TaxTMI 
TaxTMI 
2011 (7) TMI 984
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....em and duty of Rs. 47 lakhs was demanded along with interest and penalty was proposed under Rule 25 of Central Excise Rules, 2002 for contravention of various rules (ibid). The proceedings were also initiated for recovery of Cenvat credit taken on bought out items which were used in CJK. The lower authorities confirmed the demand of duty along with interest and imposed penalty of Rs. 1 lakh on the Respondents (in appeal No. 480/2006) and confirmed the demand of Rs. 20,50,911/- of Cenvat credit and imposed penalty of Rs. 50,000/- (in appeal No. 479/2006). The respondents filed appeals before the Commissioner (Appeals) who upheld the order of the lower Adjudicating Authority confirming the duty liability along with interest. However, the Commissioner (Appeal) allowed the adjustment of duty paid on CJK and set aside the penalty of Rs. 1 lakh in appeal No. 479/2006 vide order-in-appeal No. 406/GRM/RTK/2005. Learned Commissioner (Appeal) upheld the Order of the lower adjudicating authority disallowing Cenvat credit of Rs. 20,50,991/, however, waived the demand of interest and penalty in case of appeal No. 480/2006 vide order-in-appeal No. 405/GRM/RTK/2005. Hence, these appeals. 3.&em....
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....by them on stage which is prior to the stage on which the respondents paid excise duty on CJK the duty paid on CJK is duty adjusted against the duty demanded on manufactured items. They placed reliance on Hon'ble Supreme Court's decision in the case of Divya Engerprises Ltd. (supra). The contention is that they have paid Rs. 55 lakhs (Rs. 34 lakhs credit on inputs used in intermediate products + Rs. 21.25 lakhs paid through PLA) whereas the duty liability comes to Rs. 47 lakhs on the intermediate goods and thus they paid Rs. 8 lakhs more. The learned Advocate submitted that they will not claim refund if later on it is found that they have paid excess duty. 5. We have considered the submissions from both sides and perused the records. It is not in dispute that the respondents did not pay the duty at the intermediate stage. We find that the appellants have paid duty amounting to Rs. 75.40 lakhs on CJK despite the fact that CJK are not excisable, in view of the Tribunal's decision in their own case. Out of Rs. 75.40 lakhs Rs. 20.51 lakhs were paid through credit on bought out items. 6. Both the lower authorities have given concurrent finding and confirmed the demand of....
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....f Order-in-appeal No. 406 is concerned the learned Commissioner (Appeals) has erred in relying upon the decision of the Hon'ble Supreme Court in the case of Divya Enterprises (supra) since the instant case relates to recovery of wrongly availed Cenvat credit amounting to Rs. 20,50,911/- and not demand of duty which is an admitted fact that they have wrongly utilized the Cenvat credit on the bought out items for payment of duty on CJK. The credit for which the appellants are not eligible, cannot be utilized for payment of demand of wrongly availed credit. A wrong cannot be remedied by another wrong. Therefore, learned Commissioner (Appeals) has erred in modifying the impugned order-in-original. The lower adjudicating authority has imposed reasonable penalty. Therefore, the lower adjudicating authority order is restored in to-to and the order of the Commissioner (Appeals) is set aside. Appeal is allowed. 9. Cross objections are also disposed of accordingly. Sd/- S.K. Gaule Member (T) 10. [Contra per : D.N. Panda, Member (J)]. - Having privilege to read the order recorded by my learned brother Shri S.K. Gaule in both the Appeals, I agree with....
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....er of present Appeal by Revenue before Tribunal in E/480/2006 after the same being maintained in first appeal with modification for duty adjustment allowed by the first appellate authority. Learned Commissioner (Appeals) allowed set off of duty paid on Cable Jointing Kits (CJK) against the duty liability on the intermediate goods manufactured and used in the assembly of CJK. 15. Revenue being aggrieved, by the first Appellate order, came before Tribunal on the ground that when the ultimate final product i.e. CJK is not liable to duty, the Respondent is not entitled to any adjustment of the duty paid on CJK against the duty liability on the intermediate goods manufacture by it. Relying on the judgment of Hon'ble High Court of Andhra Pradesh in the case of XI Telecom Ltd. v. Superintendent of C. Ex., Hyderabad - 1999 (105) E.L.T. 263 (A.P.) decided on 2-2-1998, Revenue's serious objection is that the duty set off allowed by ld. Commissioner (Appeals) has unjustly enriched the Respondent enabling it to discharge duty liability on intermediate goods out of duty realised on CJK from buyers unauthorisedly and without sanction of law. The Respondent has been unduly benefited at th....
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....ly as 2000 when Apex Court held that CJK not amounting manufacture was not dutiable. 19. It may be stated that when the Respondent was quite aware that it had no duty liability in respect of CJK as early as 3-3-2000 when its dispute was settled by Apex Court, the modus operandi followed by it was to unjustly enrich itself at the cost of public Revenue. Since on the similar counts demand was levied on the Respondent by order in original No. 7/ADC/PKJ/04 dated 21-5-04 as coming out from page-1 of the Order-in-Original No. 02/ADC(VK)/PKL/2005 dated 27-1-2005 and confirmed in the Appeal Case No. 405/GRM/RTK/2005 disposed on 21-11-2005, the respondent does not have any right to adjustment of duty on intermediate goods against duty on CJK which was not dutiable goods. The respondent knowing very well that it has no duty liability on CJK has realised duty from the buyer without sanction of law to adjust the same against duty liability on the intermediate goods for unjust enrichment. The Respondent did not pay anything from its pocket when the duty liability on intermediate goods arose. Therefore adjustment allowed by first appeal order against the duty paid on CJK is not permissib....
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....000 reported in 2001 (130) E.L.T. 854 (Tri.-Del.), Accordingly it was held to be not liable to excise duty. Such decision of Tribunal was upheld by Apex Court in terms of order dated 3-3-2000 (Ref : SCN dated 15-4-2004 at page 29 of appeal folder). 25. The Assessee in terms of its letter dated 31-10-2003 intimated Department that they shall pay Central Excise Duty on intermediate goods manufactured by them and they shall not pay excise duty on CJK. Accordingly, for the period Nov., 2002 to March, 2003 the appellant did not dispute levy of duty of Rs. 40,65,204/- on intermediate goods value of Rs. 2,54,07,524/-. 26. On the basis of settled position as above, the appellant was liable to pay duty on intermediate products manufactured by it. They collected excise duty on CJK on the plea that they discharge duty liability on CJK (which was not liable to duty not being a manufacturing activity) and the intermediate goods manufactured were used captively for making of CJK. 27. The Assessee insisted that duty discharged on CJK be adjusted against duty demanded on intermediate goods. In adjudication, discarding the plea of denial of liability, excise duty of Rs. 47,0....
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....istry to place the file before Hon'ble President for orders. Sd/- S.K. Gaule Member (T) Sd/- D.N. Panda Member (J) 29. [Order per : Rakesh Kumar, Member (T)]. - This matter had been heard by a Division Bench on 7-4-2010. Since there is difference of opinion between the Member (Technical) and Member (Judicial), the point of difference had been referred to the undersigned by the Hon'ble President, CESTAT for decision. 30. The facts of the case, in brief, are as under :- 30.1 The Respondent are manufacturers of Cable jointing Kits (CJK). For manufacture of CJKs, some components are being manufactured by the respondent out of the inputs procured by them and some components are purchased from outside and are supplied with the other components manufactured in the factory. According to the respondent, CJK were not chargeable to duty, while according to the department, the same attracted central excise duty. However, the Respondent were paying duty on CJKs and were availing Cenvat credit of duty paid on bought out items supplied with kits Duty paid on inputs used in the manufacture of components used captively for supply with bought out i....
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....se Rules, 2002 for non-discharge of duty liability on the intermediate products. 30.3. The department was of the view that since no duty was payable on CJK and as such, the assembly of various manufactured and bought-out items into CJK did not amount to manufacture, the respondent would not be eligible for Cenvat credit of duty on bought-out items and on this ground, second show cause notice dated 16-4-2004 was issued to the respondent for - (a) recovery of allegedly wrongly taken Cenvat credit amounting to Rs. 20,50,911/- during the period from April, 2003 to October, 2003 along with interest on this Credit at the applicable rate under Rule 12 of the Central Excise Rules read with Section 11A(1) and Section 11AB of the Central Excise Act, 1944; and (b) imposition of penalty on the respondent for taking wrong cenvat credit under Rule 13 of the Cenvat Credit Rules, 2002; 30.4 The show cause notice regarding demand of duty of Rs. 47 Lakhs was adjudicated by the Addl. Commissioner vide Order-in-Original No. 02/ADC/VK/PLK/05 dated 27-1-05 by which - (a) duty demand of Rs. 47 Lakh in respect....
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.... appeal No. E/479 of 2009 Ex-challenging the portion of the' Commissioner (Appeals)'s order permitting the adjustment of Cenvat credit demand from the duty on CKJ paid by the respondent. The respondent in respect of these appeals have filed cross objection registered as E/CO/168/2006. 31. Both these appeals were heard on 7-4-2010 while so far Appeal No. E/479 of 2006 is concerned, there is no difference of opinion and as such both the Members were of the view that "the Commissioner (Appeals)'s order permitting adjustment of Cenvat credit demand from the duty paid on CJK cannot be allowed as availment of Cenvat credit of bought-out items being supplied with CJK was wrong and a wrong cannot be a remedied by another wrong", in respect of other Appeal No. E/480 2006, there is difference of opinion. While Member (Technical) is of the view that duty demand confirmed in respect of the intermediate products manufactured by the respondent which were supplied along with CJK can be adjusted from the duty paid on CJK, which was not required to be paid, the Member (Judicial) is of the view that this adjustment is not permissible as the same would result in unjust enrichment for the reas....
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...., therefore, wrongly relied upon the this judgement of the Apex Court. He also cited the judgement of the Apex Court in Sahkari Khand & Udyog Ltd. v. CCE reported in 2005 (181) E.L.T. 328 (S.C.) wherein it was held that doctrine of unjust enrichment is applicable to all the refunds. He, therefore, pleaded that the impugned order permitting the adjustment of duty paid on CJK towards the respondent's duty liability on intermediate products is not correct. 35. Shri A.R. Madhav Rao, Advocate, ld. Counsel for the respondent, pleaded that in this case during the period of dispute, total duty amounting to Rs. 75,40,000/- had been paid on CJK, which in view of the judgment of the Hon'ble Supreme Court was not liable to be paid, that out of the total amount of Rs. 75.40 Lakhs, an amount of Rs. 20.40 Lakhs had been paid by utilising the Cenvat credit in respect of the bought out items, duty of Rs. 34 Lakhs had been paid through Cenvat credit available in respect of the inputs used in or in relation to the manufacture of the intermediate products and the balance amount of about Rs. 21 Lakhs had been paid through PLA, that even if the Cenvat credit in respect of the bought out items of....
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....'s order and upholding of the Tribunal's order by the Hon'ble Supreme Court vide judgment dated 3-3-2001. So long as the respondent were paying duty on the CJK, they could always recover the same from their customers as central excise duty is an indirect tax and there is no prohibition in the Central Excise Act, 1944 or the Rules made thereunder in this regard. The only provision in this regard in the Central Excise Act, 1944 is Section 11D, according to which, when a person is liable to pay duty under Central Excise Act, 1944 or the Rules made thereunder and has collected any amount in excess of the duty assessed or determined and paid on any excisable goods under this Act or Rules made thereunder, from the buyers of such goods in any manner as representing excise duty, he shall forthwith pay the amount so collected to the credit of Central Government. In this case, during the period of dispute though no duty was payable on the CJK, the respondents paid the duty on the same. There is no dispute that the duty so paid by the respondent had been, recovered from their customers. It is not the case of the department that the amount collected by the respondent as duty in respect of the ....