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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 ..... nd, erstwhile Central Excise Rules, 1944 were in force. The differential duty liability was cast on IOCL vide Order dated 25.08.1999 along with interest under Section 11AB and penalty under Section 11AC. Therefore, on receipt of the said order-in original dated 25.08.1999, also IOCL could not issue certificate in terms of Rule 57E of the Central Excise Rules, 1944 in force during material time on account of exception clause contained in the prevailing Rule 57E(3) of the Central Excise Rules, 1944 because penalty on account of suppression etc. under Section 11AC was imposed on IOCL by the adjudicating authority. IOCL paid differential duty of Rs.14,36,74,091/- on 09.02.2000 against OIO dated 25.08.1999 but filed an appeal with the CEGAT against imposition of interest and penalty. Certificate was issued by IOCL on 18.09.2006, and MODVAT Credit was taken by IPCL in November, 2006 as a result of prolonged litigation which ended only on 17.05.2005 as per the final order passed by CESTAT in the case of the appellant IOCL. In view of the above observations and the case law of CCE Vs. Oil & Natural Gas Limited (2012 (11) TMI 864 - CESTAT, MUMBAI) we hold in the peculiar facts and circum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /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 period after 28.09.1996 was concerned. IOCL filed an appeal before the High Court of Gujarat against the Order of the CEGAT. The High Court of Gujarat set aside the said CEGAT Order dated 23.03.2001 and directed the CEGAT to consider the issue of imposition of penalty under Section 11AC of the Act for the period after 28.09.1996 afresh. The CEGAT pursuant to the High Court s Order heard the matter afresh and passed Final Order dated 17.05.2005 by accepting the contentions of IOCL that there was no suppression of facts or mis-statement etc. and, therefore, penalty under Section 11AC could not be imposed on them. IOCL intended to issue document for payment of differential duty to enable IPCL to take credit. IOCL sought opinion from their legal Counsel in this regard, who opined that it was possible for IOCL to issue certificates as well as supplementary invoices for the differential duty paid to enable IPCL to take credit of duty paid by IOCL. Accordingly, IOCL issued 83 supplementary invoices, all dated 13.04.2006, to IPCL covering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed on as credit by virtue of Rule 57E(3) of Central Excise Rules, 1944 and exclusion clause of Rule 9(1)(b) of CENVAT Credit Rules, 2004. (vi) Penalty was imposable on IPCL under Rule 25(1) of the Central Excise Rules, 2002 as the IPCL had taken credit incorrectly and utilized the same for payment of duty, which amounted to clearance of final product without payment of duty. (vii) Penalty was imposable on IOCL under the provisions of rule 173Q(1)(bbb) of the Central Excise Rules, 1944 for wrongfully facilitating IPCL to avail credit of Rs.13,99,12,911/-. (viii) Penalty was imposable on IOCL under Rule 27 of the Central Excise Rules, 2002 for issuance of invalid supplementary invoices in contravention of Rule 11 of the said Rules of 2002. 4.2 Further, Ld. Advocate argued as follows: (i) That the issue before the Hon ble CESTAT, when Order dated 23.03.2001 was passed, was whether penalty under Section 11AC of the Central Excise Act was imposable on IOCL for when extend period differential duty of Rs.14,36,74,091/-, confirmed against IOCL due to misclassification of goods cleared during March 1994 to September 1997, was paid. The issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... point of imposition of penalty on IPCL under Rule 15 of the CENVAT Credit Rules, 2004 he argued that Commissioners findings that IPCL always knew that differential duty paid by IOCL could not be passed on as credit by virtue of Rule 57E(3) and Rule 9(1)(b) were factually incorrect and without any evidence whatsoever. In fact when the CESTAT in the case of IOCL held vide its decision dated 17.05.2005 that there was no suppression of facts etc. on the part of IOCL in clearing the goods to IPCL, it was a bona fide belief that Rule 57E(3) or exception to Rule 9(1)(b) were not attracted. Moreover, taking of credit after six months from the date of supplementary invoices was not a contravention of the provisions of Rule 4(1) of the CENVAT Credit Rules, 2004. (vii) That penalty under Rule 25 (1) of the Central Excise Rules, 2002 was not imposable on IPCL as the finding of the Ld. Commissioner as to clearance of final product without payment of duty of duty was misplaced. (viii) That penalty could not be imposed on IOCL under Rule 173Q(1)(bbb) of erstwhile Central Excise Rules, 1944 as the same was not in force during the period in question. (ix) That the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eligible for the credit on the additional ground that the supplementary invoices dated 13.04.2006 were issued much beyond the period of six months from the date of payment of additional duty on 09.02.2000. Moreover, IPCL took credit on the basis of these invoices in November, 2006 i.e. after a period of six months from the date of the invoices. During the relevant time when credit became due i.e. on 09.02.2000, Rule 57G was in operation which provided for a limitation of six months for taking credit. He cited the following case laws in this context: (a) Mangalore Refinery Petrochemicals Ltd. Vs. CCE, Mangalore - [2012 (278) ELT 289 (Kar)]; (b) Brakes India Ltd. Vs. CCE, Madras - [1997 (96) ELT 434 (Tri. LB)]; and (c) G. O. I. Vs. Citadel Fine Pharmaceuticals - [1989 (42) ELT 515 (S. C.)]. (v) That the ratio of the case law - CCE, Raigadh Vs. ONGC Ltd. - [2012 (282) ELT 513 (Tri. Mumbai)], heavily relied upon by the appellants, was not applicable to the case in hand as the facts of that case were entirely different. First of all in the case of ONGC (supra), the period of demand was within normal period of one year, while in the present case demand has been confirmed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue outlined at paragraph 6(ii) above, we find that in the case of Commissioner of Central Excise, Raigad Vs. ONGC Ltd. - [2012 (282) ELT 513 (Tri. Mumbai)] the Tribunal while dealing with identical case held as follows in paragraph nos.32 to 35: 32. The decision of this Tribunal in the case of Bell Ceramics (supra) appears to be in their favour. M/s. Bell Ceramics (supra) had received certain inputs during the period from November 1991 to March 1994. Those inputs were not duty-paid. A dispute arose as to dutiability of the inputs and the same came to be settled against the input-manufacturer who, thereupon, paid the duty sometime in 1996 and requested for a certificate from the Superintendent under Rule 57E. There was considerable delay in the issuance of this certificate, which was issued in the year 2000, by which time Rule 57E had disappeared as a result of amendment of the MODVAT Rules. The new rules did not prescribe the certificate as a document on the basis of which MODVAT credit could be taken. The question considered by this Tribunal was whether the party could take MODVAT credit on the inputs on the basis of Rule 57E certificate which was issued to the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MODVAT credit of an additional amount of duty paid by the input manufacturer was allowed to the manufacturer of final product on the strength of Rule 57E certificate coupled with supplementary invoice for the period from 1-4-2000 to 28-8-2000. 34. After examining the submissions, we find that, in the case of Home Ashok Leyland Ltd., the Hon ble Madras High Court held that the procedure laid down under Rule 57E could not reduce the width of Rule 57A which dealt with the substantive right to take MODVAT credit. It was held that Rule 57E required to be harmonized with Rule 57A and the object of the MODVAT scheme and that the right of a manufacturer to take credit of the duty paid on his inputs could not be cut down by reason of procedure. By holding Rule 57E to be procedural and clarificatory, the Hon ble High Court upheld the Tribunal s view on the point and allowed MODVAT credit to the assessee. The High Court s decision was upheld by the Hon ble Supreme Court after holding that Rule 57E was procedural and clarificatory and therefore would not affect the substantive right of the manufacturer of final product to claim MODVAT credit of the additional amount of duty paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailment of such credit, was protected by Section 38A of the Central Excise Act. The substantive right, so protected, could be enforced by quasi-judicial or judicial process for dispensing justice to the party, unfettered by the rigour of procedure. It is not the case of the Revenue that the inputs supplied by ONGC was not used by IPCL in, or in relation to, the manufacture of final products, nor is it their case that the differential duty on such inputs was not paid by ONGC. In other words, the Revenue would agree that the essential conditions under Rule 57A for claiming the substantive benefit of MODVAT credit of the differential duty paid on the inputs stood satisfied. When the Superintendent issued the certificates evidencing payment of differential duty by ONGC, these documents were valid under Rule 57G(3) for taking MODVAT credit of the duty. It is not in dispute that IPCL took the credit in their MODVAT account when these rules were very much in force. When these rules were replaced by a new set of rules (57AA to 57AK), the substantive provision for MODVAT/CENVAT credit did not change and only the procedural provisions came to be amended with the result that a supplementary i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CL so far as the imposition of penalty under Section 11AC of the Central Excise Act on IOCL was concerned for the period after 28.09.1996. But the fact remained that there could be a suppression of facts etc. on the part of the IOCL for the period prior to 28.09.1996. Therefore, even after the said order dated 23.03.2001, the IOCL could not issue any certificate under Rule 57E to enable IPCL to avail credit of additional duty liability paid by IOCL on 09.02.2000 by virtue of exception contained in Rule 57E(3). IOCL filed an appeal before the High Court of Gujarat against the Order dated 23.03.2001 of the CEGAT. The Hon ble Gujarat High Court set aside the said CEGAT Order dated 23.03.2001 and directed the CEGAT to consider the issue of imposition of penalty under Section 11AC of the Act for the period after 28.09.1996 afresh. The CESTAT pursuant to the High Court s Order heard the matter afresh and passed Final Order dated 17.05.2005 by accepting the contentions of IOCL that there was no suppression of facts or mis-statement etc. and, therefore, penalty under Section 11AC could not be imposed on them. Thus only on 17.05.2005, it was held by appropriate Court that there was no suppr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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