M/S. Singla Cables vs Commissioner Of Central Excise

[Arising out of Order-In-Appeal No. 173-CE/Appeal/CHD-II(JK)/2013 dated 11.04.2013 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. Singla Cables Appellants

Vs.

Commissioner of Central Excise Respondent

Jammu

Appearance:

Shri Vicrant Kackria, Advocate for the Appellants

Shri A K Dhawan, AR for the Respondent

CORAM:

Hon'ble Shri Ashok Jindal, Member (Judicial)

Date of Hearing /decision: 14.1.2015

FINAL ORDER NO. A/50126/2015-Ex(SM)

Per Ashok Jindal :

The appellant are manufacturers of telephone cables and have unit in the area specified under Notification No. 56/2002-CE in the State of Jammu & Kashmir. They are availing of the duty exemption under Notification No. 56/2002-CE. For availing this exemption, the assessee as per the conditions of this notification, are required to utilise the Cenvat credit available at the end of the month, to the extent possible for payment of duty on the finished products cleared during the month and only balance of amount of duty, if any, is required to be paid through PLA and this duty paid through PLA is refunded in terms of this exemption notification by self credit or on making an application to the Jurisdictional Commissioner. In this case, the appellant by using imported inputs in respect of which in addition to Additional Custom Duty, Special Additional Custom Duty (SAD) under Section 3 (5) of the Indian Customs Tariff Act, had also been paid. However, the appellant, during the period from February 2006 to March 2006 had confined to Cenvat credit availment only to Additional Customs Duty and had not taken the Cenvat credit of Rs. 10,72,419/- available in respect of Special Additional Customs Duty (SAD). To the extent the lesser Cenvat credit was availed there was lesser payment of duty through Cenvat credit and higher payment of duty through PLA resulting in higher refund under Notification No. 56/2002-CE. When this was pointed out by the Department in December 2006, the appellant immediately took the Cenvat credit of Rs. 10,72,419/- during that month and utilised this credit for payment of duty on their final product cleared during December 2006. The department issued a show cause notice on 06/1/11 demanding allegedly excess refund claim under Notification No. 56/2002-CE of Rs. 10,72,419/- alongwith interest and also for imposition of penalty. This show cause notice was issued by invoking extended period under proviso to Section 11A (1). This show cause notice was adjudicated by the Additional Commissioner vide order-in-original dated 23/3/12 by which the above duty demand was confirmed alongwith interest and penalty of equal amount was imposed. On appeal being filed to Commissioner (Appeals), this order of the Additional Commissioner was upheld vide order-in-appeal dated 07/4/13 against which this appeal has been filed.

2. Heard both the sides.

3. Shri Vikrant Kackaria, Advocate, the learned Counsel for the appellant, pleaded that there is no excess of refund under Notification No. 56/2002-CE in as much as while during the period from February 2006 to April 2006, the Cenvat credit of Rs. 10,72,419/- was not taken resulting in higher payment of duty to that extent through PLA and, hence, higher quantum of refund, but in December 2006 as soon as this was pointed out by the audit party, the appellant took the Cenvat credit of this amount i.e. Rs. 10,72,419/- during that month, as a result of this during that month, they got lesser amount of refund to that extent, that overall there was no excess refund and hence there is no question of recovery, that in any case there is not even intention to claim higher refund and hence proviso to Section 11A (1) is not applicable, that the demand raised vide show cause notice dated 06/1/11 is totally time barred, therefore impugned order be set aside and the appeal be allowed.

4. Shri A.K. Dhawan, the learned DR, opposed the contentions of the learned Counsel by reiterating the findings of the Commissioner (Appeals) in the impugned order. He pleaded that there was suppression of fact and hence extended period has been correctly invoked.

5. I have considered the submissions from both the sides and perused the records.

6. In this case, though during February 2006 to April 2006 period, the appellant for whatever reason, did not take Cenvat credit of Rs. 10,72,419/- in respect of SAD resulting in higher quantum of exemption under Notification No. 56/2002-CE and thus higher quantum of refund, in December 2006 as soon as this was pointed out, they took the Cenvat credit of this amount, as a result of this in the month of December 2006 their refund claim was lesser to that extent. Thus, overall there was no excess availment of exemption under Notification No. 56/2002-CE, as the excess quantum of refund under Notification No. 56/2002-CE during February 2006 to April 2006, was neutralized by lesser quantum of refund under this notification during December 2006.

7. A similar case came up before this Tribunal in the case of New India Wire and Cables [2008 (232) ELT 681 (Tri-Del)] wherein the assessee did not take the available Cenvat credit during the period it was available and paid the excess from the PLA and took the refund thereof. Later on, they took Cenvat credit which was available and paid less duty. In that case, the excess refund availed by the assessee during the initial period was sought to be denied. In that case, this Tribunal held that it is situation of revenue neutrality, therefore denial of refund is not sustainable.

8. Further I find that in this case the fact of non-availment of Cenvat credit was in the month of December, 2006 itself and no show cause notice has been issued by invoking extended period of limitation. The same is also required to be issued by invoking extended period of limitation.

9. In nutshell, I hold that show cause notice is barred by limitation as well as the appellant succeeds on merit as it is a revenue neutral situation as per the decision of this Tribunal in the case of New India Wire and cables.

10. In these circumstances, impugned order is set aside and appeal is allowed with consequential relief (if any).

(dictated and pronounced in the open court )

( Ashok Jindal ) Member(Judicial)

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