IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT AHMEDABAD
COURT - II
Arising out of: OIA No.350/2010/Ahd-I/CE/MM/Commr(A)/Ahd, dt.2.11.2010
Passed by: Commissioner of Central Excise & Customs (Appeals), Ahmedabad
M/s Bodal Chemicals Ltd.
For Assessee: Shri N.K. Tiwari, Consultant
For Revenue: Shri K.N. Joshi, A.R.
MR.M.V. RAVINDRAN, HONBLE MEMBER (JUDICIAL)
Date of Hearing/Decision:11.01.13
ORDER No. /WZB/AHD/2013, dt.11.01.13
Per: M.V. Ravindran:
This appeal is directed against Order-in-Appeal No.350/2010/ Ahd-I/CE/MM/Commr(A)/Ahd, dt.2.11.2010.
2. Brief facts of the case are that during the course of Audit, it was observed that the appellant had availed 50% CENVAT Credit on capital goods during the year 2008-2009 and remaining 50% CENVAT Credit in the year 2009-2010. The said CENVAT Credit on capital goods so availed not covered as capital goods had been reversed along with interest by the appellant as pointed out during the CERA audit. The appellant had again re-credited the same in their CENVAT Credit register which contravened the provisions of Rules 2(a) (A) and explanation-2 given after Rule 2(k) of the CENVAT Credit Rules, 2004. Therefore, a show cause notice proposes to recover Central Excise duty of Rs.1,18,445/- under Section 11A of Central Excise Act, 1944 along with interest under Section 11AB of Central Excise Act, 1944 read with Rule 14 of CENVAT Credit Rules, 2004 and penalty under Rule 15(2) of CENVAT Credit Rules, 2004 read with Section 11AC of the Act on the appellant. The said show cause notice was adjudicated vide aforesaid impugned order by the Assistant Commissioner, Central Excise, Division-II, Ahmedabad-I and he has dropped the proceedings initiated against the appellant and regularized the CENVAT Credit.
3. Aggrieved by such impugned order, Revenue filed an appeal before first appellate authority. first appellate authority, after considering the submissions made before her, reversed the Order-in-Original and confirmed the demand raised on the appellant.
4. Ld.Consultant appearing on behalf of the appellant would submit that the appellant had correctly taken the CENVAT Credit on the items like Solvents, Master-coat, M.S. Bar, Angle, Beam, HR Coils etc. It is his submission that all these goods were used in the manufacture of vessels which are used by the appellant in the manufacture of Dyes Intermediates and the vessels are capital goods. It is his submission that initially on direction of CERA audit party, the appellant reversed the credit availed and interest was also paid on 15.04.2009. Subsequently, in the month of May 2009, he re-availed the credit as these were the inputs covered under invoices which are correctly classifiable as inputs. It is his submission that the first appellate authority has not considered these submissions in its proper perspective and had reversed the Order-in-Original. He would rely upon the decision of the Tribunal in the case of Lark Wires & Infotech Ltd 2008 (231) ELT 154 (Tri-Ahmd) and Solaris Chemtech Ltd -2008 (224) ELT 333 (Tri-Bang).
5. Ld.A.R. for the Department would rely upon the decision of Larger Bench in the case of BDH Industries Ltd 2009 (229) ELT 364 (Tri-LB), wherein it was held that suo moto refund of excess/twice paid duty cannot be done so and the assessee has to follow the proof of refund claim through the proper officers. He would reiterate the findings of the first appellate authority.
6. I have considered the submissions made at length and perused the records.
7. It is undisputed that the appellant herein had availed the CENVAT Credit of the items like Solvents, Master-coat, M.S. Bar, Angle, Beam, HR Coils etc. It is also undisputed that these goods were in the manufacture of vessels which were further utilized for the manufacture of Dye Intermediates. It is undisputed that such items were received in the factory premises by the appellant and consumed in the factory premises. It is seen from the record that initially when the CERA audit officers directed the assessee to reverse the amount of CENVAT Credit of Rs.1,18,445/-, they did so, but subsequently finding that these items on which credit was availed, can also be considered as input as they have used the said inputs for fabrication of machinery which is used in the manufacture of Dye Intermediates, they recredited the amount reversed as per the direction of CERA audit officers.
8. I find strong force in the contentions raised by the ld.Consultant on behalf of the appellant. If an assessee has correctly availed the CENVAT Credit and is directed to reverse the same by audit officers on the ground which is not examined by them, it would amount to forcibly directing the appellant to reverse the CENVAT Credit. I find that the contentions of the ld.Consultant that the items on which credit was availed initially, reversed as per the direction of Audit officers and re-credit taken on the items which are used in the manufacturing of machinery for further manufacturing of the Dye Intermediates. If that be so, I find that that the judgment of the Tribunal in the case of Lark Wires & Infotech Ltd (supra) and Solaris Chemtech Ltd (supra) are directly applicable. I may reproduce the ratio of the Tribunal in the case of Lark Wires & Infotech Ltd (supra) as enshrined in Paragraph No.5.
“5. Coming to the present case apparently the reversal of the amount Rs. 1,31,557/- in the RG23A Part-II register was made without any verification and on the basis of the direction of the officers who conducted the audit. Moreover, the reversal was not a conclusion of any legal process. Subsequently, when the assessee found that they were not eligible for the credit, they have promptly reversed the ineligible portion of the credit on their own. Therefore what has been done by the appellants is basically adjustment of the credit and it has no link to any transaction other than taking credit. Therefore, it is a mere adjustment and squarely covered by the decisions cited by the ld. Advocate.”
9. I find that the issue involved in the case before me and the case before Tribunal in the case of Lark Wires & Infotech Ltd (supra) is identical and accordingly I hold that the impugned order is unsustainable.
10. Accordingly, I set aside the impugned order and allow the appeal with consequential relief to the appellant, if any.
(Operative portion of the order pronounced in Court)