amount is paid belatedly. In the present case, since taking of credit is a mere book entry and the same has not been utilized by the appellant, the question of compensating the Government does not arise because there is no loss of Revenue to the Government exchequer. With regard to the payment of interest for late reversal of cenvat credit, the Honble Karnataka High Court in the case of CCE & ST, LTU, Bangalore- vs Bill Gorge (P) Ltd. reported in 2012 (279) ELT 209 (Kar.) has held that the credit taken if not utilized for payment of Central Excise duty, the same bears the character of a mere book entry and the interest liability cannot be confirmed against the assessee. In the above cited judgment, the Honble Court further held that the judgment of Honble Supreme Court in the case of Ind Swift Laboratories (supra) has been delivered in the entirely different set of facts, concerning interpretation of the Provisions of Rule 14 of the Cenvat Credit Rules, and thus, the principles decided therein are not applicable to the facts of the case. Since, the issue involved in the present case in identical to the facts in the Bill Forge (supra), I am of the view that demand of interest is not proper and justified in the present case, because the cenvat credit taken by the appellant irregularly has not been utilized for clearance of final product.

4. Section 11A of the Central Excise Act, 1944, was substituted w.e.f. 08.04.2011 by section 63 of the Finance Act, 2011. The effect of substitution is that sub-section (6) was inserted in section 11A. Since, the period involved in the case in hand is from December, 2010 to March 2011, the provisions of sub-rule (6), inserted subsequently, will not have any application for imposition of penalty. Further, the provisions of Rule 15(1) of the Cenvat Credit Rules, 2004 have not been invoked in the SCN for imposition of penalty. Thus, the penalty confirmed by both the authorities below is outside the scope and purview of SCN. Hence, the impugned order confirming the penalty on the appellant is liable to be set aside.

5. In view of above, the impugned order is set aside and the appeal is allowed in favour of the appellant.

(Dictated and pronounced in open court)

(S. K. Mohanty)

Member(Judicial)

Neha

Page | 4

Page | 1