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CX – Additional duty paid under re-assessment – credit of such duty paid will be admissible as CENVAT credit: CESTAT

2019-TIOL-2046-CESTAT-BANG

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, BANGALORE

Appeal No. E/21193/2018-SM

Arising out of No. BEL-EXCUS-000-APP-MSC-373-2017-18, Dated: 27.03.2018
Passed by Commissioner of Central Tax, BELGAUM (APPEALS)

E/21356/2018-SM

Arising out of No. BEL-EXCUS-000-APP-MSC-130-2018-19, Dated: 06.06.2018
Passed by Commissioner of Central Tax, BELGAUM (APPEALS

Date of Hearing: 13.02.2019
Date of Decision: 17.05.2019

M/s POPURI STEELS LTD
PLOT NO 234/247 SIDDAPURA MINES ROAD
HALKUNDI VILLAGE, BANGALORE ROAD
BELLARY KARNATAKA-00

M/s HINDUSTAN CALCINED METALS PVT LTD
NEAR VGM CAMP, BELAGAL TUMPTI ROAD,
VILLAGE JANEKUNTA, BELLARY KARNATAKA-00

Vs

COMMISSIONER OF CENTRAL TAX AND CENTRAL EXCISE
BELGAUM NO 71, CLUB ROAD, BELGAUM BELGAUM
KARNATAKA – 590001

Appellant Rep by: G. Basavaraj, Adv.
Respondent Rep by: Mr. Gopa Kumar, AR

CORAM: S S Garg, Member (J)

CX – The assessee have imported coal as ‘steam coal’ since 2004 but an investigation was conducted after an Alert Circular was issued by DRI alleging that assessee is importing ‘Bituminous coal’ in the guise of ‘Steam coal’ in order to avail benefit of concession rate of duty under Notfn 12/2012-Cus – Though, assessee is disputing classification as adopted by Customs but in the meantime, they have paid the differential duty and availed CENVAT credit of CVD part of the differential duty – As per Department, assessee is ineligible to the CENVAT credit because the same has been availed after detection of the offence of mis-classification and therefore the assessee is not entitled to benefit of Notfn – Further, this is a case of re-assessment of Bill of Entry and the assessee is entitled to CENVAT credit of duty paid on imported goods – Rule 9 (1) (b) of CCR are not applicable to the instant case because CENVAT credit is availed on re-assessment of Bill of Entry – There is no suppression on the part of assessee with intent to evade payment of duty because the assessee have declared all the particulars at the time of availing the Bill of Entry which were considered by Customs and thereafter the goods were released – In the case of Essar Oil Ltd., the Tribunal has held that when additional duty is paid under re-assessment or on being pointed out by Revenue then the credit of such duty paid will be admissible as CENVAT credit to assessee under Rule 9 (1) (c) of the CCR, 2004 – The ratio of decision in case of Coastal Energy Pvt. Ltd. – 2014-TIOL-1157-CESTAT-BANG wherein the Tribunal has held that when the issue relates to classification of imported goods and is technical in nature then “mens-rea” could not be alleged and extended period could not be invoked and no penalty can be imposed under Section 129B of Customs Act, 1962 – The impugned orders are not sustainable in law therefore same is set aside: CESTAT

Appeals allowed

Case laws cited:

Karnataka Soaps & Detergent Ltd. v. CCE, Mysore [2010 (258) ELT 62]… Para 4

Essar Oil Ltd. v. Commissioner of Central Excsie, Rajkot [2014 (303) ELT 255]… Para 4

Coastal Energy Pvt. Ltd. v. Commissioner of Customs, C.Ex. & S.T., Guntur – 2014-TIOL-1157-CESTAT-BANG… Para 4

FINAL ORDER NOS. 20440-20441/2019

Per: S S Garg:

The appellants have filed these two appeals against the impugned orders dated 27.03.2018 and 06.06.2018 passed by the Commissioner (Appeals) whereby the Commissioner (Appeals) has rejected the appeals of the appellants. The issue involved in both the appeals is identical therefore both the appeals are being disposed of by this common order. Details of both the appeals are given here in below:

SI. No.Appeal No.Period of DisputeAmount Involved (in Rs.)Penalty imposed (in Rs.)
1.E/21193/201809/201324,44,987/-24,44,987/-
2.E/21356/201801/20144,85,519/-4,85,519/-

For the sake of convenience, I take the facts of Appeal No. E/21193/2018.

2. Briefly the facts of the present case are that the appellants are engaged in the manufacture of Sponge Iron falling under Chapter 72 of the Central Excise Tariff Act, 1985. An investigation was conducted against the appellant by CCE Guntur, Andhra Pradesh during 2012-13 in view of the alert circular 03/2013 dated 30.01.2013 issued by DRI, New Delhi regarding modus operandi adopted in importing Bituminous coal in the guise of Steam coal in order to avail benefit of concessional rate of duty of BCD and CVD under Notification No. 12/2012-Cus dated 17.03.2012. A SCN dated 28.08.2013 was issued to appellant by Additional Commissioner of Customs and Central Excise, Guntur proposing to reclassify Steam coal into Bituminous coal and deny the benefit of Notification No.12/2012-Cus dated 17.03.2012 demanding a differential duty of Rs.48,73,556/-. The appellant also informed the Range Officer vide his letter dated 01.10.2013 that they have decided to pay the differential duty of Rs.48,73,556/- and avail CENVAT credit of the CVD part of the differential duty as per CCR, 2004, as there was no suppression, fraud, collusion or any wilful mis-declaration or contravention of any provisions of the Customs Act, 1962. The appellant vide his letter dated 04.04.2014 furnished the details of CENVAT credit availed on 30.09.2013 of Rs.24,44,987/-, the CVD part of the differential duty of Rs.48,73,556/-. In view of the above, the Department has alleged that the appellant has contravened provisions of Rule 9 (1) (b) and Rule 3 of the CCR, 2004, by availing credit of CVD paid subsequent to the Alert Notice No.03/2013 dated 30.01.2013 issued by DRI, New Delhi. Therefore, a SCN dated 21.08.2014 was issued to the appellant to demand ineligible CENVAT credit of Rs.24,44,987/- availed consequent to the detection of the offence of misclassification of imported coal and wrong availment of benefit of 12/2012-Cus dated 17.03.2012 by the DRI, New Delhi, in terms of Rule 14 of CCR, 2004, along with applicable interest and penalty. After following the due process, the Deputy Commissioner of Central Excise vide Order-in-Original dated 15.12.2016 disallowed and ordered for recovery of ineligible CENVAT credit of Rs.24,44,987/- under Rule 14 of CCR, 2004 along with applicable interest and imposed penalty of Rs.24,44,987/- under Rule 15 (2) of CCR, 2004. Aggrieved by the said order, the appellant filed appeal before the Commissioner (Appeals) who, vide the impugned order, has rejected the appeal of the appellant.

3. Heard both the parties and perused the records.

4. Learned Counsel for the appellants submitted that the impugned order is not sustainable in law as the same has been passed without properly appreciating the facts and the law. He further submitted that the impugned order has been passed without considering the submissions of the appellants and without giving the reasons for not considering the submissions of the appellants. He further submitted that as per Rule 9 (1) (b) of CCR, 2004 where CENVAT credit can be taken on the basis of invoices or supplementary invoice in the case of imported goods sold whereas in the present case, it is one of re-assessment and differential duty paid later which has to be considered as payment of duty with respect of Bill of Entry under re- assessment. He further submitted that the word ‘invoice’ is not defined in CCR, 2004 nor in CEA, 1944 and Rules and the credit availed on the basis of challan or any other similar document is correct as per the Rules and the Act and the provision of supplementary invoice will not be applicable in the present case as there is no such sales transactions between the appellant and any other party. He further submitted that the appellants have been imported South African Origin Steam Coal on High Sea Sale basis since from the inception of the plant i.e., 2004. Since then they have been classifying the same as South African Steam Coal in bulk in the Bill of Entries cleared after paying appropriate duty and after following necessary Customs formalities. The appellants have claimed the benefit of exemption as per S.No.123 of Notification No.12/2012-Cus dated 17.03.2012 and paid 1% duty as prescribed and cleared the coal after necessary inspection and testing by the customs authorities as stipulated under the said Notification. He further submitted that SCN was issued only after the alert by the DRI that the appellants have imported the Bituminous coal in the guise of Steam coal in order to avail the benefit of countervailing duty under Notification No.12/2012-Cus dated 17.03.2012. He further submitted that they are disputing the classification but in the meantime, they have paid the differential duty and rightly claimed the CENVAT credit which is permissible under law. In support of his submission he relied upon the decision of the Tribunal in the case of CCE, Raipur v. Ambuja Cement Eastern Ltd. wherein the Tribunal has held that CENVAT credit will be admissible on duty paying TR-6 challan when it is not disputed that goods were used in the manufacture of excisable goods to be cleared on payment of duty. The appellants have also relied upon the decision of the Hon’ble Karnataka High Court in the case of Karnataka Soaps & Detergent Ltd. v. CCE, Mysore [2010 (258) ELT 62] wherein it is held that documents specified in Rule 7 (present Rule 9 of CCR, 2004) of the earlier CENVAT Credit Rules is only illustrative in nature and cannot bar taking of CENVAT credit under Rule 3 of CENVAT Credit Rules. Further, the appellant relied upon the decision of Essar Oil Ltd. v. Commissioner of Central Excsie, Rajkot [2014 (303) ELT 255] wherein the Tribunal has held that “when additional duty is paid under re-assessment or on being pointed out by the Revenue then the credit of such duty paid will be admissible as CENVAT credit to the appellant under Rule 9 (1) (c) of the CENVAT Credit Rules, 2004. He further submitted that there is no suppression of facts in the present case as the custom authorities have been releasing the goods based on their procedure and all the documents were made available to them. He also submitted that the custom authorities at Port has drawn samples and after analyzing the result of the samples, the Bill of Entry was approved and therefore the same cannot be taken as suppression of facts to evade payment of duty. For this submission, he relied upon the decision in the case of Coastal Energy Pvt. Ltd. v. Commissioner of Customs, C.Ex. & S.T., Guntur [2014 (310) ELT 97] = 2014-TIOL-1157-CESTAT-BANG wherein the Tribunal has held that “when issue was one of classification of imported goods and technical in nature, then “mens-rea” to evade payment of duty could not be alleged and hence extended period could not be invoked and so, no penalty leviable under Section 129B of Customs Act, 1962.

5. On the other hand, Learned AR defended the impugned order.

6. After considering the submissions of both the parties and perusal of the material on record, I find that the appellants have imported the coal as ‘steam coal’ since 2004 but an investigation was conducted after an Alert Circular was issued by DRI alleging that the appellants are importing ‘Bituminous coal’ in the guise of ‘Steam coal’ in order to avail benefit of concession rate of duty under Notification No.12/2012-Cus dated 17.03.2012. Though, the appellants are disputing classification as adopted by the Customs but in the meantime, they have paid the differential duty of Rs.48,73,556/- and availed CENVAT credit of Rs.24,44,987/- of the CVD part of the differential duty. As per the Department, the appellant is ineligible to the CENVAT credit because the same has been availed after detection of the offence of mis-classification and therefore the appellants are not entitled to the benefit of the Notification. Further, I find that this is a case of re-assessment of the Bill of Entry and the appellant is entitled to CENVAT credit of duty paid on the imported goods. Further, I find that Rule 9 (1) (b) of CCR are not applicable to the instant case because in the present case CENVAT credit is availed on re-assessment of the Bill of Entry. Further, I find that in the present case, there is no suppression on the part of the appellant with intent to evade payment of duty because the appellants have declared all the particulars at the time of availing the Bill of Entry which were considered by the Customs and thereafter the goods were released. Further, I find that in the case of Essar Oil Ltd. (supra), the Tribunal has held that when additional duty is paid under re-assessment or on being pointed out by the Revenue then the credit of such duty paid will be admissible as CENVAT credit to the assessee under Rule 9 (1) (c) of the CCR, 2004. Further, I find that the ratio of the decision in the case of Coastal Energy Pvt. Ltd. (supra) wherein the Tribunal has held that when the issue relates to classification of the imported goods and is technical in nature then “mens-rea” could not be alleged and extended period could not be invoked and no penalty can be imposed under Section 129B of the Customs Act, 1962.

7. In view of my discussion above, I am of the considered view that the impugned orders are not sustainable in law therefore I set aside both the impugned orders by allowing the appeals of the appellant with consequential relief, if any.

(Order was pronounced in Open Court on 17.05.2019)

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