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Hng Float Glass Ltd V/S Commissioner of Central Excise and Service Tax, - Vadodara-II


Company & Directors' Information:- HNG FLOAT GLASS LIMITED. [Active] CIN = U26101WB2006PLC111182

Company & Directors' Information:- CENTRAL GLASS COMPANY INDIA PRIVATE LIMITED [Active] CIN = U26100HR2012FTC047499

Company & Directors' Information:- GLASS AND GLASS (INDIA) PRIVATE LIMITED [Active] CIN = U26100MH1996PTC102597

Company & Directors' Information:- SERVICE CORPORATION LIMITED [Dissolved] CIN = U93090KL1946PLC001075

Company & Directors' Information:- THE GLASS CORPORATION PVT LTD [Strike Off] CIN = U74999RJ1947PTC000025

    Appeal No. E/11720/2014 (Arising out of OIO-VAD-EXCUS-002-COM-068-13-14 passed by Commissioner of Central Excise, and Service Tax-Vadodara-II) and Order No. A/10154/2018

    Decided On, 19 January 2018

    At, Customs Excise Service Tax Appellate Tribunal West Zonal Bench At Ahmedabad

    By, THE HONORABLE JUSTICE: DR. D.M. MISRA
    By, MEMBER

    For Petitioner: S.R. Dixit, Advocate And For Respondents: A. Mishra, AR



Judgment Text


1. This is an appeal filed against the OIO-VAD-EXCUS-002-COM-068-13-14 passed by the Commissioner of Central Excise, and Service Tax-Vadodara-II.

2. Briefly stated the facts of the case are that the appellant had wrongly taken excess credit of Rs. 9,97,32,292/- during the period September 2008 to January 2009 on imported capital goods. Consequently, they have reversed the credit in February 2009, but availed to discharge interest for wrong availment of the said credit. Consequently, a show cause notice was issued to them on 31.08.2009 proposing recovery of interest of Rs. 17,80,894/- under the provisions of Section 11AB read with Rule 14 of CCR, 2004 and penalty. On adjudication, the demand was confirmed, however, no penalty imposed. Hence, the present appeal.

3. Ld. Advocate Shri S.R. Dixit for the appellant submits that due to inadvertent errors they had availed Cenvat credit on the duty forgone on capital goods imported under EPCG Scheme during the period September 2008 to January 2009 and such credit was voluntarily reversed by them before being pointed out by the department. It is his contention that since the appellant had reversed the credit, no demand for recovery was issued and therefore demanding interest alone is not sustainable in law. In support, the Ld. Advocate referred to the judgment of the Hon'ble Karnataka High Court in the case of Commissioner of Central Excise & Bangalore-III vs. Bharat Heavy Electricals Ltd. : 2010 (257) ELT 369 (Kar.). Further, he has submitted that on the time barred demands, no interest is leviable even if the amount has been paid. In support, he refers to the judgment of the Hon'ble Gujarat High Court in the case of CCE & C. Vadodara-II vs. Gujarat Narmada Fertilizers Co. Ltd. : 2012 (285) ELT 336 (Guj.). Further, he has submitted that the principle of laid down by the Hon'ble Supreme Court in the case of Union of India vs. Ind-Swift Laboratories Ltd. : 2012 (25) STR 184 (S.C.), since delivered in a different set of circumstances not applicable to the facts of the present case. Further, he has submitted the judgment of this Tribunal in the case of Atul Ltd. and others vide final order No. A/10685-10696/2017 dated 31.03.2017 could not be applicable to the facts and circumstances of the present case, as no duty has been determined under Section 11A of CEA, 1944, and the demand for interest was only issued.

4. Per contra, the Ld. AR for the Revenue reiterated the findings of the adjudicating authority. Further, he has contended that it is a simple case of availment of erroneous Cenvat credit of capital goods imported during the period September 2008 to January 2009 hence, along with reversal of erroneous credit, the appellant ought to have paid the interest. It is his contention that there is no issue of determination of duty as was in the Bharat Heavy Electricals Ltd.'s case, but an erroneous credit availed which the appellant are not eligible and accordingly reversed on realization of the said mistake. Therefore, the principle laid down in the said case is not applicable to the facts of the present case. Similarly, the present demand was issued for the normal period of limitation, therefore, the principle laid down in GNFC's case also not applicable to the facts and circumstances of the case. He has further submitted that this Tribunal has already considered the issue in Atul Ltd. and others Final Order No. A/10685-10696/2017 dated 31.03.2017 and held that interest is payable for the normal period.

5. Heard both sides and perused the records. The limited issue involved in the present appeal is: whether interest is payable on the erroneous Cenvat credit availed during the period September 2008 to January 2009. There is no dispute of the fact that the appellant had incorrectly availed Cenvat credit of the amount of additional customs duty and countervailing duty forgone while the capital goods are imported under the EPCG Scheme. It is the contention of the appellant that since the said credit has not been utilized, therefore, interest for the intervening period is not applicable. I find that this Tribunal in the case of Atul Ltd. and others vide its final order No. A/10685-10696/2017 dated 30.03.2017 after analyzing the principles of the law laid down in this regard held that erroneous credit availed even if not utilized; interest could be applicable for the normal period of limitation. This Tribunal observed as:

17. In these circumstances, I do not find merit in the contentions raised in the respective appeals that mere availment of CENVAT credit without its utilisation of the same will not attract interest at appropriate rate under Rule 14 of Cenvat Credit Rules, 2004 as was in force during the relevant time. However, as far as recovery of interest is concerned for invoking extended period of limitation, the principle laid down in this regard including the judgment of Hon'ble High Court in the case of Hindustan Insecticides Ltd. vs. C.C.E., LTU: 2013 (297) ELT 332 (Del.) will be applicable. After analyzing relevant provisions, it has been observed by their Lordships at Para 14 of the said Judgment as follows:

14. A reading of the aforesaid paragraph would show that in the said case notice of payment for interest was issued after four years and it was held that it was beyond a reasonable period and the department could recover the amount from the Assessing Officer, who had not taken steps for four years and not from the respondent-assessee therein. The finding of the Supreme Court on interpreting the applicable Act was that no limitation period was prescribed, therefore, proceedings for recovery could be initiated within a reasonable time. The ratio in the said case is distinguishable for the reason that payment of interest is to be made under Section 11A and, therefore, the period of limitation prescribed therein would equally apply as has been held by the Delhi High Court in the case of Kwality Ice Cream Company (supra), Punjab and Haryana High Court in the case of M/s. VAE VKN Industries Private Limited (supra) and Gujarat High Court in Gujarat Narmada Fertilizers Company Limited (supra). These judgments have relied upon the decision of the Supreme Court approving the view of the Tribunal in TVS Whirlpool Limited (supra) wherein pari materia provisions of the Customs Act were considered. This being a distinguishing feature, we feel that the appellant is enti

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tled to succeed in the present appeals. The question of law is accordingly answered in affirmative, i.e., in favour of the appellant and against the respondent-Revenue. Further, I agree with the contention of the Ld. AR for the Revenue that the principles of law laid down in Bharat Heavy Electricals Ltd., case (supra) by the Hon'ble Karnataka High Court, was in a different factual matrix, whereas the present case relates to excess credit availed, but, not utilized, hence, the said judgment is not applicable to the facts and circumstances of the present case. In these circumstances, the impugned order is upheld and the appeal being devoid of merit is dismissed. (Order pronounced on 19.01.2018)
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