Case Law Details
Beekay Steel Industries Limited Vs Commissioner of CGST & CX (CESTAT Kolkata)
We find that the Ld. Commissioner in the denovo Order-in-original which is also the order impugned has recorded that the details of invoices mentioned in the documents submitted by the assessee were matched with the copies of invoices submitted and were found to match. In subsequent paragraphs though he reiterates the specific direction of the Tribunal, but goes on to examine the statutory provisions and has passed the impugned order.
We find that the Ld. Commissioner has re-adjudicated the dispute which is already settled by the earlier order of this Tribunal in the first round of litigation. Thus, under the Doctrine of Merger, the Commissioner was not correct in re-visiting the issue which was already concluded in the remanded matter by the Tribunal, wherein directions were very specific and the Ld. Adjudicating authority was only required to examine the Certificate issued by the Senior Manager Accounts (Indirect Taxation) on behalf of TSL since it was not submitted before the Ld. Adjudicating authority during adjudication. In this view of the matter we find that the denovo order passed by the Adjudicating authority is hit by Doctrine of Merger as he has gone beyond the directions or findings of this Tribunal in the earlier round of litigation.
In view of the above discussion, the impugned order cannot be sustained and is therefore set aside.
FULL TEXT OF THE CESTAT KOLKATA ORDER
This is second round of litigation before the Tribunal. The Appellant is engaged in the manufacture of TMT bars and rods classifiable under chapter 72 of First Schedule to the Central Excise Tariff Act, 1985. A Show Cause Notice dated 07.02.2014 was issued alleging irregular availment CENVAT Credit on the basis of ineligible documents namely supplementary invoice/debit notes issued by M/s. Tata Steel Ltd. (in short ‘TSL’) in violation of provisions of Rule 3 and Rule 9 of the CENVAT Credit Rules, 2004 during the period January 2009 to December 2013.
2. The facts of the case as mentioned in the Show Cause Notice are that during the course of audit of the records of the Appellant, it appeared that they availed irregular CENVAT Credit on the basis of invoices/debit notes issued by TSL. It was alleged that such credit was taken without having actually received the goods. It is the case of the department that such supplementary invoice/debit notes issued by TSL appeared to be not a valid document for the purpose of availing CENVAT Credit. For this it was stated that the goods were not received along with these documents and the documents did not contain all the information required under Rule 11 of the Central Excise Rules, 2002. Such as the number of original invoices and Sl. No. of PLA or GAR -7 challan No. and date by which the duty have been paid. Since the differential duty paid by TSL were not their monthly duty liability. It was further alleged that no evidence that billets received from TSL were under provisional assessment since ‘under provisional assessment’ had not been mentioned in any invoice issued by TSL. Prior to issuance of the Show Cause Notice the Appellant have been asked to reverse the credit irregularly availed along with interest. In response, vide their letter dated 07.12.2011 it was submitted that the said documents were raised by TSL on account of price variation and were in the nature of supplementary invoices and were valid documents for availment of CENVAT Credit. Statement showing details of CENVAT Credit availed on the basis of such documents were submitted. It is the case of the Appellant that TSL dispatched the goods to the Appellant on payment of duty on cost + 10% as per Rule 8 of Central Excise (Valuation of Determination of Price of Excisable Goods) Rules, 2000. Since actual cost of goods were not known to TSL at the time of dispatch and it was known only in the subsequent month of dispatch, TSL dispatched the goods to the Appellant on estimated cost and subsequently when final cost was known to TSL, they paid the differential excise duty and raised debit notes for the differential duty. On receipt of this debit notes/supplementary invoices, the Appellant availed CENVAT Credit of excise duty, which is under dispute in this Appeal. The Adjudicating authority vide Order-in-Original dated 08.04.2015 confirmed the recovery of irregularly availed CENVAT Credit amounting to Rs.4,93,53,416/- and ordered for payment of interest and also a penalty of equal amount under Rule 15(2) of the CENVAT Credit Rules, 2002 read with Section 11AC of the Central Excise Act, 1944. Being aggrieved, the assessee filed appeal before the Tribuanal and the Tribunal vide its order dated 14.06.2022 remanded the matter to the original adthority to examine the certificate issued by the Senior manager Accounts (Indirect taxation) on behalf of TSL and allow the credit as may be applicable as per law. The Adjudicating authority vide de novo order dated 23.08.2022 passed the following order:-
A. I disallow the impugned Cenvat credit of Rs.4,93,53,416 (Rupees four crores ninety three lakhs fifty three thousand four hundred sixteen only) (BED Rs.4,79,15,840, Education Cess Rs.9,58,418 and SHE Cess Rs.4,79,158) taken by M/s. Beekay Steel Industries Ltd and order for its recovery from M/s. Beekay steel Industries Ltd., Larger Scale Sector, Adityapur Industrial Area, Gamharia, Saraikela Kharsawan under Rule 14 of the Cenvat Credit Ruels, 2004 read with Section 11A of the Central Excise Act, 1944.
B. I confirm the demand of interest on the amount confirmed at A above, under Rule 14 of the Cenvat Credit Rules, 2004 read with Section 11AA of the Central Excise Act, 1944 and order for its recovery from M/s. Beekay Steel Industries Ltd., Large Scale Sector, Adityapur Industrial Area, Gamharia, Saraikela Kharsawan.
C. I impose penalty of rs.4,93,53,416 (Rupees four crores ninety three lakhs fifty three thousand four hundred sixteen only) on M/s. Beekay Steel Industries Ltd., Large Scale Sector, Adityapur Industrial Area, Gamharia, Saraikela Kharsawan under Rule 15(2) of the Cenvat Credit Rules, 204 read with Section 11AC of the Central Excise Act, 1944.
Hence the present Appeal before this Tribunal.
3. The grounds of appeal submitted by the Appellant are mainly –
(i) For that the Commissioner grossly erred in ignoring the directions of the Tribunal in its remand order dated June 14, 2022.
(ii) For that the Commissioner grossly erred in ignoring the aforesaid clear direction of the Tribunal wherein the Tribunal had given clear direction to the adjudicating authority to examine the certificate produced by the appellant to its satisfaction and thereafter allow the credit as may be applicable as per law.
(iii) For that the Commissioner grossly erred in ignoring the verification report submitted by the Range Officer on August 17, 2022 wherein the Range Officer, after examining all the documents including invoices relating to the debit notes in question certified that the invoices submitted by the assessee were tallied with the list of invoices of corresponding annexure to the debit notes to the extent of invoice number and date, weighment, assessable value and central excise duty element and thereafter the jurisdictional Range Officer observed that all invoices submitted by the assessee were examined and matched barring five isolated invoices which are set out in the table of the impugned order.
(iv) For that the Commissioner grossly erred in ignoring the certificate issued by M/s. Tata Steel Limited wherein M/s. TSL confirmed that the billets manufactured by TSL were dispatched to the appellant during the relevant period and the same were covered by the finalization of the provisional assessment orders. Details of the same were given as annexure to the said certificate. M/s. TSL further confirmed that they had issued annexure to the debit notes/supplementary invoices listed in the annexure to the said certificate giving details of the corresponding original invoices relating to the said debit notes/supplementary invoices during the relevant period and all of them were covered by the aforesaid provisional assessments.
(v) For that the commissioner grossly erred in ignoring the fact that the Range officer had verified all the invoices and debit notes and his certification should have been read together with the certificate issued by M/s. Tata Steel.
(vi) For that a combined reading of the certificate issued by M/s. TSL and the range Officer would clearly show that the debit notes/supplementary invoices in question consisted of all details necessary for enabling the appellant to avail cenvat credit.
(vii) For that the Commissioner grossly erred in holding that the debit notes is not a proper document for taking Cenvat credit.
(viii) For that the Commissioner grossly erred in ignoring the binding judgment of the Hon’ble Rajasthan High Court and following the single bench order of the Tribunal which was also considered by the Hon’ble Rajasthan High Court. The said conduct is contrary to judicial discipline and the law of precedence.
(ix) For that the Commissioner grossly erred in holding that the supplementary invoices in question do not qualify as proper duty paying documents as per Cenvat Credit Rules, 2004.
(x) For that the Commissioner grossly erred in holding that in terms of Rule 9 of the 2004 Rules, the debit notes/supplementary invoices in question do not find mention of the assessable value (in this case, differential value) and differential duty payment details. The Commissioner grossly erred in ignoring a combined reading of the said debit note with its annexure and the certificate issued by M/s. TSL and the verification done by the Range Officer. It is submitted that combined reading of the said documents clearly show that the said details are present and contrary finding by the Commissioner is grossly illegal, arbitrary and perverse.
4. The Ld.Advocate for the Appellant vehemently argued that merely because the word ‘debit notes’ had been written on the invoice, the Cenvat Credit could not be disallowed as long as they were valid documents in terms of Rule 9 of the CENVAT Credit Rules, 2004. He further submitted that Rule 9(1)(b) prescribes the documents on the basis of which CENVAT Credit was allowable and such documents could be issued only in cases where duty had been paid and/or payable from the premises from which the goods had been cleared. It was further submitted that all the invoices on the basis of which credit had been taken were related to the differential duty due to the cost revision of the goods cleared earlier. In Rule 9(1)(b) 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 Act. In support of his submissions he relied upon various decisions.
5. The Ld. Authorized Representative for the department justified the impugned order and prayed that the Appeal being devoid of any merit may be dismissed.
6. Heard both sides and perused the appeal records.
7. We find that the Tribunal vide Final Order No.75350/2022 dated 14.06.2022 has passed the following order:-
U5. Accordingly, we admit the additional evidence filed by the appellants and also proceed to decide the issue finally. We find that the appeal deserves to be allowed by way of remand to the original authority. We direct that the original authority examine the dated Certificate, which the Ld.Counsel for the appellants has undertaken to submit to the satisfaction and allow the credit as may be applicable as per law. We also direct that the entire exercise be completed within the period of eight weeks from the date of receipt of this order.”
8. We find that the Ld. Commissioner in the denovo Order-in-original which is also the order impugned has recorded that the details of invoices mentioned in the documents submitted by the assessee were matched with the copies of invoices submitted and were found to match. In subsequent paragraphs though he reiterates the specific direction of the Tribunal, but goes on to examine the statutory provisions and has passed the impugned order.
9. We find that the Ld. Commissioner has re-adjudicated the dispute which is already settled by the earlier order of this Tribunal in the first round of litigation. Thus, under the Doctrine of Merger, the Commissioner was not correct in re-visiting the issue which was already concluded in the remanded matter by the Tribunal, wherein directions were very specific and the Ld. Adjudicating authority was only required to examine the Certificate issued by the Senior Manager Accounts (Indirect Taxation) on behalf of TSL since it was not submitted before the Ld. Adjudicating authority during adjudication. In this view of the matter we find that the denovo order passed by the Adjudicating authority is hit by Doctrine of Merger as he has gone beyond the directions or findings of this Tribunal in the earlier round of litigation.
In view of the above discussion, the impugned order cannot be sustained and is therefore set aside. The Appeal filed by the Appellant is allowed with consequential relief, as per law.
(Order pronounced in the open court on 27 April 2023.)
