Sree Kaderi Ambal Mills Ltd vs Commissioner Of Central Excise

[Arising out of Order-in-Appeal No.74/2005 dt.27.5.2005 passed by the Commissioner of Central Excise (Appeals), Madurai]

Sree Kaderi Ambal Mills Ltd. Appellant

Versus

Commissioner of Central Excise, Madurai Respondent

Appearance:

Shri M. Kannan, Advocate For the Appellant Shri L. Paneer Selvam, AC (AR) For the Respondent

CORAM:

Honble Shri R. Periasami, Technical Member

Date of hearing/decision :22.5.2015

FINAL ORDER No.41005/2015

This appeal is against the Commissioner (Appeals) order dated 27.5.2005.

2. The brief facts of the case are that the appellant was registered with EOU Development Commissioner. They availed credit on the capital goods. Subsequently, the appellant opted for debonding of the same unit. Before debonding, the appellant has reversed the credit. The adjudicating authority in his order dropped the demand in his order dt. 12.1.2005 and ordered for recovery of interest of Rs.11,97,139/- and also imposed a penalty of Rs.1,20,000/-. On appeal, the Commissioner (Appeals) has rejected the appeal and upheld the order. Hence the present appeal.

3. The learned advocate submits that they had two units one is registered as EOU and the other is registered as DTA and EOU had applied for debonding and paid appropriate duty on the capital goods. The same was transferred by raising invoice dt. 30.3.2001 to the Unit-II. Unit II has availed credit on 31.3.2001 whereas the AC has demanded interest on Unit II and he submitted a date chart showing the date of availing the credit and date of debonding and date of approval by the Development Commissioner. The Development Commissioner approved the debonding w.e.f. 31.3.2001 whereas the adjudicating authority took the relevant date from 14.8.2001 and demanded the interest. He further submits that when there was no the demand, question of interest does not arise. The relevant date for the demand should be taken as 31.3.2001 as approved by the Development Commissioner.

4. On the other hand, Ld. AR reiterates the findings and submits that final debonding was given by the Asst. Commissioner only on 14.8.2001 and till such time unit has remained as an EOU. Therefore interest is payable. He relied para-20 of the OIO.

5. On a careful consideration of the submissions of both sides and also on perusal of records and the date chart submitted by the appellant, I find that adjudicating authority in his order dropped the proceedings in respect of recovery of demand of reversal of cenvat credit. However, he demanded the interest. On perusal of the DC letter dt. 20.7.2001 addressed to the appellant, where the appellant applied for debonding on 30.3.2001, final debonding order was issued and appellant was allowed to operate as DTA unit with effect from 1.4.2001. Subsequently, the Development Commissioner clarified that appellants have been permitted to operate as DTA unit on 31.3.2001 instead of 1.4.2001 as they have completed Central Excise formalities on 30.3.2001 itself. In view of the Development Commissioners letter allowing for debonding of EOU, the DTA unit of the appellants have reversed the credit on 30.3.2001 itself and the Development Commissioner in the above letter has also approved debonding w.e.f. 31.3.2001. Therefore, the question of demand of interest and imposition of penalty does not arise and also find that there was no removal of capital goods till the same unit becomes the DTA unit. There was no physical removal or clearance of capital goods or excisable goods. I find that the adjudicating authority instead of taking the date as 31.3.2001 has taken the date of debonding as 14.8.2001 which is not correct. Hence I hold that appellants are not liable for any interest or penalty. Accordingly, the impugned is set aside and appeal is allowed.

(Operative part of the order pronounced in open court on 22.5.2015)

(R. PERIASAMI) TECHNICAL MEMBER

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