2016 (12) TMI 906 - AT - Central Excise

Appellate Tribunal rules duty payment on input removal should match modvat credit

The Appellate Tribunal CESTAT Mumbai ruled in favor of the appellant in a case concerning duty demand on the removal of input under Rule 57F(1)(ii) of the ... Duty demand u/r 57F(1)(ii) of the Central Excise Rules - removal of input as such - Held that: - We observed that matter was taken up by five members' larger bench of this Tribunal in case of Commissioner of C. Ex., Vadodara Versus Asia Brown Boveri Ltd. [2000 (7) TMI 110 - CEGAT, NEW DELHI], wherein judgment of American Auto Service[1995 (6) TMI 33 - CEGAT, MADRAS] has been approved and accordingly, it was held that the debit of the Cenvat credit should be at the same rate at which assessee had taken the credit therefore proposal in the Revenue's proceedings is absolutely contrary to the view taken by three member judgment in the case of American auto, which was approved by the judgment of five members larger bench in Asia Brown boveri Ltd. As per above decision, we find that demand made in the order-in-Original and upheld by the commissioner(Appeals) is absolutely incorrect and illegal therefore the same is set aside - Appeal is allowed - decided in favor of appellant. Issues involved: Duty demand confirmed on removal of input under Rule 57F(1)(ii) of Central Excise Rules - Applicability of excise duty rate on clearance of input as such - Contention of appellant regarding duty payment equal to modvat credit availed on input.Analysis:The judgment by the Appellate Tribunal CESTAT Mumbai addressed the issue of duty demand confirmed on the removal of input under Rule 57F(1)(ii) of the Central Excise Rules. The Revenue contended that excise duty should be applied as per the rate applicable on the date of removal of the goods, while the appellant argued that duty payment on the removal of input should be equal to the modvat credit availed on such input. The appellant had filed an appeal before the Commissioner(Appeals), which was rejected, leading to the appeal before the Tribunal.During the proceedings, none appeared on behalf of the appellant, but an adjournment request was made. The Tribunal observed that the issue in the case was no longer res-integra and could be taken up for disposal. The Ld. Superintendent(A.R.) representing the Revenue reiterated the findings of the impugned order and referred to a decision in the case of Collector of Central Excise, Coimbatore Vs. American Auto Service, emphasizing the payment of excise duty as per the rate applicable on the value at the time of clearance of the input under Rule 57F.Upon careful consideration of the submissions and records, the Tribunal delved into the judgment of the Tribunal's Larger Bench in the case of American Auto Service. It was noted that the majority order of the Larger Bench determined that duty to be paid on the removal of input as such should be equal to the Cenvat credit. The Tribunal highlighted that the minority decision referred by the Ld. A.R. was not beneficial to the Revenue. Furthermore, a subsequent judgment by a five-member Larger Bench in the case of Commissioner of C. Ex., Vadodara Versus Asia Brown Boveri Ltd. approved the judgment of American Auto Service, emphasizing that the debit of the Cenvat credit should be at the same rate at which the assessee had taken the credit.Based on the above analysis, the Tribunal concluded that the demand made in the order-in-Original and upheld by the Commissioner(Appeals) was incorrect and illegal. Therefore, the Tribunal set aside the order, allowing the appeal in favor of the appellant. The judgment was pronounced in court on 16/11/2016.