Madras High Court
M/S.Sri Shanmugavel Mills (P) Ltd vs The Additional Commissioner Of ... on 21 September, 2021
W.P(MD)Nos.1721 & 1722 of 2012
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED: 21.09.2021
CORAM
THE HON'BLE MR.JUSTICE R.SURESH KUMAR
W.P.(MD)Nos.1721 & 1722 of 2012
and
M.P(MD)Nos.1 & 1 of 2012
M/s.Sri Shanmugavel Mills (P) Ltd.,
Rep. by its Director,
K.Shanmugavel. ... Petitioner (in both cases)
-Vs-
1.The Additional Commissioner of Central Excise,
Central Revenue Building,
No.4, Lal Bahadur Shastri Road,
Bibikulam, Madurai – 625 002.
2.The Assistant Commissioner of Central Excise,
Dindigul I Division,
No.68, Nehurji Nagar, R.M.Colony,
Dindigul – 624 001.
... Respondents in W.P.(MD)Nos.1721 of 2012
1.The Assistant Commissioner of Central Excise,
Dindigul I Division,
No.68, Nehurji Nagar, R.M.Colony,
Dindigul – 624 001.
... Respondent in W.P.(MD)Nos.1722 of 2012
Prayer in W.P.(MD)No.1721 of 2012: Writ Petition filed under Article
226 of Constitution of India, to issue a Writ of Certiorari, to quash the
impugned order in C.No.V/52/15/127/2009 Adjn dated 08.12.2011
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W.P(MD)Nos.1721 & 1722 of 2012
disallowing the credit of Rs.24,71,126/- taken/availed and utilized during
the period from 07.12.2008 to 06.07.2009 as illegal.
Prayer in W.P.(MD)No.1722 of 2012: Writ Petition filed under Article
226 of Constitution of India, to issue a Writ of Certiorari, to quash the
impugned order in C.No.V/52/15/21/2011 Adjn dated 05.01.2012
disallowing the credit of Rs.2,11,894/- taken during July 2009 to
November 2009 and April 2010 on the input services and capital goods
received during the period 07.12.2008 to 06.07.2009 as illegal.
For Petitioner : Mr.R.Sivaraman (in both cases)
For Respondents : Mrs.S.Ragaventhre (in both cases)
Standing Counsel
COMMON ORDER
The prayer sought for herein is for a Writ of Certiorari, to quash
the impugned order in C.No.V/52/15/127/2009 Adjn dated 08.12.2011
disallowing the credit of Rs.24,71,126/- taken/availed and utilized during
the period from 07.12.2008 to 06.07.2009 as illegal and to quash the
impugned order in C.No.V/52/15/21/2011 Adjn dated 05.01.2012
disallowing the credit of Rs.2,11,894/- taken during July 2009 to
November 2009 and April 2010 on the input services and capital goods
received during the period 07.12.2008 to 06.07.2009 as illegal.
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W.P(MD)Nos.1721 & 1722 of 2012
2.It is the case of the petitioner that the petitioner engaged in
export of cotton yarn falling under Chapter 52 of the First Schedule to
the Central Excise Tariff Act, 1985 and having Central Excise
Registration No.AADCS8200N XM001. Only the period from
07.12.2008 to 06.07.2009, the petitioner Company has availed
CENVAT credit in respect of the capital goods and input services by
having bonafide impression that the Notification No.59/2008-CE fixing
the rate of the cotton yarn at 4% was issued and hence, they paid the duty
under claim for rebate on cotton yarn exported by availing the benefit of
notification, since cotton yarn was dutiable under notification No.
59-2008-CE. Therefore, the petitioner Company took credit of the duties
paid on capital goods and input services and availed the payments of
duty for exports.
3.For the same period, the petitioner Company earlier rebated in
respect of the said CENVAT credit and this was initially sanctioned by
the Revenue. Against such proceedings sanctioning first rebate to the
petitioner, the Department preferred an appeal before the Commissioner
of Central Excise, Dindigul, who by order dated 29.10.2009 had set aside
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W.P(MD)Nos.1721 & 1722 of 2012
the order in original sanctioning the rebate and ordered to make cash
payment to the Department. Against said order, the petitioner preferred a
revision before the Government and the Joint Secretary, Government of
India, by order dated 14.02.2011 held that the duty paid by the said
Company was just a deposit with the Government and directed the same
to re-credit into CENVAT credit. Against such order, the petitioner
company filed W.P.Nos.9814 to 9817 of 2011 in the Principal Seat of
this Court. The Principal Seat of this Court, by order dated 19.04.2011
admitted the writ petitions and granted an order of interim stay of the
proceedings.
4.In the meanwhile, in the matters which were pending before the
Joint Secretary, Government of India, ie., the first respondent, vide
proceedings dated 21.12.2009 had issued show cause to explain why
CENVAT credit already availed and utilized during the period from
07.12.2008 to 06.07.2009 should not be disallowed and recovered.
Written submissions in response to the same has been made on
01.02.2010. As against the show cause notice, the petitioner also filed a
writ petition in W.P.(MD)No.4915 of 2011 before this Court and by
order dated 27.04.2011, the said case along with connected writ petitions
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W.P(MD)Nos.1721 & 1722 of 2012
was disposed of directing the respondents to consider the explanation
offered by the petitioner. However, it is the grievance of the petitioner
that the first respondent, without adhering to the observations made by
this Court in the said order, has passed an order on 08.12.2011
disallowing CENVAT credit. As against which, the present writ
petitions have been filed.
5.Mr.R.Sivaraman, learned counsel appearing for the petitioner, at
the outset would submit that, the issue raised in this writ petition is
covered by a decision of this Court made in W.P.(MD)No.4922 of 2011
dated 01.08.2019 in the matter of M/s.Sudan Spinning Mills (P)
Limited vs. Commissioner of Central Excise and another. In the said
order, this Court has made the following orders to that effect.
“9. Circular No.937/27/2010-CX dated
26.11.2010 is extracted below:
'References had been received from
the field formations as well as trade to
clarify the ambiguity arising out of
simultaneous prevalence of two exemption
Notifications namely 29/2004-C.E., dated
9-7-2004 as amended by notification No.
58/2008-C.E., dated 7-12-2008 and another
notification 59/2008-C.E., dated 7-12-2008.
The period of dispute is from 7-12-2008 to
6-7-2009. During this period while one
Notification No.29/2004-C.E., as amended
granted full exemption to certain items of
Textile Sector without any condition, the
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W.P(MD)Nos.1721 & 1722 of 2012
second notification 59/2008-C.E., prescribed
a concessional rate of duty of 4% on these
items, with the benefit of Cenvat Credit.
2. The dispute was with regard to whether an
assessee can avail the benefit of either of the
above said two notifications whichever is
beneficial to him or he is bound to avail the
unconditional exemption under notification
No.20/2004-C.E., as amended, during the
period under dispute in terms of the
provisions of Section 5A(1A) of the Central
Excise Act, 1944.
3. The matter was examined in the Board.
As a substantial question of law was
involved, the matter was referred to the Law
Ministry for its opinion. The Ministry of
Law has opined that the language used in
said Section 5A(1A) is unambiguous and
principles of harmonious construction
cannot be applied in the instant case in view
of specific provision under sub-section (1A)
of Section 5A of the Central Excise Act. The
Law Ministry has accordingly concluded
that in view of the specific bar provided
under sub-section (1A) of Section 5A of the
Central Excise Act, the manufacturer cannot
opt to pay the duty under notification
59/2008-C.E., dated 7-12-2008 and he can
not avail the Cenvat Credit of the duty paid
on inputs.
4. The aforesaid opinion of Law Ministry has
been accepted by the Board. Pending issues,
if any, may be decided accordingly.'
10. In direct contradiction to the above, the
Board has issued Circular No.99/2008, dated
11.12.2008 in response to a query by the Southern
India Mills' Association, Coimbatore, clarifying that
where the levy of duty is covered by more than one
Notification, the rate more beneficial to the
assessees will have to be extended, subject to the
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W.P(MD)Nos.1721 & 1722 of 2012
assessee satisfying all conditions imposed
thereunder. The aforesaid Notification reads as
follows:
ALL MEMBER MILLS:
Sub: Fiscal Stimulus package – central excise duty –
Reg.,
Ref: Association Circular No.95/2008 dated
December 08, 2008
<><><>
Member mills may be aware that the Central
Government had amended Notification No.29/2004-
C.E., dated 09.07.2004 by way of Notification No.
58/2008-CE dated 07.12.2008 thereby reducing the
rate of duty on cotton yarn and pure cotton fabrics to
zero percent from 4 per cent. A query therefore
arose with regard to the utilisation of the
accumulated credit. The validity of Notification No.
59/2008-CE dated 07.12.2008 was also questioned.
In
reply to the Association's query as to whether the
textile mills are still eligible to clear their goods
utilising both the Notifications i.e., at zero per cent
and 4 per cent simultaneously, the Commissioner of
Central Excise, Coimbatore has clarified by way of a
Trade Notice on the following lines:
'Due to issue of these
notifications, there may be cases where
same product / commodity is being
covered by more than one notification.
In such a situation, it is clarified that
the rate beneficial to the assesses
would have to be extended if they fulfill
the attendant conditions of the
exemption.'
A copy of the Trade Notice No.14/2008 dated
11.12.2008 issued by the Commissioner of
Central Excise, Customs and Service Tax,
Coimbatore is reproduced below for your
information and guidance.'
11. The aforesaid two Circulars are in direct
contradiction with each other. Circular No.99/2008,
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W.P(MD)Nos.1721 & 1722 of 2012
dated 11.12.2008 makes it clear that where there are
multiple Notifications operating simultaneously in
respect of the same commodity and extending
different benefits, an option must be given to the
assessee to elect and choose the Notification that
would be most beneficial to it. Circular No.
937/2010, dated 26.11.2010 on the other hand,
limits the choice to only the Notification granting
unconditional exemption.
12. This does not stand to reason. All the
Notifications providing multiple choices to an
assessee for tax treatment of the same commodity
have been issued by one and the same Department
and continued to operate simultaneously. The
rationale behind this cannot be fathomed and it was
incumbent upon the authorities to withdraw the
Notifications that would be unavailable such that the
remaining Notifications would prevail. This, not
having been done, I am of the view that the assessee
has to be permitted to elect and choose the
Notification of its choice and the Department cannot
thrust a Notification of its choice upon the assessee.
13. I am supported in this view by two
judgments of the Supreme Court in the case of
H.C.L.Limited vs. Collector of Customs, New Delhi,
[2001 (130) E.L.T. 405 (S.C.)] and Collector of
Central Excise, Baroda vs. Indian Petro Chemicals
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W.P(MD)Nos.1721 & 1722 of 2012
[1997 (92) E.L.T. 13 (S.C.)] where the Full Bench
and Division Bench of the Supreme Court
respectively have categorically confirmed the
position that the option to elect and select the
benefits provided under Notification is clearly within
the realm of choice of an assessee. Circular No.
937/27/2010-CX dated 26.11.2010, thus does not set
out the correct position in law.”
6.The said decision infact has not been controverted by
Mrs.S.Rageventhree, learned Standing Counsel appearing for the
respondent revenue.
7.In view of the aforesaid position, where the issue raised in this
writ petition since has been covered by the decision as referred to above,
by order dated 01.08.2019 and also in view of the order passed by the
Principal Seat of this Court in the assessee's own case in W.P.Nos.9814
to 9819 of 2011, etc batch, dated 25.10.2019, this Court feels that the
issue raised in the writ petitions can be decided in favour of the
petitioner assessee.
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W.P(MD)Nos.1721 & 1722 of 2012
8.Resultantly, the following orders are passed in the writ petitions:
that the impugned orders are quashed and
the Writ Petitions are allowed accordingly.
However, there shall be no order as to costs.
Consequently, connected Miscellaneous
Petitions are closed.
21.09.2021
Index : Yes/No
SM
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W.P(MD)Nos.1721 & 1722 of 2012
Note:
In view of the present lock down owing to COVID-19
pandemic, a web copy of the order may be utilized for
official purposes, but, ensuring that the copy of the order
that is presented is the correct copy, shall be the
responsibility of the Advocate/litigant concerned.
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W.P(MD)Nos.1721 & 1722 of 2012
R.SURESH KUMAR, J.
SM
Common Order made in
W.P.(MD)Nos.1721 & 1722 of 2012
Dated:
21.09.2021
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