Bhagwati Power and Steel Ltd. vs Commissioner, C. Ex. and Customs

This is a tax appeal against the order dated 1-8-2011 passed by the Central Excise Service Tax Appellate Tribunal, New Delhi (the Tribunal) dismissing the appeal of M/s. Bhagwati Power & Steel Limited (the Assessee) for non-compliance of the order dated 13-12-2010.

The Facts

A show cause notice dated 13-11-2009 was issued to the Assessee to show cause as to why the Cenvat credit availed by it from November, 2004 to March, 2009 on various structural items be not disallowed.

The Assessee filed its reply. Thereafter, the Adjudicating Officer (the AO) by his order dated 31-5-2010 disallowed the credit of ` 61,76,793/-; ordered for recovery of the same amount alongwith interest; and also imposed the penalty of the same amount, with the observation that in case if the credit disallowed alongwith interest and penalty equivalent to 25% is paid within 30 days of the communication of the order, the penalty shall stand reduced to 25%.

Aggrieved by the aforesaid order, the Assessee filed an appeal before the Tribunal alongwith an application for waiver of the pre-deposit.

The aforesaid application for waiver was decided on 13-12-2010 and the Assessee was required to pay a sum of ` 40,00,000/-, and it was ordered that in case the Assessee deposits a sum of ` 40,00,000/- within a period of 10 weeks, then the order of the AO shall remain stayed.

The Assessee could not deposit the sum of ` 40,00,000/- and its appeal was ultimately dismissed on 1-8-2011 for non-compliance of the order dated 13-12-2010. Hence, the present tax case by the Assessee.

The Decision

We have heard counsel for the parties. There is a delay in filing the tax case. The Assessee filed an application to condone the delay alongwith an affidavit. No counter-affidavit has been filed. The delay in filing the tax case is condoned and it is heard on merits.

It is not disputed that the Assessee has deposited a sum of ` 40,00,000/- on 31-3-2013. However, this amount has been deposited through Cenvat credit account and not in cash.

The counsel for the Central Excise Department (the Department) submits that the amount mentioned in the order dated 13-12-2010 cannot be deposited through Cenvat credit account and it should be deposited in cash.

The counsel for the Assessee submits that:

� In case the appeal of the Assessee is dismissed then the Excise duty sought to be recovered can always be paid through the Cenvat credit account;

� In this case, the Excise duty sought to be recovered from the Appellant is much more than ` 40,00,000/-;

� In case the Excise duty can be paid through Cenvat credit account then ` 40,00,000/- which is much less than the Excise duty sought to be recovered can always be deposited through Cenvat credit account.

It is not necessary for us to decide this question whether the amount mentioned in the order dated 13-12-2010 can be paid through Cenvat credit account or not as this question should first be decided by the Tribunal.

The delay in depositing the amount through Cenvat credit account is condoned. The Tribunal may first decide the question whether the amount of ` 40,00,000/- can be deposited through Cenvat credit account or not.

It is clarified that in case the Tribunal holds that the amount mentioned in the order 13-12-2010 can be paid through Cenvat credit account, then the appeal of the Assessee will not be dismissed merely on the ground that this amount was deposited with delay.

In view of above, the order dated 1-8-2011 is set aside. The matter is sent back to the Tribunal. The Assessee may appear before the Tribunal on 26-5-2014 and file a certified copy of this order and thereafter the Tribunal may decide the case in accordance with law. With the aforesaid observations, the tax case is allowed.