w w w . L a w y e r S e r v i c e s . i n



Saraswati Agro Chemicals India Ltd V/S CCE, Jammu & Kashmir

    Appeal Nos. E/60516-60526/2017 (Arising out of OIA No. J & K-EXCUS-APP-113-115/16-17, OIA No. J & K-EXCUS-APP-39-40/16-17, OIA No. J & K-EXCUS-APP-36-38/16-17, OIA No. J & K-EXCUS-APP-59-61/16-17 dt. 31.5.2017 passed by the CCE (Appeals), Chandigarh-II) and Final Order Nos. 60140-60150/2018

    Decided On, 27 February 2018

    At, Customs Excise Service Tax Appellate Tribunal Chandigarh Bench

    By, THE HONORABLE JUSTICE: ASHOK JINDAL
    By, MEMBER AND THE HONORABLE JUSTICE: DEVENDER SINGH
    By, MEMBER

    For Petitioner: Vikrant Kackria, Advocate And For Respondents: A.K. Saini, AR



Judgment Text


1. The appellants are in appeal against the impugned orders.

2. The facts of the case are that for the month of April, 2015 to June, 2015, in terms of Notification No. 01/2010-CE dated 6.2.2010, the appellants were required to file a statement of utilization of credit, payment of duty and taking of credit by 15th day of subsequent month. As the appellants had contravened the said condition of the Notification for the month of April, 2015 to June, 2015 by not filing a statement for the subsequent month till 15th day but were filed with a delay of 9-10 days. In that circumstance, show cause notices were issued to deny self credit taken by the appellant. The adjudicating authority sanctioned the self credit taken by the appellants but the Revenue has challenged those orders before the Commissioner (Appeals) who held that as the appellant did not file statement till 15th day of the subsequent month, therefore, they are not entitled to take self credit which was irregular and consequently self credit was disallowed. There are other appeals which were filed by the appellants wherein self credit sought to be denied on the consequence of self credit denied by the Commissioner (Appeals).

3. The appellant is located in the State of Jammu & Kashmir and availing exemption under Notification No. 01/2010-CE dated 6.2.2010 and complied with the conditions of the said Notification. Further as per the condition 5(d) of the said Notification, the appellant is required to submit a statement of total duty payable and as well as duty paid by utilization of credit or otherwise by 15th day of subsequent month. The Commissioner (Appeals) has denied the benefit of the Notification. Against those orders, the appellants are before us.

4. Ld. Counsel for the appellants submits that the sole ground to deny self credit to the appellant by the Commissioner (Appeals) is that the substantive condition of 5(d) of the Notification is required to comply by the appellant strictly. Therefore, they are not entitled to take self credit. The contention of the Ld. Counsel is that in similar circumstances in other cases in the Notification No. 32/99-CE and No. 33/99-CE dated 8.7.1999, similar conditions were placed and after examining those conditions, this Tribunal in the case of Vinay Cement Ltd. : 2002 (147) ELT 724 (Tri.-Kolkata) and K.K. Beverages Pvt. Ltd. (Tri.-Kolkata) held that these conditions are procedural in nature, therefore on that ground self credit cannot be denied. Moreover it is seen by the authorities below whether to comply substantive condition they are entitled to the benefit of exemption of notification or not.

Further, he relied on the Hon'ble Apex Court in the case of Mangalore Chemicals & Fertilizers Ltd. : 1991 (55) ELT 437 (SC) to say that the Apex Court has examined the issue and held that in the notification certain conditions are substantive which are required to be fulfilled strictly and the some conditions are procedural in nature. For violation of conditions which are procedural in nature, the benefit of exemption notification cannot be denied. He also brought on record the larger bench decision in the case of Breach Candy Hospital & Research Centre: 2000 (118) ELT 271 (Tri.-LB) to say that merely delay in filing declaration cannot vitiate benefit the notification. Further, he also relied on the decision in the case of Herbal Concepts Healthcare Pvt. Ltd. : 2013 (294) ELT 570 (Tri.-Del.) to say that merely because formal letter was filed subsequently, the same cannot be a ground for denial of the benefit of notification. He has also brought on record the order passed by the adjudicating authority in the case of M/s. Aroma Hightech Limited vide Order dated 7.2.2013, wherein the objection raised by the audit has been admitted by the Ministry. Therefore, he prayed that merely delay in filing the statement cannot be the reason for denial of the benefit of Notification No. 01/2010-CE dated 6.2.2010.

5. On the other hand, Ld. AR reiterated the findings of the impugned orders.

6. Heard the parties and considered the submissions.

7. We have examined the notification No. 01/2010-CE dated 6.2.2010. For better appreciation, the relevant conditions 5(d), 5(e) and 5(f) of the Notification are reproduced below:

(d) the manufacturer shall submit a statement of the total duty payable as well as the duty paid by utilization of CENVAT credit or otherwise and the credit taken as per clause (a), on each category of goods manufactured and cleared under the notification and specified in the said Table, to the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise, as the case may be, by the 15th day of the month in which the credit has been so taken;

(e) the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, after such verification, as may be deemed necessary, shall determine the amount correctly refundable to the manufacturer and intimate to the manufacturer by the 15th day of the next month to the month in which the statement under clause (d) has been submitted. In case the credit taken by the manufacturer is in excess of the amount determined, the manufacturer shall, within five days from the receipt of the intimation, reverse the said excess credit from the account current maintained by him. In case, the credit taken by the manufacturer is less than the amount of refund determined, the manufacturer shall be eligible to take credit of the balance amount;

(f) in case the manufacturer fails to comply with the provisions of clauses (a) to (e), he shall forfeit the option, to take credit of the amount calculated in the manner specified in paragraph 2 in his account current on his own, as provided for in clauses (a) to (c).

8. As per the said Notification, Condition 5(d) stipulates that the appellant is required to file a statement of the total duty payable as well as the duty paid by utilization of Cenvat credit or otherwise and the credit taken on or before 15th of the subsequent month. Admittedly, the appellant did not comply with the condition of the notification, therefore, we have to see whether the condition is an substantive or procedural lapse on the part of the appellant. We find that similar conditions have been enumerated in the Notification No. 32/99-CE and Notification No. 33/99-CE dated 8.7.1999 which are reproduced below: 2C. The exemption contained in this notification shall be given effect to in the following manner, namely :-(a) The manufacturer shall submit a statement of the duty paid by utilization of Cenvat credit, on each category of goods specified in the said Table and cleared under this notification, to the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise, as the case may be, by the 7th of the next month in which the duty has been paid..

Notification No. 33/99-CE dated 8.7.1999:

2C. The exemption contained in this notification shall be given effect to in the following manner, namely:-

(a) The manufacturer shall submit a statement of the total duty paid by utilisation of CENVAT credit, on each category of goods specified in the Table and cleared under this notification, to the Assistant Commissioner or the Deputy Commissioner of Central Excise, as the case may be, by the 7th of the next month in which the duty has been paid.

9. As the conditions 2C of the Notification No. 32/99-CE and Notification No. 33/99-CE dated 8.7.1999 are similar with condition 5(d) of Notification No. 01/2010-CE This Tribunal has examined the Notification No. 32/99-CE and Notification No. 33/99-CE dated 8.7.1999 in the case of Vinay Cement Limited (supra) and observed as under:-

3. The dispute in the present case is as regards the availability of Notification No. 33/99 dated 8-7-99 to the respondents. The Revenues contention is that inasmuch as the respondents have not fulfilled the condition No. 2(a) of the Notification in question, which requires them to submit a statement of the duty paid from account current to the Asst. Commissioner or Deputy Commissioner, Central Excise, by the 7th of the next month in which the duty has been paid from account current, the benefit cannot be extended to them. The Commissioner (Appeals) has observed in her impugned order that all the other conditions as regards the eligibility of the respondents to claim the benefit of Notification are fulfilled and the said conditions as contained in 2(a) of the Notification being only procedural condition, the benefit of the Notification cannot be denied to the respondents.

4. After giving our careful consideration to the issue involved we find that there is no dispute as regards the eligibility of the respondents to the benefit of the Notification in question. The Revenues only objection is that the statement showing payment of duty from the account current has been filed by the respondents to the proper officer by the 7th of the next month. It is well settled law that non-following of procedural requirement cannot deny the substantive benefit, otherwise available to the assessee. It is on record that the factum of payment of duty was being reflected by the appellants in RT-12 returns filed by them with the Department and as such in any case was before the Revenue. The only lapse on the part of the assessee is that the separate statement of such duty paid was not made by them and separately submitted to the proper officer. In our view such lapse on their part is not sufficient to deny them the benefit otherwise available to the Notification. Accordingly, merits are found in the Revenues appeal. The same is rejected.

10. Further, in the case of K.K. Beverages Pvt. Ltd. (Supra), this Tribunal has observed as under:

3. On a careful reading of the notification and of the impugned order we find that para 2(a) of the said notification is procedural for submission of statement. As rightly observed by the Commissioner (Appeals) that the Hon'ble Supreme Court has held in the case of Mangalore Fertilisers & Chemicals Ltd. that a distinction has to be made between substantive mandatory policy consideration and those in the area of procedure. The notification required the assessee to submit statements of duties paid under PLA by 7th of the following month. Nothing more is required to be done by the assessee for claiming the benefit. RT-12 returns were submitted to the range superintendent and as such we hold that late filing of a separate statement by itself will not result in denial of the substantive benefit, otherwise available to the respondents. There is no allegation much less any finding that the respondents have not fulfilled the substantive conditions of the notification. We also take note of the Tribunals Order No. A-246/KOL/2001, dt. 26-4-2001 [2002 (147) E.L.T. 724 (Tribunal)] wherein the Revenues appeal filed on the identical ground in respect of the same notification was rejected. Accordingly, we do not find any merits in all the three appeals of the Revenue and reject the same.
11. We also take note of the decision the Hon'ble Supreme Court in the case of Mangalore Chemicals & Fertilizers Ltd. (supra), the Apex Court has observed as under:

..... Truly, speaking liberal and strict construction of an exemption provision are to be invoked at different stages of interpreting it. When the question is whether a subject falls in the notification or in the exemption clause then it being in nature of exception is to be construed strictly and against the subject but once ambiguity or doubt about applicability is lifted and the subject falls in the notification then full play should be given to it and it calls for a wider and liberal construction
12. We also take note of the fact that in all the above case, similar issue was examined by the adjudicating authority in the case of M/s. Aroma Hightech Limited vide Order dated 7.2.2013 (supra) wherein it has been observed in as under:

3.1 During the CERA audit, vide para 1 of LAR No. 1823/2007-2008 dated: 04.01.2008, it was observed that as per Para 2C(d) of the said Notification the Noticee was required to submit a statement of the duty paid, other than by way of utilization of Cenvat Credit under the Cenvat Credit Rules, 2002, along with the refund amount by 7th day of the next month to the month under consideration.

3.3. Since the Noticee has failed to submit the statement, as required under Para 2C(d) of the Notification, within the stipulated time limit, therefore, the credit of the duty of Rs. 2,32,12,642/- taken/utilized by the Noticee appeared to be irregular.

3.4 As the objection was not admitted by the department, the Para No. 1 of the Local Audit Report No. 1823/2007-2008 dated: 04.01.2008 was converted into Statement of Facts No. 80/2007-2008 dated 17.03.2008 and later on as Draft Para No. 33/2007-2008 dated 06.11.2008 and finally as Draft Audit Para No. 290/2007-2008 dated 18.09.2008.

4. Section Officer (PAC) vide letter F. No. 232/290/2007-2008 Cx-VII dated 17.03.2009 forwarded the Ministry's comments on Draft Audit Para No. 290/2007-2008 dated:18.09.2009, which are reproduced below for ready reference:

The objection is not admitted.

2. It is reported that there was only delay in submission of documents relating to payment of duty through PLA. There is no non-payment or delay in payment of duty. When the substantive condition of the exemption Notification No. 39/2001-CE dated:7.7.2001 has been fulfilled, the benefit of exemption cannot be denied merely for procedural delay of a technical nature. Hon'ble Supreme Court in its decision in the case of Mangalore Chemicals & Fertilizers Ltd. Vs. DC : 1991 (55) ELT 437 (SC)] has enunciated that while granting the exemption, the distinction is required to be made between a procedural condition of a technical nature and a substantive condition and has held that non-observance of procedural condition of technical nature is condonable. Similarly, the CESTSAT in its decision in the case of:

(i) CCE, Shillong Vs. K.K. Beverages Pvt. Ltd. : 2002 (148) ELT 567 (T-Kol)]

(ii) CCE, Shillong Vs. Vinay Cement Ltd. : 2002 (147) ELT 724 (T)]

3. In view of the above, the objection may be dropped. Approved by Special Secretary to Govt. of India (F. No. 232/290/2008-CX.7)

5. Since the objection was being contested by the department, the present show cause notice, of protective nature, was issued on 10.03.2010, wherein it was proposed to recover the wrongly availed credit of duty amounting to Rs. 2,32,12,642/- in terms of provisions of Para 2C(g) of the said Notification. It was also proposed to impose penalty under Rule 27 of Central Excise Rules, 2002.

6. The Draft Audit Report No. 290/2007-2008 was included as Audit Para No. 3.1 of the Report of the Comptroller and Auditor General of India fo

Please Login To View The Full Judgment!

r the year ended March, 2007. In its Action taken the Ministry of vide its letter F. No. 232/290/2008-CX.7 dated 27.10.2009 reiterated its comments earlier. 7. Finally, Sr. Adm. Officer (PAC), Office of the C & AG of India, New Delhi vide his letter No. 180H/PAG/Ind.Tax/CEX/PAC/258-2008 dated 29.02.2012 informed the Ministry that the Ministry's ATN on Audit Para No. 3.1 of the Report of the Comptroller and Auditor General of India for the year ended March, 2007 has been vetted with no comments. The copy of the said comments was forwarded by Assistant Commissioner (PAC) vide his letter F. No. 232/290/2008-CX.7 dated 12.03.2012. 13. As the said issue has been examined by several authorities including the Apex Court wherein it has been held that condition 5(d) of Notification No. 01/2010-CE dated 6.2.2010 is similar to other notifications which are in the manner of procedure to be followed by the appellant wherein the appellant is required to file certain documents before a particular date. If such documents are filed with a delay, in that circumstance, it is only a procedural lapse on the part of the appellant, the benefit of notification cannot be to the appellant. 14. In view of above observations, we hold that condition 5(d) of Notification No. 01/2010-CE dated 6.2.2010 is procedural in nature and for complying with the said condition with a delay cannot be fatal to the appellant. In that circumstance, the self credit taken by the appellant cannot be denied. Therefore, we do not find any merit in the impugned orders and the same are set aside. 15. In the result, the appeals are allowed with consequential relief.
O R