Sudhir Power Ltd. Unit-III Vs CCE & ST- Jammu and Kashmir (CESTAT Chandigarh)

This case concerns Sudhir Power Ltd. Unit-III's use of Served From India Scheme (SFIS) duty credit scrips to pay excise duty on DG sets. The authorities sought to recover duty, interest, and penalties, arguing that Rule 6(3) of the Credit Rules, 2004 (CCR) was applicable. Sudhir Power contended that previous tribunal and high court decisions established that Rule 6(3) does not apply when duty credit scrips are used, even if the specific notification wasn't mentioned in a relevant circular.

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL CHANDIGARH 

REGIONAL BENCH – COURT NO. 1

Excise Appeal No. 61004 Of 2018

[Arising out of OIA No. JNK-EXCUS-000-APP-479-480-17-18 dated 28.03.2018 passed by the Commissioner (Appeals) of Central Excise-JAMMU & KASHMIR]

M/s Sudhir Power Ltd. Unit-III : Appellant (s) (formerly Known As Sudhir Gensects Ltd), epip,kartholi, sidco Industrial Complex, Bari Brahmana, Jammu and kashmir

Vs

CCE & ST- Jammu and Kashmir : Respondent (s) OB-32, RAIL HEAD COMPLEX, JAMMU & KASHMIR 180012

APPEARANCE: Ms. Krati Somani, Advocate for the Appellant Shri H. S. Brar, Authorised Representative for the Respondent

CORAM : HON’BLE MR. ASHOK JINDAL, MEMBER (JUDICIAL)

ORDER No. A/60406 / 2020

Date of Hearing:28.10.2020 Date of Decision:28.10.2020

Per : Mr. Ashok Jindal

The issue involved in the matter is that whether the provisions of Rule 6 (3) of CCR, 2004 is applicable to the facts of this case or not?

2. The brief facts of the case are that the appellant in engaged in the manufacture of DG sets and enclosures which are being sold by the appellant in open market and to various customers against the Duty Credit Scrips issued to them by DGFT under Served From India Scheme (‘SFIS’) in terms of Chapter 3 of the Foreign Trade Policy 2009-2014 (‘FTP’). These scrips were issued under Notification No. 34/2006-CE dated 14.06.2006. The appellant cleared the goods during the period April 2012 to January 2016. An audit was conducted and it was found that the appellant has cleared DG sets without payment of excise duty under the Status Holder Incentive Scheme by availing the benefit of Notification No. 33/2012-CE dated 09.07.2012 and under SFIS by availing the benefit of Notification dated 14.06.2006. Further, in terms of CBEC Circular No. 973/07/2013-CX dated 04.09.2013, the provisions of Rule 6(3) of the CCR, 2004 are not applicable for the goods cleared by availing the benefit of Notification No. 33/2012-CE dated 09.07.2012. As the Notification No. 34/2006-CE dated 14.06.2006 was not the part of the said circular, therefore, the proceedings were initiated against the appellant for recoveries for the goods cleared by the appellant to the goods cleared to the buyers by availing the benefit of Notification No. 34/2006-CE dated 14.06.2006. Two show cause notices were issued and adjudicated; demands were confirmed alongwith interest and equivalent amount of penalty was imposed. Against the said order, the appellant is before me.

3. The Ld. Counsel for the appellant submits that the appellant submits that SFIS duty credit scrips/licenses were issued by the DGFT as per Chapter 3 of the FTP and Para 3.12.8 of the FTP states that duty credit scrips are permitted to be utilized for payment of excise duty in terms of Department of Revenue Notification for procurement from domestic sources, in respect of items permitted for imports under SFIS Duty Credit Scrip. Thus, SFIS scrips provide an alternate way of paying the duty on goods other than discharging the duty liability in cash or through Cenvat. The Ld. Counsel drew my attention on the decision of this Tribunal in the case of M/s Voltamp Transformers Ltd. vs. CCE Vadodara 2011 (9) TMI 648 – CESTAT, AHMEDABAD to say that the provisions of Rule 6 (3) of CCR, 2004 are not applicable to the facts of this case and the said decision has been affirmed by the Hon’ble Gujarat High Court reported in – 2013 (296) ELT A16 (Guj). She further submits that the said decision was followed by this Tribunal in the case of Commissioner of Central Excise vs. Kirloskar Chillers Pvt. Ltd. – 2017 (9) TMI 694 CESTAT- Mumbai. She further submitted that the Ld. Commissioner (Appeals) has dismissed their appeal relying on the CBEC Circular No. 973/07/2013-CX dated 04.09.2013 the said circular does not mention the notification is in question and it is the observation of the Ld. Commissioner (Appeals) that as the notification in question has not been mentioned in the Circular, therefore, the benefit of the said circular is not entitled to the appellant. But, the Ld. Commissioner (Appeals) has ignored the decision of the Hon’ble High Court of Gujarat as well as the decision of this Tribunal on the issue. Therefore, the impugned order is to be set-aside.

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