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TMI Blog2014 (6) TMI 792X X X X Extracts X X X X X X X X Extracts X X X X ..... n payment of duty. The duty paid by IOCL @ 10% and 15% was taken by IPCL as MODVAT Credit. Show Cause Notice was issued by invoking extended period of time limitation to re-classify the Xylene Reformate and to demand duty @ 20% and 18% from the IOCL. Order dated 25.08.1999 confirming demand of duty of Rs. 14,36,74,091/- from IOCL, imposing penalty under Section 11AC of the Central Excise Act and ordering interest under Section 11AB of the Act was passed by the Commissioner. The Committee of Disputes (CoD) permitted IOCL to only contest the Order-in-Original dated 25.08.1999 in so far as it related to imposition of penalty and interest, but (CoD) did not allow the appellant to contest duty demand. Thus on 09.02.2000, IOCL paid the entire demand of differential duty of Rs. 14,36,74,091/-. However, IOCL challenged the imposition of penalty and interest by way of an appeal before the CEGAT on the ground that there was no suppression of facts, mis-statement etc. on their part. The CEGAT vide Final Order No. 36/2001-C & S.O. No. 15/2001-C dated 23.03.2001 decided the appeal against IOCL so far as the imposition of penalty under Section 11AC of the Central Excise Act on IOCL for the perio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of one crore rupees on IOCL under Rule 173Q(1)(bbb) of erstwhile Central Excise Rules, 1944. 4.1 Shri Anand Nainawati (Advocate) appearing on behalf of the appellant, submitted that the adjudicating authority passed the impugned Order-in-Original holding that: (i) The issue regarding availability of MODVAT Credit has attained finality inasmuch as request for credit was rejected by the Tribunal vide its earlier Order dated 23.03.2001. (ii) The differential duty of Rs.14,36,74,091/-, paid by IOCL as per Order-in-Original dated 28.05.1998 on 09.02.2000, was originally not paid by IOCL. (iii) The supplementary invoices were not proper documents for taking credit. (iv) Certificates in terms of Rule 57E could not have been issued for the reason that differential duty was originally not paid by IOCL due to suppression of facts etc. (v) Penalty was imposable on IPCL under Rule 15 of the CENVAT Credit Rules, 2004 as IPCL always knew that differential duty paid by IOCL could not be passed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Rules, 1944. (iv) That the supplementary invoices issued by IOCL are valid documents for availing CENVAT Credit as per Rule 9 of the CENVAT Credit Rules, 2004 inasmuch as differential duty paid on 09.02.2000 was finally held to be without suppression of facts or willful mis-statement etc. on 17.05.2005 by the Hon'ble CESTAT when the CENVAT Credit Rules, 2004 were in force. In this context he cited the following case laws: (a) Andhra Petrochemicals Ltd. Vs. CCE - [2005 (183) ELT 377 (Tri. Bang.)]; (b) Eicher Ltd. Vs. CCE - [2003 (156) ELT 485 (Tri. Chennai)]; (c) CCE Vs. Ucal Systems Ltd. - [2004 (171) ELT 70 (Tri. Chennai)]; (d) Century Rayon Vs. CCE - [2005 (191) ELT 216 (Tri. Mumbai)]; (e) Jindal Vijayanagar Steel Ltd. Vs. CCE - [2004 (174) ELT 189 (Tri. Bang.)]; and (f) Jindal Iro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal's findings that M/s IOCL was not eligible to pass on the credit under Rule 57E has attained finality and cannot be reopened. (ii) The confirmation of duty vide OIO dated 25.08.1999 was accepted by the appellants and the differential duty paid by them on 09.02.2000. The confirmation of duty for the extended period from March 1994 to September, 1998 on the grounds of suppression of facts etc. was never challenged by IOCL. Thus the issue of suppression etc. as regards the demand of differential duty has become final. He cited the case law - Collector of Central Excise, Kanpur Vs. Flock (India) Pvt. Ltd. - [2000 (120) ELT 285 (S.C.)] in this regard. The CEGAT dropped vide its order dated 23.03.2001 the penalty of Rs.13,90,86,359/- for the period prior to 28.09.1996 only on the grounds that Section 11AC was not in the statute book before 28.09.1996. (iii) When differential duty was paid on 09.02.2000, the statutory provisions of Rule 57E of Central Excise Rules, 1944 for passing of credit prevailing at that time ought to have been followed by the appellant. He contended that IPCL did not have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of supplementary invoices after more than six years from the date of payment of differential duty. 6. Heard both sides and perused the records. The issues to be decided by us are: (i) Whether IOCL was eligible to pass on credit as per the provisions of Rule 57E of the Central Excise Rules, 1944. (ii) If answer to point (i) above is yes, whether the IOCL could issue 83 supplementary invoices on 13.04.2006 or the same could issue Certificate dated 18.09.2006 under Rule 57E of erstwhile Central Excise Rules, 1944 in respect differential duty liability of Rs.13,99,12,911/- pertaining to the period under Order-in-Original (August 1994 to August 1997) to IPCL for duty paid by IOCL on 09.02.2000. 7. On the first issue we find that Para 6 of Tribunals Order dated 23.03.2001 reads as under: 6. Learned Representative tried to put forth an argument that there was no evasion of duty disentitling claim for Modvat under Rule 57E of the Rules. This argument is not open to him because the legality of imposition of duty is not open to challenge be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... document for the manufacturer of final product to take MODVAT credit even after the change of law. 33. Before 1-4-2000, a certificate issued under Rule 57E by the Superintendent of Central Excise having jurisdiction over the manufacturer of inputs/capital goods, was one of the documents prescribed under Rule 57G(3) for the purpose of taking MODVAT credit of the duty paid on the Inputs/capital goods. Rule 57AE, which replaced Rule 57G(3) with effect from 1-4-2000, did not prescribe such certificate as one of the documents for the purpose of MODVAT credit. The corresponding provision of the CENVAT Credit Rules, 2001, the CENVAT Credit Rules, 2002 and the CENVAT Credit Rules, 2004 also did not prescribe such certificate as a document for the purpose of taking CENVAT credit on inputs or capital goods. The latest provision, which was referred to by the learned JCDR and is still in force, is Rule 9 of the CENVAT Credit Rules, 2004, which prescribes a supplementary invoice issued by the manufacturer of input/capital goods, for the manufacturer of the final product to avail CENVAT Credit of any additional amount of duty p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period subsequent to the repeal of Rule 57E. Nobody has claimed before us that the Tribunals decision in the said case was not accepted by the department. It is equally noteworthy that the Tribunals decision in the case of Bell Ceramics case was not challenged by the department. In the result, we hold that RIL is entitled to MODVAT/CENVAT credit of the differential duty paid by ONGC. 35. We have also noted that principles of equity were applied by the Supreme Court in the customs case of Priyanka Overseas Pvt. Ltd. (supra) and the excise case of Kuil Fire Works Industries (supra). Restitution is one such principle, which, in our view, is applicable in an appropriate case like this. When Rule 57E was repealed, any provision recognizing certificate of Superintendent as a valid document for availment of MODVAT/CENVAT credit was not incorporated in the new rules. The new rules prescribed a supplementary invoice in lieu of such certificate. In the absence of a transitional provision enabling a manufacturer of final product, who obtained Rule 57E certificate prior to 1-4-2000, to use the certificate for taking MODVAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perintendent. The limited case of the department for denying MODVAT credit to IPCL (RIL) is based on this procedural change. Such a case cannot succeed in view of judicial pronouncements to the effect that a substantive right cannot be defeated on the plank of strict construction of procedural provisions. We are of the view that the case law cited by the learned JCDR on mandatory nature of certain rules and on application of principles of equity is not applicable to the above matrix of facts. The revalidation and reissue of the certificates by the Superintendent in the wake of the Tribunal's decision in favour of ONGC on the question whether they had indulged in any fraud, collusion or suppression or misstatement of facts or contravention of law with intent to evade payment of duty must be seen as restitution of their right to have such certificates under Rule 57E. It goes without saying that IPCL could also claim restitution of their right to take MODVAT credit on the strength of such certificates. We may contextually state that this Tribunal is empowered to safeguard the legal consequences of its own earlier order which was accepted by both the sides which cannot be termed 'grant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 091/- for the period from March 1994 to September 1997 and that no penalty is imposable. Thus it was on or after 17.05.2005 that IOCL was absolved by CESTAT of the charge of suppression of facts etc. with intention to evade payment of duty. It was thus on or after 17.05.2005 the IOCL could issue Certificate under Rule 57E to enable IPCL or other buyers to take credit of the differential duty paid on 09.02.2000 by virtue of saving of erstwhile Central Excise Rules, 1944 by Section 38A of the Central Excise Act, 1944. The appellants have placed on record (Page 86-87 of appeal) a copy of Certificate dated 18.09.2006 issued by IOCL duly verified and signed by the jurisdictional Superintendent of Central Excise certifying that M/s IOCL had paid duty of Rs.14,36,74,091/- with reference to adjudication order No.6/BRC/MP/99, dated 25.08.1999, and that out of which Rs.13,99,12,946/- pertained to IPCL as per Annexure enclosed to the said certificate dated 18.09.2006. We find that the certificate dated 18.09.2006 contains all details required for the purpose of issuing 57E Certificate and for taking credit etc. The MODVAT Rules did not contain any time limit for issuance of such Rule 57E Cert ..... X X X X Extracts X X X X X X X X Extracts X X X X
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