Commissioner of Central Excise and Customs, Raigad Vs. M/S. Siyaram Silk Mills Ltd. - Court Judgment

Per : Ashok Jindal, Member (Judicial)

This appeal is filed by the Revenue against the order of Commissioner (Appeals) Order No. SRK/454/RGD/2008 dated 17.7.2008.

2. The brief facts of the case are that during the period from 1.4.2003 to 28.2.2004, the respondent had processed yarn on job-work basis and has also availed CENVAT credit on some inputs which were used for job work, which were alleged to be not admissible. Responding to the audit objection, the respondent reversed the CENVAT credit amounting to Rs. 1,71,110/- along with interest under protest before issue of the show-cause notice. A show-cause notice was issued for appropriation of credit and interest already paid, and also for imposition of penalty under Section 11AC of the Central Excise Act, 1944 read with Rule 13 of the CENVAT Credit Rules 2004. The adjudicating authority confirmed the demand along with interest and imposed the penalty under Section 11AC. On appeal before the Commissioner (Appeals), the Commissioner appeal set aside the order-in-original and the duty demand, interest and penalties were dropped. Aggrieved from the same the Revenue is before me.

3. Shri S.M. Vaidya, the learned JDR submitted that in this case the respondent has reversed the CENVAT credit along with interest although under protest but after adjudication they contested only the penalty imposed on them before the Commissioner (Appeals) and therefore it is an admitted case by the respondent of their duty liability. But the Commissioner (Appeals) held that duty demand is also not leviable. The relief which was not sought by the respondent cannot be given therefore the impugned order is liable to be set aside and further submitted that in the case of Rajasthan Spinning and Weaving Mills reported in 2009 (238) E.L.T. 3 (S.C.) it has been held that in the case of detection of wrongly availment of CENVAT credit which was found by the department during the course of investigation equivalent amount of penalty is imposable. To support his contention he placed reliance on Balaji Vegetables Products Pvt. Ltd. Vs. Collector of Central Excise, Kanpur reported in 1999 (108) E.L.T. 802 (Tribunal) wherein it was held that assessees’s own communication admitting the liability will not absolve the responsibility of Revenue to proceed in terms of Section 11A of the Central Excise Act, 1944 and in due process of law. Further he relied on A.P. Plastic Pvt. Ltd. reported in 2004 (171) E.L.T.413 (Tri.-Del.) wherein it was observed that the issue of show-cause notice under Section 11A for recovery of the demand pertaining to duty/credit is mandatory and even in a case of voluntary deposit of duty during the investigation proceedings. Further he relied on Commissioner of Central Excise Vs. M/s. Him Chemicals and Fertilizers Ltd. reported in 2009-TIOL-574-HC-HP-CX wherein it was held that once a case is covered by the situation mentioned in the section, mere deposit prior to issuance of show-cause notice under Section 11A of the Act will not necessarily negate the situation mentioned in the said Section.

4. On the other hand the learned Advocate submitted that their case is squarely covered by the case of Sterlite Industries (I) Ltd. Vs. Commissioner of Central Excise, Pune reported in 2005 (183) E.L.T. 353 (Tri.-LB) wherein it was held that MODVAT credit of duty-paid on inputs used in manufacture of final product cleared without payment of duty for further utilization in manufacture of final product, which are cleared on payment of duty by principal manufacturer, not hit by provisions of Rule 57C of erstwhile Central Excise Rules, 1944 and in this case also the Commissioner (Appeals) has relied on the above decision and held that this demand is not sustainable hence is set aside the order-in-original. He further prayed that in the case of Patton Ltd. Vs. commissioner of Central Excise reported in 2006 (206) E.L.T. 496 (Tri.-Kolkata), this Tribunal has held that inaction of department in not issuing show-cause notice immediately on being pointed out by Audit unexplainable, no cogent reason adduced, suppression or misdeclaration cannot be alleged, demand barred by limitation. Further in the case of Kalpana Lamps and Components Ltd. Vs. Commr. Of C.Ex. reported in 2008 (232) E.L.T. 163 (Tri.-Chennai) wherein this Tribunal had held that when all the facts were within the knowledge of the department, there was no justification for invoking the extended period of limitation.

5.. Heard.

6. I have perused the record and considered the arguments advanced by both the sides and found that in this case, the respondent is a job-worker and during the process of manufacture, the job worker who received goods from the manufacturer and also used some other inputs on which the job worker has availed CENVAT credit were used in the manufacture of the final product on job work basis and the same was sent back to the principal manufacturer, who cleared the said goods on payment of duty. The facts of the case are identical to the case of Sterlite Industries (I) Ltd., (supra) wherein the Larger Bench of this Tribunal has held that the job worker, who received the goods from other manufacturer are entitled to take credit of duty in respect of other inputs received directly and used by the job worker in manufacture of the said goods on job work basis cleared to the principal manufacturer without payment of duty for further utilization in manufacture of final product which were cleared on payment of duty by the principal manufacturer, CENVAT credit to the job work cannot be denied. I find that the issue is identical and the respondent is entitled for the CENVAT credit. The argument advanced by the DR that they have not contested the duty liability before the Commissioner (Appeals), the appeal is not sustainable. The respondent has reversed the CENVAT credit along with interest under protest, which amounts that the respondent never admitted their duty liability. Hence, I do not find any infirmity in the impugned order, same is upheld. The appeal filed by the Revenue is rejected.