Madhyadesh Papers Ltd vs Commissioner Of Central Excise

IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI

COURT No. I

Appeal No. E/1149/12

(Arising out of Order-in-Original No. 35/2012/C dated 16.05.2012 passed by Commissioner of Customs & Central Excise, Nagpur)

For approval and signature:

Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. C.J. Mathew, Member (Technical)

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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 : No 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?

Madhyadesh Papers Ltd.

Appellant Vs.

Commissioner of Central Excise Nagpur Respondent

Appearance:

Shri G.L. Deshpande, Advocate for appellant Shri Hitesh Shah, Commr (AR) for respondent

CORAM:

Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. C.J. Mathew, Member (Technical)

Date of Hearing: 14.10.2015 Date of Decision: 14.10.2015

ORDER NO

Per: M.V. Ravindran

This appeal is directed against the order in original number 35/2012/C dated 16.05.2012

2. The relevant issue that arises for consideration is during the period April 2006 to March 2011, it was noticed that the appellant herein has availed Cenvat credit of service tax paid on common input services, which were utilised for in relation to the manufacture of dutiable and exempted goods. It is the case of the revenue that the appellant having not maintained separate accounts for the utilisation of common input services towards exempted and dutiable final products, they are required to pay an amount which is 5% or 10% of the value of exempted goods. The show cause notice was issued, which was contested by the appellant on merits and also on limitation. The adjudicating authority has, after following the due process of law did not agree with the contentions raised by the appellant and confirmed the demands with interest and also imposed penalties.

3. Learned Counsel would submit that the appellant has reversed an amount equivalent to the Cenvat credit of the input services attributable to the percentage of production manufactured and cleared by them of dutiable and exempted goods. He would draw our attention to the said details which are annexed to the show cause notice. He would submit that the amount reversed by them is in accordance with the provisions of the law. It is his submission that they are not contesting the amount confirmed by the adjudicating authority of Rs.8,90,313/-with interest, but are seeking an indulgence of setting aside of the penalty. It is also his further submission that they have reversed the entire Cenvat credit of the common input services.

4. Learned departmental representative reiterates the findings of the lower authority.

5. After hearing both sides and perusal of records, the entire issue is regarding the amount of Cenvat credit to be reversed. It is undisputed that appellant had availed Cenvat credit of service tax paid on common input services. We find from the records that the appellant had manufactured and cleared newsprint paper and Kraft paper. Appellant claimed exemption from payment of duty in respect of newsprint paper and discharged appropriate duty liability on the Kraft paper.

5.1 It is also seen from the records, more specifically, the worksheet attached to the show cause notice that 87% of the final products manufactured by the appellant are cleared availing exemption from payment of duty. It is the case of the appellant that they had initially reversed the Cenvat credit proportionate to the exempted goods cleared but subsequently reversed the entire Cenvat credit availed on common input services. In support of such a claim, our attention was drawn to the relevant documents. On perusal of such documents, we find it so.

5.2 As per the provisions of the Cenvat credit rules, more specifically Rule 6, we find that if a manufacturer proportionately reverses the Cenvat credit attributable to the clearances of exempted goods, it is considered as compliance of the provisions and need not be burdened with the demand of an amount equivalent to 5% or 10% of the value of exempted goods. In the case in hand, as the appellant has already reversed the entire Cenvat credit of service tax paid on the common input services, we find that further demanding any amount from him is not in consonance with the law.

5.3 In view of the foregoing, we uphold the amount that has been reversed as an amount of the Cenvat credit availed on common input services along with interest. The penalties sought to be imposed on this count are unwarranted as the lower authorities have not considered the fact that the rules themselves provided for such reversal. They are set aside. The demands confirmed as an amount payable of the value of exempted clearances are set aside so also the interest liability and the penalties on this count.

6. The appeal is disposed of as indicated hereinabove.

(Dictated in Court)

(C.J. Mathew) Member (Technical) (M.V. Ravindran) Member (Judicial)

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