IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
APPEAL NO: E/458/2010
[Arising out of Order-in-Appeal No: SB/04/Th-II/10 dated 06/01/2010 passed by the Commissioner of Central Excise (Appeals), Mumbai Zone I.]
Shree Rubber Plast Co. Pvt. Ltd.
Commissioner of Central Excise
Thane - II
Shri Mayur Shroff, Advocate for the appellant
Shri Ashuthosh Nath, Asstt. Commissioner (A. R.) for the respondent
Honble Ramesh Nair, Member (Judicial)
Date of hearing : 16/04/2015
Date of decision: 16/04/2015
ORDER NO: ____________________________
The appeal is directed against Order-in-Appeal No: SB/04/Th-II/10 dated 06/01/2010 passed by the Commissioner of Central Excise (Appeals), Mumbai Zone I wherein the learned Commissioner (Appeals) has upheld the order-in-original No. VS/09/2008/27/3/2008.
2. The fact of the case is that the appellant availed CENVAT credit on input and capital goods. On a visit of the Central Excise officers, Preventive Unit, Thane I on 20/02/2007, on their instance, the appellant have reversed CENVAT credit of ` 1,70,737/- on 12/03/2007. Subsequently, neither any query was raised by the department nor any show cause notice was issued. Therefore, the appellant took re-credit of the said amount of ` 1,70,737/- on 07/05/2007. For this re-credit a show cause notice dated 09/07/2007 was issued proposing disallowance of the said re-credit, demand of interest under Section 11AB and penalty under Rule 15 of the CENVAT Credit Rules, 2004. In adjudication, the adjudicating authority has confirmed the demand of ` 1,70,737/-, demanded interest under Section 11AB and imposed penalty of ` 2,000/- under Rule 15(1) of CENVAT Credit Rules, 2004. Aggrieved by the said order, an appeal was preferred by the appellant before the Commissioner (Appeals), who upheld the order-in-original. Aggrieved by the said impugned order the appellant is before me.
3. Shri Mayur Shroff, learned counsel for the appellant submits that CENVAT credit was denied on the ground that for taking re-credit no document is available. He submits that re-credit is nothing but the reversal of the debit made at the instance of the departmental officers. Though the departmental officers got this amount debited, but lateron no dispute was raised about the admissibility of the said credit. Therefore, the appellant correctly took re-credit of the said amount in their CENVAT credit account. The re-credit is nothing but as good as fresh CENVAT credit availed in accordance with CENVAT credit Rules. It is only a book entry, though for the time being the amount was debited at the instruction of the departmental officers. However, when no demand or show cause notice was issued in respect of the said reversal amount, CENVAT credit of the said amount stand admissible to the appellant and, therefore, they have re-credited the same. In support, he placed reliance on the following judgments:
(i) ICMC Corporation Ltd. vs. CESTAT 2014 (302) ELT 45 (Mad.);
(ii) Sopariwala Exports Pvt. Ltd. vs. Commissioner of Central Excise 2013 (291) ELT 70 (Tri.-Ahmd);
(iii) Bodal Chemicals Ltd. vs. Commissioner of Central Excise, Ahmedabad I 2013 (291) ELT 399 (Tri.-Ahmd);
(iv) Lark Wires & Infotech Ltd. vs. Commissioner of Central Excise & Customs, Vadodara II 2008 (254) ELT 154 (Tri.-Ahmd);
4. On the other hand, Shri Ashuthosh Nath, learned Asstt. Commissioner (AR) appearing for the Revenue reiterates the findings of the impugned order. He submits that re-credit of CENVAT credit is not permissible, as held in the various judgments. He placed reliance on the following judgments:
(i) BDH Industries Ltd. vs. Commissioner of Central Excise 2008 (229) ELT364 (Tri.-LB);
(ii) Commissioner of Central Excise, Pune I vs. Sunil Industries (P) Ltd. 2014-TIOL-1379-CESTAT-MUM;
(iii) Commissioner of Central Excise, Kolhapur vs. Parvati Agro Plast 2013-TIOL-1563-CESTAT-MUM;
(iv) Matrix Laboratories vs. Commissioner of Central Excise, Hyderabad 2012-TIOL-1297-CESTAT-BANG;
(v) New Allenberry Works vs. Commissioner of Central Excise, Kolkata V 2012-TIOL-1297-CESTAT-BANG;
(vi) BDH Industries Ltd. vs. Commissioner of Central Excise 2008 (231) ELT 61 (Tri.-Mum);
(vii) Titawi Sugar Complex vs. Commissioner of Central Excise, Meerut I 2009 (247) ELT 519 (Tri.-Del.)
5. I have carefully considered the submissions made by both the sides. I find that, in the present case, the re-credit is not against any amount of duty payment. It is admittedly re-credit of an amount of CENVAT credit debited at the instruction of the officers. I find that the amount of debit which was made earlier was legally admissible as CENVAT credit to the appellant. Because of the reversal at the instance of the departmental officers, on which the revenue has not raised any dispute on admissibility, re-credit the same by the appellant cannot be faulted with. As per the judgment relied upon by the learned counsel, in one of the judgment, the honble Madras High Court has held as under:
“13. We do not subscribe to the view expressed by the Revenue. Admittedly, the assessee originally availed the Cenvat Credit on service tax for discharging its liability. However, for sound reasons, it reversed the credit. Strictly speaking, in this process, there is only an account entry reversal and factually there is no outflow of funds from the assessee to result in filing application under Section 11B of the Central Excise Act, 1944 claiming refund of duty. The contention of the Revenue that even in reversal of the entry there is bound to be an unjust enrichment has no substance or based on any legal principle, since, what is availed off by the assessee is only a credit on the duty paid on the services rendered. Further, the assessee is entitled to take note of as per Rule 6(5) of the Cenvat Credit Rules, 2004, as there is no dispute of the fact that a sum of Rs.3,21,308/- available as Cenvat Credit was in respect of input services, which are given under Rule 6(5) of the Cenvat Credit Rules, 2004. When that being the case, in respect of those services specifically mentioned under Rule 6(5) of the Cenvat Credit Rules, 2004 as it existed during the relevant period viz., 2004-2006 getting the reversal of the entry is in tune with its stand taken, which was accepted by the Tribunal in the earlier round of litigation.
14. We do not find any good ground to hold that it was a case of refund of duty falling under Section 11B of the Central Excise Act, 1944 and that the assessee was to comply with the provisions of Section 11B of the Act. The view of the Tribunal that the assessee should seek reversal in the appropriate judicial forum, if the assessee was aggrieved by the earlier order herein does not arise at all.
15. Even a cursory reading of the order of the Tribunal in the earlier round of litigation would show that it accepted the assessee's case of suo motu reversal of the entry. That being the case, the subsequent conduct of the assessee for a follow up action on an amount of Rs.3,21,308/-, which is only an account entry adjustment, technically speaking cannot be taken exception to either by Tribunal or for that matter by the Revenue. For this, we do not find any need for a finding to be given in the order of the Tribunal in the earlier round of litigation.
16. We do not for a moment deny the fact that a sum of Rs.3,21,308/- for which suo motu credit was taken by the assessee was forming part of Rs.5,38,796/-, which was earlier reversed by the assessee. On the admitted fact, Rs.3,21,308/- represented the enumerated input services as given under Rule 6(5) of the Cenvat Credit Rules, 2004, we have no hesitation in accepting the plea of the assessee that on a technical adjustment made, the question of unjust enrichment as a concept does not arise at all for the assessee to go by Section 11B of the Central Excise Act, 1944.
17. In the circumstances, we set aside the order of the Tribunal and allow the appeal filed by the assessee and hold that legally speaking there is no impediment in the asseesee taking suo motu credit of the sum of Rs.3,21,308/-. In the light of the above, we allow the appeal.
18. We may also note that in ground (C) of the appeal grounds, the assessee had specifically pointed out that what they debited in the Cenvat Account was not at all made towards any duty payment, which would require a refund claim. The assessee made a specific claim that they had re-credited only the credit reversed on those services mentioned under Rule 6(5) of the Cenvat Credit Rules, 2004 and nothing beyond.
19. On this aspect, we specifically posed the question to learned counsel appearing for the assessee, who re-affirmed the same and given the fact that re-credit of the credit reverse was only in respect of those enumerated services under Rule 6(5) of the Cenvat Credit Rules, 2004 on which there is no dispute from the Revenue, we have no hesitation in accepting the assessee's case.
20. In the result, we set aside the order passed by the Customs, Excise and Service Tax Appellate Tribunal and allow the assessee's case. No costs. Consequently, the connected miscellaneous petition is closed.”
6. From the above judgment it is clear that suo motu re-credit of the amount reversed by an assessee, there is no need to file any refund claim under Section 11B. In view of the Madras High Court judgment, which is squarely applicable in the present case, re-credit of the amount already reversed by the appellant cannot be objected to.
7. As regard the Revenues reliance on the Larger Bench judgment in the case of BDH Industries Ltd. (supra), I have observed that in the case of Sopariwala Exports Pvt. Ltd. (supra) this Tribunal has held as under:
“5. Learned Additional Commissioner (AR) appearing on behalf of the Revenue would draw my attention to the decision of the Larger Bench of the Tribunal in the case of BDH Industries Limited - 2008 (229) E.L.T. 364 (Tri.-LB) and submit that suo motu credit which has been availed by the appellant is not acceptable as has been laid down by the Larger Bench in Paragraph No. 12. It is his submission that this decision has not been set-aside by any other forum.
6. In a rejoinder, learned counsel would submit that the decision of the BDH Industries Limited was in the light of the contradictory decision of Motorola India Pvt. Limited [2006 (192) E.L.T. 468 (Tri.-Bang.) = 2007 (7) S.T.R. 613 (Tri. - Bang.)] and Comfit Sanitary Napkins (I) Pvt. Limited [2004 (174) E.L.T. 220 (Tri.-Bang.)]. It is his submission that the decision in the case of Motorola India Pvt. Limited was carried in appeal by the Revenue before the Honble High Court of Karnataka wherein the Honble High Court of Karnataka has upheld the said order [2006 (206) E.L.T. 90 (Kar.) = 2008 (11) S.T.R. 555 (Kar.)]. It is his submission that this decision of the Honble High Court was not brought to the notice of the Larger Bench when the matter was being decided.
7. I have considered the submissions made at length by both sides and perused the record.
8. I find that the issue involved in this case is regarding confirmation of demand of an amount taken as suo motu credit by the appellant having come to the conclusion that they have paid this duty twice over.
9. The undisputed facts are that the amount which has been paid in the cenvat credit and PLA is over and above the amounts which were debited by them for the consignments which were exported by availing the benefit under Rule 19 of Central Excise Rules, 2002 i.e. that they have executed LUT/Bond with the authorities for clearance of the goods without payment of duty. It is undisputed that the appellant is not required to pay any duty on these clearances made by them for export under LUT.
10. At the first blush, I would have to agreed with the submissions made by the Revenue authorities that the judgment of the Larger Bench in the case of BDH Industries Limited (supra) would be applicable in this case, as the identical facts were decided by the Larger Bench but on deeper consideration, I find that the reference to Larger Bench was made by me in the case of BDH Industries Limited, sitting singly, only on the ground that the appellant had taken suo motu credit of excess paid duty by double debit in PLA and the and credit was taken in RG 23A Part-II; noticing contrary decisions of Tribunal in the case of Motorola India Pvt. Limited and Comfit Sanitary Napkins (I) Pvt. Limited. I find that the law as has been decided by the Larger Bench seems to be incorrect on the face of the fact that the judgment of the Tribunal in Motorola India Pvt. Limited was carried in appeal before the Honble High Court of Karnataka and their Lordships have upheld the said order. It is seen from the case of BDH Industries Limited that the said judgment of the Honble High Court of Karnataka was, not brought to the notice of the Larger Bench when they heard the Larger Bench reference. In order to appreciate the correct position of the law I first, reproduce the ratio laid down by the Tribunal in the case of Motorola India Pvt. Limited, which is as under :-
“6. We have gone through the records of the case carefully. In the month of March 2001, the appellants debited excess amount in their CENVAT account to the tune of Rs. 1,58,099/-. The fact was brought to the notice of the department by the appellants in their letter dated 12th June, 2001. In fact, the letter requests the department for correcting the error. This is a simple arithmetical mistake. The departmental authorities could have advised the appellants to adjust the excess amount towards payment of duty for subsequent periods. But they advised the appellant to file a claim for refund. If at all a refund claim is required, the first letter informing the department of the mistake and requesting for permission to rectify the same should be taken as claim for the purpose of Section 11B. Alternatively, the contention of the appellant that the amount paid by mistake is not duty merits consideration. In fact, duty paid on the goods is indicated in the invoices. The amount erroneously paid in excess does not find mention in any invoices. In that sense, the amount paid should be considered as deposit and not duty. Therefore, the question of time bar does not arise. In any case, the denial of the refund claim for the excess amount paid on account of clerical error is unjust. In the peculiar facts and circumstances of the case, we allow the appeal with consequential relief.”
11. Aggrieved by such an order of the Division Bench of the Tribunal, Revenue preferred appeal before the Honble High Court of Karnataka, wherein their Lordships have passed the following order :-
[Judgment]. - Revenue is before us aggrieved by the order dated 1-9-2005 passed in appeal No. E/83/2004 by the Customs Excise Service Tax Appellate Tribunal, Bangalore.
2. The respondent-assessee by mistake debited an amount of Rs. 1,58,099/- in excess of the duty payable in their PLA/CENVAT account for the month of March 2001. The same was brought to the notice of the Department by the respondent in terms of a letter dated 12-6-2001. The authorities directed the respondent to file a refund claim. Another letter was submitted by the assessee stating therein that there was an error committed in the matter. Subsequently, a refund application was also filed by the assessee. Claim was rejected on the ground of lapse of time by the Assistant Commissioner. The same was confirmed by the Appellate Commissioner. Aggrieved by the same, the assessee moved the Tribunal. The Tribunal accepted the case of the assessee. It is in these circumstances, the Revenue is before us.
3. Heard Shri Bhaskar, learned Counsel appearing for the Revenue and Smt. Padmini Sudaram, learned Counsel appearing for the assessee. Perused the order of the Tribunal.
4. The Tribunal, after noticing the material facts has chosen to allow the claim on the basis that the amount paid by mistake cannot be termed as duty in the case on hand. The Tribunal also stated that the time bar does not apply in such cases. Somewhat in similar circumstances, the Apex Court in India Cements Ltd. v. Collector of Central Excise - 1989 (41) E.L.T. 358 has chosen to accept the case of the assessee. The Madras High Court subsequently noticing the Judgment of the Supreme Court has also chosen to hold that the claim is reasonable on the facts of this case. In the light of the case laws, we are of the view that the order of the Tribunal does not require any interference by us. No question of law arises. The order is based on the law laid down by the Apex Court.”
12. It can be seen from the above reproduced portion of the Tribunals order as well as the Honble High Courts order, that the facts of the case in Motorola India Pvt. Limited is identical to the facts as is in the case before me. In my view, as no contrary judgment of any other High Court to the decision of the Honble High Court of Karnataka in the case of Motorola India Pvt. Limited is brought to my notice, I find that the judgment of Motorola India Pvt. Limited will hold the field and the Larger Bench decision in the case of BDH Industries being a decision of the Tribunal, shall have no binding effect.”
8. From the above observation of this Tribunal, it is clear that the BDH Industries case has been departed. Therefore, the reliance cannot be made on such judgment by the Revenue. I have considered the judgment relied upon by both the sides. In view of my above discussion and the facts of the present case, the re-credit of CENVAT credit made by the appellant is in order. I, therefore, set aside the impugned order and allow the appeal of the appellant, with consequential relief, if any, in accordance with law.
(Pronounced in Court)