- (1.) The assessee is engaged in the manufacture of cosmetic preparations and availed CENVAT credit of duty paid on the inputs and capital goods used by them in relation to the manufacture of their final products. According to the department, since the assessee wrongly availed CENVAT credit, a show cause notice was issued demanding customs duty amounting to Rs.1,76,04,762/-. The assesse filed an application under Section 127B of the Customs Act, 1962 before the Custom and Central Excise Settlement Commission praying for the settlement of the dispute. The Commission, by its order dated 28th May, 2002, directed the assessee to pay the Counter Veiling Duty, which liability was paid by the assessee. The Commission in its order settled the matter on the following terms:- "(i)The correct duty liability of the first application is Rs.1,62,06,346/- as accepted by them in their application. This liability has now been fully paid. The correct liability of the second applicant is Rs.1,25,62,941/- as accepted by them in their application. This liability has also been fully paid. The duty liability includes the additional duty of Customs (CVD) payable on the goods of the applicant. In respect of the amount representing the CVD, the DRI shall issue a certificate in proof of payment thereof so as to enable the applicant to claim the benefit of MODVAT credit in accordance with law. (ii)Both the applicants are granted full immunity from prosecution for offences under the Act read with the relevant provisions of the IPC in respect of the matters covered by the applications in question. (iii)Both the applicants are granted full immunity from levy of penalty and fine under the Act in respect of the matters covered by the present applications. (iv)Both the applicants are granted part immunity from levy of interest under the Act. The first applicant shall pay interest @ 10% per annum in respect of the duty amounting to Rs.41,35,096/- involved in the mis-declared freight amount from the date the duty became payable to the date of actual payment. The second applicant shall also pay interest @ 10% per annum on the duty amounting to Rs.47,57,902/- involved in the mis-declared freight amount from the date the duty became payable to the date of actual payment. The interest liability as ordered above shall be restricted to imports effected under Section 28AB of the Act coming into force. The applicant shall workout the interest liability and make the payment thereof within 30 days of the receipt of this order. They shall submit a copy of the worksheet to this Commission as well as to the DRI, who will certify the correctness thereof.
(2.) The settlement arrived at under this order shall be void it it is subsequently found by the Commission that it has been obtained by fraud or mis-representation of facts. Attention of all concerned is drawn to sub-section 2 and sub-section 3 of Section 127Hso far as the immunities granted under this order are concerned." From a perusal of the aforesaid, it is clear that the Commission directed that in respect of the Counter Veiling duty paid by the assessee, the Directorate of Revenue Intelligence (DRI) would issue a certificate of proof of payment made by the assessee, so as to enable the assessee to claim the benefit of MODVAT credit in accordance with law. The Commission also granted immunity to the assessee from levy of penalty under the Act as well as immunity from levy of tax under the Act. Pursuant to the order of the Commission, the Counter Veiling duty was paid by the assessee in August, 2002 and a certificate was obtained from the DRI on 6th August, 2002. The certificate indicated proof of payment of customs duty including Counter Veiling duty by the assessee. Pursuant to the certificate, the assessee wrote a letter dated 23rd August, 2002 to the Commissioner of Central Excise, Noida indicating that the assessee would be availing credit of additional Counter Veiling duty paid by them on the basis of the certificate issued by the DRI. A reminder was written on 3rd October, 2002. Since the assesse did not hear anything from the department, the assessee took the necessary CENVAT credit. In this background, the department issued a show cause notice dated 1st October, 2003 asking the assessee to show cause as to why credit of additional Counter Veiling duty that was taken by the assessee should not be denied. The notice also indicated that penalty would also be imposed on the Managing Director and the Authorized Signatory of the assessee. The assessee submitted a reply to the show cause notice, which was not accepted. The Commissioner of Customs and Central Excise passed an order in original dated 26th December, 2003 confirming the entire duty and imposed penalty of an equivalent amount. Being aggrieved, the assessee preferred an appeal before the Customs Excise and Service Tax Appellate Tribunal, which was allowed and the order in original was set aside. The department, being aggrieved, has filed the present appeal under , which was admitted on the following substantial questions of law:- "1.Whether the credit of differential additional customs duty wrongly availed by the respondent on the strength of certificate issued by the Directorate of Revenue Intelligence and supplementary invoice issued by the supplier is admissible? 2.Whether the penalties should not be imposed on the respondent as well as on Mr. Krishan Gupta, Ex-Managing Director and Mr. Akhilesh Kulshreshth (Authorised Signatory) for contravening the provisions of Rule 57E(3), (4) & (5) of the Central Excise Rules, 1944 and Rule 7(1)(b) of Cenvat Credit Rules, 2002 We have heard Sri Amit Mahajan, the learned counsel for the appellant-department and Sri M.P. Devnath and Sri Nishant Mishra, the learned counsel for the respondent. Sri Amit Mahajan, the learned counsel for the department contended that the certificate issued by the Directorate of Revenue Intelligence (DRI) cannot be taken into consideration, inasmuch as the certificate is required to be issued by the Superintendent of Central Excise under Rule 57E(4) of the Central Excise Rules, 19744.
(3.) The submission of the learned counsel for the department is patently erroneous. The Settlement Commission in its order has given a categorical finding that as the consequence of their order, the assessees are entitled to a certificate of payment of Counter Veiling duty from the Jurisdictional Commissioner or the DRI who are duty bound to issue such certificate. Consequently, the certificates issued by the DRI in consequence of the order of the Settlement Commission is perfectly legal. Further, Rule 57E is not applicable. We find that the Counter Veiling duty was paid by the assessee in August, 2002 and the certificate was issued on 6th August, 2002 by the DRI. The Cenvat Credit Rules, 2002 came into existence with effect from 1st March, 2002 and, consequently, the Cenvat Credit Rules became applicable. We are of the opinion that Rule 57E of the Central Excise Rules, 1944 is not applicable in the instant case.;