Temple Packaging Private Ltd vs Commissioners Of Central Excise

[ Arising out of OIA-AKP/103/NDMN/DAMAN/2009-2010 dtd 29.10.2009 Passed by Commissioners of Central Excise (Appeals), Customs and Service Tax-DAMAN ]

Temple Packaging Private Ltd - Appellant(s)

Vs

Commissioners of Central Excise, Customs and Service Tax-DAMAN - Respondent (s)

Represented by :

Appellant(s) : Shri H D Dave (Learned Advocate) Respondent (s) : Shri G P Thomas (Authorised Representative)

For approval and signature :

Mr. P.K. Das, Hon'ble Member (Judicial)

1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

No 2 Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

No 3 Whether their Lordships wish to see the fair copy of the Order?

Seen 4 Whether Order is to be circulated to the Departmental authorities?

Yes

CORAM :

Mr. P.K. Das, Hon'ble Member (Judicial)

Date of Hearing / Decision : 27/2/2015

ORDER No. A/10373 / 2015 dtd 27/2/2015

Per : Mr.P.K. Das,

The relevant facts of the case, in brief, are that the appellants had imported some capital goods under EPCG scheme. On 14.3.2006, the appellant paid duty of Rs 68,74,266/- on the basis of Bill of Entry generated through EDI system on 13.3.2006. It was noticed that the appellant is not liable to pay the special additional duty. Accordingly, another Bill of Entry was generated on 14.3.2006 showing the payment of duty of Rs 37,68,138/-. The appellant filed refund claim of Rs 31,06,128/- as paid by them on the basis of earlier Bill of Entry. By adjudication order dtd 17.11.2006, the Assistant Commissioner of Customs, EPCG section, has directed the appellant to re-credit of Rs 31,06,128/- manually on the back side of the EPCG licence to be on par with debits in the EDI system. The appellant found that they are unable to utilise the amount in the EPCG licence as they were going to redeem the licence in a shorter period and therefore they have taken credit in the Cenvat account.

2. A show cause notice dtd 3.1.2008 was issued proposing to recover the amount of Rs 31,06,128/- alongwith interest from them as wrongly taken as cenvat credit and also to impose penalty. The Adjudicating Authority disallowed the cenvat credit of Rs 31,06,128/- alongwith interest and also imposed penalty of equal amount of cenvat credit under Rule 15 of the Cenvat Credit Rules 2004 read-with section 11AC of the Central Excise Act 1944. By the impugned order, Commissioner (Appeals) dismissed the appeal filed by the appellant.

3. The Learned Advocate for the appellant submits that EPCG licence was redeemed on 23.11.2010. He drew the attention of the Bench to the correspondences with DGFT authorities informing them that they have taken this amount in their cenvat account, which will be taken into consideration for export obligation under the EPCG Scheme. Further, they are entitled to avail the cenvat credit as per Notification No 97/2004-CUS dtd 17.9.2004. He also drew the attention of the Bench the findings of the Commissioner (Appeals) that they are eligible to take credit in the cenvat account on the Bill of Entry showing that payment of this amount. Thus, the findings of the Commissioner (Appeals) would be in favour of the appellant. In any event, there is no revenue loss in so far as instead of availing EPCG scheme that they availed cenvat credit. He relied upon the Honble Supreme Court decision in the case of CCE&C, Vadodara vs Narmada Chematur Pharmaceuticals  2005(179)ELT.276 (SC).

4. It is contended that one of the objections of the lower appellate authority is that they took the credit on the basis of TR6 challans. He submits that the Tribunal in the case of Essar Oil Ltd vs CCE, Rajkot  2014(303)ELT.255(Tri.Ahmd) held that Cenvat Credit would be admissible on the basis of TR6 Challan duty paying document as mentioned in the Rule 9 of the Cenvat Credit Rule. He further submits that they have paid the duty on the basis of the Bill of Entry dtd 13.3.2006. It is submitted that cenvat credit cannot be denied on procedural lapse, as there is substantial compliance of the law.

5. The Learned Authorised Representative for the Revenue submits that they have already filed the refund claim of the amount, which was rejected by the Commissioner (Appeals) and therefore they have no right to avail the cenvat credit of the said amount. He also submits that there are two course of action available to the appellant in so far as filing of refund or availing credit in the cenvat account.

6. But, the appellant had claimed the refund of the duty and therefore, they have no right to avail the cenvat credit in the Cenvat Account. He submits that in this case that doctrine of election will come into play. He relied upon the decision of Honble Andhra Pradesh High Court in the case of Andhra Cylinders Pvt Ltd vs Deputy Commissioner of Customs and Central Excise, Hyderabad  2013(289)ELT.88(AP). There are two remedies available and when they have opted one remedy, the other remedy is not available.

7. After hearing both the sides and on perusal of records, I find that the appellant paid the Additional Special duty on the basis of the Bill of Entry generated from EDI system on 13.3.2006 vide Challan dtd 14.3.2006. It was noticed that the appellant is not liable to pay duty and thereafter, another Bill of Entry was generated on 14.3.2006 showing SAD nil duty. Paragraph 3 of the notification No 97/2004-CUS dtd 17.9.2004 provides that  if the importer does not claim exemption from the additional duty leviable under Section 3 of the Customs Act 1975, the additional duty so paid by him shall not be taken for computation of the net duty saved for the purpose of fixation of export obligation provided that cenvat credit of additional duty paid has not been taken. Therefore, if the importer has taken cenvat credit of additional duty, the same shall be taken into for computation of the net duty saved for the purpose of fulfilment of export obligation.

8. The appellant filed refund claim of the amount of SAD paid by them. The Assistant Commissioner of Customs by order dtd 17.11.2006 rejected the refund claim and directed to re-credit the amount on the back side of the EPCG licence. However, the appellant was not able to avail the amount for subsequent import under EPCG scheme as they were likely to redeem the licence earlier and therefore they were compelled to avail cenvat credit as per Notification 97/2004.

9. It is seen from the correspondence that the DGFT authority made an enquiry of utilisation of the said amount Rs 31,06,128/- The appellant by their letter dtd 23.2.2010 informed DGFT authority that this amount was availed by them as cenvat credit towards excise duty. DGFT authorities redeemed the EPCG licence by letter dtd 23.11.2010 as the appellant fulfilled export obligation.

10. The main argument of the Learned Authorised Representative for the Revenue is that the appellant opted the procedure of refund claim and therefore availment of cenvat credit is irregular. There is no dispute that the appellant is entitled to avail the cenvat credit of SAD as evident from the Notification in 97/2004-CUS (supra), which was also noted by the DGFT authority and after considering that they have availed this amount in their cenvat account, this amount was not reduced towards the value of export obligation. Thus, it is clearly evident that the applicant is eligible to avail the cenvat credit on merit.

11. The Commissioner (Appeals) observed that the Challan is not a document for the purpose of availment of the cenvat credit. It is also observed that the appellant could have taken the credit in the cenvat account on the basis of Bill of Entry. It is revealed from the record that the appellant paid the duty by challan on the basis of the Bill of Entry generated through EDI on 13.3.2006. It is observed that the appellant has shown the reference of the Challan in their cenvat account. In my considered view, the appellant could have mentioned the reference of Bill of Entry number in their cenvat account. The appellant is also eligible to avail credit on the basis of Challan under Rule 9 of the Cenvat Credit Rule 2004 as held by the Tribunal in the case of Essar Oil Ltd (supra). It is held that word Challan and any other similar document mentioned in the explanation to Rule 9(i)(b) of the said Rules evidencing payment of additional CVD on sale of cenvatable goods would be eligible for availing cenvat credit. It is settled by series of decisions that when there is substantial compliance of law the benefit of cenvat credit cannot be denied on procedural lapse.

12. The Learned Authorised Representative strongly relied upon the decision of the Honble Andhra Pradesh High Court in the case of Andhra Cylinders Pvt Ltd (supra) for application of the doctrine of election. I find that the facts, in the case of Andhra Cylinders Pvt Ltd (supra) in respect of filing of writ petition vide Article 226 of the Constitution of India when the appeal pending before CESTAT. The relief under Article 226 of the Constitution of India is not available, when the petitioner opted any other alternative remedies, which is not applicable in the present case.

13. The Honble Supreme Court in the case of Narmada Chematur Pharmaceuticals Ltd (supra) held that optional exemption not availed in order to take cenvat/modvat credit and such credit subsequently held to be wrongly availed and when the amount of cenvat/modvat credit wrongly availed is exactly equivalent to the amount of excise duty paid by not availing the exemption, the consequences is revenue neutral and the demand of such wrong availment of credit rightly quashed by the Tribunal. In the present case, the appellant had not availed the EPCG scheme and the exact amount utilized in the cenvat account and there is no dispute the appellants are eligible to avail cenvat credit as per Notification No. 97/2004. Thus, the decision of the Honble Supreme Court in the case of Narmada Chematur Pharmaceuticals Ltd (supra) would be applicable in the present case.

14. In view of the above discussion, the impugned order cannot be sustained. Accordingly, the impugned order is set aside. The appeal filed by the appellant is allowed with consequential relief.

(Dictated and pronounced in the Court)

(P.K. Das) Member (Judicial)

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