Racold Thermo Ltd vs Commissioner Of Central Excise, Pune-I

[Arising out of Order-in- Appeal No. PUNE-EXCUS-001-APP-76-13-14 dated 23/7/2013 passed by the Commissioner(Appeals), Central Excise, Pune]

For approval and signature:

Honble Mr Ramesh Nair, Member(Judicial)

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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 : 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? =======================================================

Racold Thermo Ltd. : Appellants

VS

Commissioner of Central Excise, Pune-I : Respondent

Appearance

Shri. Makrand Joshi, Advocate for the Appellant Shri. V.K. Agarwal, Addl. Commissioner(A.R.) for the Respondent

CORAM:

Honble Mr. Ramesh Nair, Member (Judicial)

Date of hearing: 8/5/2015 Date of decision: 8/5/2015

ORDER NO.

Per : Ramesh Nair

This appeal is directed against Order-in- Appeal No. PUNE-EXCUS-001-APP-76-13-14 dated 23/7/2013 passed by the Commissioner(Appeals), Central Excise, Pune, wherein Ld. Commissioner (Appeals) has upheld the order in original No. PI/47/CEX/ADC/ADJ/2012 dated 7/12/2012 and dismissed the appeal of the appellant. The fact of the case is that during audit of the appellants record by Central Excise audit team, it was pointed out that in the balance sheet the value of certain inputs has been written off and therefore Cenvat credit on written off value is not admissible and same was required to be reversed. On pointing out by audit officers appellant reversed the Cenvat credit on the written off value for the period 2009-10 and they also paid the interest. Subsequently Central Excise Revenue audit of CAG was conducted, wherein they observed that appellant have written off value of certain inputs during the period 2007-08 to 2008-09 also appellant on their own calculated Cenvat Credit which amounting Rs. 9,90,630/- and paid same alongwith interest of Rs. 3,64,081/-. on 5/8/2011. Show cause notice was issued on 4/9/2012 proposing demand of Cenvat credit of Rs. 11,32,147/- and also demanded interest and penalty. In the adjudication demand of Rs. 11,32,147/- was confirmed and amount of Rs. 9,90,630/- paid on 31/7/2011 was appropriated, interest was also demanded under Section 11AB. However an amount of Rs. 3,64,081/- paid on 5/8/2011 was appropriated, penalty of equal amount of Cenvat Credit of Rs. 11,32,147/- was imposed under Section 11AC. Aggrieved by the adjudication order appellant filed appeal before the Commissioner (Appeals) which was dismissed therefore appellant is before me.

2. Shri. Makrand Joshi, Ld. Counsel for the appellants submits that while pointing out by Central Excise audit team regarding non-availability of Cenvat Credit on written off value of inputs, the audit officers have gone through balance sheet for the period 2007-08, 2008-09 also which is evident from the audit report wherein same discrepancy related to this period was pointed out. He submits that it is not only appellant but also the audit officer were of the view that this reversal of written off value is applicable only for the period 2009-10 in view of amendment of the Rule 3(5B) of Cenvat Credit Rules, 2004, therefore under bonafide belief they paid the amount of Cenvat Credit only for 2009-10 and audit officer also not raised objection for the period 2007-08 and 2008-09. He submits that subsequently CERA audit was conducted then issue was raised for the years 2007-08 and 2008-09 and on their pointing out, they immediately calculated an amount of Rs. 9,90,630/- and paid the said amount alongwith interest without any protest and admitted the said liability. In view of this fact which is not under dispute it cannot be said that there is any malafide intention on the part of the appellant to evade payment of duty. He submits that since amount of written off value was very much declared in the balance sheet and it was available for the audit officers for verification, there cannot be suppression of facts and therefore penalty is not imposable. He submits that under subsection 2B of 11A(1) there is a provision if the amount of demand and interest paid before issuance of show cause notice and same is not contested, the department should not issue show cause notice. Their case is also covered by this provision as they have paid Cenvat amount along with interest on their own without contesting demand.

3. On the other hand, Shri. V.K. Agarwal, Ld. Addl. Commissioner(A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order. He submits that at the first occasion audit was conducted, this discrepancy was raised by the audit officer, the appellant should have reversed Cenvat Credit for the period 2007-08 and 2008-09 also as they are aware about written off value of inputs during the said period also therefore appellant knowingly about written of value in their books of account have neither reversed the same nor intimated to the department therefore it is clear case of suppression of facts.

4. I have carefully considered the submissions made by both sides.

5. I find that appellant has paid amount of Rs. 9,90,630/-alongwith interest as per their calculation immediately after pointed out by CERA audit team and intimated to the department. In my view the act of the appellant regarding the payment of Cenvat amount alongwith interest without any contest is covered by subsection (2B) of Section 11A(1), according to which if the duty amount alongwith interest is paid, no show cause notice should be issued. In this position since show cause notice should not have been issued the penalty could not have been imposed. Considering overall facts and circumstances of the case, I am of the view that penalty commensurate to the amount of Cenvat credit of Rs. 9,90,630/- is not sustainable therefore the same is set aside. However, I agree with the Ld. Commissioner(Appeals) that total demand of Rs. 11,32,147/- sustainable accordingly appellant is directed pay difference Cenvat amounting to Rs. 1,41,517/- alongwith interest and also penalty of equal amount of Rs. 1,41,517/-. In view of my above discussion, appeal is partly allowed.

(Dictated in court)

Ramesh Nair Member (Judicial)

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