Western Refrigeration Pvt. Ltd. Versus Commissioner of CGST, Thane Rural
Central Excise
2018 (6) TMI 235 – CESTAT MUMBAI – TMI
CESTAT MUMBAI – AT
Dated:- 17-5-2018
Appeal No. E/85245/2018 – Order No. A/86433/2018
Central Excise
Hon'ble Mr. Ramesh Nair, Member ( Judicial )
Shri Rajesh Ostwal, Advocate, for appellant
Shri M. R. Melvin, Superintendent (AR), for respondent
ORDER
The present appeal is filed by the appellant only for waiver of penalty imposed under Section 11AC of the Central Excise Act, 1944.
2. The facts of the case are that the appellant has availed cenvat credit in respect of common input service. Apart from the sale of their manufactured goods, they are also doing the trading activity of boughtout items. The case of the department is that the appellant was supposed to reverse the cenvat credit under Rule (3A) of the Cenvat Credit Rules, 2004 attributed to the trading activity being an exempted service. The demand of cenvat credit was confirmed
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he case of wrong availment of credit. As per Rule 6(3A), the appellant is required to pay the proportionate cenvat credit attributed to the exempted service along with interest @ 24%. Since this interest rate is very exorbitant, it is in the form of penalty. Therefore, the legislators very consciously did not make the provision for penalty in such cases. He submits that Rule 15 of the Cenvat Credit Rules, 2004 meant for penalty was not invoked and also not invokable. Therefore, penalty under Section 11AC cannot be imposed. He placed reliance on the following judgments:-
(i) CCE vs. Sangrur Agro Ltd. – 2010 (254) ELT 25 (P&H);
(ii) Eastern Medikit Ltd. vs. CCE – 2009 (242) ELT 51 (Tri.-Del.);
(iii) Sandoz Pvt. Ltd. vs. CCE – 2018 (4) TMI-CESTAT Mumbai;
(iv) Man Structural Pvt. Ltd. vs. CCE&ST – 2015 (11) TMI 664-CESTAT New Delhi.
He further submits that the appellant has recorded the trading activity and availment of cenvat credit in their books. Therefore, the case was als
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oods or the provider of output service shall intimate in writing to the Superintendent of Central Excise giving the following particulars, namely :-
(i) name, address and registration number of the manufacturer of goods or provider of output service;
(ii) date from which the option under this clause is exercised or proposed to be exercised;
(iii) description of inputs and input services used exclusively in or in relation to the manufacture of exempted goods removed or for provision of exempted services and description of such exempted goods removed and such exempted services provided;
(iv) description of inputs and input services used exclusively in or in relation to the manufacture of non-exempted goods removed or for the provision of non-exempted services and description of such non-exempted goods removed and non-exempted services provided;
(v) CENVAT credit of inputs and input services lying in balance as on the date of exercising the option under this condition;
(
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mmon credit, denoted as C and calculated as,-
C = T – (A + B);
Explanation. – Where the entire credit has been attributed under sub-clauses (i) and (ii), namely ineligible credit or eligible credit, there shall be left no common credit for further attribution.
(iv) the amount of common credit attributable towards exempted goods removed or for provision of exempted services shall be called ineligible common credit, denoted as D and calculated as follows and shall be paid, –
D = (E/F) x C;
where E is the sum total of –
(a) value of exempted services provided; and
(b) value of exempted goods removed, during the preceding financial year; where F is the sum total of –
(a) value of non-exempted services provided,
(b) value of exempted services provided,
(c) value of non-exempted goods removed, and
(d) value of exempted goods removed, during the preceding financial year :
Provided that where no final products were manufactured or no output service was provi
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(c) the manufacturer or the provider of output service shall determine the amount of CENVAT credit attributable to exempted goods removed and provision of exempted services for the whole of financial year, out of the total credit denoted as T (Annual) taken during the whole of financial year in the following manner, namely :-
(i) the CENVAT credit attributable to inputs and input services used exclusively in or in relation to the manufacture of exempted goods removed or for provision of exempted services on the basis of inputs and input services actually so used during the financial year, shall be called Annual ineligible credit and denoted as A(Annual);
(ii) the CENVAT credit attributable to inputs and input services used exclusively in or in relation to the manufacture of non-exempted goods removed or for the provision of non-exempted services on the basis of inputs and input services actually so used shall be called Annual eligible credit and denoted as B(Annual);
(iii) com
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ble common credit and the aggregate amount of ineligible credit and ineligible common credit for the period of whole year, namely, [{A(Annual) + D(Annual)} – {(A+D) aggregated for the whole year)}], where the former of the two amounts is greater than the later;
(e) where the amount under clause (d) is not paid by the 30th June of the succeeding financial year, the manufacturer of goods or the provider of output service, shall, in addition to the amount of credit so paid under clause (d), be liable to pay on such amount an interest at the rate of fifteen per cent. per annum, from the 30th June of the succeeding financial year till the date of payment of such amount;
(f) the manufacturer or the provider of output service, shall at the end of the financial year, take credit of amount equal to difference between the total of the amount of the aggregate of ineligible credit and ineligible common credit paid during the whole year and the total of the amount of annual ineligible credit
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h the date of payment of the amount;
(iv) interest payable and paid, if any, determined as per the provisions of clause (e); and
(v) credit determined and taken as per the provisions of clause (f), if any, with the date of taking the credit”.
5.1 As per above Rule 6(3A), it can be seen that the only requirement is to pay the proportionate cenvat credit along with interest @ 24%. There is no provision for imposition of penalty. The penalty provisions under the Cenvat Credit Rules are provided under Rule 14 which reads as under:-
“Recovery of CENVAT credit wrongly taken or erroneously refunded. – Where the CENVAT credit has been taken and 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 11AA of the Excise Act or sections 73 and 75 of the Finance Act, shall apply mutatis mutandis for effecting such recoveries.”
5.2 From the above
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