M/S. Mohan Breweries and Distilleries Ltd. and Another Vs. Commissioner of Central Excise, Pondicherry and Another - Court Judgment

SooperKanoon Citationsooperkanoon.com/1149700
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Chennai
Decided OnMar-06-2014
Case NumberE/696 of 2007, E/699 of 2007 [Arising Out of Order-in-Appeal No.90 of 2007 (P), dated 18.06.2007 passed by the Commissioner of Central Excise (Appeals), Chennai]
JudgeTHE HONOURABLE MR. P.K. DAS, JUDICIAL MEMBER
AppellantM/S. Mohan Breweries and Distilleries Ltd. and Another
RespondentCommissioner of Central Excise, Pondicherry and Another
Excerpt:
finance act, 1997 - section 87; 1. both the appeals are arising out of common order and both are taken up together for disposal. 2. the relevant facts of the case, in brief, are that the assessees are engaged in the manufacture of glass bottles classifiable under sub-heading no.7007.90 of the schedule to the central excise tariff act, 1985. they availed cenvat credit on various inputs including furnace oil as fuel. by notification no.5/94-ce (nt), dated 01.03.1994 issued under rule 57a of the erstwhile central excise rules, 1944 in supersession of the notification no.177/86-ce, dated 01.03.1986 modvat credit was extended to fuels amongst others. the said notification was amended by notification no.14/97-ce(nt), dated 03.05.1997 and credit on inputs, namely, furnace oil and other items were restricted to the amount of excise duty calculated at the rate of 10% ad valorem instead of 15% ad valorem as paid by them. there was a retrospective amendment of notification no.14/97-ce(nt), dated 03.05.1997 by section 87 of the finance act, 1997. as per section 87 of the finance act, 1997, the restriction of credit of duties paid on the specified petroleum products as per notification, dated 03.05.1997, used as inputs in the manufacture of final products shall be deemed to prevail over all the notification with effect on and from 23rd july, 1996 to 3rd may, 1997. a show-cause notice dated 01.11.1997 was issued to the assessee proposing to demand of an amount of rs.7,60,566/- along with interest as per notification no.14/97-ce(nt), dated 03.05.1997 and section 87 of finance act, 1997. adjudicating authority confirmed the demand of rs.7,60,566/- along with interest being excess credit availed for the period 23.07.1996 to 03.05.1997 under section 87 of the finance act, 1997 and rule 57i of the erstwhile central excise rules, 1944 read with section 11a of the central excise act. commissioner (appeals) modified the adjudication order and upheld the demand for the period 23.07.1996 to 28.02.1997 along with interest and the demand of duty for the period from 01.03.1997 to 03.05.1997 was set aside. the assessee and the revenue both filed the appeals against the impugned order. 3. the learned counsel on behalf of the assessee submits that the demand of duty for the period 23.07.1996 to 28.02.1007 is not sustainable mainly on the ground that they have availed credit under rule 57d of the erstwhile central excise rules, 1944. he submits that the notification no.5/94-ce(nt) as amended by notification no.14/1997-ce(nt) (supra) were issued under rule 57a of the said erstwhile rule, 1944. he further submits that section 87 of the finance act, 1997 is in respect of a notification dated 03.05.1997 issued under rule 57a of the erstwhile rules. further, as per sub-section (2) of section 87 of the finance act, 1997 the present proceedings cannot be sustained. he further submits that at any event, the revenues appeal cannot be accepted as it is covered by the decision of the honble supreme court in the assessees favour in the case of jindal poly films ltd. vs commissioner of central excise, meerut-ii reported in 2006 (198) e.l.t. 3 (s.c.) [paragraphs 9 and 10]. he further submits that before issuance of the show-cause notice, the appellant moved before the honble high court challenging the vires of section 87 of the finance act, 1997.. the honble high court held that section 87 of the finance act and notification no.14/97-ce(nt) (supra) are subject to the limitation provided under section 11a of the central excise act, 1944. it has also directed that the tribunal shall decide all the issues independently after affording sufficient opportunities to the parties concerned. 4. on the other hand, the learned authorised representative on behalf of the revenue reiterates the grounds of appeal. she submits that commissioner (appeals) erroneously followed the decision of the honble supreme court in the case of jindal poly films ltd (supra). it is submitted that the honble supreme court had not restricted the confirmation of the demand upto 28.02.1997. she further submits that the honble supreme court at para14 of the said decision observed that the restriction 10% ad valorem would apply in the entire material period as referred to in section 87 of the finance act, 1997. she further submits that section 57d would apply in the context of credit of duty not to be denied or varied in certain circumstances. it is submitted that the assessee availed credit in terms of notification no.5/94-ce(nt) which was issued under rule 57a and, therefore, the submission of the learned counsel that they availed cenvat credit under 57d has no consequence. she relied upon the decision of the honble supreme court in the case of union of india and others vs maharaja shree umaid mills reported in 2013-tiol-66-sc-cx, where it has been held that finance act, 2000 disallowed cenvat credit on hsd and any credit taken shall be reversed within 30 days of enactment of finance act, 2000 and if not, interest is leviable. 5. after hearing both the sides and on perusal of the records, i find there is no dispute that notification no.5/94-ce(nt), dated 01.03.1994 was issued in exercise of power conferred under rule 57a of the central excise rules, 1944. the assessee availed modvat credit at the rate of 15% ad valorem paid on the specified inputs, furnace oil, among others. subsequently, by notification no.6/97-ce(nt), dated 01.03.1997, new provision of rule 57a and 57b were substituted. it is seen that fuel is specifically mentioned in rule 57b. section 87 of the finance act, 1997 retrospectively validated the notification dated 03.05.1997 issued in exercise of power under rule 57a of the erstwhile rules for the period on and from 23.07.1996 to 03.05.1997. in effect, the limit of 10% ad valorem under section 87 of the finance act, 1997 would not apply in respect of credit availed under rule 57b of the rules as substituted vide notification no.6/97-ce(nt), dated 01.03.1997. 6. notification no.5/94-ce(nt) was issued under rule 57a, extended cenvat credit on furnace oil. so, the contention of the learned counsel that they have availed credit under rule 57d of the erstwhile central excise has no merit. 7.  in a rejoinder, the learned counsel submitted that that they have availed credit under rule 57b vide notification no.6/87-ce(nt), dated 01.03.1987. "8. i find the present case is squarely covered by the decision of the honble supreme court in the case of m/s. jindal poly films ltd. (supra). in that case, the issue involved is whether duty paid on the furnace oil used as input could be availed of as credit under modvat scheme as envisaged under rule 57b of the erstwhile rules. it is contended by the appellant that this 10% limit on the credit would not apply in respect of the goods which are cleared under rule 57b. the appellant claimed the credit of duty to the extent of 15% under modvat scheme. the honble supreme court held that in terms of rule 57b as amended, the appellant would be entitled to take credit in respect of furnace oil for the amount actually paid on account of specified duty during the period mar.97 to feb.9. 9. in the present case, the commissioner (appeals) following the decision of the honble supreme court in the case of m/s. jindal poly films ltd. rightly allowed the credit for the period 01.03.1997 to 03.05.1997 and upheld the demand for the period 23.07.1996 to 28.02.1997. the relevant portions of the decision of the honble supreme court is reproduced below:- 12. the relevant period in these appeals is march, 97 to feb, 99. therefore, in terms of rule 57b as amended the appellant would be entitled to take credit in respect of the furnace oil for the amount actually paid on account of specified duty upto 2nd june, 1998 and thereafter at 95% of the duty paid. the appeals are accordingly allowed with no order as to costs." 8. in view of the above the decision of the honble supreme court, i do not find any reason to interfere with the order of commissioner (appeals). accordingly, both the appeals filed by the appellant and the revenue are dismissed.
Judgment:

1. Both the appeals are arising out of common order and both are taken up together for disposal.

2. The relevant facts of the case, in brief, are that the assessees are engaged in the manufacture of Glass Bottles classifiable under sub-heading no.7007.90 of the Schedule to the Central Excise Tariff Act, 1985. They availed Cenvat credit on various inputs including Furnace Oil as fuel. By Notification No.5/94-CE (NT), dated 01.03.1994 issued under Rule 57A of the erstwhile Central Excise Rules, 1944 in supersession of the Notification No.177/86-CE, dated 01.03.1986 MODVAT credit was extended to fuels amongst others. The said notification was amended by Notification No.14/97-CE(NT), dated 03.05.1997 and credit on inputs, namely, Furnace Oil and other items were restricted to the amount of excise duty calculated at the rate of 10% ad valorem instead of 15% ad valorem as paid by them. There was a retrospective amendment of Notification No.14/97-CE(NT), dated 03.05.1997 by Section 87 of the Finance Act, 1997. As per Section 87 of the Finance Act, 1997, the restriction of credit of duties paid on the specified petroleum products as per Notification, Dated 03.05.1997, used as inputs in the manufacture of final products shall be deemed to prevail over all the notification with effect on and from 23rd July, 1996 to 3rd May, 1997. A show-cause notice dated 01.11.1997 was issued to the assessee proposing to demand of an amount of Rs.7,60,566/- along with interest as per Notification No.14/97-CE(NT), dated 03.05.1997 and Section 87 of Finance Act, 1997. Adjudicating authority confirmed the demand of Rs.7,60,566/- along with interest being excess credit availed for the period 23.07.1996 to 03.05.1997 under Section 87 of the Finance Act, 1997 and Rule 57I of the erstwhile Central Excise Rules, 1944 read with Section 11A of the Central Excise Act. Commissioner (Appeals) modified the Adjudication Order and upheld the demand for the period 23.07.1996 to 28.02.1997 along with interest and the demand of duty for the period from 01.03.1997 to 03.05.1997 was set aside. The assessee and the Revenue both filed the appeals against the impugned order.

3. The learned Counsel on behalf of the assessee submits that the demand of duty for the period 23.07.1996 to 28.02.1007 is not sustainable mainly on the ground that they have availed credit under Rule 57D of the erstwhile Central Excise Rules, 1944. He submits that the Notification No.5/94-CE(NT) as amended by Notification No.14/1997-CE(NT) (supra) were issued under Rule 57A of the said erstwhile Rule, 1944. He further submits that Section 87 of the Finance Act, 1997 is in respect of a notification dated 03.05.1997 issued under Rule 57A of the erstwhile Rules. Further, as per sub-section (2) of Section 87 of the Finance Act, 1997 the present proceedings cannot be sustained. He further submits that at any event, the Revenues appeal cannot be accepted as it is covered by the decision of the Honble Supreme Court in the assessees favour in the case of Jindal Poly Films Ltd. Vs Commissioner of Central Excise, Meerut-II reported in 2006 (198) E.L.T. 3 (S.C.) [Paragraphs 9 and 10]. He further submits that before issuance of the show-cause notice, the appellant moved before the Honble High Court challenging the vires of Section 87 of the Finance Act, 1997.. The Honble High Court held that Section 87 of the Finance Act and Notification No.14/97-CE(NT) (supra) are subject to the limitation provided under Section 11A of the Central Excise Act, 1944. It has also directed that the Tribunal shall decide all the issues independently after affording sufficient opportunities to the parties concerned.

4. On the other hand, the learned Authorised Representative on behalf of the Revenue reiterates the grounds of appeal. She submits that Commissioner (Appeals) erroneously followed the decision of the Honble Supreme Court in the case of Jindal Poly Films Ltd (supra). It is submitted that the Honble Supreme Court had not restricted the confirmation of the demand upto 28.02.1997. She further submits that the Honble Supreme Court at para14 of the said decision observed that the restriction 10% ad valorem would apply in the entire material period as referred to in Section 87 of the Finance Act, 1997. She further submits that Section 57D would apply in the context of credit of duty not to be denied or varied in certain circumstances. It is submitted that the assessee availed credit in terms of Notification No.5/94-CE(NT) which was issued under Rule 57A and, therefore, the submission of the learned Counsel that they availed Cenvat Credit under 57D has no consequence. She relied upon the decision of the Honble Supreme Court in the case of Union of India and Others Vs Maharaja Shree Umaid Mills reported in 2013-TIOL-66-SC-CX, where it has been held that Finance Act, 2000 disallowed CENVAT credit on HSD and any credit taken shall be reversed within 30 days of enactment of Finance Act, 2000 and if not, interest is leviable.

5. After hearing both the sides and on perusal of the records, I find there is no dispute that Notification No.5/94-CE(NT), dated 01.03.1994 was issued in exercise of power conferred under Rule 57A of the Central Excise Rules, 1944. The assessee availed MODVAT credit at the rate of 15% ad valorem paid on the specified inputs, furnace oil, among others. Subsequently, by Notification No.6/97-CE(NT), dated 01.03.1997, new provision of Rule 57A and 57B were substituted. It is seen that Fuel is specifically mentioned in Rule 57B. Section 87 of the Finance Act, 1997 retrospectively validated the Notification dated 03.05.1997 issued in exercise of power under Rule 57A of the erstwhile Rules for the period on and from 23.07.1996 to 03.05.1997. In effect, the limit of 10% ad valorem under Section 87 of the Finance Act, 1997 would not apply in respect of credit availed under Rule 57B of the Rules as substituted vide Notification No.6/97-CE(NT), dated 01.03.1997.

6. Notification No.5/94-CE(NT) was issued under Rule 57A, extended Cenvat credit on furnace oil. So, the contention of the learned Counsel that they have availed credit under Rule 57D of the erstwhile Central Excise has no merit.

7.  In a rejoinder, the learned Counsel submitted that that they have availed credit under Rule 57B vide Notification No.6/87-CE(NT), dated 01.03.1987.

"8. I find the present case is squarely covered by the decision of the Honble Supreme Court in the case of M/s. Jindal Poly Films Ltd. (supra). In that case, the issue involved is whether duty paid on the Furnace Oil used as input could be availed of as credit under Modvat scheme as envisaged under Rule 57B of the erstwhile Rules. It is contended by the appellant that this 10% limit on the credit would not apply in respect of the goods which are cleared under Rule 57B. The appellant claimed the credit of duty to the extent of 15% under Modvat scheme. The Honble Supreme Court held that in terms of Rule 57B as amended, the appellant would be entitled to take credit in respect of Furnace Oil for the amount actually paid on account of specified duty during the period Mar.97 to Feb.9.

9. In the present case, the Commissioner (Appeals) following the decision of the Honble Supreme Court in the case of M/s. Jindal Poly Films Ltd. rightly allowed the credit for the period 01.03.1997 to 03.05.1997 and upheld the demand for the period 23.07.1996 to 28.02.1997. The relevant portions of the decision of the Honble Supreme Court is reproduced below:-

12. The relevant period in these appeals is March, 97 to Feb, 99. Therefore, in terms of Rule 57B as amended the appellant would be entitled to take credit in respect of the furnace oil for the amount actually paid on account of specified duty upto 2nd June, 1998 and thereafter at 95% of the duty paid. The appeals are accordingly allowed with no order as to costs."

8. In view of the above the decision of the Honble Supreme Court, I do not find any reason to interfere with the order of Commissioner (Appeals). Accordingly, both the appeals filed by the appellant and the Revenue are dismissed.