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CX – SCN proposed recovery of credit under one provision of CEA whereas Asstt. Commr. confirmed demand under different provisions of law, which is not permitted: CESTAT

2019-TIOL-2396-CESTAT-BANG

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

Appeal No. E/20972/2018-SM

Arising out of Order-in-Appeal No. BEL-EXCUS-000-APP-MSC-017-2018-19, Dated: 16.04.2018
Passed by the Commissioner of Central Tax, Belgaum

Date of Hearing: 03.01.2019
Date of Decision: 03.01.2019

JAGLANKS INDUSTRIES
PLOT NO. 552-A, BHARAT GAS ROAD, BELUR
INDUSTRIAL AREA, DHARWAD-580011 KARNATAKA

Vs

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

Appellant Rep by: Mr D Sharath kumar, CA
Respondent Rep by: Dr J Harish, Joint Commissioner AR

CORAM: S S Garg Member (J)

CX – Appellant shifted his factory to a new location and also transferred the cenvat credit of Rs.2.76 lakh without following the procedure of rule 10 of Cenvat Credit Rules, 2004 [CCR] – SCN issued proposing to demand irregular cenvat credit of Rs.2.76 lakh along with interest and impose penalty under rule 15(1) of CCR – the Assistant Commissioner, vide O-i-O dated 30.12.2015 disallowed and ordered for recovery of irregularly transferred cenvat credit of Rs.2.76 lakh along with interest and imposed equal penalty under rule 15 of CCR – thereafter, a corrigendum to the O-i-O was issued on 24.3.2016 to read the O-i-O at para 14 and in order portion, with section 11A(4) instead of section 11A(5) of CEA and rule 15(2) of CCR, instead of rule 15(1) of CCR – on appeal, the Commissioner rejected the appeal, hence assessee before CESTAT.

Held: Original authority has travelled beyond the SCN and proposed the recovery under one provision of the CEA whereas confirmed the demand under different provisions of law which is not permitted under law – further, the corrigendum issued to the appellant is also not sustainable in view of the Board Circular 502/68/99-CX dated 16.12.1999 – further, original authority has observed that appellant had not appeared before him and satisfied the authority regarding the procedure followed by them – in view of this, the impugned order is not sustainable in law and the same is set aside by allowing the appeal of the appellant by way of remand to the original authority who will pass a De novo order after affording an opportunity of hearing and after considering the findings recorded above – accordingly, the appeal is allowed by way of remand : CESTAT [para 5]

Appeal allowed by way of remand

Case law cited:

Tilrode Chem Pvt. Ltd. Vs. CCE, Bangalore – 2011-TIOL-259-CESTAT-BANG… Para 3

FINAL ORDER NO. 20011/2019

Per: S S Garg:

The present appeal is directed against the impugned order dated 23.04.2018 passed by the Commissioner (Appeals) whereby the Commissioner (Appeals) has rejected the appeal of the appellant. Briefly the facts of the present case are that the appellants are engaged in the manufacture of Plywood Sheets and Plywood pellets falling under CETH 44129990 of the Central Excise Tariff Act, 1985 and are availing cenvat credit on inputs, capital goods and input services and are regularly filing the excise returns. During the course of audit of the records of the appellant, it was noticed that the appellant availing cenvat credit on inputs and capital goods. He has shifted his factory premises located at Plot No. 171 B, Belur Industrial Area, Dharwad to Plot No. 552-A, Belur Industrial Area, Dharwad, on 21.08.2012. On the date of shifting, the appellant had cenvat credit balance of Rs. 2,76,659/- (Rupees Two Lakhs Seventy Six Thousand Six Hundred and Fifty Nine only) on inputs received under Invoice Nos. 405 dated 06.08.2012, 90 dated 13.08.2012 and 427 dated 14.08.2012. The balance cenvat credit of Rs. 2,76,659/- (Rupees Two Lakhs Seventy Six Thousand Six Hundred and Fifty Nine only) was transferred by the appellant without following the procedure under Rule 10 of Cenvat Credit Rules, 2004, and as such liable to be recovered from the appellant.

On these allegation, a show-cause notice dated 10.11.2014 was issued to the appellant proposing to demand irregular cenvat credit of Rs. 2,76,659/- (Rupees Two Lakhs Seventy Six Thousand Six Hundred and Fifty Nine only) along with interest and penalty under Rule 15(1) of Cenvat Credit Rules, 2004. After following the due process, the Assistant Commissioner vide order dated 30.12.2015 disallowed and ordered for recovery of irregularly transferred cenvat credit of Rs. 2,76,659/- (Rupees Two Lakhs Seventy Six Thousand Six Hundred and Fifty Nine only) along with interest and imposed equal penalty under Rule 15 of Cenvat Credit Rules. Thereafter a corrigendum to the Order-in-Original was issued on 24.03.2016 to read the Order-in-Original at para 14 and in order portion, with Section 11A(4) instead of Section 11A(5) of Central Excise Act, 1944 and Rule 15(2) of CCR, instead of Rule 15(1) of CCR 2004. Aggrieved by the said order, appellant filed appeal before the Commissioner who rejected the appeal.

2. Heard both the parties and perused the records.

3. Learned consultant for the appellant submitted that the impugned order is not sustainable in law as the same has been passed without properly understanding the facts and the law. He further submitted that the corrigendum was issued without following the principles of natural justice and is in violation of Board’s Circular No. 502/68/99-CX dated 16.12.1999. He further submitted that before shifting the factory, the appellant had already informed the Range Officer regarding the proposed shifting of his factory and promptly got amended the RC and there is no allegation in the show-cause notice that the input/capital goods were not transferred and not accounted properly. He further submitted that a letter was written to the Range Officer before one week of shifting and it is reflected in their ER-1 return of August 2012 and the adjudicating authority cannot travel beyond the show-cause notice because in the show-cause notice only Section 11A(5) of Central Excise Act, 1944 and Rule 15(1) of Cenvat Credit Rules, 2004 were mentioned whereas in the corrigendum issued, the original authority has invoked Section 11A(4) of the Act and Rule 15(2) of the Cenvat Credit Rules, 2004 which is not permissible under law. In support of this submission, he relied upon the decision in the case of Tilrode Chem Pvt. Ltd. Vs. CCE, Bangalore – 2011 (264) E.L.T. 306 (T) =2011-TIOL-259-CESTAT-BANG wherein it was held that no demand can be sustained unless the same is based on the proposal in the show-cause notice and the assessee has been afforded adequate opportunity to present his case in defense.

4. On the other hand the learned AR defended the impugned order and submitted that when the show-cause notice was issued to the appellant he did not file the reply to the same and thereafter the original authority has afforded number of opportunity to the appellant to appear and satisfy the authorities regarding the procedure followed by him in transferring the cenvat credit but in spite of the opportunities given to the appellant, they did not appear and thereafter the original authority has come to the conclusion that they have not followed the procedure as prescribed in Rule 10 of Cenvat Credit Rules, 2004 and similarly the Commissioner (Appeals) also upheld the order-in-original.

5. After considering the submissions of both the parties and perusal of the material on record, I find that the appellant vide their letter dated 14.08.2012 informed the Superintendent of Central Excise regarding the proposed shifting of their machines, raw-materials and finished goods to the new premises and sought his advice regarding the procedure and thereafter applied for the amendment in the registration certificate which was given and thereafter the appellant transferred the credit. Further I find that the appellant has also shown the shifting of the unit in their ER-1 returns also. Further I find that the allegations are based on the audit report wherein it has given that the appellant has shifted his factory to a new location and has also transferred the cenvat credit of Rs. 2,76,659/- (Rupees Two Lakhs Seventy Six Thousand Six Hundred and Fifty Nine only) without following the procedure of Rule 10 of Cenvat Credit Rules, 2004. Admittedly, there is no dispute regarding the shifting of the factory and the fact of transferring the cenvat credit which has been accepted in the impugned order also. But the only ground on which the cenvat credit has been denied is that the appellant has not followed the procedure as prescribed in Rule 10 of the Cenvat Credit Rules, 2004. Further I find that the original authority has also travelled beyond the show-cause notice and proposed the recovery under one provision of the Central Excise Act whereas confirmed the demand under different provisions of law which is not permitted under law. Further I find that the corrigendum issued to the appellant is also not sustainable in view of the Board Circular 502/68/99-CX dated 16.12.1999. Further I find that original authority has observed that appellant has not appeared before them and satisfied the authority regarding the procedure followed by them. In view of this, I am of the opinion that the impugned order is not sustainable in law and the same is set aside by allowing the appeal of the appellant by way of remand to the original authority who will pass a De novo order after affording an opportunity of hearing and after considering the findings recorded above. Accordingly, the appeal is allowed by way of remand.

(Operative portion of the Order was pronounced in Open Court on 03.01.2019)

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