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Commissioner of Customs, Central Excise & Service Tax, Guntur Versus M/s Blue Whale Industries, Guntur

2016 (6) TMI 993 - GOVERNMENT OF INDIA

Refund of un-utilized cenvat credit - rejection of refund to the extent transferred from other unit - Condonation of delay - export of Indian Mouth Freshner falling under chapter Sub-Heading No.21069020 - The Commissioner (Appeals) decided the case in favour of respondent assessee as there was no confirmed demand of ₹ 1,44,16,817/- against the respondent for violation of Rule 10 of the Cenvat Credit Rules. Now the Department has filed this Revision Application under Section 35EE of the Cen .....

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ss to which it was sent as per the postal authorities. - Government holds that the revision application has been filed within time under Section 35EE of the Central Excise Act, 1944 and question of being hit by limitation does not arise. - Government observes that under Section 35 EE of the Central Excise Act, 1944, a Revision Application against the Order of Commissioner (Appeals) passed under Section 35 A ibid lies with Government only if such orders relate to cases as mentioned in the pro .....

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s in the authorization to file Revision Application under Section 35EE (2) has erred in considering the issue as a case of rebate of duty. - Revision application dismissed - Decided against the revenue. - F.No. 198/114-A/2015-RA - ORDER NO. 56/2016-CX- Dated:- 18-4-2016 - SMT. RIMJHIM PRASAD, JOINT SECRETARY ORDER: This Revision Application has been filed by the Commissioner of Central Excise & Customs, Guntur (hereinafter referred to as the Department) against the Order-in Appeal No.64-2014 .....

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1985 and exporting the same. The respondents are availing the facility of Cenvat credit under the Cenvat Credit Rules, 2004. The respondents filed a refund claim of ₹ 2,57,77,440/- in terms of Rule 5 of the Cenvat Credit Rules, 2004 being the accumulated Cenvat Credit attributable to the inputs used in the manufacture of finished goods exported during the quarter ending December 2013. The lower authorities observed that the present claim of ₹ 2,57,77,440/- also includes the credit a .....

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, wherein the refund claim amounting to ₹ 1,44,16,817/- was rejected on the ground that the respondents have taken the said amount as irregular cenvat credit under Rule 10 of the Cenvat Credit Rules, 2004 on account of transfer of their unit from Vasai to Guntur. 3. Being aggrieved by the said Order-in-Original, respondent filed appeal before Commissioner (Appeals), Customs, Central Excise & Service Tax, Guntur, who decided the case in favour of respondent in the absence of any confirm .....

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filed by the Department or not. The Hon'ble High Court disposed off the above said Writ Petition vide Order dated 07.012016 (received in the Revision Application Unit on 23.02.2016 from the Dispatch Assistant, High Court of Telangana and Andhra Pradesh) with direction to the first respondent, viz. Union of India through Joint Secretary (Revision Application) to decide the pending Revision Application within two months from the date of receipt of a copy of this order and also directing that .....

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the JAC, Guntur Division calling for a report on the transfer of the unit from Vasai to Guntur. The Deputy Commissioner of Customs, Central Excise and Service Tax, Vasai Division, Thane-Il vide his letter in F.No.C.EX/Vasai/R-03/Blue Whale/2013/1171, dated 20.12.2013, stated that the ER-I return submitted by the assessee for the month of October, 2012 shows clearance of 33826 Nos. of Indian Mouth Freshner (PM) valued at ₹ 2,72,29,930/and 1873 Nos. of parts of Electro Mechanical Devices va .....

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ormed that: (i) They have obtained a new Central Excise Registration ECC No.AAHFB7252LEM002 at Guntur. (ii) They will be shifting finished goods lying in their Vasai Unit under Rule 10 of the Credit Rules, without discharging the duty. (jii) They shall account for the finished goods lying in Vasai Unit and transferred to Guntur Unit in their Daily Stock Register at Guntur. Thereafter, they shall request Central Excise Authorities at Guntur to verify physical receipt of the material, if they so d .....

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Unit to Guntur. (v) No permission is required from the Vasai Division Office for shifting/transferring the credit to their Guntur Unit. The Deputy Commissioner also stated that: I. While receiving the said letter on 1109.2012 of M/s.Blue Whale Industries, Vasai were asked to furnish copy of stock statement submitted to the Bank for the period from June, 2012 to 17.09.2012-and-also to furnish-copy of stock register for the period from June, 2012 to 17.09.2012. However, the same was not submitted .....

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5.3 Meanwhile, M/S. Blue Whale Industries, Perecherla, Guntur (AP), vide their letter dated 14.11.2013 have informed the Assistant Commissioner, Guntur Division that they have raised a credit entry of ₹ 1,44,10,817/- (Cenvat Credit-RG 23A Part-Il] & ₹ 34,572/- (PLA) stating that they have concluded that there is substantial compliance of Rule 10(3) of the Credit Rules. The assesse have also reflected the same in their ER-I Return filed for the month of November, 2013 as well. 5. .....

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amalgamated factory. The assesses have not complied with the provisions of the said Rule, The assesses have not procured/produced any clearance certificate / fact statement regarding their Central Excise credits/liabilities/plant & machinery/raw material/semi finished goods/finished goods from the jurisdictional central Excise Authorities of Vasai Division, Maharashtra, thereby contravening the provisions of Rule 10 (1) of the Credit Rules. 5.5 Further, it was verified from the CBECs verific .....

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5.6 As per Rule 10 (3) of the Credit Rules, the transfer of the Cenvat Credit under sub-rule (1) shall be allowed only if the stock of inputs as such or in process, or the capital goods is also transferred along with the factory or business premises to the new site or ownership and the inputs, or capital goods, on which credit has been availed of are duly accounted for to the satisfaction of the Deputy Commissioner of Central Excise or, as the case may be, the Assistant Commissioner of Central E .....

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Deputy Commissioner, Customs & Central Excise, Vasai Division, nor from the jurisdictional Assistant Commissioner, Customs & Central Excise, Guntur Division but have availed the said credits sue motto and thus, contravened the provisions of Rule 10 (3) of the Credit Rules and thus have suppressed the facts. 5.7 The relevant provision under which the refund claimed is Rule 5 of credit Rules which is reproduced hereunder: Rule 5: Refund of CENVAT credit - Where any input or input service i .....

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t of duty; or (ii) service tax on output service, and where for any reason such adjustment is not possible, the manufacturer or the provider of output service shall be allowed refund of such amount subject to such safeguards, conditions and limitations, as may be specified, by the Central Government, by notification: 5.8 In view of the above narrated developments, the respondent's Unit has not been transferred by following the procedures prescribed under Rule 10 of CCR, but have availed the .....

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demand under Section 1 IA has also been issued on 11.11.2014 by the Commissioner, Guntur. 5.9 As such the violations made by the asseessee in availing the said credit have been mentioned in the Show Cause Notice issued by the JAC. The JAC on 21.10.2014 has informed the Appellate Authority that the issuance of the SCN by the Commissioner is under process. It is imperative to mention that the demand ultimately raised well within the time frame of Section 1 IA and the timing of issuance of will no .....

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Commissioner of Central Excise., New Delhi Versus Hari Chand Shri Gopal reported in 2010 (260) E.L.T. 3 (S.C.). 5.10 Since a demand has already been raised for the irregular availment of credit, the question of payment of this disputed credit by way of refund does not arise. Only in the case, the assessee proves that there was no irregular availment of credit then only the question of consideration of refund arises. 6. A show cause notice was issued to the respondent party under Section 35EE of .....

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y sufficient cause from presenting the application within the prescribed period of 3 months. Thus, the statutory scheme of Section 35EE of the Act is that a Revision Application has to be filed within 3 months of the communication of the order to be challenged, and delay of further 3 months could be condoned by the Revisionary Authority. But if a period of 6 months passed by and revision application was not filed within such total period of 6 months, then a Revision Application cannot be filed t .....

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Supreme Court has held in case of Singh Enterprises Vs Commissioner, Jamshedpur 2008 (221) ELT 163 (SC) that the proviso to Sub Section (1) of Section 35 makes the position crystal clear that the appellate authority has no power to allow the appeal to be presented beyond the period of 30 days, and the language used makes the position clear that the Legislature intended the appellate authority to entertain the appeal by condoning delay only upto 30 days after the expiry of 60 days which is the no .....

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. The proviso to Section 35EE (2) makes the position clear that the Legislature intended the Revisionary Authority to entertain a Revision Application by condoning the delay only upto 3 months after the expiry of specified period of 3 months which was the normal period for preferring a Revision Application. The provisions of the Limitation Act are not applicable even in case, of a Revision Application, and therefore there is no power to condone the delay after a total period of 6 months from the .....

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Guj.), held that the limitation provided under Section 35 of the Act cannot be condoned in filing the appeal beyond the period of 30 days as provided under the proviso to Section 35(1), nor could the appeal be filed beyond the period of 90 days. The Hon'ble High Court has also held that even a petition under Article 226 of the Constitution would not lie for the purpose of condonation of delay in filing the appeal; and it is further held by the Larger Bench of the Hon'ble High Court that .....

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ause notice, an 010 No.62/2014(R) (CE) dated 02.07.2014 was passed by the Assistant Commissioner of Central Excise, Guntur, who sanctioned refund claim to the extent of ₹ 1,13,66,623/in cash, and rejected the remaining clam for ₹ 1,44,10,817/- on the grounds that a Draft Show Cause Notice for denial of the credit of the above amount was submitted to the Commissioner for the consideration vide letter No.C.No.V/21/15/32/2014-Adj. dated 26.06.2014; because such credit was allegedly foun .....

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s pre-audited and approved by the office of the Commissioner, Guntur, and accordingly refund of such amount was allowed. 6.6 Thus, the Assistant Commissioner had held, and rightly so, that the issue about the merits of our eligibility for credit of transferred from our Vasai Unit to our new unit at Perecherla in Guntur District was, not the subject matter of the case before him; but the claim for such unutilized credit was rejected only because a Draft Show Cause Notice was submitted to the Comm .....

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for deciding a refund claim lodged under Rule 5 of the Cenvat Credit Rules, and accordingly our appeal is allowed by the Commissioner (Appeals). But a perusal of the Revision Application now filed by the Revenue shows that totally new grounds are raised in the Application though no such grounds were considered or decided by the Assistant Commissioner while rejecting our refund claim or even by the Commissioner (Appeals) while allowing our appeal. 6.8 Three grounds are raised in the Revenue's .....

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bilities/plant and machinery/raw materials/semi-finished goods/finished goods in this case; (ii) that our Central Excise registration for Thane factory has not been surrendered and therefore there was contravention of the provisions of Rule 9 of the Central Excise Rules, 2002; and (iii) that though Rule 10 of the Cenvat Credit Rules refers to the satisfaction of the Deputy/Assistant Commissioner of Central Excise regarding transfer of stock of inputs as such or in process or the capital goods al .....

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rounds like Draft proposal to issue a Show Cause Notice by the Commissioner for alleged irregular transfer of this Cenvat credit of ₹ 1,44,10,817/- and pre-audit and approval having been allowed by the Commissioner's office only for the remaining claim of But these grounds on which the Assistant Commissioner had rejected our refund claim for which we filed appeal before the Commissioner (Appeals) are not raised in the Revenue's Application now filed before the Hon'ble Revisiona .....

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officers for transfer and availment of Cenvat Credit when his factory was shifted to another site because Rule 10 only provides that the manufacturer shall be allowed to transfer the Cenvat Credit lying unutilized in his accounts to such transferred factory. We have also caused enquiry in other Divisions and Commissionerates and we have learnt that there is no practice anywhere for applying for a permission or obtaining a permission for transferring unutilized Cenvat Credit when a factory was sh .....

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of unutilized Cenvat Credit of ₹ 1,44,10,817/- are sustainable in facts as well as in law, and therefore all these objections deserve to be rejected at once in the interest of justice. 6.10.3 In this view of the matter, we request you to reject the Revenuers Revision Application. 7. In compliance of Hon'ble High Court's Order, personal hearing was scheduled in this case on 21.03.2016. 7.1 Shri Ratna Kishore, Assistant Commissioner, Guntur appeared on behalf of the Department who s .....

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ed as such. Even on merits refund is admissible to them as it is not the jurisdiction of the Revisionary Authority to decide issue raised in the Show Cause Notice which is in any case pending adjudication. 7.3 The department vide their FAX, received in this Office on 29.03.2016 forwarded dispatch particulars of revision application sent by registered post sent on 16.01.2015 vide registered letter along with acknowledgement due from Guntur Post Office bearing No.RN6108463491N and letter No.522004 .....

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he lower authorities observed that this amount included the credit amount of ₹ 1,44,10,817/- transferred from their old unit at Vasai to present unit at Guntur under Rule 10 of the Cenvat Credit Rules and a Show Cause Notice dated 18.06.2014 was issued to the respondents asking them as to why the refund claimed by them should not be disallowed to the extent of ₹ 1,44,10,817/- as the said amount is found to be irregularly availed credit on account of transfer of their old unit at Vasa .....

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ation of Rule 10 of the Cenvat Credit Rules. Now the Department has filed this Revision Application under Section 35EE of the Central Excise Act, 1944 before the Central Government on grounds mentioned in para 4 above. 10. Government further observes that a Writ Petition No.28868 of 2015 was filed by the respondent before the Hon'ble High Court of Telangana and Andhra Pradesh making a prayer that the original authority may be directed to grant refund pursuant to impugned Order-in-Appeal, whi .....

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g informed that no such revision application is seen to have been received. The Hon'ble High Court disposed off the above said Writ Petition with direction to Revisionary Authority to decide the Revision Application within two months from the date of receipt of a copy of the order if it is otherwise in order and uninfluenced by any of the observations made there in above. 11 Government first proceeds to examine the issue of the limitation raised by the respondent. In this regard, Hon'ble .....

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tation with reference to Section 35EE (2) of the Act. Therefore, we do not wish to express any opinion at this stage about the limitation, One of the contentions of the petitioners is that the 15t respondent has no authority to condone the delay beyond three months under Section 35EE (2) of the Act. No doubt, the power conferred on the 1st respondent is limited. However, when the application was sent to the wrong address due to the misdirection of the Appellate Commissioner and the Committee of .....

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. In the present facts of the case, as directed by the Appellate Commissioner and Committee of Commissioners, the Revision was sent to the Joint Secretary, Government of India, Ministry of Finance and Company Affairs, Department of Revenue, Jeevan Deep Building, Sansad Marg, New Delhi but the office address of the Joint Secretary (Revision Jurisdiction) Ministry of Finance, 14 Hudco Vishal Buildings, Bhikhaji Cama Palace, New Delhi was not repeated in the address given in the orders referred abo .....

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are not aware about the change in the address of the office of the Joint Secretary. In those circumstances, to avoid loss to any one of the parties to this Writ Petition, we find that it is a fit case to direct the 1st respondent to dispose of the Appeal pending before them, as expeditiously as possible, in any event not later than two months from the date of receipt of a copy of this order, by exercising an equitable jurisdiction conferred on this Court under Article 226 of the Constitution. Th .....

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n specified in Section 35EE (2) of the Central Excise Act, 1944 as under: ' (2) An application under sub-Section (1) shall be made within three months from the date of the communication to the applicant of the order against which the application is being made: Provided that the Central Government may, if it is satisfied that applicant was prevented by sufficient cause from presenting the application within the aforesaid period of three months, allow it to be presented within a further period .....

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eference to Section 35EE of the Act. Government notes that it is an established fact on record that the Revision Application against the impugned Order-in-Appeal dated 29.10.2014 (received on 30.10.2014) was dispatched by registered speed post on 1601.2015 through Guntur Post Office bearing NoRN61084634 to an address as mentioned in preamble to the impugned Order-in-Appeal and in the authorization to file appeal. The Department of Posts, Guntur vide their letter No.522004-00308 dated 27.11.2015 .....

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in response to their request for early hearing in the revision petition filed by them that no such Revision Application had been received at the present address, where after they sent a copy. 11.3 From the above, it emerges that it is not a case that no Revision Application has been filed in terms of Section 35EE of the Central Excise Act, 1944 but that it has been sent at the wrong address, In para 2 of page 9 of Hon'ble High Court's judgement, it has been stated that if the Revision A .....

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ress of Revisionary Authority. 11.4 In this regard, Government finds support in the decision of the Hon'ble CESTAT in the case of Kanishk Steel Industries Ltd. 2005 (191) ELT 231 (Tri-Chennai) where in a similar situation, an appeal was sent by Speed Post to the Registry of the bench but nothing was heard from the Registry in relation to that appeal. Later on when a connected appeal arose before the Bench, the matter came to light that it was not received by the Registry. The Tribunal based .....

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na and Andhra Pradesh in the context of the present case is persuaded by the principle laid down in the case of Ruby Rubber Works. The Hon'ble Kerala High Court therein has dealt with a case where the order was appealed against within time, although on account of a wrong address, the memorandum of appeal did not reach the office of the Appellate Collector and held that even assuming that the petitioner's appeal was ultimately received by the appellate authority outside the period of limi .....

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the Appellate Commissioner and Committee of Commissioners. If the application had not been wrongly addressed, it would have reached the Revision Application Unit at the correct address well within time as it reached the address to which it was sent as per the postal authorities. 11.7 In view of the above discussion, Government holds that the revision application has been filed within time under Section 35EE of the Central Excise Act, 1944 and question of being hit by limitation does not arise. .....

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sub-section (1) of Section 35 B, annul or modify' such order: [Provided that the Central Government may in its discretion, refuse to admit an application in respect of an order where the amount of duty or fine or penalty, determined by such order does not exceed five thousand rupees] [(IA) The Principal Commissioner of Central Excise or Con7/77issioner of Central Excise as the case may be, if he is of the opinion that an order passed by the Commissioner (Appeals) under section 35A is not leg .....

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5A; (c) an order passed by the Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 (54 of 1963) (hereafter in this Chapter referred to as the Board) or the Appellate Commissioner of Central Excise under Section 35, as it stood immediately before the appointed day; (d) an order passed by the Board or the Commissioner of Central Excise either before or after the appointed day, under Section 35A, as it stood immediately before that day: Provided that no app .....

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ported to any county or territory outside India or on excisable materials used in the manufacture of goods which are exported to any country or territory outside India; (c) goods exported outside India (except to Nepal or Bhutan) without payment of duty ; *(d) credit of any duty allowed to be utilized towards payment of excise duty on final products under the provisions of this Act or the rules made thereunder and such order is passed by the Commissioner (Appeals) on or after the date appointed .....

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ision Application relates to refund of unutilized credit under Rule 5 of Cenvat Credit Rules 2004, the subject matter is not covered in the first proviso to sub-section (1) of Section 35 B of the Central Excise Act 1944. Therefore, Revision Application on this issue does not lie before Central Government under Section 35 EE of the Central Excise Act, 1944. 12.3. Further, Government observes that the Department as in the authorization to file Revision Application under Section 35EE (2) has erred .....

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