Samrudhi Sugars Ltd vs Commissioner Of Central Excise, ...

(Arising out of Order-in-Original No. 15/CEX/COMMR/2014 dated 18.3.2014 passed by Commissioner of Central Excise, Customs & Service Tax, Aurangabad)

For approval and signature:

Honble Mr. P.K. Jain, 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 :

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?

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Samrudhi Sugars Ltd. Appellant Vs. Commissioner of Central Excise, Aurangabad Respondent

Appearance: Shri H.S. Shirsat, Consultant, for appellant Shri Ashutosh Nath, Assistant Commissioner (AR), for respondent

CORAM: Honble Mr. P.K. Jain, Member (Technical)

Date of Hearing: 30.1.2015 Date of Decision: 11.3.2015

ORDER NO

Brief facts of the case are that the appellants had availed cenvat credit on various capital goods during the establishment of the new unit and a show cause notice was issued to them proposing to deny cenvat credit amounting to Rs.60,27,939/-. The case was adjudicated vide the impugned order wherein the Commissioner has confirmed a demand of Rs.13,34,445/-. The Commissioner has also confirmed interest on the said amount and imposed penalty equivalent to the duty confirmed, under Rule 15(2) of the Cenvat Credit Rules read with Section 11AC of the Central Excise Act.

2. It is seen from the impugned order that the appellant though initially disputed the said demand, however, during the course of the personal hearing, they did not press for dropping the amount confirmed. It is also seen that in the appeal filed before this Tribunal, the appellant has initially disputed the denial of cenvat credit of Rs.8,13,887/- and imposition of equal penalty.

3. The case was heard, wherein the learned counsel was asked by the Tribunal that when they have not pressed for the said demand before the original authority, why are they pressing for the same at this stage and the Commissioner in his order has not gone into merits for the reason that the appellants are not contesting the said amount. The learned counsel for the appellant stated that even though they have filed an appeal for an amount of Rs.8,13,887/- and imposition of equal penalty, they are no more pressing denial of the cenvat credit but they are pressing for imposition of equal penalty under Section 11AC. His main contention for non-imposition of penalty was that it would be seen from the impugned order that they have not suppressed anything from the department and there was no wilful intention to evade the duty and under the circumstances, in view of the Honble Supreme Court decision in the case of CCE vs. Gujarat Narmada Fertilizers Co. Ltd. reported in 2009 (240) ELT 661 (SC) and in the case of CCE, Mumbai vs. Mahindra & Mahindra Ltd. reported in 2004 (171) ELT 159 (SC), no penalty should be imposed as the issue whether the appellants are entitled to cenvat credit for the items falling under Chapter 73 involves interpretation.

4. The learned AR, on the other hand, reiterates the impugned order wherein it is stated that the appellant is working under self-assessment scheme and the responsibility is cast on him to avail the cenvat credit which is inadmissible and the appellant has failed in the said duty. They have reversed the cenvat credit only after detection by the departmental officer during the scrutiny of the records.

5. I have considered the submissions of both the sides. The only issue to be decided is whether penalty can be imposed under the facts and circumstances of the case. It is seen that the appellant was setting up a new unit and in that context, they have availed the cenvat credit on many items and even though initially the demand was issued for an amount of Rs.60,27,939/-, finally the Commissioner has confirmed only an amount of Rs.13,34,445/-. It is also seen that the items on which the credit has been denied are undoubtedly used in the factory. It is only due to interpretation of whether the said items would be covered within the definition of capital goods that they are being denied the credit. It is also seen that the items are falling under Chapter 73 and are in the nature of inputs used in the manufacture of supporting structures of capital goods and few items are used in the installation work outside the factory limits.

6. Keeping in view the nature of the dispute as also the fact that on being pointed out, the appellants have reversed the cenvat credit and also paid the interest, I find that the ingredients of Section 11AC are missing in the case and, therefore, penalty imposed is set aside. The appeal is disposed of in above terms.

(Pronounced in Court on 11.3.2015)

(P.K. Jain) Member (Technical)

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