TMI Blog2019 (4) TMI 1686X X X X Extracts X X X X X X X X Extracts X X X X ..... credit on the entire inputs knowingly well that the entire inputs would not be used exclusively for excisable goods, the Appellant was liable to pay interest under Rule 14 of the Cenvat Credit Rules. The said amendment to Rule 14 of the Cenvat Credit Rules, 2004, vide Notification dated 17 March 2012 would apply only with prospective effect and not with retrospective effect. No such issue was raised by the Appellant before the Commissioner Customs and Central Excise, Goa and also before the CESTAT. Be that as it may a plain reading of the said Notification dated 17 March 2012 clearly indicates that such amendment was applicable only with prospective effect. It is also an admitted position that the notice of demand was issued by the Respondent upon the Appellant much prior to the date of said Notification dated 17 March 2012. No benefit of such amendment thus can be availed of by the Appellant. The said substantial question of law is answered accordingly. Appeal dismissed - decided against appellant. - EXCISE APPEAL NO.2 OF 2018 - - - Dated:- 25-3-2019 - R.D. Dhanuka Nutan D. Sardessai, JJ. Mr. Gajendra Jain, with Ms. Vidhya Naik, Advocate for the Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) It was the case of the Appellant that, the value of clearance of non-excisable medicaments constitute 3% and 6% of the value of excisable medicaments cleared by the Appellant during the Financial Years 2006-07 and 2007-08 (upto January 2008), respectively. It was the case of the Appellant that it used to take cenvat credit of excise duty paid on inputs and capital goods and service tax paid on input services and use it in or in relation to the manufacturing activity and utilize such credit for payment of excise duty on the medicaments in terms of the provisions of the Cenvat Credit Rules, 2004. It was the case of the Appellant that it used to maintain the stock of inputs, namely bulk drugs, excipients and packaging materials purchased by them and utilize the inputs for manufacturing activity, as and when required. (c) It is an admitted position that the Appellant had taken cenvat credit of excise duty paid on the entire quantity of common inputs at the time of receipt of these inputs in its factory. It was also the case of the Appellant that the Appellant was following FIFO (first in first out) method for consumption of inputs for use in the manufacturing activity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Show Cause Notice, the Respondent issued summons under Section 14 of the Act. The Respondent recorded the statement of Mr. Sreekumaran Nair, the Authorised Signatory and Incharge of day-to-day Central Excise matters, on 21 July 2008. The learned Commissioner Customs Central Excise, Goa passed an order on 30 November 2009, holding that the Appellant was liable to pay a sum of ₹ 1,92,86,034/- under the Cenvat Credit Rules, 2004. Since the Appellant had already reversed the said amount by debiting the Cenvat Account, the learned Commissioner passed an order for appropriation of the said amount under Rule 14 of the Cenvat Credit Rules, 2004, read with Section 11A-B of the Central Excise Act, 1944, and confirmed the demand of interest. The learned Commissioner also imposed a penalty of ₹ 50,000/- under the provisions of Rule 15 of the Cenvat Credit Rules, 2004, and refrained the Appellant from confiscating the input goods utilized by the Appellant in the manufacture of non-excisable goods on which they had wrongly availed of Cenvat Credit of ₹ 1,92,86,034/- which was proposed to be confiscated in the Notice in terms of Rule 15 of the Cenvat Credit Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay any interest or penalty as demanded by the Respondent and confirmed by the learned Commissioner Customs and Central Excise and also by the CESTAT. 8. The learned counsel also placed reliance upon the Rule 14 of the Cenvat Credit Rules, 2004 amended vide Notification dated 17 March 2012 in support of his submission that with effect from 17 March 2012, for the words taken or utilised wrongly , the words taken and utilised wrongly came to be substituted. He submits that the amendment of Rule 14 by Notification dated 17 March 2012, would clearly indicate the intention of the legislature that it wants the recovery of interest only when the credit was wrongly taken and utilized and not in case of any inadvertent error. 9. The learned counsel for the Appellant placed reliance on the Judgment of the Hon'ble Supreme Court in the case of Commissioner of C.Ex. Mumbai vs. Bombay Dyeing Mfg. Co. Ltd. 2007 (215) E.L.T. 3 (S.C.). He made an attempt to distinguish the Judgment of the Hon'ble Supreme Court in the case of Union of India vs. Ind-Swift Laboratories Ltd. 2011 (265) E.L.T. 3 (SC) on the ground that the facts before the Hon'ble Supreme Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h dues where Cenvat credit has been taken or utilized wrongly or has been erroneously refunded, and that in case of such nature, the provisions of Section 11-AB would apply for effecting such recovery. The learned counsel submits that since the appellant had admittedly availed of the Cenvat credit at the threshold wrongly and even if the Appellant has ultimately not utilized such Cenvat credit for manufacture of such non-excisable goods, the conditions prescribed under Rule 14 of the Cenvat Credit Rules, would still apply and the Appellant would be liable to pay interest and other consequences provided under the said Rule. 13. The learned counsel submits that the amended Rule 14 by which the words taken or utilised wrongly were substituted by the words taken and utilised wrongly , would not apply to the assessment year in question, since the Cenvat credit was already taken wrongly by the Appellant prior to the date of such amendment of Rule 14. She submits that the amended Rule 14 does not apply with retrospective effect. 14. The learned Counsel for the Revenue also strongly placed reliance on the Judgment of this court in the case of Commissioner of Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Industries Limited vs. The Commissioner of Central Excise (supra). She submits that in any event, the orders passed by this Court admitting those two appeals, would not assist the case of the Appellant in view of the Judgment of this Court in the case of Commissioner of Central Excise vs. GL V India Pvt. Ltd.(supra), deciding the matter finally, holding that interest under Rule 14 of the Cenvat Rules, 2004 was rightly levied by the Revenue against the assessee. 17. We shall now consider the rival submissions made by the learned Counsel for the parties. Rule 14 of the Cenvat Rules, 2004 applicable to the parties is extracted as under : Rule 14. Recovery of CENVAT credit wrongly taken or erroneously refunded:- Where the CENVAT credit has been taken or utilized wrongly or has been erroneously refunded, the same along with interest shall be recovered from the manufacturer or the provider of the output service and the provisions of sections 11A and 11AB of the Excise Act or sections 73 and 75 of the Finance Act, shall apply mutatis mutandis for effecting such recoveries 18. A perusal of the record and proceedings annexed to this appeal, clearly ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur view, the learned Commissioner Customs and Central Excise, Goa has rightly rendered a finding that the Appellant had contravened the provisions of Rule 3(1)(i) of the Cenvat Credit Rules, read with Rule 2(d), 2(h) and 2(k) thereof, by wrongly taking Cenvat credit of central excise duties paid on inputs which had not been used to manufacture the excisable goods to the extent of ₹ 1,92,86,034/- and thus became liable to interest in terms of Rule 14 of the Cenvat Credit Rules, 2004. 22. The Hon'ble Supreme Court in the case of Union of India vs. Ind-Swift Laboratories Ltd. (supra), has interpreted the unamended Rule 14 which was applicable to the appellant during the financial years in question and, has categorically held that a bare reading of such rule would clearly indicate that the manufacturer or the provider of the output service becomes liable to pay interest, along with the dues where Cenvat credit has been taken or utilized wrongly or has been erroneously refunded. The Hon'ble Supreme Court, accordingly, held that if the said Rule 14 was read as a whole, the Hon'ble Supreme Court did not find any reason to read the word 'or' in between th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the relevant financial years which were subject-matter of this proceeding. In our view, even if the Appellant had not utilized such Cenvat credit, ultimately, since the Appellant had admittedly availed of the Cenvat credit on the entire inputs knowingly well that the entire inputs would not be used exclusively for excisable goods, the Appellant was liable to pay interest under Rule 14 of the Cenvat Credit Rules. The CESTAT has rightly adverted to the Judgment of the Hon'ble Supreme Court in the case of Union of India vs. Ind-Swift Laboratories Ltd. (supra) and has rightly rendered a finding of fact that the Appellant had taken Cenvat credit knowingly well that entire inputs would not be used exclusively for excisable goods and, thus there was no doubt that the Cenvat credit was availed of wrongly by the Appellant. We do not find any infirmity in the order passed by the Commissioner Customs and Central Excise, as well as by the CESTAT. 26. In so far as the Judgment of the Hon'ble Supreme Court in the case of Commissioner of C.Ex. Mumbai vs. Bombay Dyeing Mfg. Co. Ltd. (supra), relied upon by the learned Counsel for the Appellant is concerned, the facts before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se, Goa and has rightly rejected the Appeal preferred by the Appellant under Section 35(1) of the Central Excise Act, 1944. In the facts and circumstances of this case, the order imposing penalty of ₹ 50,000/- was also justified and does not warrant any interference. 31. For the reasons recorded aforesaid, the substantial question of law (A) is answered in the affirmative against the assessee and in favour of the Revenue. 32. The substantial question of law (B) is answered in the affirmative against the assessee and in favour of the Revenue. 33. In so far as substantial question of law (C) is concerned, we are of the view that the said amendment to Rule 14 of the Cenvat Credit Rules, 2004, vide Notification dated 17 March 2012 would apply only with prospective effect and not with retrospective effect. No such issue was raised by the Appellant before the Commissioner Customs and Central Excise, Goa and also before the CESTAT. Be that as it may a plain reading of the said Notification dated 17 March 2012 clearly indicates that such amendment was applicable only with prospective effect. It is also an admitted position that the notice of demand was issu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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