RMC Switch Gears Ltd Vs Commissioner of Central Excise (CESTAT Delhi)
CESTAT Delhi held that CCR, or the Central Excise Rules or the Act places an obligation on the buyer of the goods to investigate that whether the process undertaken by the supplier amounts to manufacture or not and determine the duty thereon.
Facts- During the investigation initiated at M/s Bhushan Steels Ltd., Ghaziabad who supplied HR Coils and other inputs to the appellant, it appeared that M/s Bhushan Steels had undertaken processes which did not amount to manufacture but had paid central excise duty. It further appeared that the duty so paid cannot be termed as duty, but only as an amount u/s. 11D of the Central Excise Act, 1944, which must be deposited with the Central Government.
A show cause notice was issued proposing to deny Cenvat credit to the appellant on the above invoices on the ground that Rule 3 of the Cenvat Credit Rules, 2004 provides for credit of duty of excise, but not the credit of an amount deposited u/s. 11D. Accordingly, the appellant was called upon to explain why the above credit should not be recovered from it under Rule 14 of the CCR read with section 11A along with interest u/s. 11AA. Penalty was also proposed to be imposed under Rule 15 (2) of CCR read with section 11AC.
The Assistant Commissioner passed order dated 11.2015, which was affirmed by the impugned order. Being aggrieved, the present appeal is filed.
Conclusion- Deciding the amount of excise duty leviable and deciding whether the activities of an assessee amount to manufacture or otherwise and other related issues are matters of assessment. Such assessment can be done by the assessee itself (self-assessment under Rule 6 of Central Excise Rules, 2002) or by the Scrutinizing Officer who has jurisdiction for the assessee under Rule 12 (3) of the Central Excise Rules. Neither the appellant in this case who is the only the buyer of the goods nor the Assistant Commissioner who has jurisdiction over the appellant had any jurisdiction or right to change the assessment made by M/s Bhushan Steels. For this reason alone, the entire SCN and the consequent orders need to be set aside.
It also needs to be noted that the appellant cannot be expected to conduct an investigation into the activities of each of its suppliers to decide and determine if the processes which it undertook amounted to manufacture and further determine if the amount of duty was actually leviable on such manufacture and thereafter take credit of duty. We find nothing in the CCR, or the Central Excise Rules or the Act which places such an obligation on any assessee who is the buyer of the goods. The SCN and the consequent orders need to be set aside on this ground as well.
FULL TEXT OF THE CESTAT DELHI ORDER
Nobody appeared on behalf of the appellant despite notice. We have heard Shri Rakesh Agarwal, learned Authorized Representative for the Revenue and perused the records.
2. M/s RMC Switch Gears Ltd.1 filed this appeal to assail the order dated 16.02.2018 passed by the Commissioner (Appeals), CGST & Central Excise, Jaipur, whereby he upheld the order-inoriginal dated 24.11.2015 passed by the Deputy Commissioner and rejected the appellant’s appeal. The operative part of this order is as follows :-
(i) I disallow and order to recover Rs. 1,36,929/- (Cenvat Rs. 1,32,941/- + Edu. Cess Rs. 2,659/- + SHE Cess Rs. (i) 1,329/-) wrongly availed and utilized cenvat credit by M/s RMC Switch Gears Ltd., 7 KM from Chaksu, Khotkawda Road, Badodiya, Chaksu, Jaipur under the provisions of Rule 14 of Cenvat Credit Rules, 2004 read with proviso to 11A (4) of the Central Excise Act, 1944.
(ii) I also order to recover interest at an appropriate rate on the amount of Rs. 1,36,929/- under the provisions of Rule 14 of Cenvat Credit Rules, 2004 read with Section 11 AB/11 AA of the Central Excise Act, 1944.
(iii) I impose penalty under the provisions of Section 11AC of the Central Excise Act, 1944, read with Rule 15 (2) of Cenvat Credit Rules, 2004, a penalty equal to the Cenvat Credit wrongly availed and utilized by RMC Switch Gears Ltd., 7 KM from Chaksu, Khotkawda Road, Badodiya, Chaksu, Jaipur. However, benefit of reduced penalty of 25% as per provisions of Section 11AC ibid is available to the assessee subject to the condition that Cenvat credit wrongly availed and utilized payable for the period 20.03.2011 and the interest payable thereon under section 11AB/11AA ibid, is paid within thirty days from the date of communication of this order and further subject to the condition that the benefit of reduced penalty (25% of the demand so determined) shall be available if the amount of penalty so determined has also been paid within the period of thirty days from the date of communication of this order”.
3. The appellant is registered with the central excise department and manufactures boards, panels, cabinets etc. and pays central excise duty. It also avails Cenvat credit as per rules. During the investigation initiated at M/s Bhushan Steels Ltd., Ghaziabad who supplied HR Coils and other inputs to the appellant, it appeared that M/s Bhushan Steels had undertaken processes which did not amount to manufacture but had paid central excise duty. It further appeared that the duty so paid cannot be termed as duty, but only as an amount under section 11D of the Central Excise Act2, 1944, which must be deposited with the Central Government. The Assistant Commissioner of Central Excise Division – I, Jaipur obtained the following details of invoices from the appellant :
