Karnataka High Court
M/S Durag India Instrumentation ... vs The Commissioner Of Central Tax on 23 July, 2021
Author: Satish Chandra Rangaswamy
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 23RD DAY OF JULY, 2021
PRESENT
THE HON'BLE MR. JUSTICE SATISH CHANDRA SHARMA
AND
THE HON'BLE MR. JUSTICE NATARAJ RANGASWAMY
C.E.A. NO.1 OF 2020
BETWEEN:
M/S DURAG INDIA INSTRUMENTATION PVT. LTD.,
NO.27/30, 2ND MAIN, INDUSTRIAL TOWN,
RAJAJINAGAR, BANGALORE-560044.
KARNATAKA (PRESENT ADDRESS)M
(REPRESENTED BY MR.JAYARAMA. N,
CHIEF FINANCIAL OFFICER)
...APPELLANT
(BY SRI. N.ANAND, ADVOCATE FOR
SRI. RAVISHANKAR K.S., ADVOCATE)
AND:
THE COMMISSIONER OF CENTRAL TAX,
BANGALORE WEST GST COMMISSIONERATE,
TTMC/BMTC BUILDING, BANASHANKARI ,
BANGALORE-560070.
... RESPONDENT
(BY SRI. VIKARM ADITYA HUILGOL, ADVOCATE)
THIS APPEAL IS FILED UNDER SECTION 35G OF THE
CENTRAL EXCISE ACT, 1944 ARISING OUT OF ORDER DATED
31.05.2019 PASSED IN FINAL ORDER NO.20445/2019 PASSED
IN APPEAL NO.E/20716/2018-SM PRAYING TO FORMULATE THE
SUBSTANTIAL QUESTIONS OF LAW, QUASH THE IMPUGNED
ORDER IN FINAL ORDER NO.20445/2019 DATED 31.05.2019
2
PASSED IN APPEAL NO.E/20716/2018-SM AND DIRECT THE LD.
TRIBUNAL TO HEARING THE APPEAL ON MERITS.
THIS APPEAL HAVING BEEN HEARD AND RESERVED ON
06.07.2021, COMING ON FOR 'PRONOUNCEMENT OF ORDERS'
THIS DAY, NATARAJ RANGASWAMY J., DELIVERED THE
FOLLOWING:
JUDGMENT
This appeal is filed challenging the final order
No.20445/2019 dated 31.05.2019 passed by the Customs,
Excise and Service Tax Appellate Tribunal, South Zonal
Bench, Bengaluru (hereinafter referred to as 'Tribunal' for
short) as well as the Miscellaneous Order No.20444/2018
dated 23.02.2018.
2. The appellant had imported certain inputs on
payment of applicable custom duty and had availed
CENVAT Credit. The appellant sold the inputs outside the
factory without using them in the manufacture of the final
product. The appellant claimed that it had paid the Excise
Duty of Rs.4,61,683/- on the said components which was
more than the CENVAT credit of Rs.2,64,133/- availed by
the appellant on the inputs. As per Rule 3(5) of the
CENVAT Credit Rules 2004, if a manufacturer disposes off
the inputs without using them in the manufacture of the
final product, the manufacturer is required to reverse the
CENVAT credit availed. The audit wing of the department
conducted an audit of the records of the appellant and
found that the appellant had sold CENVAT availed inputs
without reversal of the credit as per Rule 3(5) of the
CENVAT Credit Rules, 2004. The Department found that
the appellant did not reverse the CENVAT credit of
Rs.6,04,910/-. The department issued a show cause notice
dated 10.05.2010 proposing to demand CENVAT credit of
Rs.6,04,910/- for the period prior to April-2007 to July-
2008 along with interest and penalty. Though the appellant
contested the notice, the adjudicating authority passed an
order dated 27.12.2010 and confirmed the demand of
CENVAT credit of Rs.6,04,910/- along with interest and
equal amount of penalty under Section 11AC of the Central
Excise Act, 1944. The appellant filed a First Appeal
No.694/2014-CE and contested the order of adjudication
before the Commissioner of Central Excise (Appeals-1).
The first appeal was disposed off in terms of an order
dated 17.11.2014, whereby the adjudicating authority was
directed to "re-examine the limited issue of quantum of
credit availed on the inputs sold". The Commissioner of
Central Excise (Appeals-1) held that the amount of duty of
Rs.4,61,683/- paid by the appellant had to be disregarded
as such payment was contrary to law. The case was
therefore remitted back to the adjudicating authority. The
appellant being aggrieved by the order passed by the
Commissioner of Central Excise (Appeals-1) filed a
statutory appeal No.E/20597/2015-SM before the Tribunal
on 19.03.2015. During the pendency of the appeal before
the Tribunal, the adjudicating authority following the order
of remand, held proceedings and dropped the proceedings
against the appellant in terms of the order 25.02.2016.
Since the appellant obtained relief at the hands of the
adjudicating authority, the appellant withdrew the appeal
filed before the Tribunal on 20.12.2016. In the meanwhile,
the department had preferred an appeal before the
Commissioner of Central Excise (Appeals-1) challenging
the order of the adjudicating authority dated 25.02.2016.
The appellant alleged that it was not informed about the
filing of the appeal and came to know of it when it received
an intimation from the office of Commissioner of Central
Excise (Appeals-1) on 19.09.2017. The Commissioner of
Central Excise (Appeals-1) later passed an order dated
13.10.2017 and allowed the Department's appeal and
remanded the case back to the adjudicating authority to
follow the directions as per the order dated 17.11.2014.
The appellant realizing the mistake in withdrawing the
appeal before the Tribunal, filed an application for
restoration of appeal which was heard by the Tribunal and
rejected on 23.02.2018. The appellant thereafter filed a
second appeal bearing No.E/20716/2018-SM challenging
the order dated 17.11.2014 which was rejected by the
Tribunal in terms of an order dated 31.05.2019 on the
ground that the earlier appeal filed was withdrawn and
that the present appeal was hit by principles of res
judicata. The appellant has therefore filed the present
petition challenging the order dated 31.05.2019 passed by
the Tribunal as well as the order dated 23.02.2018 in
Miscellaneous Order No.20444/2018.
3. The above facts would disclose that the
appellant was bonafide pursuing his appeal remedy before
the Tribunal in Appeal No.E/20597/2015-SM challenging
the order dated 17.11.2014 remanding the case to the
adjudicating authority to re-examine the limited issue of
the quantum of credit availed. In the meanwhile, the
adjudicating authority in terms of the order dated
25.02.2016 granted the relief to the appellant, which
forced the appellant to withdraw the appeal
No.E/20597/2015-SM before the Tribunal. The department
challenged the order of the adjudicating authority dated
25.02.2016 before the Commissioner of Central Tax
(Appeals-I) who in terms of the order dated 13.10.2017
set aside the order dated 25.02.2016 as the order
exceeded the terms of remand and further remitted the
case back to the Original Authority to follow the directions
passed in Appeal No.694/2014-CE. As a result, though the
appellant succeeded, it was short lived as the order dated
25.02.2016 granting relief to the appellant was set at
naught. The appellant tried to get the appeal
No.694/2014-CE restored by filing an application, which
was dismissed in terms of the order dated 23.02.2018.
Another attempt made by the appellant to challenge the
order passed in Appeal No.694/2014-CE dated 17.11.2014
was rejected by the Tribunal on the ground that the
appellant had voluntarily withdrawn the appeal without
reserving any liberty on 20.12.2016. Thus, the appellant
is left with no remedy to contest the claim of the
Department.
4. Now that the Commissioner of Service Tax
(Appeals) has remitted the case back to the Original
Authority to comply the order passed in Appeal
No.694/2014-CE, we feel it appropriate in the peculiar
facts and circumstances of this case to set at naught the
order passed in Appeal No. 694/2014-CE and remit the
entire case for proper adjudication before the Original
Authority. Since the matter is now remitted to the Original
Authority, all contentions are left open to be urged by the
parties.
5. Hence, this appeal is allowed and the final order
No.20445/2019 dated 31.05.2019 passed in Appeal
E/20716/2018-SM are set aside. Consequently, the order
passed by the Commissioner for Central Excise(Appeals-I)
in Appeal No. 694/2014-CE dated 17.11.2014 is set aside
and the case is remitted back to the Adjudicating
Authority/ Original Authority for re-consideration of the
case on merits and to pass appropriate orders.
Sd/-
JUDGE
Sd/-
JUDGE
NR/-
