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CX – CENVAT – ‘taken and utilised’ – Amendment to Rule 14 of CCR, 2004, vide Notification dated 17 March 2012 would apply only with prospective effect: HC

2019-TIOL-1686-HC-MUM-CX

IN THE HIGH COURT OF BOMBAY

AT GOA

Case Tracker
CIPLA LTD Vs CC & CE    [CESTAT]

Excise Appeal No.2 Of 2018

CIPLA LTD
HAVING ITS FACTORY AT VERNA, INDUSTRIAL ESTATE, SALCETE
GOA-403722 & REGISTERED OFFICE AT L D BUILDING
MEHRA ESTATE, ASHA USHA COMPOUND
LBS MARG, VIKHROLI (WEST)
MUMBAI-400083

Vs

THE COMMISSIONER OF CENTRAL EXCISE
GOA, HAVING OFFICE AT ICE HOUSE, EDC COMPLEX
PLOT NO.6, PATTO, PANAJI
GOA-403001

R D Dhanuka & Nutan D Sardessai, JJ

Dated: March 25, 2019

Appellant Rep by: Mr Gajendra Jain, with Ms Vidhya Naik, Adv.
Respondent Rep by: 
Ms Asha Dessai, Sr. Central Govt. Standing Counsel

CX – Appellant is manufacturing PP medicines and also non-excisable goods viz. medicaments containing alcohol or narcotic drugs within same manufacturing premises on which no excise duty is payable – since CENVAT credit availed on inputs used in manufacture of such non-excisable goods, Adjudicating Authority confirmed demand of CENVAT and also appropriated an amount of Rs.1,92,86,034/- paid by appellant; demand of interest also made along with penalty – appellant contested the imposition of interest and penalty before CESTAT – Tribunal relied upon the Apex Court decision in case of  Ind-Swift Laboratories –  2011-TIOL-21-SC-CX wherein it is held that in view of the mention of the words “taking credit or utilization” in rule 14 of CCR, interest is chargeable – in the matter of imposition of penalty, CESTAT noted that as regards a huge CENVAT credit demand of Rs.1.92 crores, adjudicating authority had granted substantial relief by imposing penalty of Rs.50,000/- only and which is very reasonable – holding that the order does not require any interference, the same was upheld and appeal was dismissed – Assessee in appeal before High Court. 

Held: Representative of appellant had confirmed that the inputs, on which the credit was reversed, were exclusively used for the manufacture of non-excisable products; that only on pointing out these facts during the course of audit, the Appellant had reversed the cenvat credit – Explanation to Rule 8 of the Central Excise Rules, 2002 clearly provides that the expression ‘duty’ or ‘duty of excise ‘, shall include the amount payable in terms of the Cenvat Rules – Commissioner has, therefore, rightly rendered a finding that the Appellant had contravened the provisions of Rule 3(1)(i) of the Cenvat Credit Rules, read with Rule 2(d), 2(h) and 2(k) thereof, by wrongly taking Cenvat credit of central excise duties paid on inputs which had not been used to manufacture the excisable goods to the extent of Rs. 1,92,86,034/- and thus became liable to interest in terms of Rule 14 of the Cenvat Credit Rules, 2004 – Rule 14 of the Cenvat Credit Rules, thus, was clearly attracted to the facts of this case during the relevant financial years which were subject-matter of this proceeding – Even if the Appellant had not utilized such Cenvat credit, ultimately, since the Appellant had admittedly availed of the Cenvat credit on the entire inputs knowingly well that the entire inputs would not be used exclusively for excisable goods, the Appellant was liable to pay interest under Rule 14 of the Cenvat Credit Rules – CESTAT has rightly adverted to the Judgment of the Supreme Court in the case of Union of India vs. Ind-Swift Laboratories Ltd. – 2011-TIOL-21-SC-CX and has rightly rendered a finding of fact that the Appellant had taken Cenvat credit knowingly well that entire inputs would not be used exclusively for excisable goods and, thus there was no doubt that the Cenvat credit was availed of wrongly by the Appellant – no infirmity in the order passed by the Commissioner, Customs and Central Excise, as well as by the CESTAT – Commissioner was, thus, right in directing the Appellant to pay interest in the sum of 14,62,497/- on the wrongly availed Cenvat credit of Rs. 1,92,86,034/- in terms of Rule 14 of the Cenvat Credit Rules, 2004, read with Section 11AB of the Central Excise Act, 1944 and was also right in imposing the penalty of Rs. 50,000/- upon the Appellant under the provisions of Rule 15 of the Cenvat Credit Rules, 2004 in the facts and circumstances of this case – substantial question of law (A) & (B) is answered in the affirmative against the assessee and in favour of the Revenue: High Court [para 20, 21, 25, 29, 31, 32]

CX – Whether the amendment to Rule 14 of Cenvat Credit Rules, 2004 vide Notification No. 18/2012-CE(NT)dated 17.03.2012 clarifies the position for the period prior to the amendment or is only prospective in operation.

Held: Bench is of the view that the said amendment to Rule 14 of the Cenvat Credit Rules, 2004, vide Notification dated 17 March 2012 would apply only with prospective effect and not with retrospective effect – No such issue was raised by the Appellant before the Commissioner and also before the CESTAT – Be that as it may a plain reading of the said Notification dated 17 March 2012 clearly indicates that such amendment was applicable only with prospective effect – It is also an admitted position that the notice of demand was issued by the Respondent upon the Appellant much prior to the date of said Notification dated 17 March 2012 – No benefit of such amendment thus can be availed of by the Appellant – substantial question of law is answered accordingly: High Court [para 33]

Appeal dismissed

Case laws Cited:

Commissioner of C.Ex. Mumbai vs. Bombay Dyeing & Mfg. Co. Ltd – 2007-TIOL-141-SC-CX… Para 9, 15 & 26

Union of India vs. Ind-Swift Laboratories Ltd – 2011-TIOL-21-SC-CX… Para 9, 11, 14, 16, 22, 23, 25, 28 & 34

Hindustan Petroleum Corporation Ltd. vs. Commissioner of CGST & Central Excise, Navi Mumbai , Central Excise Appeal No.78/2018… Para 10, 16 & 27

Central Excise Appeal No.70/2018 in the case of Finolax Industries Limited vs. The Commissioner of Central Excise … Para 10, 16 & 27

Commissioner of C.Ex., Madurai vs. Strategic Engineering (P) Ltd – 2014-TIOL-466-HC-MAD-CX… Para 10, 14, 16 & 23

Commissioner of Central Excise vs. GL & V India Pvt. Ltd – 2015-TIOL-1210-HC-MUM-CX… Para 14, 16, 23, 27 & 28

JUDGEMENT

Per: R D Dhanuka:

1. The Appeal is admitted on the following substantial questions of law :

(A) Whether, under the facts and circumstances, the Appellate Tribunal is correct and justified in confirming the demand of interest on canvat credit alleged to be incorrectly taken, but admittedly not utilized in terms of the provisions of Rule 14 of Cenvat Credit Rules, 2004 ?

(B) Whether, under the facts and circumstances, the Appellate Tribunal is correct and justified in confirming the demand of interest on alleged inadmissible cenvat credit even after noting the fact that the Appellants have reversed the disputed credit without utilizing the same specially when its settled law that reversal of canvat credit without utilizing the same does not amount to taking credit ?

(C) Whether the amendment to Rule 14 of Cenvat Credit Rules, 2004 vide Notification No.18/2012-CE(NT)dated 17.03.2012 clarifies the position for the period prior to the amendment or is only prospective in operation ?

(D) Whether, under the facts and circumstances, the Appellate Tribunal is correct and justified in applying the decision of the Apex Court in Ind-Swift Laboratories to the present facts to confirm the demand of interest ?

(E) Whether, under the facts and circumstances, the Appellate Tribunal is correct and justified in imposing penalty on the Appellants under Rule 15 of Cenvat Credit Rules, 2004 ?

2. By consent of the parties, the Appeal is heard finally.

3. Some of the relevant facts for the purpose of deciding this appeal, are as under :

(a) The Appellant is holding the Central Excise registration for manufacture of medicaments, falling under Chapter Heading 3004 of the First Schedule to the Central Excise Tariff Act, 1985. It was the case of the Appellant that it was also engaged in manufacture of medicaments containing ethanol (alcohol), which falls outside the purview of Central Excise Tariff in view of Chapter Note 5 to Chapter 30 of the Central Excise Tariff Act, 1985. These medicaments qualify as non-excisable goods. It is the case of the Appellant that it had paid duty on the medicaments under the Medicinal and Toilet Preparations (Excise Duties) Act, 1955.

(b) It was the case of the Appellant that, the value of clearance of non-excisable medicaments constitute 3% and 6% of the value of excisable medicaments cleared by the Appellant during the Financial Years 2006-07 and 2007-08 (upto January 2008), respectively. It was the case of the Appellant that it used to take cenvat credit of excise duty paid on inputs and capital goods and service tax paid on input services and use it in or in relation to the manufacturing activity and utilize such credit for payment of excise duty on the medicaments in terms of the provisions of the Cenvat Credit Rules, 2004. It was the case of the Appellant that it used to maintain the stock of inputs, namely bulk drugs, excipients and packaging materials purchased by them and utilize the inputs for manufacturing activity, as and when required.

(c) It is an admitted position that the Appellant had taken cenvat credit of excise duty paid on the entire quantity of common inputs at the time of receipt of these inputs in its factory. It was also the case of the Appellant that the Appellant was following FIFO (first in first out) method for consumption of inputs for use in the manufacturing activity, in accordance with the provisions of the Drugs & Cosmetics Act, 1945. By following the FIFO method, some of the common inputs get consumed in the manufacture of non-excisable medicaments.

(d) It was the case of the Appellant that for the period between the Financial Year 2006-07 and Financial Year 2007-08, the Appellant, however, did not reverse the cenvat credit taken on common inputs to the extent used in the manufacture of non-excisable mdicaments, which was an alleged inadvertent and bonafide mistake on the part of the Appellant.

(e) Sometime in the month of March 2008, Audit Section of the Central Excise Department scrutinized the records of the appellant and observed that the Appellant had taken inadmissible cenvat credit on inputs used in the manufacture of non-excisable medicaments and directed the Appellant to reverse the cenvat credit along with interest. The Appellants, vide letter dated 27 May 2008, admitted their alleged mistake and reversed the cenvat credit. The Appellant, however, contended that no interest was payable by the Appellant since the credit had been reversed prior to utilization of the cenvat credit availed of by the Appellant.

(f) The Respondent issued a show cause notice dated 30 January 2009 upon the Appellant, proposing to recover an amount of 1,92,86,034/-, Rs. alleged to be the cenvat credit incorrectly taken on common inputs used in the manufacture of non-excisable medicaments and appropriate the amounts debited in the Cenvat Credit Account. The said Demand Notice was issued under Rule 14 of the Cenvat Credit Rules, 2004, read with Section 11A of the Central Excise Act, 1944. By the said show cause notice, the Respondent also proposed to recover interest amounting to 14,62,497/-, Rs. on the alleged inadmissible cenvat credit of Rs. 1,92,86,034/- under the provisions of Rule 14 of the Cenvat Credit Rules, 2004, read with Section 11A of the Central Excise Act, 1944.

(g) The Appellant replied to the said Show Cause Notice vide letter dated 20 July 2009 and contended that the cenvat credit was not availed of by the Appellant with an intention to evade any duty. The Appellant also disputed the proposed demand in respect of the interest and objected to the other amounts proposed to be recovered, as referred to in the said show cause notice.

(h) In furtherance of the Show Cause Notice, the Respondent issued summons under Section 14 of the Act. The Respondent recorded the statement of Mr. Sreekumaran Nair, the Authorised Signatory and Incharge of day-to-day Central Excise matters, on 21 July 2008. The learned Commissioner Customs & Central Excise, Goa passed an order on 30 November 2009, holding that the Appellant was liable to pay a sum of Rs. 1,92,86,034/- under the Cenvat Credit Rules, 2004. Since the Appellant had already reversed the said amount by debiting the Cenvat Account, the learned Commissioner passed an order for appropriation of the said amount under Rule 14 of the Cenvat Credit Rules, 2004, read with Section 11A-B of the Central Excise Act, 1944, and confirmed the demand of interest. The learned Commissioner also imposed a penalty of Rs. 50,000/- under the provisions of Rule 15 of the Cenvat Credit Rules, 2004, and refrained the Appellant from confiscating the input goods utilized by the Appellant in the manufacture of non-excisable goods on which they had wrongly availed of Cenvat Credit of Rs. 1,92,86,034/- which was proposed to be confiscated in the Notice in terms of Rule 15 of the Cenvat Credit Rules, 2004.

4. Being aggrieved by the said order dated 30 November 2009, passed by the learned Commissioner Customs and Central Excise, Goa, the Appellant preferred an Appeal under Section 35(1) of the Central Excise Act, 1944 before the Customs, Excise & Service Tax Appellate Tribunal, (CESTAT), Mumbai. By an order dated 31 March 2017, the CESTAT dismissed the Appeal No.E/357/10 = 2017-TIOL-2010-CESTAT-MUM filed by the Appellant, upholding the impugned order passed by the Commissioner Customs and Central Excise, Goa. Being aggrieved by the said order dated 31 March 2017, passed by the CESTAT, the Appellant has preferred this appeal under Section 35G of the Central Excise Act, 1944.

5. Mr. Gajendra Jain, learned Counsel for the appellant invited our attention to the findings rendered by the learned Commissioner, Customs and Central Excise, Goa and also various paragraphs of the order passed by the CESTAT. He submits that the Appellant is not contesting the applicability of the Cenvat Credit in dispute, but is only contesting the recovery of interest under Section 14 of the Cenvat Credit Rules, 2004, as well as imposition of penalty under Rule 15 of the Cenvat Credit Rules, 2004. He submits that under Rule 14, interest could be charged by the Respondent to the Appellant only if the Appellant would have utilized the credit incorrectly. He submits that none of these conditions were satisfied in this case.

6. It is submitted that the Appellant was not aware as to how much quantity of which common inputs would be used in the manufacture of non-excisable medicaments out of the total quantity of common inputs purchased. The Appellant was taking Cenvat Credit only on that quantity of common inputs which were used in the manufacture of dutiable medicaments and were not taking credit of excise duty paid on common inputs to the extent used in the manufacture of non-excisable medicaments.

7. It is submitted that though the Appellant had taken Cenvat Credit of excise duty paid on the entire quantity of common inputs at the time of receipt of these inputs in its factory, the Appellant had not utilized the said Cenvat Credit in manufacture of non-excisable goods. No sooner the objection was raised by the Respondent during the course of audit, the Appellant admittedly reversed the said Cenvat credit in the account. He submits that the Appellant was thus not liable to pay any interest or penalty as demanded by the Respondent and confirmed by the learned Commissioner Customs and Central Excise and also by the CESTAT.

8. The learned counsel also placed reliance upon the Rule 14 of the Cenvat Credit Rules, 2004 amended vide Notification dated 17 March 2012 in support of his submission that with effect from 17 March 2012, for the words “taken or utilised wrongly”, the words “taken and utilised wrongly” came to be substituted. He submits that the amendment of Rule 14 by Notification dated 17 March 2012, would clearly indicate the intention of the legislature that it wants the recovery of interest only when the credit was wrongly taken and utilized and not in case of any inadvertent error.

9. The learned counsel for the Appellant placed reliance on the Judgment of the Hon’ble Supreme Court in the case of Commissioner of C.Ex. Mumbai vs. Bombay Dyeing & Mfg. Co. Ltd. 2007 (215) E.L.T. 3 (S.C.) = 2007-TIOL-141-SC-CX. He made an attempt to distinguish the Judgment of the Hon’ble Supreme Court in the case of Union of India vs. Ind-Swift Laboratories Ltd. 2011 (265) E.L.T. 3 (SC) = 2011-TIOL-21-SC-CX on the ground that the facts before the Hon’ble Supreme Court in the said Judgment were totally different. He submits that in this case, there was an inadvertent error on the part of the Appellant in availing of the Cenvat credit at the threshold, which credit was subsequently reversed.

10. The learned counsel for the Appellant invited our attention to the order dated 15 October 2015, passed by the Division Bench of this Court in Central Excise Appeal No.78/2018 in the case of Hindustan Petroleum Corporation Ltd. vs. Commissioner of CGST & Central Excise, Navi Mumbai Commissionerate, and the order dated 23 October 2018, passed by the Division Bench of this Court in Central Excise Appeal No.70/2018 in the case of Finolax Industries Limited vs. The Commissioner of Central Excise and would submit that after considering the Judgment of the Hon’ble Supreme Court in the case of Union of India vs. Ind- Swift Laboratories Ltd. (supra), and the Judgment of the Madras High Court in the case of Commissioner of C.Ex., Madurai vs. Strategic Engineering (P) Ltd., 2014 (310) ELT 509 = 2014-TIOL-466-HC-MAD-CX, the Division Bench of this Court admitted those two Central Excise Appeals on the substantial questions of law, which questions are identical in the facts of this case as well.

11. Ms. Asha Dessai, learned Senior Central Govt. Standing Counsel for the Respondent, on the other hand, invited our attention to the findings of facts rendered by the learned Commissioner Customs and Central Excise, Goa and also the findings rendered by the CESTAT which are impugned by the Appellant in this Appeal. She invited our attention to the substantial questions of law formulated by the Appellant in this Appeal. She submits that in the facts of this case, unamended Rule 14 of the Cenvat Credit Rules, 2004 is applicable. She submits that the Hon’ble Supreme Court in the case of Union of India vs. Ind-Swift Laboratories Ltd. (supra), has considered the same Rule 14 and has held that an attempt by the High Court to read down provision by substituting the word “or” by word “and”, so as to give relief to the assessee is found to be erroneous.

12. The learned counsel strongly placed reliance on paragraphs 15 to 20 of the said Judgment and would submit that the Hon’ble Supreme Court has categorically held that under Rule 14, the manufacturer or the provider of the output service becomes liable to pay interest along with dues where Cenvat credit has been taken or utilized wrongly or has been erroneously refunded, and that in case of such nature, the provisions of Section 11-AB would apply for effecting such recovery. The learned counsel submits that since the appellant had admittedly availed of the Cenvat credit at the threshold wrongly and even if the Appellant has ultimately not utilized such Cenvat credit for manufacture of such non-excisable goods, the conditions prescribed under Rule 14 of the Cenvat Credit Rules, would still apply and the Appellant would be liable to pay interest and other consequences provided under the said Rule.

13. The learned counsel submits that the amended Rule 14 by which the words “taken or utilised wrongly” were substituted by the words “taken and utilised wrongly”, would not apply to the assessment year in question, since the Cenvat credit was already taken wrongly by the Appellant prior to the date of such amendment of Rule 14. She submits that the amended Rule 14 does not apply with retrospective effect.

14. The learned Counsel for the Revenue also strongly placed reliance on the Judgment of this court in the case of Commissioner of Central Excise vs. GL & V India Pvt. Ltd. 2105 (321) ELT 611 (Bom) = 2015-TIOL-1210-HC-MUM-CX and would submit that the Division Bench of this Court has, in identical facts, after adverting to the Judgment of he Hon’ble Supreme Court in the case of Union of India vs. Ind-Swift Laboratories Ltd. (supra), has held that the assessee was liable to pay interest under Rule 14 of the Cenvat Credit Rules, 2004. She submits that the Judgment of the Division Bench of this Court has also adverted to the Judgment of the Madras High Court in the case of Commissioner of C.Ex., Madurai vs. Strategic Engineering (P) Ltd. (supra) which Judgment is pressed into service by the learned Counsel for the Appellant herein. She further submits that the Division Bench of this Court has distinguished the said Judgment and has clearly held that the view taken by the Madras High Court is not what has been held by the Hon’ble Supreme Court in the case of Union of India vs. Ind-Swift Laboratories Ltd. (supra).

15. In so far as the Judgment of the Hon’ble Supreme Court in the case of Commissioner of C.Ex. Mumbai vs. Bombay Dyeing & Mfg. Co. Ltd. (supra), relied upon by the learned Counsel for the Appellant is concerned, she distinguishes the said Judgment on the ground that the facts before the Hon’ble Supreme Court in the said Judgment were totally different.

16. In so far as the orders passed by the Division Bench of this Court in the case of Hindustan Petroleum Corporation Ltd. vs. Commissioner of CGST & Central Excise, Navi Mumbai Commissionerate, (supra) and in the case of Finolax Industries Limited vs. The Commissioner of Central Excise (supra), relied upon by the learned Counsel for the Appellant is concerned, it is submitted by the learned Counsel for the Revenue that the Judgment of this Court in the case of Commissioner of Central Excise vs. GL & V India Pvt. Ltd.(supra) following the Judgment of the Hon’ble Supreme Court in the case of Union of India vs. Ind-Swift Laboratories Ltd. (supra) and distinguishing the Judgment of Madras High Court in the case of Commissioner of C.Ex., Madurai vs. Strategic Engineering (P) Ltd. (supra) was not brought to the notice of the Division Bench while admitting those two appeals in the cases of Hindustan Petroleum Corporation Ltd. vs. Commissioner of CGST & Central Excise, Navi Mumbai Commissionerate, (supra) and Finolax Industries Limited vs. The Commissioner of Central Excise (supra). She submits that in any event, the orders passed by this Court admitting those two appeals, would not assist the case of the Appellant in view of the Judgment of this Court in the case of Commissioner of Central Excise vs. GL & V India Pvt. Ltd.(supra), deciding the matter finally, holding that interest under Rule 14 of the Cenvat Rules, 2004 was rightly levied by the Revenue against the assessee.

17. We shall now consider the rival submissions made by the learned Counsel for the parties. Rule 14 of the Cenvat Rules, 2004 applicable to the parties is extracted as under :

“Rule 14. Recovery of CENVAT credit wrongly taken or erroneously refunded:- Where the CENVAT credit has been taken or utilized wrongly or has been erroneously refunded, the same along with interest shall be recovered from the manufacturer or the provider of the output service and the provisions of sections 11A and 11AB of the Excise Act or sections 73 and 75 of the Finance Act, shall apply mutatis mutandis for effecting such recoveries”

18. A perusal of the record and proceedings annexed to this appeal, clearly indicates that it was the case of the Appellant that the Appellant was engaged in manufacture of medicaments falling under Chapter Heading 3004 of the First Schedule to the Central Excise Tariff Act, 1985, which were excisable goods. It is the case of the Appellant itself that the Appellant used to take Cenvat credit of excise duty paid on the entire quantity of common inputs at the time of receipt of these inputs in their factory and thereafter was reversing the cenvat credit taken on common inputs used in the manufacture of non-excisable medicaments.

19. It is not in dispute that during the period between the Financial Years 2006-07 – 2007-08, the Appellant did not reverse the cenvat credit taken on common inputs to the extent used in the manufacture of the non-excisable medicaments. It is also not in dispute that the Audit Section of the Central Excise Department on scrutiny of the records of the Appellants in March 2008, had observed that the Appellant had taken inadmissible cenvat credit on inputs used in the manufacture of non-excisable medicaments. The Appellant was accordingly directed to reverse the cenvat credit, along with interest. Only after such directions were issued by the Respondent that the Appellant, vide its letter dated 27 May 2008, informed the Respondent that it had reversed the cenvat credit.

20. The authorised representative of the Appellant appeared before the learned Commissioner Customs and Central Excise, Goa in response to the summons issued by the Respondent and made a statement that the Appellant had availed of the credit of inputs on non-excisable produts and had reversed the same amounting to Rs. 1,63,51,408/- , Education Cess Rs. 3,27,034/- , AED Rs. 24,86,387/-, High Education Cess Rs. 1,21,205/-, thus totalling to Rs. 1,92,86,034/- as pointed out by the Central Excise Audit. The said representative Shri Sreekumar Nair confirmed that the inputs, on which the credit was reversed, were exclusively used for the manufacture of nonexcisable products. The Appellant admitted that only on pointing out these facts during the course of audit, the Appellant reversed the cenvat credit.

21. Explanation to Rule 8 of the Central Excise Rules, 2002 clearly provides that the expression ‘duty’ or ‘duty of excise ‘, shall include the amount payable in terms of the Cenvat Rules. In our view, the learned Commissioner Customs and Central Excise, Goa has rightly rendered a finding that the Appellant had contravened the provisions of Rule 3(1)(i) of the Cenvat Credit Rules, read with Rule 2(d), 2(h) and 2(k) thereof, by wrongly taking Cenvat credit of central excise duties paid on inputs which had not been used to manufacture the excisable goods to the extent of Rs. 1,92,86,034/- and thus became liable to interest in terms of Rule 14 of the Cenvat Credit Rules, 2004.

22. The Hon’ble Supreme Court in the case of Union of India vs. Ind-Swift Laboratories Ltd. (supra), has interpreted the unamended Rule 14 which was applicable to the appellant during the financial years in question and, has categorically held that a bare reading of such rule would clearly indicate that the manufacturer or the provider of the output service becomes liable to pay interest, along with the dues where Cenvat credit has been taken or utilized wrongly or has been erroneously refunded. The Hon’ble Supreme Court, accordingly, held that if the said Rule 14 was read as a whole, the Hon’ble Supreme Court did not find any reason to read the word ‘or’ in between the expressions ‘taken’ or ‘utilized wrongly ‘ or ‘has been erroneously refunded’ as the word ‘and’. It is held that on the happening of any of the three circumstances, such credit becomes recoverable along with interest. In our view, the submission of the learned counsel for the Appellant that since the Appellant had not utilized the Cenvat credit and thus Rule 14 of the Cenvat Credit Rules was not attracted, is ex facie contrary to the principles of law laid down by the Hon’ble Supreme Court in the case of Union of India vs. Ind-Swift Laboratories Ltd. (supra).

23. The Division Bench of this Court in the case of Commissioner of Central Excise vs. GL & V India Pvt. Ltd. (supra), has considered the identical facts and after adverting to the Judgment of the Hon’ble Supreme Court in the case of Union of India vs. Ind-Swift Laboratories Ltd. (supra) has rejected the similar augments advanced by the Appellants therein, and has held that the word ‘and’ cannot be read between the expressions ‘taken’ or ‘utilized wrongly’. This Court, while allowing the appeal filed by the Commissioner of Central Excise and reversing the order passed by the CESTAT, also distinguished the Judgment of the Madras High Court in the case of Commissioner of C.Ex., Madurai vs. Strategic Engineering (P) Ltd. (supra). The Judgment of the Hon’ble Supreme Court in the case of Union of India vs. Ind-Swift Laboratories Ltd. (supra) and the Judgment of the Division Bench of this Court in the case of Commissioner of Central Excise vs. GL & V India Pvt. Ltd.(supra) squarely apply to the facts of this case. We are respectfully bound by the said Judgments.

24. The Appellant in the present case was fully aware that the Appellant was manufacturing not only excisable goods, but also non-excisable goods but availed of the Cenvat credit for the entire inputs required to be used for not only excisable goods, but also for non-excisable goods at the threshold and did not reverse the Cenvat credit taken by it, though it had used the inputs also for nonexcisable goods. The Appellant reversed the Cenvat credit only after the Audit Department of the Respondent brought these facts to the notice of the Appellant.

25. In our view, Rule 14 of the Cenvat Credit Rules, thus, was clearly attracted to the facts of this case during the relevant financial years which were subject-matter of this proceeding. In our view, even if the Appellant had not utilized such Cenvat credit, ultimately, since the Appellant had admittedly availed of the Cenvat credit on the entire inputs knowingly well that the entire inputs would not be used exclusively for excisable goods, the Appellant was liable to pay interest under Rule 14 of the Cenvat Credit Rules. The CESTAT has rightly adverted to the Judgment of the Hon’ble Supreme Court in the case of Union of India vs. Ind-Swift Laboratories Ltd. (supra) and has rightly rendered a finding of fact that the Appellant had taken Cenvat credit knowingly well that entire inputs would not be used exclusively for excisable goods and, thus there was no doubt that the Cenvat credit was availed of wrongly by the Appellant. We do not find any infirmity in the order passed by the Commissioner Customs and Central Excise, as well as by the CESTAT.

26. In so far as the Judgment of the Hon’ble Supreme Court in the case of Commissioner of C.Ex. Mumbai vs. Bombay Dyeing & Mfg. Co. Ltd. (supra), relied upon by the learned Counsel for the Appellant is concerned, the facts before the Hon’ble Supreme Court in the said Judgment were totally different. The Hon’ble Supreme Court had not decided the matter arising out of Rule 14 of the Cenvat Credit Rules, 2004. The said Judgment would thus not even remotely apply to the facts of this case and would not assist the case of the Appellant

27. In so far as the orders passed by the Division Bench of this Court in the case of Hindustan Petroleum Corporation Ltd. vs. Commissioner of CGST & Central Excise, Navi Mumbai Commissionerate, (supra) and Finolax Industries Limited vs. The Commissioner of Central Excise (supra) relied upon by the learned Counsel for the Appellant are concerned, by those two orders, the Division Bench of this Court has admitted the Central Excise Appeals preferred by those two assessees. A perusal of the said order clearly indicates that the Judgment of the Division Bench of this Court in the case of Commissioner of Central Excise vs. GL & V India Pvt. Ltd.(supra), following the principles laid down by the Hon’ble Supreme court in the case of Union of India vs. Ind- Swift Laboratories Ltd. (supra) was not brought to the notice of the Division Bench of this Court when those two orders admitting the Central Excise Appeals preferred by those two appellants, were passed.

28. Be that as it may, the Judgment delivered by this Court int the case of in the case of Commissioner of Central Excise vs. GL & V India Pvt. Ltd.(supra), is the Judgment rendered after adverting to the Judgment of the Hon’ble Supreme Court in the case of Union of India vs. Ind-Swift Laboratories Ltd. (supra) applies to the facts of this case and is binding on this Court.

29. In our view, the Commissioner Customs and Central Excise, Goa was, thus, right in directing the Appellant to pay interest in the sum of 14,62,497/- on the wrongly availed Rs. Cenvat credit of Rs. 1,92,86,034/- in terms of Rule 14 of the Cenvat Credit Rules, 2004, read with Section 11AB of the Central Excise Act, 1944. The learned Commissioner Customs and Central Excise was also right in imposing the penalty of Rs. 50,000/- upon the Appellant under the provisions of Rule 15 of the Cenvat Credit Rules, 2004 in the facts and circumstances of this case.

30. The CESTAT rightly did not find any infirmity with the orders passed by the Commissioner Customs and Central Excise, Goa and has rightly rejected the Appeal preferred by the Appellant under Section 35(1) of the Central Excise Act, 1944. In the facts and circumstances of this case, the order imposing penalty of Rs. 50,000/- was also justified and does not warrant any interference.

31. For the reasons recorded aforesaid, the substantial question of law (A) is answered in the affirmative against the assessee and in favour of the Revenue.

32. The substantial question of law (B) is answered in the affirmative against the assessee and in favour of the Revenue.

33. In so far as substantial question of law (C) is concerned, we are of the view that the said amendment to Rule 14 of the Cenvat Credit Rules, 2004, vide Notification dated 17 March 2012 would apply only with prospective effect and not with retrospective effect. No such issue was raised by the Appellant before the Commissioner Customs and Central Excise, Goa and also before the CESTAT. Be that as it may a plain reading of the said Notification dated 17 March 2012 clearly indicates that such amendment was applicable only with prospective effect. It is also an admitted position that the notice of demand was issued by the Respondent upon the Appellant much prior to the date of said Notification dated 17 March 2012. No benefit of such amendment thus can be availed of by the Appellant. The said substantial question of law is answered accordingly.

34. In so far as the substantial question of law (D) is concerned, in our view, the Judgment of the Hon’ble Supreme Court in the case of Union of India vs. Ind-Swift Laboratories Ltd. (supra) was clearly applicable to the facts of this case and thus the principles laid down in the said Judgment were rightly applied by the CESTAT to the present case. The said substantial question of law is accordingly answered in the affirmative against the assessee and in favour of the Revenue.

35. In so far as the substantial question of law (E) is concerned, in the facts and circumstances of this case, we are of the view that the Appellate Tribunal was justified in imposing the penalty of Rs.50,000/- on the Appellant under Rule 15 of the Cenvat Credit Rules, 2004 and thus, the question is answered in the affirmative against the assessee and in favour of the Revenue.

36. Excise Appeal No.2 of 2018 is, accordingly, dismissed. There shall be no order as to costs.

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