Home Case Index All Cases Central Excise Central Excise + HC Central Excise - 2019 (7) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (7) TMI 622 - HC - Central ExciseCENVAT Credit of CVD - Rule 9 (1) (b) of the Cenvat Credit Rules, 2004 - case of the Revenue is that even Rule 9 (1) (b) of the Cenvat Credit Rules,2004, prohibits the credit of excise duty or customs duty in case the same has been paid and recovered from the Assessee on account of earlier non-levy or short-levy, by reason of fraud, collusion, wilful misstatement or suppression of facts - Approach to Settlement Commission - HELD THAT - The effort of the Assessee in the present case seems to be taking away what was given by it under the order of the Settlement Commission under another law. In other words, what was paid under the Customs Act resulting in a binding order passed by the Settlement Commission is sought to be scuttled by the proceedings under the Central Excise Act,1944. It is precisely these kinds of loopholes, which were sought to be checked and plugged by the Parliament, by enacting the provision of Section 127-J of the Customs Act,1962. What is intended by making the order of the Settlement Commission to be conclusive is that both the parties, namely, the Assessee and the Revenue, are for ever bound and to remain within the four corners of the orders of the Settlement Commission and this is the specific negation of re-opening of any proceedings under the Act (The Customs Act,1962) or under any other law for the time being in force (including the Central Excise Act,1944, or the Cenvat Credit Rules made thereunder). Giving a finality and conclusiveness to the orders of the Settlement Commission has to be taken to its logical end and the position inter se between the parties flowing from the order of the Settlement Commission cannot be allowed to be disturbed in any manner, much less any indirect gain or duty paid can be allowed to be taken back by the Assessee under the provisions of any other law, including the Central Excise Act and the Cenvat Credit Rules - The case of the Revenue that even Rule 9 (1) (b) of the Cenvat Credit Rules,2004, prohibits the credit of excise duty or customs duty in case the same has been paid and recovered from the Assessee on account of earlier non-levy or short-levy, by reason of fraud, collusion, wilful misstatement or suppression of facts, also has considerable force. The contents of the Show Cause Notice in the present case, would clearly reveal that the case of the Revenue against the Assessee in the said Show Cause Notice was that of misstatement of facts and suppression of facts as well as misrepresentation of the assessable value of the goods to the extent of ₹ 49,02,861/-, which was declared only at ₹ 13,93,827/- - even on the applicability of Rule 9 (1) (b) of the Cenvat Credit Rules,2004, we find that the denial of Cenvat Credit to the Assessee in the present case independently was also justified. There is no merit in the contention raised by the learned counsel for the Assessee that the Assessee was independently entitled to Cenvat Credit in respect of the CVD paid by it under the orders of the Customs Duty Settlement Commission in the present case under the provisions of Cenvat Credit Rules, 2004 - appeal dismissed - decided against assessee.
Issues Involved:
1. Eligibility of Cenvat Credit under Rule 9(1)(b) of the Cenvat Credit Rules, 2004. 2. Impact of the Settlement Commission's order on the eligibility of Cenvat Credit. 3. Applicability of Rule 3(7) and Rule 9 of the Cenvat Credit Rules, 2004. 4. Interpretation of Section 127-J of the Customs Act, 1962. 5. Relevance of precedents cited by the appellant. Detailed Analysis: 1. Eligibility of Cenvat Credit under Rule 9(1)(b) of the Cenvat Credit Rules, 2004: The appellant, M/s. Supreme Petrochem Ltd., imported second-hand machinery and was found to have undervalued the goods. A Show Cause Notice was issued, demanding additional customs duty and alleging fraud, collusion, and misstatement. The appellant approached the Settlement Commission, which imposed a duty liability and granted immunity from penalty and prosecution. Despite paying the duty, the appellant's claim for Cenvat Credit was denied by the adjudicating authority under Rule 9(1)(b) of the Cenvat Credit Rules, 2004, which disallows credit where duty is recoverable due to fraud or misstatement. This denial was upheld by the appellate authorities and the Tribunal. 2. Impact of the Settlement Commission's Order on the Eligibility of Cenvat Credit: The appellant contended that the customs duty paid under the Settlement Commission's order should be eligible for Cenvat Credit under a different enactment. However, the court held that the Settlement Commission's order is conclusive and binding, as per Section 127-J of the Customs Act, 1962, which states that such orders cannot be reopened in any proceeding under any other law. The court emphasized that allowing the appellant's claim would undermine the finality and conclusiveness intended by the Settlement Commission's order. 3. Applicability of Rule 3(7) and Rule 9 of the Cenvat Credit Rules, 2004: The appellant argued that Rule 3(7) entitles them to take credit of additional duty (CVD) and that Rule 9 allows the production of documents for claiming Cenvat Credit. However, the court found that the customs duty paid under the Settlement Commission's order was not free from the taint of suppression and misrepresentation, thus falling under the disqualification criteria of Rule 9(1)(b). The court rejected the appellant's oversimplification that the customs duty paid was merely CVD and hence eligible for credit. 4. Interpretation of Section 127-J of the Customs Act, 1962: The court highlighted that Section 127-J makes the Settlement Commission's order conclusive and prohibits reopening of matters covered by such an order in any proceeding under any law. This provision aims to provide finality to the settlement process and prevent any subsequent modification or adjustment of the settled duty. The court emphasized that this finality extends to preventing claims for Cenvat Credit on the duty paid under the Settlement Commission's order. 5. Relevance of Precedents Cited by the Appellant: The appellant cited judgments from the Allahabad High Court (Silver Oak Laboratories Pvt. Ltd.) and the Gujarat High Court (Philips India Ltd.) to support their claim. However, the court found these precedents inapplicable. The Allahabad High Court's decision was based on specific documents and did not consider the scope of Rule 9(1)(b) or Section 127-J. The Gujarat High Court's observation was context-specific and did not address the present case's issues. Thus, these judgments did not aid the appellant's case. Conclusion: The court dismissed the appeal, holding that the appellant was not entitled to Cenvat Credit for the customs duty paid under the Settlement Commission's order. The court affirmed that the Settlement Commission's order is conclusive and binding, precluding any claims for credit under other laws. The appellant's arguments and cited precedents were found unconvincing and irrelevant to the case at hand. The appeal was dismissed with no costs, and the connected miscellaneous petition was also dismissed.
|