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Judgment
In the writ petition out of which the present proceeding arises the petitioner questioned legality of a notice to show cause and demand issued by the Central Excise Authorities on 31st March, 2016.
The allegation against the appellant/writ petitioner is wrongful availing of CENVAT credit without maintaining separate accounts for dutiable and exempted goods.
The learned FiRs.Court in substance dismissed the writ petition imposing costs of Rs.2,00,000/- to be paid to the West Bengal State Legal Aid Services.
This appeal and the stay petition were listed today under the heading To Be Mentioned upon being mentioned on behalf of the learned Counsel for the Appellant for urgent hearing.
We are taking up both the appeal and the stay petition for hearing on consent of the learned Counsel appearing for the parties.
Mr.Ganguli, learned Counsel appearing for the respondents waives of service of notice of appeal.
All other formalities for filing the appeal shall stand dispensed with and the appeal is treated as ready for hearing.
In the stay petition, entire set of papers which was before the learned FiRs.Court has been annexed.
The demand against the appellant is for Rs.38,21,16,522/-.
Prior to issuance of notice of show cause, department had issued a letter inviting comments from the Appellant on 30th June, 2015 in the following term: It is noticed from your Monthly ER-1 Returns that you are manufacturer of Excisable Goods under CETH No.1511,1512,1513,1515,1521,1522 and 3823 and out of which some of your manufactured items are cleared without payment of duty on availment of full exemption under Notification No.12/2012-C.E.dated 17.03.2012 and some of your products are cleared on payment of Central Excise duty.
It is also noticed that you are availing Credit on Input Services.
According to Rule 6 of Cenvat Credit Rules 2004 no Cenvat credit will be allowed if the finished goods are exempted.
If a manufacturer or provider of output service avails CENVAT credit in respect of any inputs or input services and manufactures such final products or provides such output service which are chargeable to duty or tax as well as exempted goods or service, then, the manufacturer or provider of output service shall maintain separate accounts and if the assessee fails to maintain separate the accounts, an amount equals to six percent of the assessable value of the exempted goods are chargeable.
But on scrutiny of ER-1 Returns it is noticed that you are availing CENVAT Credit on Input Service without paying the Central Excise Duty on appropriate value at appropriate rate.
So, you are hereby requested to offer your comments on the issue immediately. (quoted verbatim).In its reply dated 19th August, 2015 to the said letter the Appellant stated:- This has reference to the aboveWe would like to state that we had taken Input Credit of Service Tax Paid on Import of Raw materials for the manufacture of goods in our factory.
The Service Tax Credit so taken were utilized for payment of Central Excise Duty on Fatty Acid, Gum, Wax etc.We are manufacturing Refine Palm Oil/Refine Rice Bran Oil/Vanaspati etc.which are cleared without payment of duty in terms of exemption under Notification No.4/2006/CE dated 01-03-2006.
The Department has wrongly levied Central Excise Duty on Fatty Acid, GuMs.Wax etc.which are exempted under Notification No.89/95-C.Ex.
Since the fatty Acid, GuMs.Wax etc.are waste product and not intended for manufacture of finished goods exemption from duty should be available on the said waste products even though they are sold in the market.
In this connection your attention is invited to tribunal judgement in the case ofCCI -VsPriyanka Refineries LTD.2010(249) ELT70Tri) Wherein it was held by the Tribunal that exemption under Notification No.89/95-CE should be allowed the said judgement of the tribunal was upheld by the Honorable Supreme Court 2011(274) ELTA16SC) SWASTIK OIL REFINERY PRIVATE LIMITED.
Director/Authorised Signatory Further the Commissioner(Appeal).Central Excise( Appeal-III) kolkata in case of M/S.Sethia Oils LTD.Vs.CCE, Bolpur, Order-in- Appeal No.03-04/BOL/2014 dated 04-03-2014 as well as the Commissioner, Central Excise (Apple-LKO).Orderin-Appeal No.23-25/CE/LKO/2014 dated 16-01-2014 & 4649/CE-LKO/2014 dated 29-01-2014 allowed the exemption under Notification No.89/95-CE has held that benefit of exemption Notification No.89/95-CE, dated 18- 05-1995 shall be allowed for clearance of waste/residue in the form of Gums/Waste/Fatty-Acid etc.arising in the manufacture of exempted Refined Edible Oil (Order copy enclosed) In view of the above no duty is payable on the waste products under reference.
Accordingly the question of utilization of credit under CENVAT Rules-6 as pointed out in your letter dated 30-06-2015 does not arise." Pursuant to the issuance of notice to the show cause, the Appellant had furnished reply thereto on 30-06-2016.
The writ petition, however, was instituted on 21st August, 2017, after a gap of more than one year from the date of filing of the reply to the notice to show-cause.
Contention of Mr.Chowdhury, learned counsel for the appellant is that the writ petition involves purely question of law as regards satisfaction on the stipulated requirements for issuance of notice to show cause during the extended period.
According to Mr.Chowdhury, there is no suppression of any material fact since the assessee had filed ER-1 return, to which reference has been made in the notice to the show cause itself.
He has relied on a decision of the CESTAT in the case of Commissioner of Central Excise, Hyderabad versus Priyanka Refineries LTD.reported in (2010) 249 E.L.T.70.
The question raised relying on this judgment will be examined by the adjudicating authority, particularly when the demand to show cause notice is based on the appellant manufacturing both exempted and dutiable goods without maintaining separate account.
The appellant had relied on paragraph 5 at page 46 of the stay petition which is as follows: The Petitioner states that the Petitioner maintained separate sets of accounts for dutiable by products and exempted products. The learned FiRs.Court, however, opined that the question of suppression of material facts is an issue of fact and the same is required to be considered by the adjudicating authority.
The learned FiRs.Court found on the basis of materials placed that it could not be said that such an issue had to be decided in favour of the assessee.
We do not find any error in the view taken by the learned FiRs.Court.
Moreover, the appellant has already filed reply to the show cause notice.
We, accordingly, dismiss both the appeal and the stay petition.