9911796707
TMI Blog2025 (1) TMI 304X X X X Extracts X X X X X X X X Extracts X X X X ..... Credit is without authority of law. Similar issue has considered by this tribunal in the case of M/S ESSAR OIL LTD. VERSUS CCE RAJKOT [ 2014 (2) TMI 766 - CESTAT AHMEDABAD ] wherein it was held that 'The word Challan and any other similar document evidencing payment of additional CVD, mentioned in Explanation to Rule 9 (1)(B), will thus mean those situations where duty is paid under a challan by an importer/dealer of imported goods who has sold the cenvatable goods.' Conclusion - In the present case transaction being of stock transfer and not of sale, Rule 9(1)(b) is not applicable and on that basis denial of Cenvat Credit is without authority of law. Appeal allowed. - MR. RAMESH NAIR, MEMBER (JUDICIAL) AND MR. C. L. MAHAR, MEMBER (TECHNICAL) Shri Devan Parikh, Senior Advocate Shri Nirav P Shah, Advocate for the Appellant Shri Tara Prakash, Deputy Commissioner (AR) for the Respondent ORDER The issue involved in the present appeal is whether the availment of Cenvat Credit by the appellant on the supplementary invoice in respect of the duty paid on the stock transfer can be denied invoking Rule 9(1)(b) of Cenvat Credit Rules, 2004. 2. Shri Devan Parikh learned counsel appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )(b) of Cenvat Credit Rules, 2004 which reads as under:- Rule 9 : Documents and accounts. - (1) The Cenvat credit shall be taken by the manufacturer or the provider of output service or input service distributor, as the case may be, on the basis of any of the following documents, namely :- (a) . (i) (I) (II) (ii) .. (iii) .. (iv) .. (b) a supplementary invoice, issued by a manufacturer or importer of inputs or capital goods in terms of the provisions of Central Excise Rules, 2002 from his factory or depot or from the premises of the consignment agent of the said manufacturer or importer or from any other premises from where the goods are sold by, or on behalf of, the said manufacturer or importer, in case additional amount of excise duties or additional duty leviable under Section 3 of the Customs Tariff Act, has been paid, except where the additional amount of duty became recoverable from the manufacturer or importer of inputs or capital goods on account of any non-levy or short-levy by reason of fraud, collusion or any wilful misstatement or suppression of facts or contravention of any provisions of the Excise Act, or of the Customs Act, 1962 (52 of 1962) or the rules made thereu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r : (i) the Cenvat credit amounting to Rs. 2,52,27,074/- (Rupees Two Crores Fifty Two Lakhs Twenty Seven Thousand and Seventy Four only) wrongly availed by them on the basis of supplementary invoices (as detailed in the annexure) issued by KSDL, Mysore, along with interest leviable thereon should not be demanded from them under the provisions of Rule 12 of 2002 Rules read with Section 11A/11AB of the Central Excise Act, 1944. (ii) Penalty should not be imposed on them under Rule 13 of the 2002 Rules read with Section 11AC of the said Act. 8. On receiving the reply to the show cause notice, matter came to be adjudicated and the demand made in the show cause notice was confirmed and the Cenvat credit availed by assessee was ordered to be recovered amounting to Rs. 2,52,27,074/- together with interest by its order dated 25-2-2005 (Annexure-C). 9. The Tribunal on considering both the appeals accepted the argument of the assessee in so far as the demand made by the Commissioner of Central Excise, Bangalore and set aside the Order-in-Original No. dated 25-2-2005 passed by Commissioner of Central Excise, Bangalore. However, Tribunal confirmed the Order-in-Original of the Commissioner of C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he sandalwood oil? (3) Whether the Tribunal, in the above facts and circumstances, was right in upholding the order of the lower authority invoking the longer period of limitation under Section 11A(1) of the Central Excise Act, 1944 when the law on this issue has been settled by numerous decisions of the Supreme Court? (4) Whether the Tribunal was right in passing the impugned order by ignoring the law as settled on this issue by various decisions of the Hon ble Supreme Court? 12. We have heard Sri. G. Shivadas, learned counsel appearing for the assessee and Sri. Raghavendra, learned counsel appearing on behalf of Sri. N.R. Bhaskar (standing counsel) for the revenue. RE: CEA 11/2006 13. As rightly pointed out by the learned counsel for the Revenue and as observed by us in preceding paragraph No. 10, this appeal is filed only against finding in para 9 of CESTAT order which raises only question for our consideration in this appeal viz., regarding invoking of extended period of Limitation i.e., question No. 3 formulated in CEA No. 11/2006 and accordingly substantial question of law No. 3 formulated herein above is considered and answered by us. It is contended by Sri. Shivadas, learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .C.). (7) CCE v. Mahindra Mahindra Ltd., 2004 (179) E.L.T. 21 (S.C.) (8) CCE v. Narmada Chematur Pharmaceuticals Ltd., 2005 (179) E.L.T. 276 (S.C.) (9) CCE v. Jamshedpur Beverages - 2007 (214) E.L.T. 321 (S.C.) (10) Bharat Electronics Ltd. v. Commissioner of C.Ex., Meerut, 2004 (165) E.L.T. 485 (S.C.) (11) Continental Foundation Jt. Venture v. Commr. of C. Ex., Chandigarh-I, 2007 (216) E.L.T. 177 (S.C.) (12) Tamil Nadu Housing Board v. Collector of Central Excise, Madras, 1994 (74) E.L.T. 9 (S.C.). 14. Per contra, Sri. Raghavendra, learned Advocate appearing on behalf of Sri. N.R. Bhasker, would contend u/sec. 4(1)(a) prescribes the assessable value would be transaction value in respect of each transaction provided the buyer and the seller being not connected. He contends that Sec. 4(1)(b) mandates that assessable value shall be determined as per Valuation Rules in respect of other transaction including the goods, which are not sold. He contends that Valuation Rules, 2000 have been introduced along with new Sec. 4(1)(b) i.e., transaction value and the appropriate Rule being Rule 8, which is applicable which mandates that excisable goods on stock transfer basis for home consumption, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -11-2004 as confirmed by CESTAT by order dated, 1-6-2005 in Appeal No. 248/2005 (Final Order No. 855/2005 is just and proper and does not call for interference. Re : CEA No. 23/2005 16. In support of his grounds urged in Appeal No. 23/2005 it is contended by learned counsel for appellant revenue, that Tribunal was not justified in allowing the appeal of the assessee by its order dated 1-6-2005 passed in Appeal No. 277/2005 (Final Order No. 856/2005) since Rule 7(1)(b) of Cenvat Credit Rules, 2002 does not allow the assessee to claim Cenvat credit since there is prohibition to avail the Cenvat credit particularly when the Tribunal by its order has confirmed the suppression of facts by the assessee and also confirmed the action of the department of invoking of longer period of limitation, as such the prohibition under Rule 7(1)(b) is itself inapplicable to the facts of the case and contends that the duty paid by the Mysore unit cannot be taken by the Bangalore unit under any other provision of Cenvat Credit Rules, 2002. It is further contended that assessee had collected the unpaid excise amount by way of increased MRP Maximum Retail Price on the rate of soaps from the consumers and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uty paid at Mysore factory is taken at credit at the Bangalore factory. The toilet soaps manufactured in Bangalore factory are cleared for payment of appropriate duty u/Sec. 4A of the Central Excise Act, 1944 on the basis of Maximum Retail Price (MRP) less permissible deductions. Provisions of Law (Section and Rules) 19. In order to appreciate the rival contentions raised by the learned counsel for the parties and for determining the substantial questions of law framed in these two appeals, it would be necessary to extract the relevant provisions of the Central Excise Act, Central Excise Valuation (Determination of Price of Excisable Goods) Valuation Rules, 2000, Cenvat Credit Rules, 2002 i.e., Section 4(1)(a), 4(1)(b), Rule 8 of Valuation Rules, 2000 and Rule 7(1)(b) of Cenvat Credit Rules 2002 respectively and they read as under : Sec. 4(1)(b) of the Central Excise Act, 1944 - 4. Valuation of excisable goods for purposes of charging of duty of excise . - (1) Where under this Act, the duty of excise is chargeable on any excisable goods with reference to their value, then, on each removal of the goods, such value shall - (a) in a case where the goods are sold by the assessee, for d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as may be accepted by him, and the interest payable thereon under Section 11AB and penalty equal to twenty-five percent. Of the duty specified in the notice or the duty so accepted by such person within thirty days of the receipt of the notice.] (2) (Central Excise Officer) shall, after considering the representation, if any, made by the person on whom notice is served under sub-section (1), determine the amount of duty of excise due from such person (not being in excess of the amount specified in the notice) and thereupon such person shall pay the amount so determined : [Provided that if such person has paid the duty in full together with, interest and penalty under sub-section (1A), the proceedings in respect of such person and other persons to whom notice is served under sub-section (1) shall, without prejudice to the provisions of Sections 9, 9A and 9AA, be deemed to be conclusive as to the matters stated therein : Provided further that, if such person has paid duty in part, interest and penalty under sub-section (1A), the proceedings in respect of such person and other persons to whom notice is served under sub-section (1) shall, without prejudice to the provisions of Sections ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty. Explanation 2. - For the removal of doubts, it is hereby declared that the interest under Section 11AB shall be payable on the amount paid by the person under this sub-section and also on the amount of short-payment of duty, if any, as may be determined by the Central Excise Officer, but for this sub-section. (2C) The provisions of sub-section (2B) shall not apply to any case where the duty had become payable or ought to have been paid before the date on which the Finance Bill, 2001 receives the assent of the President. (3) For the purposes of this section - (i) refund includes rebate of duty of excise on excisable goods exported out of India or on excisable materials used in the manufacture of goods which are exported out of India; (ii) relevant date means,- (a) in the case of excisable goods on which duty of excise has not been levied or paid or has been short-levied or short-paid - (A) where under the rules made under this Act a periodical return, showing particulars of the duty paid on the excisable goods removed during the period to which the said return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or suppression of facts or contravention of any provisions of the Act or of the Customs Act, 1962 or the rules made thereunder with intent to evade payment of duty. Findings CEA. 11/2006 20. The issue viz., the substantial questions of law raised in CEA. 11/2006 is taken up first since the issue regarding invoking the longer period of limitation has been raised in the said appeal. The said question reads as under : Whether the Tribunal in the above facts and circumstances, was right in upholding the order of the lower authority invoking the longer period of limitation u/Sec. 11-A(1) of the Central Excise Act, 1944, when the law on this issue has been settled on the numerous decisions of the Supreme Court? 21. The decisions of the Hon ble Supreme Court relied upon by the learned counsel for the assessee are as follows - (1) 2007 (216) E.L.T. 177 (S.C.) - Continental Foundation Jt. Venture v. Commr. of C. Ex., Chandigarh-I. (2) 2004 (165) E.L.T. 485 (S.C.) - Bharat Electronics Limited v. Commissioner of C. Ex., Meerut. (3) 1994 (74) E.L.T. 9 (S.C.) - Tamil Nadu Housing Board v. Collector of Central Excise, Madras. (4) 2005 (179) E.L.T. 276 (S.C.) - Commissioner of C. Ex. Cus., Vadoda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndant on provisions of Section 4(1)(a) or Section 4(1)(b) of the Central Excise Act, 1944, as the case may be. In case an assessee does not sell the excisable goods but indulges in captive consumption either in his own factory or elsewhere. Section 4(1)(b) of the Act contemplates that assessable value shall be determined as may be prescribed. The prescription can be traced to the provisions of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. As extracted herein above Rule 8 states that where the excisable goods are not sold by the assessee, but are used for consumption by him or on his behalf in the production or manufacture of other articles, the value shall be 115% of the cost of production or manufacture of such goods. The methodology for determining the cost of production in respect of such captively consumed goods are governed by the guidelines prescribed under the different Board Circulars. 25. During the year 2000-01 the Assessee-Mysore unit had undertaken to pay duty on sandalwood oil as and when removed from their factory by adopting the method of determination on the basis of cost production as per Rule 8 of Central Excise Evaluation Rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (6) Suitable Trade Notices may be issued for the benefit of the Trade. (7) Hindi version will follow. (8) Receipt of these instructions may be acknowledged. In the above circular the Revenue has clarified its earlier circular dated 30-10-1996 which reads as under : Circular No. 258/92/96-CX Dated 30-10-96 F. No. 6/28/94-CX. 1 Government of India Ministry of Finance Department of Revenue Central Board of Excise and Customs, New Delhi Subject : Assessable Value in the case of Goods captively consumed - Addition of Profit - Reg. I am directed to refer to instructions contained in Board s letter F. No. 6/64/80-CX. 1 dated 6-12-80, Circular F. No. 6/72/85-CX.1 dated 11-3-86 and Issue A of Section 37B order No. 24/14/93 dated 31-12-93 regarding the method to be followed for determining assessable value of goods captively consumed. The Board in its order dated 31-12-93 issued under section 37-B has clarified that for the purpose of assessment of goods captively consumed, value should be arrived at by adding previous year s gross profit, if any, of the assessee as per their audited balance sheets. 2. Subsequently, a doubt has been raised as to which profit whether Gross Profit (i.e. prof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essable-value under Rule 6(b)(ii) of Central Excise Rules, 1975. It is clarified that for the purpose of assessable value, profit before tax should be considered. Profit before is, invariably, a distinct item appearing in the Profit Loss Account of companies. Profit before tax is arrived at after providing for interest and depreciation. Therefore, cost of production of the captively consumed goods will also include applicable interest, depreciation etc. 2. As regard the methodology of determining percentage of profit with reference to sale of the previous year and applying it is to the cost of production of the present year (which presently in vogue), the existing methodology may continue. 3. It is clarified that profit before tax should be related to the net-sales (total sales minus Excise Duty). Further, profit percentage so computed should be adjusted for its application on the cost of production of the relevant year as under :- (i) Let net sales (excluduig Excise Duty) = Rs. 100 (ii) Profit before tax @ 20% on sales in previous year = 20/- (iii) Therefore, cost of production (Sales-profit) = 80/- (iv) Thus profit before tax as percentage of cost of production = 20/80 x 100 or 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be 115% of the cost of production or manufacture of goods. The circular dated 30-6-2002 issued by the Board makes it abundantly clear that even if identical or comparable goods have been manufactured and sold by the same assessee, the assessable value of captively consumed goods shall be taken at 115% as the cost of manufacture of goods. 28. In the instant case the assessee first adopted assessable value at Rs. 6,589/- per kg. during the year 2000-01 for captive clearance of sandalwood oil to their Bangalore unit while the actual rate was much more. Though assessee had cleared by way of sale of sandalwood oil to third parties at a much higher rate they had not increased cost of production of sandalwood oil so cleared to Bangalore Unit, despite the cost of production having gone up which assessee was aware and the fact of increase in cost had not been brought to the notice of department which it ought to have. Though cost of procurement of sandalwood had increased in 2001-02 itself which in effect increased the final cost of production of sandalwood oil Thus, the assessee did not adopt the method i.e., actual cost of production for clearance to Bangalore unit by taking into account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise Act, particularly that of Sri. M.K. Hanumanthaiah, Deputy General Manager, Mysore Unit, it is admitted that, after submitting a cost sheet on 18-8-2000 there was revision in the value nor the assessee disclosed the increase in the value to the department nor the differential duty was paid. However, when it was detected by the officers the same came to be paid. These statements have remained uncontraverted. 32. Yet another factor to be noticed by us is that assessee raised journal vouchers at Mysore unit for the difference in stock transfer price and price element/new valuation as was evident from the vouchers which fact is not disputed. Though both Mysore unit and Bangalore unit were aware about this depicting of difference in values, the assessee did not bring it to the notice of the department and on facts it was found by the authorities that the assessee had subscribed to a wrong declaration in the returns filed at regular intervals. In this regard the proposition of law laid down by their Lordship s in the case of Madras Petrochem Ltd. v. CCE, Madras, reported in 1999 (108) E.L.T. 611 (S.C.) is required to be extracted which reads as under; The proposition of law as laid d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not chose to inform the department by giving the cost analysis when there was escalation in the price of sandalwood oil. Hence, the said judgments are inapplicable to the facts of the present case. (c) Continental Foundation - An incorrect statement cannot be equated with a wilful mis-statement for invoking extended period of limitation. In para 10 of the said judgment it has been held as follows - When revenue invokes the extended period of limitation u/sec. 11A, the burden is cast upon it to prove suppression of fact. An incorrect statement cannot be equated with a willful mis-statement. The latter implies making of an incorrect statement with the knowledge that the statement was not correct. As observed by us herein above in the instant case the assessee being under as removal procedure was aware about the applicability of Sec. 4(1)(b) of the Act and also the Valuation Rules. It having adopted the cost construction method and being fully aware of the determination of the cost analysis did not choose to sell the same for a higher rate to other customers and in respect of stock transfer raised journal vouchers as found in the balance sheet which amounted to suppression and wilful ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lding prohibition under Rule 7(1)(b) will not be applicable to the facts of the case. Per contra Sri. Shivdas would vehemently contend that department/revenue cannot deprive the assessee of taking Cenvat credit of the additional duty paid. When admittedly there is no sale and it was only a stock transfer and hence assessee would not be hit by exclusion clause under Rule 7(1)(b). In order to consider this rival contention Rule 7(l)(b) is required to be extracted. It reads as under : Rule 7. Documents and Accounts - (1) The Cenvat credit shall be taken by the manufacturer on the basis of any of the following documents namely : - (c) xxxxx (d) A supplementary invoice, issued by a manufacturer or importer of inputs or capital goods in terms of the provision of Central Excise Rules, 2002 from his factory or from his depot or from the premises of the consignment agent of the said manufacturer or importer or from any other premises from where the goods are sold by or on behalf of the said manufacturer or importer, in case additional amount of excise duties or additional duty of customs leviable under Section 3 of the Customs Tariff Act, has been paid, except where the additional amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was no revenue loss to the exchequer at all. This fact has been recorded by both the Adjudicating authorities. Whatever duty is paid at Mysore on Sandalwood oil, the same is taken as CENVAT credit at Bangalore. The duty on the finished products namely, toilet soaps is discharged under Section 4A on the basis of MRP. Since the value of soap takes into account the escalated cost of the sandalwood oil there cannot be any short payment of duty on the toilet soaps at Bangalore. In effect, the Government did not suffer any loss. 38. Learned counsel for the revenue has contended that Tribunal had relied upon the Judgment of Nagpur Tribunal in the case of Ballarpur Industries Ltd. v. CCE, Nagpur [2001 (138) E.L.T. 94 (Tribunal)] which has been overruled by Hon ble Supreme Court in CCE, Nagpur v. Ballarpur Industries Ltd., reported in 2007 (215) E.L.T. 489 (S.C.) and contends the finding of Tribunal is to be reversed. In Ballapur Industries case the Hon ble Supreme Court held as follows : Applying the above tests to the facts of the present case, we hold that the Department was not entitled to invoke the extended period of limitation vide the first show cause notice dated 21-5-1999. Howev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he exempted goods . Our interpretation stands supported by the Instructions issued by the Central Board of Excise and Customs based on the Circular No. B-42/1/96-TRU, dated 27-9-1996. This is where Section 4 and the Valuation Rules, 1975 come into play. In the light of the above discussion, the adjudicating authority was required to adjudicate upon applicability of Rule 6(b)(i) and Rule 6(b)(ii). However, it has been held by the adjudicating authority that Rule 6(b)(i) is not applicable, hence, in our view the only issue which remains to be decided is whether all the requisite elements of costing like wages, profits etc. have been taken into account by the assessee herein as required under Rule 6(b)(ii). 16. In the case of Union of India and Ors v. Bombay Tyre International Ltd., AIR 1984 SC 420 this Court had drawn a distinction between the nature of levy and the measure/yardstick on which the tax (duty) is determined. 39. In the said case the issue that came up for consideration was with regard to valuation of the goods itself whereas in the instant case the issue is with regard to entitlement of CENVAT credit on the additional duty paid. The revenue is attempting to press into s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacturer for use in, or in relation to, the manufacture of final products, on or after the first day of March, 2002. Explanation - For the removal of doubts it is clarified that the manufacturer of the final products shall be allowed CENVAT credit of additional duty leviable under section 3 of the Customs Tariff Act on goods falling under heading 98.01 of the First Schedule to the Customs Tariff Act. (2) Notwithstanding anything contained in sub-rule (1), the manufacturer or producer of final products shall be allowed to take CENVAT credit of the duty paid on inputs lying in stock or in process or inputs contained in the final products lying in stock on the date on which any goods cease to be exempted goods or any goods become excisable. [(3) The CENVAT credit may be utilized for payment of- (a) any duty of excise on any final product; or (b) an amount equal to CENVAT credit taken on inputs if such inputs are removed as such or after being partially processed; or (c) an amount equal to the CENVAT credit taken on capital goods if such capital goods are removed as such; or (d) an amount under sub-rule (2) of rule 16 of Central Excise Rules, 2002.] Provided that while paying duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CENVAT credit as if it was a duty paid by the person who removed such goods under sub-rule (4). (6) Notwithstanding anything contained in sub-rule (1), - (a) CENVAT credit in respect of inputs or capital goods produced or manufactured, - [(i) by a hundred per cent. Export-oriented undertaking ......,.............. assessable value ] (ii) ..................... Explanation - Where the provisions of any other rule or notification provide for grant of partial or full exemption on condition of non- availability of credit of duty paid on any input or capital goods, the provisions of such other rule or notification shall prevail over the provisions of these rules. 40. We are of the considered opinion that Rule 7 is illustrative in nature and it cannot place any fetters on Rule 3. The additional duty has been paid under re-assessment or on being detected by the department and such duty paid is available as credit under Rule 3 of CENVAT Credit Rules to the assessee it cannot be allowed to be whittled down by Rule 7(1)(b). Thus, principles enunciated in Ballarpur Industries would be inapplicable to the facts of the case. The Commissioner while passing the Order-in-Original has accepted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A(1) of the Central Excise Act, 1944 when the law on this issue has been settled by numerous decisions of the Supreme Court? Affirmative. Tribunal, in the facts of the case was right in upholding the order of the lower authority invoking the longer period of limitation under Section 11A(1) of the Central Excise Act, 1944. 42. In view of the above both the appeals are dismissed answering the questions of law as hereinabove. The above judgment has been upheld by the Hon ble Karnataka High Court reported at Karnataka Soaps and Detergents Limited Vs. Commissioner of Central Excise Mysore 2010 (258) ELT 62. In the above judgments though the issue relates to Rule 7(1)(b) but the Rule 7(1)(b) and Rule 9(1)(b) is very same to each other. Therefore the judgment is directly applicable in the present case also. Similar issue has considered by this tribunal in the case of Essar Oil Limited Vs. Commissioner of Central Excise Rajkot-II reported as 2014 (303) ELT 255 wherein following judgment was passed: This appeal has been filed by the appellant M/s. Essar Oil Ltd. against O-I-O No. 19/Commissioner/2010, dated 12-5-2010, under which a Cenvat credit of Rs. 3,15,85,715/- has been denied to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court vide Order dated 7-10-2004 in the Civil Appeal No. 4299-4305 filed by the noticee. In the course of the investigation, the noticee deposited Rs. 36.35 Crores towards differential Customs duty (including CVD and Interest for which present credit was taken) vide TR-6 Challans dated 22-12-1999, 7-12-1999, 6-10-1999, 13-8-1999, 30-6-1999, 28-5-1999 and 15-5-1999. 2.2 An intelligence received by the DRI, Ahmedabad indicated that the noticee has availed the Cenvat credit in respect of the differential duty paid by them pertaining to the case booked by the DRI and that the said availment of Cenvat credit was in contravention of Rule 9 of Cenvat Credit Rules, 2004. 2.3 Accordingly, investigation was initiated by DRI, Ahmedabad and a show cause notice was issued to the appellant. After following the principles of natural justice the case was decided against the appellant under Order-in-Original dated 12-5-2010 against which the present appeal has been filed. 3. Shri V.K. Jain (Adv.) appearing on behalf of the appellant during the course of hearings, as well as in the written submissions dated 24-12-2013, broadly made the following arguments :- (i) That the present case is one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credit of differential CVD paid was admissible under Rule 9(1)(c) of Cenvat Credit Rules, 2004, no penalty/interest is attracted against the appellant in these proceedings. (vi) Regarding time bar, it was argued that as per their letter dated 27-12-1999 and 17-2-1997 appellant filed the required declarations under Rule 57(5)(7) of Cenvat Credit Rules, 2004 as per C.B.E. C. Circular No. 88/88/94-CX, dated 26-12-1994. That the amount of credits taken with respect to capital goods were also duly reflected in the periodical returns filed with the field formation. It was thus argued that as per Apex Court s Order in the case of CCE v. Champhar Drugs Liniments [1989 (40) E.L.T. 276 (S.C.)], extended period is not applicable. Appellant s Advocate made the Bench go through the relevant Paragraph 8 of the said judgment. (vii) That as the credit of differential CVD paid was correctly availed, the confiscation and redemption fine was wrongly adjudicated by the adjudicating authority. 4. Shri S.K. Mall, (AR) appearing on behalf of the Revenue during the course of hearing and vide written submissions, inter alia, made the following submissions : (i) That it was held by Hon ble Supreme Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s completed and TR-6 challans were prepared between 18-2-1999 to 23-2-1999. The rate of CVD applicable at the time of assessment was 10% ad valorem. As per the Union Budget presented on 27-2-1999, the duty structure on impugned capital goods under project imports was increased from only 10% CVD to 5% Basic Customs Duty + 10% of Customs Duty as surcharge + 10% CVD. The cheques provided by the appellant could be encashed only on 17-3-1999, due to insufficient balance in appellant s bank account, when higher rate of duty was applicable after the Union Budget presented on 27-2-1999. CVD initially paid @ 10% was Rs. 60,03,13,422/-. Though there was no change in the rate of duty of CVD under Budget presented on 27-2-1999 but due to imposition of 5% Basic Customs Duty + 10% Surcharge on Basic Customs Duty, CVD element got enhanced to Rs. 3,15,85,715/- as a result of case earlier made by DRI against the appellant which culminated in the final order passed by the Apex Court. This differential duty was also paid in 1999. In November, 2007, after the refinery of the appellant commenced production, Cenvat credit of 50% of CVD paid with respect to both Rs. 60,03,13,422/- (initially paid) and Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts or capital goods on account of any non-levy or short-levy by reason of fraud, collusion or any wilful misstatement or suppression of facts or contravention of any provisions of the Excise Act, or of the Customs Act, 1962 (52 of 1962) or the rules made thereunder with intent to evade payment of duty. Explanation. - For removal of doubts, it is clarified that supplementary invoice shall also include challan or any other similar document evidencing payment of additional amount of additional duty leviable under Section 3 of the Customs Tariff Act; or (c) a bill of entry; or (d) a certificate issued by an appraiser of customs in respect of goods imported through a Foreign Post Office; or (e) a challan evidencing payment of Service Tax by the person liable to pay Service Tax under sub-clauses (iii), (iv), (v) and (vii) of clause (d) of sub-rule (1) of Rule (2) of the Service Tax Rules, 1994; or (f) an invoice, a bill or challan issued by a provider of input service on or after the 10th day of, September, 2004; or (g) an invoice, bill or challan issued by an input service distributor under Rule 4A of the Service Tax Rules, 1994. Provided that the credit of additional duty of customs le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Explanation. - For the purposes of this rule, first stage dealer and second stage dealer shall have the meanings assigned to them in Cenvat Credit Rules, 2002. A combined reading of Rule 11(3), Rule 11(7) of Central Excise Rules, 2002 and Rule 9(a)(ii) of the Cenvat Credit Rules, 2004 will convey that in case of sale of imported goods by a first stage dealer or second stage dealer also the credit is admissible on the basis of such a sale invoice. A similar situation will exist for supplementary invoice issued by a first stage dealer/second stage dealer under Rule 9(1)(b) of Cenvat Credit Rules, 2004. The word Challan and any other similar document evidencing payment of additional CVD, mentioned in Explanation to Rule 9(1)(B), will thus mean these situations where duty is paid under a challan by an importer/dealer of imported goods who has sold the cenvatable goods. This provision relating to issue of supplementary invoice will not be applicable to the goods imported by the appellant which are not sold. This interpretation has been upheld by Karnataka High Court in the case of Karnataka Soaps Detergent Ltd. v. CCE, Mysore [2010 (258) E.L.T. 62 (Kar.)]. The argument of the ld. A.R. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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