2016 (8) TMI 747 - AT - Central Excise

Cross utilization of credit wrongly - AED(ST) alongwith interest and penalty - appellant received semi finished fabrics from its sister unit under cover of invoices - duty paid was shown to be 16% basic excise duty but the appellant on its own apportioned it in two parts and 50% was taken as credit under basic excise duty and the remaining 50% was taken as credit under AED (ST) in terms of Notification No. 17/2000-CE dated 01.03.2000. Held that - it is a fact that the notification was issued on 01.03.2000 and prescribed an aggregate duty of 16% ad valorem and possibly for that reason the invoices issued in the month of March 2000 itself showed the aggregate duty of 16% ad valorem and were stamped with stamp showing apportionment as per the said notification. It has to be taken into consideration that the Notification was issued on 01.03.2000 and was being applied immediately thereafter in the same month when it may still have been in the process of being figured out as to how be depict the aggregate duty @ 16% ad valorem in the excise invoices. One also cannot lose sight of the fact that the appellant did not stand to gain in any way whatsoever by doing such apportionment because it was not as if the BED credit would have lapsed if the entire duty shown in the invoices was taken as BED Credit because it was paying BED in cash to the tune of Crores of rupees after utilizing cenvat credit. Thus, it is not a case where the appellant could have gained any advantage whatsoever by apportioning the duty equally between BED & AED(ST) for taking cenvat credit. In any case, the action of the appellant was in conformity with the legal requirement prescribed under Notification 17/2000-CE. Once credit under AED(ST) of 50% of the duty shown in the invoices is upheld, the demand does not survive and as a consequence nor would interest and penalties. - Decided in favour of appellant --

Summary

Issues:
1. Demand confirmation of AED(ST) with interest and penalty.
2. Appropriate apportionment of duty under Notification No. 17/2000-CE.
3. Allegation of duty apportionment as an afterthought.
4. Compliance with legal requirements regarding duty apportionment.
5. Validity of demand, interest, and penalties.

Analysis:
1. The appeal was filed against the confirmation of demand for AED(ST) along with interest and penalty. The appellant received semi-finished fabrics from its sister unit, and the duty apportionment was disputed. The adjudicating authority held that the appellant was not allowed to apportion the duty as done, resulting in the demand confirmation of &8377; 61,77,847/-.

2. The appellant contended that duty apportionment was done in accordance with Notification No. 17/2000-CE, which required equal apportionment between basic excise duty and AED(ST). The stamps on the invoices supported this apportionment, and the appellant utilized the credit of AED(ST) for payment. The appellant argued that the duty apportionment was not an afterthought, as alleged by the Commissioner.

3. The Commissioner claimed that the stamps on the invoices indicating duty apportionment were put later, but the Tribunal found no evidence to support this assertion. The Tribunal emphasized the principle that the burden of proof lies with the accuser and noted that the supplier and recipient units were part of the same corporate entity, indicating awareness of duty apportionment.

4. Considering the legal requirements and the timing of the notification issuance, the Tribunal concluded that the duty apportionment was in conformity with Notification 17/2000-CE. The appellant did not stand to gain any advantage by apportioning the duty equally, as the credit utilization was in compliance with the law. Therefore, the demand for AED(ST) did not stand, leading to the setting aside of the impugned order and allowing the appeal.

5. In light of the analysis provided, the Tribunal found the impugned order unsustainable and set it aside, resulting in the appeal being allowed. The decision was made after considering the submissions of both parties and examining the legal provisions and factual circumstances surrounding the duty apportionment issue.

Judgment:
The Tribunal set aside the impugned order confirming the demand for AED(ST) and associated interest and penalties, ruling in favor of the appellant based on the compliance with duty apportionment requirements under Notification No. 17/2000-CE and the lack of evidence supporting the allegation of duty apportionment as an afterthought.