2023 (5) TMI 91 - AT - Central Excise

Suo moto adjustment of the duty paid in excess against the short payment of duty - provisional assessment under rule 7 of Central Excise Rules, 2002 - HELD THAT - The Tribunal in the aforesaid judgments have consistently taken the stand in terms of the decision in COLLECTOR OF CENTRAL EXCISE, HYDERABAD VERSUS DIVYA ENTERPRISES LTD. 2003 (3) TMI 108 - SC ORDER whereby the Apex Court re-cognising the concept of adjustment of duties has categorically allowed for such adjustment of duties with respect to less and excess duty paid and on that basis have allowed the appeals filed by the assessee - Reliance can be placed in the case of TILRODE CHEM PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, BANGALORE 2010 (6) TMI 544 - CESTAT, BANGALORE and TOYOTA KIRLOSKAR AUTO PARTS PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, BANGALORE 2011 (10) TMI 201 - KARNATAKA HIGH COURT . It has been informed that the department has already challenged the judgements of the MP High Court in THE PRINCIPAL COMMISSIONER CGST AND CENTRAL EXCISE HEADQUARTERS BHOPAL VERSUS M/S GODREJ CONSUMER PRODUCTS LTD. 2019 (5) TMI 222 - MADHYA PRADESH HIGH COURT before the Hon'ble Supreme Court in SLP (C) No. 30394/ 2019. However, it is found that there is no stay by the Hon'ble Supreme Court of the judgements under challenge and therefore as on today the present appeal has to be decided in terms of the earlier orders of the Tribunal and as affirmed by the MP High Court on the principle that adjustment of duty is permitted under Law and the benefit of the same ought to have been allowed to the assessee. Since the issue stands decided on merits in favour of the assessee the question of limitation and the imposition of penalty does not survive. In so far as the interest is concerned the same is liable to be paid by the appellant on the short duty paid which is to be determined after adjusting the excess duty paid and for that purpose matter remanded back to the original authority for adjustment of duty and also for determination of interest to be payable by the appellant. Appeal is allowed by way of remand.

Summary

Issues:
Challenge to Order-in-Original confirming duty liability, interest, and penalty for the period January 2016 to June 2017.
Consideration of suo moto adjustment of excess duty paid against short payment of duty.

Analysis:
1. The appellant contested the Order-in-Original dated 7.12.2018, confirming duty liability, interest, and penalty for the period January 2016 to June 2017. The main issue revolved around the suo moto adjustment of the duty paid in excess against the short payment of duty. This issue had been previously addressed in various Tribunal decisions and in the case of the appellant for an earlier period, which was decided in favor of the appellant.

2. The appellant, engaged in manufacturing motor vehicles, availed cenvat credit of duty paid on raw materials. The appellant cleared finished goods on a job work basis for another company and adjusted duties (short paid with excess paid) at the end of the month. The Commissioner, however, denied the adjustment of excise duty, citing the absence of a legal provision for such adjustment. The appellant, feeling aggrieved, filed the present appeal challenging this decision.

3. The Tribunal referred to previous cases like Bajaj Tempo Ltd., Tilrode Chem Pvt Ltd, TVS Motors, Toyota Kirloskar Auto Parts Pvt Ltd., and Tilrode Chem Ltd., where the concept of adjustment of duties was recognized. The Tribunal highlighted the decision in CCE, Hyderabad Vs. Divya Enterprises Ltd., where the Apex Court allowed adjustment of duties concerning less and excess duty paid. Based on these precedents, the Tribunal held that the adjustment of duty is permitted under the law, and the benefit should be extended to the assessee.

4. Despite the department challenging certain judgments before the Supreme Court, no stay had been issued on the judgments. Therefore, the present appeal was decided in line with the earlier orders of the Tribunal and the affirmation by the MP High Court that adjustment of duty is permissible under the law. Consequently, the Tribunal set aside the Commissioner's order and remanded the matter for the adjustment of duty and determination of interest payable by the appellant.

5. As the issue was decided in favor of the assessee, the Tribunal concluded that the question of limitation and imposition of penalty did not stand. Regarding interest, it was deemed payable by the appellant on the short duty paid, to be determined after adjusting the excess duty paid. The matter was remanded back to the original authority for these specific purposes, and the appeal was allowed by way of remand.