Coramandel Foams P. Ltd. Vs. Commissioner of Central Excise - Court Judgment

Excerpt:
1. this application is filed by m/s. coramandel foams pvt. ltd. pondicherry for waiver of predeposit and stay of recover in respect of duty and penalty as per an order dated 31.10.2005 of the commissioner of central excise (appeals), chennai against which they have filed an appeal. after hearing the parties, the main appeal itself is taken up for final disposal.2. in the subject order the commissioner of central excise (appeals), chennai, reduced the demand of differential duty of rs. 1,18,862/- to rs. 36,925/- and the penalty of equal amount of rs. 1,18,862/ to rs. 5000/- made in the order of the original authority under section 11ac.he retained the demand of interest due under section 11ab on the reduced demand.3. the facts of the case are that during 1999 to 2003, the appellant had periodically sold duty paid inputs, reversing the credit initially availed, barring in one case when they had paid duty on its transaction value. the differential duty amounts of rs. 11,136/-and rs. 63,691/- were demanded for clearances of inputs made during the periods 29.7.99 to 31.3.2000 and 1.4.2000 to 28.2.2001 respectively. the original authority had made these demands on the basis of the provisions contained in rules 57f(3) and 57ab (1)(b) respectively at the relevant time which required that the assessee reverse the duty equal to the credit originally availed on the inputs when they were received.considering their appeal, the lower appellate authority set aside the demands for these amounts following the ratio of the decision rendered by the larger bench of the tribunal in the case of cce v. asia brown bovery ltd. and southern iron & steel co. v. cce . as regards rs. 25,592/- and rs. 11,333/- pertaining to clearances made during 1.3.2001 to 20.6.2001 and 1.3.2002 to 6.2.2003 respectively, the commissioner (appeals) found that the ratio of the above decisions was not applicable as the relevant rules had been amended as follows: when inputs or capital goods, on which cenvat credit has been taken, are removed as such from the factory, the manufacturer of the final products shall pay an amount equal to the duty of excise which is leviable on such goods at the rate applicable to such goods on the date of such removal and on the value determined for such goods under section 4 or section 4a of the act.he accordingly upheld the same. considering the plea of bona fide, the commissioner (appeals) reduced the penalty from rs. 1,18,862/- to rs. 5000/- under section 11ac and modified the demand of interest consequent to the revised demand.4. ld. consultant for the appellant has argued that the demand of rs. 36,925/- was incorrectly worked out in the impugned order. as regards the demand of rs. 25,592/-, the department had worked out differential duty taking the duty payable without considering the sale price as cum-duty-value of the inputs sold. similarly, during 1.3.2002 to 6.2.2003 the inputs were cleared paying duty on the transaction value as required by law and there was no short-levy as mentioned in the impugned order. though they had indicated these errors in computation to the original authority and the lower appellate authority, the incorrect demands were maintained by the lower authorities. ld. counsel submitted that the amounts required to be requantified and requested that the issue may be remanded back to the original authority for requantification. ld. sdr reiterated the reasoning adopted by the commissioner (appeals).5. on a careful consideration of the facts of the case, it appears that despite their submissions, the amounts to be paid and the demand were not correctly worked out in case of clearances made during 1.3.01 to 20.6.01 by the original authority. as per the submissions made, the amount due was only rs. 22069. the claim that the duty due has to be worked out considering the sale price as cum duty price as per the ratio of maruti udyog ltd. case has to be allowed. similarly in respect of clearances made during 1.3.02 to 6.2.2003, the appellants has apparently already paid the amount of duty to be paid at the time of removal of inputs and the demand of rs. 11333/ was not sustainable.this however needs to be examined by the original authority.6. in the circumstances, i remand the case to the original authority to quantify the demands of duty correctly. the original authority shall pass an order after hearing the appellant. as regards the penalty, the short payment has occurred due to an interpretation of provisions bona fide believed to be supported by various case law. therefore, i am inclined to take a lenient view in this regard and reduce the penalty to rs. 1000/- the appeal is thus allowed by way of remand.

Judgment:
1. This application is filed by M/s. Coramandel Foams Pvt. Ltd. Pondicherry for waiver of predeposit and stay of recover in respect of duty and penalty as per an order dated 31.10.2005 of the Commissioner of Central Excise (Appeals), Chennai against which they have filed an appeal. After hearing the parties, the main appeal itself is taken up for final disposal.

2. In the subject order the Commissioner of Central Excise (Appeals), Chennai, reduced the demand of differential duty of Rs. 1,18,862/- to Rs. 36,925/- and the penalty of equal amount of Rs. 1,18,862/ to Rs. 5000/- made in the order of the original authority under Section 11AC.He retained the demand of interest due under Section 11AB on the reduced demand.

3. The facts of the case are that during 1999 to 2003, the appellant had periodically sold duty paid inputs, reversing the credit initially availed, barring in one case when they had paid duty on its transaction value. The differential duty amounts of Rs. 11,136/-and Rs. 63,691/- were demanded for clearances of inputs made during the periods 29.7.99 to 31.3.2000 and 1.4.2000 to 28.2.2001 respectively. The original authority had made these demands on the basis of the provisions contained in Rules 57F(3) and 57AB (1)(b) respectively at the relevant time which required that the assessee reverse the duty equal to the credit originally availed on the inputs when they were received.

Considering their appeal, the lower appellate authority set aside the demands for these amounts following the ratio of the decision rendered by the Larger Bench of the Tribunal in the case of CCE v. Asia Brown Bovery Ltd. and Southern Iron & Steel Co. v. CCE . As regards Rs. 25,592/- and Rs. 11,333/- pertaining to clearances made during 1.3.2001 to 20.6.2001 and 1.3.2002 to 6.2.2003 respectively, the Commissioner (Appeals) found that the ratio of the above decisions was not applicable as the relevant rules had been amended as follows: When inputs or capital goods, on which CENVAT credit has been taken, are removed as such from the factory, the manufacturer of the final products shall pay an amount equal to the duty of excise which is leviable on such goods at the rate applicable to such goods on the date of such removal and on the value determined for such goods under Section 4 or Section 4A of the Act.

He accordingly upheld the same. Considering the plea of bona fide, the Commissioner (Appeals) reduced the penalty from Rs. 1,18,862/- to Rs. 5000/- under Section 11AC and modified the demand of interest consequent to the revised demand.

4. Ld. Consultant for the appellant has argued that the demand of Rs. 36,925/- was incorrectly worked out in the impugned order. As regards the demand of Rs. 25,592/-, the department had worked out differential duty taking the duty payable without considering the sale price as cum-duty-value of the inputs sold. Similarly, during 1.3.2002 to 6.2.2003 the inputs were cleared paying duty on the transaction value as required by law and there was no short-levy as mentioned in the impugned order. Though they had indicated these errors in computation to the original authority and the lower appellate authority, the incorrect demands were maintained by the lower authorities. Ld. Counsel submitted that the amounts required to be requantified and requested that the issue may be remanded back to the original authority for requantification. Ld. SDR reiterated the reasoning adopted by the Commissioner (Appeals).

5. On a careful consideration of the facts of the case, it appears that despite their submissions, the amounts to be paid and the demand were not correctly worked out in case of clearances made during 1.3.01 to 20.6.01 by the original authority. As per the submissions made, the amount due was only Rs. 22069. The claim that the duty due has to be worked out considering the sale price as cum duty price as per the ratio of Maruti Udyog Ltd. case has to be allowed. Similarly in respect of clearances made during 1.3.02 to 6.2.2003, the appellants has apparently already paid the amount of duty to be paid at the time of removal of inputs and the demand of Rs. 11333/ was not sustainable.

This however needs to be examined by the original authority.

6. In the circumstances, I remand the case to the original authority to quantify the demands of duty correctly. The original authority shall pass an order after hearing the appellant. As regards the penalty, the short payment has occurred due to an interpretation of provisions bona fide believed to be supported by various case law. Therefore, I am inclined to take a lenient view in this regard and reduce the penalty to Rs. 1000/- The appeal is thus allowed by way of remand.