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PJ/Case Laws/2011-12/1530

Refund of excise duty on supplementary invoices of jobworker when duty paid in lieu of SCN

Case: COMMISSIONER OF CENTRAL EXCISE, JAIPUR-I Versus SUPREME CYLINDERS LTD.
 
Citation: 2010 (262) E.L.T. 987 (Tri. - Del.)
 
Issue:- Refund of excise duty taken on supplementary invoices issued by Jobworker – Duty paid by Jobworker due to demand raised vide show cause notice for irregularities - validity of.
 
Brief Facts:- Respondent is a manufacturer of cylinders falling under Chapter Heading 73.11 of Central Excise Tariff Act, 1985. They supplied hot rolled MS sheets to M/s. International Engineering and Manufacturing Pvt. Ltd. referred to as job worker and got foot rings and VS plates manufactured on job work basis. The respondent took Cenvat credit and removed the same to the job worker and received back the materials after completion of job work. On the ground that there were certain irregularities on the part of the job worker in not following the procedure prescribed under Rule 57F of Central Excise Rules, the duty was demanded which was paid by the job worker and said amount of duty was taken as credit by the respondent based on supplementary invoices issued by the job worker. The credit taken by the respondent of the duty paid by the job worker was directed to be reversed which was done under protest. Subsequently, they claimed refund which was denied by the original authority but allowed by the Commissioner (Appeals) vide his impugned order.
 
Appellant’s Contention:- Revenue submits that the duty demand from the job worker was made invoking extended period of limitation. The order for demand of duty on the job worker stands upheld by the Commissioner (Appeals) and by the Tribunal as well. Therefore, by implication, the ingredients of fraud, misstatement is there on the part of the job worker and therefore, the duty paid by job worker could not have been taken as credit by the respondents.
 
Respondent’s Contention:- Assessee supporting the order of the Commissioner (Appeals), submits that the demand of duty on the job worker has been confirmed but no penalty under Rule 173Q has been imposed. The order of the original authority relating to the job worker clearly records that the offences have been committed due to ignorance. Under these circumstances, the credit of duty paid by the job worker has been rightly taken by the respondent and therefore, he seeks upholding the order of the Commissioner (Appeals).
 
Reasoning of Judgment:- The Tribunal noted that the Commissioner (Appeals) has held that Rule 9(1)(b) of Cenvat Credit Rules, 2004 is not applicable and that the respondents are eligible to take credit of duty paid by the job worker.
 
It was held that the grounds of appeal do not dispute the factual findings that the demand of duty on the job worker has been made after holding that non-payment was due to ignorance on the part of job worker. Though the duty has been demanded by invoking the extended period of limitation it is noticed that there is a clear finding by the original authority in charge of the job worker that non-payment was due to ignorance, therefore, the question of invoking bar under Rule 9(1)(b) does not arise. The said Rule which provides for credit based on supplementary invoice bars passing of credit when duty became payable “on account of any non-levy or short-levy by reason of fraud, collusion or any wilful misstatement or suppression of facts or contravention of any provisions of the Excise Act.............. or the rules made thereunder with intent to evade payment of duty”. Whether supplying unit has resorted to fraud, collusion or any wilful misstatement has to be determined by the jurisdictional authority in charge of the supplying unit. Undisputedly, the authorities in respect of job worker’s unit in this case have held that the non-payment was due to ignorance. Under these circumstances, the question of invoking the exception provided under Rule 9(1)(b) does not arise. Therefore, there are no valid grounds adduced to interfere with the order of the Commissioner (Appeals).
 
Decision:- Appeal rejected. 

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