2016 (4) TMI 1328 - HC - Central Excise

CENVAT credit - excess availment of CENVAT credit - Revenue claims that discount which had been given to Bhushan Steel contained certain duty element and, therefore, Bhushan Steel should reverse the CENVAT credit duty contained in the discount. Held that - It is not disputed by learned counsel for the appellant that Tata Steel did not claim any refund of duty on the reduced price nor is it the case of the appellant that it is not on account of subsequent negotiations that had taken place between Bhushan Steel and Tata Steel that the price of inputs procured by Bhushan Steel was reduced - Such being the position when Tata Steel has not claimed any refund of duty from the department, the department was not justified in imposing any duty with interest and penalty on Bhushan Steel. No substantial question of law, therefore, arises for consideration - appeal dismissed.

Summary

Issues:
1. Appeal filed by Commissioner of Central Excise and Service Tax, Ghaziabad under section 35G(1) of the Central Excise Act, 1944 to challenge the order of the Customs, Excise and Service Tax Appellate Tribunal, New Delhi.
2. Question of law regarding the admissibility of CENVAT Credit of duty availed in excess and not proportionate to the assessable value of raw materials.
3. Challenge by M/s. Bhushan Steel Ltd. against the levy of duty, interest, and penalty for excess availment of CENVAT credit on inputs procured from M/s. Tata Steel Ltd.
4. Interpretation of statutory provisions including Rule 3(1) of Cenvat Credit Rules, 2004, Section 4 and 11D of the Central Excise Act, 1944.
5. Examination of whether the demand of duty with interest and penalty on Bhushan Steel was justified.

Analysis:
The judgment pertains to an appeal filed by the Commissioner of Central Excise and Service Tax, Ghaziabad challenging the order of the Customs, Excise and Service Tax Appellate Tribunal, New Delhi. The central question of law raised in this appeal revolves around the admissibility of CENVAT credit of duty availed in excess and not proportionate to the assessable value of raw materials, particularly in the context of the statutory provisions of Rule 3(1) of Cenvat Credit Rules, 2004, and Section 4 and 11D of the Central Excise Act, 1944. The appeal was triggered by the challenge put forth by M/s. Bhushan Steel Ltd. against the imposition of duty, interest, and penalty for the period between June 2008 to December 2013 due to the alleged excess availment of CENVAT credit on inputs procured from M/s. Tata Steel Ltd.

The crux of the matter lies in the contention that Bhushan Steel availed CENVAT credit on duty paid by Tata Steel, and subsequent negotiations between the two parties led to a reduction in the price of inputs procured by Bhushan Steel. The revenue asserted that the discount provided by Tata Steel to Bhushan Steel contained a duty element, necessitating Bhushan Steel to reverse the CENVAT credit duty associated with the discount. However, the Tribunal, after careful examination, found that Tata Steel did not claim any payment of extra duty due to the price reduction and cited relevant circulars and legal precedents to support its decision.

The Tribunal highlighted that since Tata Steel did not seek a refund of duty on the reduced price, the imposition of duty, interest, and penalty on Bhushan Steel by the department was deemed unjustified. The judgment emphasizes the importance of factual findings, the absence of duty refund claims, and the impact of negotiations between the parties in determining the liability for duty payment. Ultimately, the Court dismissed the appeal, concluding that no substantial question of law warranted further consideration in this matter.