2014 (6) TMI 720 - AT - Central Excise

Issue of subsequent show show cause notice when an earlier show cause notice on the same ground is pending - suppression of facts - extended period of limitation - Held that - When the first SCN was issued all the relevant facts were in the knowledge of the authorities. Later on, while issuing the second and third show cause notices the same/similar facts could not be taken as suppression of facts on the part of the assessee as these facts were already in the knowledge of the authorities. - Decided in favor of assessee. CENVAT Credit - Common inputs used in the manufacture of dutiable and exempted goods - Non-maintenance of separate records - reversal of credit with interest - benefit of retrospective amendment of Central Excise Rules 1944 and CENVAT Credit Rules 2001/2002/2004 for non compliance of order passed under the aforesaid provision of sections 70 to 73 of the Finance Act, 2010 - Held that - If CENVAT Credit attributable to inputs used in the manufacture of exempted final products is reversed along with interest subsequent to removal of exempted final products, then the appellant cannot be said to have taken credit of inputs used in or in relation to the manufacture of exempted final products, and they need not pay an amount @ 8% or 10% of the sale price of exempted final products. - matter remanded back to adjudicating officer to verify the facts and reversal of credit - Decided in favor of assessee. Jurisdiction of Tribunal to entertain an appeal - one time opportunity vide sub-sections (2) and (3) of the said Sections 70 to 73 of the Finance Act 2010 - Held that - Evidently, the applicant has not complied with the provisions sub-section (3) of Sections 70 to 73 of the Finance Act, 2010, as the differential amount of ₹ 60,32,345/- decided by the appropriate authority was not paid within ten days of receipt of the said Order dated 28.12.2010. In these circumstances, the Order No. Section 68 to 72/ F.A./ COMMISSIONER/ 03/ 2010 dated 28.12.2010, passed by the Commissioner of Central Excise Ahmedabad-II, does not exist after the time specified in the relevant sections of Finance Act, 2010. It was a one time scheme. It has to be either accepted or rejected by the concerned parties. Further, since this Order has not been passed in exercise of powers conferred on the Commissioner under the Central Excise Act, 1944 or Rules made there under, this is not an appealable Order under the Central Excise Act, 1944. In this case the Commissioner as well as the applicant was bound to act in accordance with Sections 69 to73 of the Finance Act, 2010. For the same reasons, this Tribunal has no jurisdiction to entertain any appeal against the said Order.

Summary

Issues Involved:
1. Maintainability of subsequent show cause notice.
2. Sufficiency of subsequent reversal of credit with interest to discharge the demand.
3. Maintainability of appeals against the Commissioner's Order dated 28.12.2010.

Issue-wise Detailed Analysis:

1. Maintainability of Subsequent Show Cause Notice:
The appellant argued that the second show cause notice (SCN) dated 01.12.2005, covering the period from November 2000 to March 2005, was not maintainable as an earlier SCN dated 26.09.2005 for the period 2000-01 to March 2004 on the same grounds had already been issued but not adjudicated. The Tribunal referred to the Supreme Court's ruling in Nizam Sugar Factory vs. Collector of Central Excise, which held that once a SCN has been issued for a certain period on a set of facts, another SCN for the same period on the same facts invoking the extended period of limitation cannot be issued. The Tribunal concluded that since all relevant facts were known to the Department when the first SCN was issued, the second SCN was not maintainable.

2. Sufficiency of Subsequent Reversal of Credit with Interest:
The appellant contended that they had reversed the input credit of Rs. 7,85,573/- attributable to inputs used in the manufacture of exempted goods and had deposited Rs. 23,19,954/- against their liability. The Tribunal noted the Karnataka High Court's decision in Commissioner of Central Excise vs. Himalaya Drug Company, which stated that if CENVAT Credit attributable to inputs used in the manufacture of exempted final products is reversed along with interest, the manufacturer is not liable to pay 8% or 10% of the sale price of exempted goods. The Tribunal found that the method adopted by the adjudicating authority to demand Rs. 88,41,543/- based on 8% or 10% of the sale price was not maintainable. The matter was remanded to the adjudicating authority for verification of the appellant's claim of reversal of CENVAT Credit.

3. Maintainability of Appeals Against the Commissioner's Order Dated 28.12.2010:
The Tribunal examined the maintainability of Appeal No. E/444/2011 filed by the Revenue and Appeal No. E/449/2011 filed by the assessee against the Commissioner's Order dated 28.12.2010. The Tribunal noted that the Finance Act 2010 provided a one-time opportunity for manufacturers to pay an amount equivalent to CENVAT Credit attributable to inputs used in exempted final products. The appellant had not complied with the provisions of sub-section (3) of Sections 70 to 73 of the Finance Act 2010, as they failed to pay the differential amount within ten days of the Commissioner's order. Consequently, the Tribunal held that the Commissioner's order did not exist after the specified time and was not appealable under the Central Excise Act, 1944. Therefore, the Tribunal had no jurisdiction to entertain any appeal against the said order.

Conclusion:
The Tribunal disposed of the appeals in accordance with the findings on each issue. The second SCN was deemed not maintainable, the demand based on 8% or 10% of the sale price was remanded for verification, and the appeals against the Commissioner's order were dismissed for lack of jurisdiction.