Ranutrol Instrumentation Ltd vs Commissioner Of Central Excise, ...
2013 Latest Caselaw 565 Del

       THE HIGH COURT OF DELHI AT NEW DELHI
%                                      Judgment delivered on: 06.02.2013

+      CEAC 4/2013 & CM 576/2013 and CM 1325/2013

RANUTROL INSTRUMENTATION LTD                                   ... Appellant

                                        versus

COMMISSIONER OF CENTRAL EXCISE,
DELHI-II                                                       ... Respondent
Advocates who appeared in this case:
For the Appellant     : Mr Aditya Kumar with Mr Pravesh Bahuguna
For the Respondent    : Mr Satish Kumar

CORAM:-
HON'BLE MR JUSTICE BADAR DURREZ AHMED
HON'BLE MR JUSTICE R.V.EASWAR

                                  JUDGMENT

BADAR DURREZ AHMED, J (ORAL)

1. On 11.01.2013, when this appeal came up for hearing before us, the

following order was passed by us:-

"The appellant was availing Cenvat credit in respect of clearances of its final products (electrical equipments). Notification No.16/97/CE dated 01.04.1997 was issued by the Central Government whereby an option was given to avail for full exemption from duty in respect of the final products. Of course, if that option was exercised, Cenvat credit could not be availed of in respect of those clearances after having exercised the option.

2. Although the learned Counsel for the appellant made several arguments challenging the impugned order dated

02.07.2012 passed by the Central Excise Services Tax Appellate Tribunal, Principal Bench, New Delhi in appeal No.E/918/2005-EX(DB), the only point which we feel ought to be examined is whether the option exercised by the appellant was in accordance with the notification No.16/97/CE dated 01.04.1997.

3. One of the conditions for exercising that option to not avail the exemption and to pay the appropriate duty of excise leviable was that the option should be exercised before effecting the first clearance in a financial year. And, if so exercised, it was required to be subject to clause (ii) of paragraph 2 of the notification. We need not go into the examination of clause (ii) of paragraph 2 inasmuch as according to the appellant the exercise of option itself was defective as it had been exercised on 01.08.1997, after effecting the first clearance in the financial year 1997-98. Consequently, the option exercised was contrary to notification No.16/97/CE dated 01.04.1997. In other words, according to the learned counsel for the appellant, the option was still-born and, therefore, duty was payable.

4. However, despite this defective option, the petitioner cleared goods without payment of duty for a period of three months (April to June, 1997). The learned counsel for the appellant further states that it is not as if he wanted to withdraw the option which he had exercised but that the option itself was defective. According to him the Tribunal has misconstrued this as withdrawal of a valid option exercised by him under the said notification.

5. It is clear that if there was valid exercise of the option, he could not have withdrawn it in the concerned financial year. But, this is not a case of withdrawal of an option but of the option itself being ineffective inasmuch as it was not in accordance with the conditions stipulated in the said notification.

6. This being the case, we feel that it would be appropriate for the learned counsel for the respondent to take instructions as

to whether the clearances for which no duty have been paid for three months mentioned above could be subjected to central excise duty after giving the benefit of Cenvat credit to the appellant in accordance with law. The learned counsel for the appellant states that the appellant is willing to pay whatever amount is calculated as per the record of clearances.

7. The learned counsel for the respondent shall take instructions accordingly.

Renotify on 06.02.2013."

2. The learned counsel for the respondent had taken time to take

instructions as to whether the clearances, for which no duty has been paid for

the months mentioned in the above order, could be subjected to central excise

duty after giving the benefit of Cenvat credit to the appellant in accordance

with law. The learned counsel for the appellant had stated categorically that

the appellant was willing to pay whatever amount was calculated as per the

record of clearances.

3. The learned counsel for the respondent informs us that he has taken

instructions and that the department is not willing to accede to this proposal.

4. In these circumstances, we feel that the substantial questions of law

which had arisen in this appeal and are embedded in the order dated 11.01.2013

need to be answered. The questions are:-

(1) Whether the appellant had validly exercised the option given in the notification No. 16/97/CE dated 01.04.1997?

(2) If the answer to the above question was that the assessee had not validly exercised the option, what would be the position in law?

5. Insofar as the first question is concerned, we find that in the order dated

11.01.2013 itself, we have indicated that the appellant had not exercised the

option validly. The option was still-born and, therefore, the appellant could not

have taken advantage of the notification dated 01.04.1997. We also made it

clear that the Tribunal was in error in assuming that this was a case of

withdrawal of an option. It was not a case of withdrawal, but it was a case of

an option which had not been validly exercised, in the first instance. It is no

doubt true that an option once exercised under the said notification, could not

be withdrawn for the entire period of the financial year during which that

option is exercised but, as we have already mentioned above, this is not a case

of withdrawal of an option. On the contrary, it is a case of the option itself

being ineffective from its inception.

6. This being the position, if the appellant has taken any advantage of the

notification, that advantage would have to be reversed. The appellant's case

would, therefore, have to be governed outside the said notification for the entire

financial year 1997-98. This answers both the questions.

7. The department shall make the computation, as the appellant is willing

to pay the amount as per the record of clearances. The appellant shall file the

requisite documents for the purposes of computation within four weeks from

today. Once the computation is done and the appellant is notified of the same,

he shall pay the requisite amount, if any, within six weeks thereof. We have

already indicated in the order dated 11.01.2013 that the dispute is only with

regard to the first four months of the financial year 1997-98.

The appeal is allowed to the aforesaid extent.

BADAR DURREZ AHMED, J

R.V.EASWAR, J

FEBRUARY 06, 2013 SR