Rakesh Kumar, Member (T) -
(1.)THE facts leading to filing of this appeal and stay application are, in brief, as under: -
"1.1 The appellant are engaged in the manufacture of dutiable glassware (tableware and kitchenware) as well as exempted articles of glass (glass articles manufactured by mouth blown process). The appellant availed cenvat credit of excise duty paid on inputs Soda Ash and other chemicals and capital goods and service tax paid on input services viz. GTA services availed for transportation of the inputs upto the factory premises and the service of pipeline transportation of the gas received in the factory. The department was of the view that since the appellant are using common cenvat credit availed inputs and input services for the manufacture of dutiable as well as exempted goods and since they do not maintain separate accounts and inventory of the inputs and input services used for manufacture of dutiable items and the inputs and input services used for manufacture of exempted items, in accordance with the provisions of Rule 6(3) of the Cenvat Credit Rules, 2004, they would be liable to pay an amount equal to 5%/10% of the sale value of the exempted goods. It is on this basis that a show cause notice dated 29.03.2010 was issued for recovery of an amount of Rs. 2,08,96,245/ - for the period from 1.4.2005 to 31.08.2009 along with interest thereon under Section 11AB and another show cause notice dated 20.10.2010 was issued for recovery of an amount of Rs. 15,92,240/ - for the period from 1.9.2009 to 31.03.2010 along with interest thereon under Section 11AB. Both the show cause notices, in addition to recovery of the amount payable under Rule 6(3) of Cenvat Credit Rules, 2004 along with interest, also sought imposition of penalty on them under Rule 15 of the Cenvat Credit Rules, 2004.
1.2 W.e.f. 1.3.2008, Rule 6 (3) of the Cenvat Credit Rules, 2004 was amended so as to give an additional option to every manufacturer using common cenvat credit availed inputs/input services in manufacture of dutiable as well as exempted goods and not maintaining separate accounts and inventory, to reverse the cenvat credit attributable to the input and input services used in or in relation to the manufacture of exempted final products, subject to conditions and procedure specified in sub -rule (3A) of the Rule 6. By Finance Act, 2010, a retrospective amendment was made to Rule 6 of the Cenvat Credit Rules, 2004 w.e.f. 10.09.2004 and there was also a provision that in respect of pending disputes, the appellant instead of paying an amount equal to 5%/10% of the sale value exempted final products, could pay an amount equal to the cenvat credit attributable to the inputs and input services used in or in relation to the manufacture of exempted goods, subject to production of Chartered Accountant's certificate in this regard.
1.3 The above mentioned two show cause notices were adjudicated by the Commissioner by a common order -in -original No. 09/COMMR/2011 dated 27.05.2011 by which out of the cenvat credit demand of Rs. 2,08,96,245/ - in the show cause notice dated 29.03.2010, the demand of Rs. 1,29,36,741/ - was dropped as the application filed by the appellant under Section 73 of the Finance Act, 2010 for the period from 1.4.2005 to 31.03.2008 was accepted by the Commissioner. But the remaining demand of Rs. 79,59,504/ - for the period from 1.4.2008 to 30.04.2009 was confirmed. Similarly, by this order cenvat credit demand of Rs. 15,92,204/ - raised vide show cause notice dated 29.10.2010 for the period 1.5.2009 to 31.03.2010 was also confirmed. The Commissioner besides confirming demands, also demanded interest on the same under Rule 14 of the Cenvat Credit Rules, 2004 read with Section 11AB of the Central Excise Act, 1944 and besides this, he also imposed penalty of equal amount on the appellant under Rule 15(2) of the Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944.
1.4 The appellant filed an appeal to the Tribunal against the above order of the Commissioner. The Tribunal vide final order No. 346/2012 -EX(BR) dated 27.02.2012 read with misc. order No. 719/2012 -EX dated 11.06.2012 in respect of ROM application, remanded the matter to the Commissioner for re -quantification of the demand observing that after retrospective amendment to Rule 6(3) of the Cenvat Credit Rules, 2004 made by Section 73 of the Finance Act, there was no scope for demanding from the assessee an amount equal to 5%/10% of the sale value of the exempted final product, if the assessee is ready to reverse the actual cenvat credit attributable to the input and inputs services used in or in relation to the manufacture of the exempted final products. The Tribunal also observed that Commissioner has not given any proper reason as to why the benefit of Section 73 of the Finance Act, 2010 is not applicable for the period from April, 2008 to March, 2010 and that the benefit of Section 73 of the Finance Act would be available for this period also. The Tribunal observed that if the calculation submitted by the appellant is not correct, the commissioner has to calculate the credit amount to be reversed explaining the method he proposes to adopt after giving an opportunity of being heard. Accordingly, the Tribunal remanded the matter to the Commissioner for re -quantification of the cenvat credit to be reversed for the period from April, 2008 to March, 2010. The Tribunal also set aside the penalty on the appellants on the ground that since the matter involved interpretation of law, the penalty on them is not called for. In this regard para -10 & 11 of the Final Order No. A -346/2012 -EX(BR) dated 27.05.2012 and para 2 to 6 of the Misc. Order No. 719/2012 -EX(BR) dated 11.06.2012 are reproduced below: -
Paras -10 & 11 of the Final Order No. A -346/2012 -EX(BR) dated 27.05.2012:
10. As per the provisions of Section 73(3) of Finance Act, 2010, if the Commissioner finds that the credit reversed by the assessee is not correctly reversed, the only option available to the Commissioner is to calculate it correctly and then ask them to reverse the correct amount. It goes without saying that before adopting the above manner of calculation, he has to give reasons as to why he considers that the calculation given by the assessee is not proper and he has to disclose the method he is going to adopt so that the assessee can make submissions as to why the calculation adopted by him may or may not be justified. After the retrospective amendment made by Section 73 of Finance Act, 2010, there is no scope for demanding the assessee to pay 10%/5% of the value of the exempted product. Prima facie, we are conceived that the assessee has complied with the provisions of the amended Rule 6 of Cenvat Credit Rules, 2004. Therefore, we find it proper to grant waiver from pre -deposit of dues arising from the impugned order for admission of the appeal. After granting such waiver, we take up the appeal itself for disposal.
11. Since we are of the view that the Commissioner has not given proper reasons why benefit under Section 73 of Finance Act, 2010 is not applicable for the period April, 2008 to March, 2010, in our view, this retrospectively amended provisions are applicable for the impugned period also. If the calculations submitted by the appellant is not correct, the Commissioner has to calculate the correct amount to be reversed explaining the method he proposes to adopt and giving an opportunity for hearing the appellant. Therefore, we set aside the impugned order and remand the matter to the adjudicating authority to properly decide the quantum of input credit to be reversed by the appellants as per provisions of Rule 6 of Cenvat Credit Rules. Thus the stay petition and appeal are disposed of.
Para 2 to 6 of the Misc. Order No. 719/2012 -EX(BR) dated 11.06.2012
(2.)THE submission of the appellant is that after hearing the case, while pronouncing the order in the open court, it was recorded that the penalties are set aside but the same is not appearing in the final order issued subsequently. On verification of the proceedings recorded, we find that the submission is correct. We also note that there is an error in numbering of the paragraphs in the order. These mistakes need rectification.
In view of the above position, we make the following corrections in the said final order:
The last paragraph of the order shall be numbered as 11 instead of 10.
(3.)AFTER paragraph so renumbered as 11, the following paragraph is added:
12. Since the matter involves interpretation of law, we find it proper to set aside the penalties imposed by the impugned order. The matter is remanded only for re -deciding the quantum of credit to be reversed.