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TMI Blog2022 (7) TMI 572X X X X Extracts X X X X X X X X Extracts X X X X ..... . B. I order for recovery of interest of Rs.7,38,856/- (Rupees Seven lakhs thirty eight thousand eight hundred fifty six only) under rule 14 of the CCR, 2004 read with the then section 11AB of the CEA, 1944. C. Since there is no misfeasance on the part of the assessee, the proposal for imposition of penalty under rule 15(1) of CCR, 2004/r/w rule 25 of CER, 2002 is not sustainable and, therefore, I do not impose any penalty." 2.1 Appellant is engaged in the manufacture of excisable goods falling under chapter sub heading no. 8504.00 of the First Schedule of the Central Excise Tariff Act, 1985 viz. Transformers. The assessee is also availing facility of CENVAT credit. 2.2 The appellant had received in their factory excisable goods i.e. transformers along with accessories for repair/rectification without original duty paying documents from their customers. The appellant had filed an intimation with the Range officer about the receipt of the said goods into their factory for repairs. Subsequently, the appellant availed Cenvat credit in their Cenvat account in respect of transformers into their factory on the strength of Xerox/photocopy of triplicate copy of their invoice under wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 29,75,948 6 V.Adj(SCN)15-80/JC/KDN/M-111/2010 dated 23.06.2011 35,18,480 TOTAL 2,96,06,162 By the six show cause notices detailed above appellant was called to show cause as to why: a. Cenvat Credit availed of by them totally amounting to Rs. 2,96,06,162/- should not be demanded and recovered from them under the provisions of Rule 14 of Cenvat Credit Rule, 2004 read with Section 11A(1) of Central Excise Act, 1944. b. The credit totally amounting to Rs. 2,96,06,162/- reversed at the time of clearance of transformers should not be appropriated towards said demand. c. Penalty should not be imposed on them under Rule 15(1) of Cenvat Credit Rules, 2004 read with Rule 25 of the Central Excise Rules, 2002. d. Interest totaling Rs.7,38,856/- on delayed payment of duty/reversal of Cenvat credit should not be demanded and recovered from them under the provision Rule 14 of Cenvat Credit Rules, 2004 read with Section 11AB of Central Excise Act, 1944. 2.4 All the six show cause notices have been adjudicated by the Commissioner by the impugned order. Aggrieved by the impugned order, appellants have preferred this appeal. 3.1 Have heard Shri Aditya Chitale, Advocate for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic Pvt. Ltd. [2009 (243) ELT 419] ii. Jindal Photo Ltd. [2009 (247) ELT 730] iii. Shah Pumps Pvt. Ltd [2006 (205) ELT 489] 3.3 Arguing for the revenue learned authorized representative submits:- * In the subject case the triplicate copies (in original) of the invoices in question were produced by the Appellants after the personal hearing and the same were found to be in order inasmuch as they co-relate with the Cenvat credits taken and the transformers initially cleared and removed after repairs as mentioned in the show-cause notices. * In such cases ascertaining that the goods were initially cleared on payment of appropriate duty would require co- relation of the identification marks on the goods and associated records maintained by the Appellants vis-à-vis the duty payment particulars in the account current or Cenvat credit register. It needs emphasis that receiving the goods back into the factory does not require any permission. * The triplicate copy meant for the Appellants (and original of which was produced after the hearing) is the one on which the Appellants has taken Cenvat Credit. Although the SCNS refer to the assessee having availed Cenvat Credit on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ersonal hearing and the same are found to be in order inasmuch as they co-relate with the Cenvat credits taken and the transformers initially cleared and removed after repairs as mentioned in the show-cause notices. As mentioned earlier, two show cause notices dated 14.02.2011 and 23.06.2011 involving similar facts have been made answerable to the Joint Commissioner and the assessee has requested that these may be taken up together for adjudication with the notices answerable to the Commissioner. I find substance in this proposal which also goes in sync with the instructions contained in paragraph 6 of the Board's Circular no. 752/68/2003-CX dated 01.10.2003 and hence agree to the request made of clubbing these notices in common adjudication proceedings. 10. Coming to the issue involved, it is the allegation that the assessee after receiving the Transformers in their factory for repairs took Cenvat Credit on the strength of the "Xerox/photocopy of the Triplicate copy of the invoices" without seeking any permission in this regard from the jurisdictional Commissioner under rule 16(3) of the Central Excise Rules, 2002. Such an availment of Credit is improper, the demand notices ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said goods. Obviously, the goods may be received back in the factory under the cover of a duty paying document viz. invoice which would indicate the duty initially paid by the manufacturer and which duty can be taken as Cenvat credit. Invoice, whether original, duplicate or triplicate would be of no relevance as long as it is proved with co-relating documents/entries that the same goods were cleared on payment of appropriate duty earlier. 11.3 The second sub-rule mentions that if the process that the manufacturer undertakes on the goods received does not amount to manufacture, he should pay an amount equal to the Cenvat Credit taken and in any other case (i.e., where the process amounts to manufacture) he should pay appropriate central excise duty on the goods. The Explanation appended clarifies that the "amount" paid when the goods are removed without them having undergoing any 'manufacturing process' is available as CENVAT to the consignee. 11.4 Sub-Rule (3) mentions that if there is any difficulty in following the provisions of sub-rule (1) and sub-rule (2), the assessee can receive these goods for the purposes of being re- made, refined, re-conditioned or for any ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as provided by or under any rule. This provision explains that the invoice of the returned goods, which would be a valid document for availing credit and duty is deemed to have been discharged. Regarding availing credit on its own invoice, rule 16(1) of the Central Excise Rules, 2002 allows the assessee to do so. In any case, the whole procedure is revenue neutral, in the sense as the duty has to be discharged by the 5th of next month. 3. In view of the above, it is clarified that credit on rejected/returned goods, received in the factory before prescribed date for duty payment, can be allowed to be taken under rule 16(1) of the Central Excise Rules, 2002." 13.2. The aforesaid letter has been issued in a different context viz, rule 8 of the CER, 2002 and although it does not answer the issue involved yet it --. clarifies that "regarding availing credit on its own invoice, rule 16(1) of the FCER, 2002 allows the assessee to do so." In the present case, as discussed earlier, the triplicate copy meant for the assessee (and original of which was produced after the hearing) is the one on which the assessee has taken Cenvat Credit. Although the SCNs refer to the assessee having av ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s shall be treated as non duty paid and interest is warranted for the period of retention of benefit. The Hon'ble Supreme Court in the case of SKF India Ltd. [2009(239)ELT 385(SC)] has held that interest is payable for delay in payment of revenue on any count. Therefore, I find that the assessee is liable for payment of interest u/s 11AB of the CEA, 1944 for the delayed reversal of the credit taken and as mentioned in the show-cause notices. 16. The assessee having reversed/paid the amounts equal to the CENVAT credit taken under sub-rule (1) of rule 16 of CER, 200 goods were removed after repairs, there cannot be any misfeasance on their part. In such an eventuality, it cannot be said that there has been a contravention of either the CER, 2002 or the CCR, 2004 so as to saddle the assessee with any penalty under rule 15(1) of the CCR, 2004/rule 25 of the CER, 2002." 4.3 The issue for consideration is applicability of Rule 16 (1) or Rule 16 (3) of the Central Excise Rules, 2002 to the transformers originally cleared by the appellant on payment of duty and subsequently received back for repairs etc. Commissioner has done an interesting analysis of the Rule 16 in para 11 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oluted argument as per para 15 of the impugned order, Commissioner has confirmed the demand for interest. In the present case there is no delay in payments that were required to be made as per rule 16 (2), and if there was no delay in making the payments of the amount due, the demand for interest cannot be sustained for what so ever reason. The reliance placed by the Commissioner on the decision of Hon'ble Apex Court in case of SKF is totally misplaced as in that case Hon'ble Apex Court confirmed the demand for interest on the duty paid subsequent to clearance of the goods on the basis of supplementary invoices issued. Reliance placed by the authorized representative on the decision of Hon'ble Apex Court in the case of Ind-Swift laboratories also is misplaced because in the present case Commissioner has himself concluded that the CENVAT Credit taken by the appellant was in order. 4.7 Counsel for the appellant has in his submissions relied upon the following decisions: i. Hitesh Plastic Pvt. Ltd. [2009 (243) ELT 419] "3. I find that there is no dispute, that provisions of Rule 16 allow the assessee to avail the credit of duty paid on the goods cleared by them, as if such goods a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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