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TMI Blog2014 (6) TMI 889X X X X Extracts X X X X X X X X Extracts X X X X ..... of electricity which was used outside the factory could have been taken. In the present case before me, the electricity generated was sold outside or taken out of the factory for use in the residential colony etc. Therefore, furnace oil which was used for the generation of electricity did not qualify as an input. Therefore, the availment of credit on furnace oil was not clearly permitted under the law. A belief can be said to be bona fide only when it is formed after all reasonable considerations are taken into account as held by this Tribunal in the case of Interscape v. Commissioner of Central Excise, Mumbai-I - [2005 (9) TMI 192 - CESTAT, MUMBAI]. In Winner Systems - [2005 (7) TMI 219 - CESTAT, MUMBAI], it was held that blind belief cannot be a substitute for bona fide belief. Applying the ratio of these decisions to the facts of the present case, as can be seen from the records, the appellant neither sought any legal opinion nor any clarification was sought from the department as to the availability of credit on the furnace oil used in the manufacture of electricity, which was wheeled out to the factory. Therefore, the argument of bona fide belief raised by the appellant is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same impugned order whereby a penalty of ₹ 10,00,000/- has been imposed under Rule 13 of the Cenvat Credit Rules, 2002/Rule 15 of the Cenvat Credit Rules, 2004 read with Rule 26 of the Central Excise Rules, 2002. The demand is confirmed by denying input credit on the duty paid on fuels used in generation of electricity which has been wheeled outside the factory premises, i.e. for use at the river site to draw water, for use in residential quarters and for sale to M/s. Vipras Castings Ltd. 2. The contention of the appellants is that this issue is now settled by the decisions of the Hon ble Supreme Court in the case of Maruti Suzuki Ltd. v. CCE, Delhi-III reported in 2009 (240) E.L.T. 641 (S.C.) and in the case of CCE v. Gujarat Narmada Fertilizers Co. Ltd. reported in 2009 (240) E.L.T. 661 (S.C.). The appellants submitted that in view of the above decisions, the appellants are not entitled for input credit in respect of the duty paid on fuel which is used for generation of electricity which has been wheeled outside the factory. 3. The only contention of the appellants is that the demand beyond the normal period is not sustainable as prior to the above mentioned decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther cases, on account of conflict of views expressed by various Tribunals/High Court, the assessees have also succeeded. Hence, although M/s. Maruti Suzuki Ltd. (appellant) has failed in their civil appeals the Department will not impose penalty. 6. Further, we find that in the case of Gujarat Narmada Fertilizer, the Larger Bench of the Tribunal reported as 2007 (208) E.L.T. 342 (Tri.-LB) = 2008 (11) S.T.R. 431 (Tri.-LB) held in favour of the manufacturer and the decision of the Larger Bench is set aside by the Hon ble Supreme Court in the case of Gujarat Narmada Fertilizer (supra). In view of the above, as there were divergent views during the period in dispute on the issue, therefore, the allegation of suppression with intent to evade payment of duty is not sustainable. In these circumstances, the demand beyond the normal period of limitation is set aside. As there is no intention to evade payment of duty, therefore, the penalties imposed on the appellants are also not sustainable hence set aside. The impugned order in respect of the demand for the normal period with interest is upheld. The appeals are disposed of as indicated above. (Pronounced in Court on 4-4-2014) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rected that a show cause notice may be issued to the appellant and thereafter the whole case may be decided after following the principles of natural justice. In the meantime, summons were issued to the appellant s representative on 5-1-2005, 12-4-2005 and 31-5-2005. The appellant did not respond to the summons. Additional Commissioner thereafter reminded the appellant for non-compliance of three summons vide letter dated 15-6-2005 and requested that the data/information may kindly be submitted. On 18-7-2005 the appellant submitted the information for the first time. On 22-8-2005 the appellant took suo motu Cenvat credit of ₹ 86,77,684/- which they had reversed on 30-11-2004 and subsequent thereto, without any direction from any authority. On 19-10-2005 and 6-1-2006, two executives of the appellant responded to the summons and statements were recorded and on 22-2-2006 show cause notice was issued to the appellant. 9. From the above dates it is very clear that the appellant did not provide the data for issuing the show cause notice till 18-7-2005. Even to the summons, the appellant did not respond. Initial intimations were vague and incorrect. Even in the letters written to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 11AC read with Rule 15 of the Cenvat Credit Rules would also be imposable. The Hon ble High Court in the case of UOI v. Dharamendra Textile Processors reported in 2008 (231) E.L.T. 3 (S.C.) has held that as long as the ingredients of Section 11AC are satisfied, the penalty is imposable. I also note that the Hon ble Supreme Court in the case of Maruti Suzuki Ltd. v. CCE, Delhi-III reported in 2009 (240) E.L.T. 641 (S.C.), in para 21, quoted by the learned Vice-President, has set aside only the penalty and in the said case, even the Tribunal has set aside the penalty keeping in view the nature of dispute. The Hon ble Supreme Court or the Tribunal have not set aside the duty beyond the normal period of limitation. 12. Another issue that was raised by the learned AR during the argument was that in the present case, the appellant themselves have taken the suo motu credit on 22-8-2005 and therefore the period of limitation should be counted from the said date. In my view, this plea of the AR is correct as the correct procedure would have been to respond to the summons, provide the information consequent to the order of the Commissioner (Appeals) and participate in the adjudicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitation could have been invoked in the present case for confirmation of duty demand. The Hon ble Vice-President has held that during the material period, there was a Larger Bench s decision of the Tribunal in the case of Gujarat Narmada Fertilizer - 2007 (208) E.L.T. 342 (Tri-LB) = 2008 (11) S.T.R. 431 (Tri.-LB) in favour of the manufacturer assessee, which was later on set aside by the Hon ble Apex Court in the same case in 2009. Therefore, the appellant could have been under the bona fide belief that he was not liable to reverse the credit taken on inputs, which were used in the generation of electricity, which was wheeled out of the factory for sale to M/s. Vipras Castings Ltd. or for use outside the factory. Whereas the learned Member (Technical) held otherwise holding that the conduct of the appellant does not reveal a bona fide conduct. He has observed that non-submission of the record/information by the appellant for issue of show cause notice in spite of a repeated reminders and summons would clearly point out to suppression of facts on the part of the appellant necessitating the invocation of the extended period of time for raising the demand. 16. The learned Counsel f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of electricity. In that case, it was held that all the three uses having occurred in the factory, it is immaterial as to what happens to the electricity manufactured from steam. It is relevant to mention here that steam is also an excisable product. In the very same judgment, the Tribunal also recorded the finding in para 5 as follows :- I am aware that fuel can also be directly used for manufacturing of electricity by heating gases which can move the turbines, without using the fuel for making steam. In the event use of LSHS was alleged in the above manner, only then, the objection and consequential duty demand could have been sustained. Since in this case, steam was admittedly manufactured and used within the plant, the Modvat credit could not have been denied, as discussed above. Therefore, the benefit of Cenvat credit was allowed only in a case where the fuel was used for manufacture of steam, which was consumed within the factory of production for manufacture of other excisable goods as also for generation of electricity. It was clearly mentioned in the said decision that if the fuels are directly used in the generation of electricity, then the benefit of Cenvat credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dely believed that they were eligible for the benefit of the Cenvat credit, this contention is not tenable for the following reason. A belief can be said to be bona fide only when it is formed after all reasonable considerations are taken into account as held by this Tribunal in the case of Interscape v. Commissioner of Central Excise, Mumbai-I - 2006 (198) E.L.T. 275 (Tri.-Mum). In Winner Systems - 2005 (191) E.L.T. 1051 (Tri.-Mum), it was held that blind belief cannot be a substitute for bona fide belief. Applying the ratio of these decisions to the facts of the present case, as can be seen from the records, the appellant neither sought any legal opinion nor any clarification was sought from the department as to the availability of credit on the furnace oil used in the manufacture of electricity, which was wheeled out to the factory. Therefore, the argument of bona fide belief raised by the appellant is only an argument of convenience and not based on any conviction, whatsoever. The ratio of the Larger Bench could not have been applied to the facts of the present case inasmuch as the said decision applied to LSHS used in the manufacture of steam, which in turn, was used in the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in those circumstances, it was held that penalty was not leviable on the appellant/assessee particularly when in a large number of cases, there were conflicting views. Following the same, in the present case also, since the issue related to a question of interpretation of law, in my considered view, imposition of penalty is not warranted. I should hasten to add here that while waiving the penalty, the Hon ble Apex Court did not set aside the duty demand for the extended period; only penalty was set aside by the Hon ble Apex Court. 20. The third issue referred to me for consideration is whether the period of limitation should be counted from the date of initial taking of credit or from 22-8-2005 when the refund was taken suo motu by the appellant. From the facts narrated and examined in detail in para 8 of the Member (Technical) order, it is clear that the appellant did not furnish the requisite information to the department in spite of a number of letters and summons issued for this purpose. This clearly shows defiance of law on the part of the appellant. After extensive persistence, the information was supplied only in July, 2005 vide letter dated 18-7-2005. Thereafter, sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound that the Commissioner (Appeals) vide Order No. 80/222/RGD/05, dated 12-4-2005 had directed the department to issue a proper notice and extend an opportunity of personal hearing before recovering the ineligible Cenvat credit taken. It is based on these orders, the appellant had taken the suo motu credit as can be seen from the records. Assuming for a minute that instead of the appellant taking suo motu credit, if the department had granted refund, what would be the time limit available to the department for recovery of credit. When a refund is granted in terms of the appellate authority s order, which is binding on the lower authorities and which is as a result of conscious act to comply with the decision of the higher authorities, it cannot be considered as an erroneous refund and, therefore, limitation under Section 11B of the Central Excise Act, 1944 would not be applicable to such refunds and the general law of limitation would apply. 21. An identical issue arose before the Hon ble High Court of Andhra Pradesh in the case of VBC Industries Ltd. v. Union of India - 1999 (114) E.L.T. 378 (AP) and in that case the Hon ble High Court held that the refund made pursuant to a b ..... 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