2022 (5) TMI 1035 - AT - Central Excise

CENVAT Credit - basic allegation against the appellant is that appellants while transferring the imported machines to its customers, had charged amount of CVD and additional duty on the machines imported by him but the said amount has not been deposited by the appellant in the Government Exchequer - HELD THAT - There is no denial to the submission of the appellant that no Cenvat credit has been availed by the appellant. These observations are sufficient for me to hold that Commissioner (Appeals) has committed an error while holding I find that there is no reference to availment of credit in the said provisions (Sec 28B or Sec 11D) whether credit is availed by the Appellant or not. Since the duty has been collected from customers, the appellant has no other option but to pay the same to govt. exchequer. Accordingly, I hold that the adjudicating authority has correctly held that the Appellant is liable to pay the duty amount of Rs.10,44,436/- along with interest collected from their customers under the provisions of Section 28B of Customs Act, 1962 read with Section 11D of Central Excise Act, 1944. Appellant while submitting today has produced on record documents in the form of commercial invoices through which the appellant has purchased the machines which got imported after purchase. The bill of entry filed for those machines has also been produced on record. Perusal thereof shows that all the articles mentioned in the commercial invoices are mentioned in the said bill of entry (nine different machines and several spare parts) - admittedly the appellant has not availed the Cenvat credit of the aforesaid duty paid it cannot be denied that appellant was entitled to claim the same under Rule 3 and 5 of Cenvat Credit Rules. No irregularity is opined to have been committed while charging the said amount of CVD and additional duties, the credit whereof was not taken by the appellant, from its customers. The finding/the reason quoted is apparently wrong as appellant has been an importer and not the manufacturer. Question of any amount of excise duty does not at all arise to ever be the liability of the appellant. Further the silence of any reference to the availment of credit in Section 28B of Customs Act or Section 11D of Central Excise Act is also observed to be an erroneous finding for the reason that irrespective both the sections are silent about the availment of credit but the simultaneous provisions in Rule 3 and Rule 5 of Cenvat Credit Rules entitle the appellant to avail the said credit. Admittedly the same has not been availed. Hence, the collection of amount of said duty from the customers was justified. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Alleged non-payment of CVD and additional duty by the appellant to the Government Exchequer.

Analysis:
The appellant, engaged in the manufacture of Sugar Boiled Confectionery, was alleged to have not deposited the collected CVD and additional duty to the Government Exchequer. A Show Cause Notice was issued proposing a demand for the unpaid amounts along with interest and penalties. The initial proposal was confirmed by the Order-in-Original, which was upheld by the Commissioner (Appeals), leading to the appeal before the Tribunal.

The appellant argued that they had paid the duties at the time of filing bills of entries but did not avail Cenvat credit, leading to charging customers the same amount. They contended that paying again would result in double taxation on a single import, creating a revenue-neutral situation. The appellant sought to set aside the order, stating that the penalty imposition was unwarranted.

The Department, however, emphasized the lack of evidence from the appellant to prove duty payment to the Government Exchequer, as charged from customers. The Commissioner (Appeals) found the appellant's evidence insufficient, leading to the dismissal of the appeal.

Upon reviewing the submissions and records, the Tribunal observed that the appellant had indeed paid the duties at the time of import clearance but did not avail Cenvat credit. The Tribunal held that the Commissioner (Appeals) erred in holding the appellant liable for payment again, as the duty had already been paid to the Government Exchequer. The Tribunal noted that the appellant was entitled to claim Cenvat credit under the relevant rules, which was not availed.

The Tribunal scrutinized the documents provided by the appellant, including commercial invoices, bills of entries, and proof of duty payment. It was established that the duty had been paid at the time of import clearance, and no irregularity was found in charging customers the same amount when Cenvat credit was not availed. The Tribunal found the findings of the Commissioner (Appeals) erroneous, as they incorrectly imposed a demand without considering the duty payment already made. The order under challenge was set aside, and the appeal was allowed, emphasizing that double payment of the same tax liability was impermissible.