CX – If case of appellant is that some of submissions actually made were not recorded and not dealt with, remedy available was before Appellate Tribunal: High Court
By TIOL News Service
MUMBAI, OCT 13, 2017: THE appellant is receiving Base Oils which is used in the manufacture of final product. The said base oil is received through vessel, pipeline and tankers. Appellants are availing the Cenvat Credit of duty paid on such Base Oil.
On verification of input invoices of Base oil, it was noticed that appellants had availed credit of duty on full quantity as shown in the invoices /bills etc. However on scrutiny of the documents viz. AC-13, OUT TURN report vis-à-vis invoices, it was noticed that appellant had received base oil in short quantity.
A SCN was issued seeking reversal of CENVAT credit of Rs.1,64,40,644/- in respect of short receipt of base oil during the period December, 2004 to March 2009.
The case was adjudicated by the Commissioner wherein he confirmed the demand which was within the normal period of limitation. Penalty equal to duty i.e. Rs. 8,37,482/- was also imposed along with interest.
The CESTAT allowed the appeal partly, thus –
CX - CENVAT credit - short quantity of base oil received by appellant whereas credit taken on the full quantity as shown in invoices/bills - In the Supplementary manual, different limits of transit loss etc. has been prescribed for different goods and different method of transfer etc. - In the case of lubricating base oil the permissible limit is 0.1% - therefore, Cenvat credit availed and utilized on short receipt of base oil in excess of 0.1% is not permissible - Appellant may compute admissible credit after taking benefit of 0.1% permissible limit and pay the differential amount and interest - in view of the nature of dispute and the fact that earlier the department has allowed such losses, it is not a fit case for imposition of penalty u/r 15(1) of CCR, 2004 - penalty set aside - appeal disposed of: CESTAT [para 5]
We reported this order as - 2016-TIOL-24-CESTAT-MUM.
The appellant is aggrieved by this order and is before the Bombay High Court.
They rely upon the letter dated 30th October 1985 addressed by the CBEC and on the various orders passed by the Custom Authorities by which loss of 1% is allowed in respect of mineral oil and submit that base oil is also a mineral oil. It is also submitted that the Board Letter No. 11-A/6/70/CX.8 dated 30th April 1971 laying down a permissible limit of 0.1% was in respect of storage loss and not the transit loss of lubricating base oil.
It is, therefore, pleaded that their submissions have not been correctly recorded by the Appellate Tribunal.
The High Court adverted to the details recorded in paragraph 2 of the impugned Judgment (of Tribunal) and which reads thus:
"2...Ld. Counsel submits that in view of this 1% transit loss may be allowed.... It was further submitted that though the Ld. Commissioner has held that Cenvat Credit availed and utilized on short receipt in excess of 0.1% is sustainable but has confirmed the demand without extending the benefit of 0.1%."
Thereafter, the High Court observed -
"7. The law is very well settled. If the case of the appellant was that either the submissions have not been correctly recorded or that some of the submissions actually made before the Appellate Tribunal were not recorded and not dealt with, the remedy available for the appellant was before the Appellate Tribunal. Only on the basis of the letter addressed by the Cen-Ex Services, the Consultants appointed by the appellant, we cannot accept the contention that what is recorded in paragraph 2 of the Judgment is not correct. Paragraph 2 records the submissions which were made across the bar before the Appellate Tribunal and therefore, only on the basis of the said letter, we are unable to accept the contention that the submissions have not been correctly recorded by the Appellate Tribunal in the impugned Judgment.
8. … The Tribunal relied upon the statement produced by the appellant and noted that it provides that in case of lubricating base oil, permissible limit is 0.1%. The Tribunal held that the limit of 0.1% is in accordance with the directions of the Central Board of Excise and Customs on the subject…."
In the matter of reliance placed in the present appeal before the High Court on the letter dated 30th October 1985 of the CBEC, the High Court remarked –
"9. Firstly, before the Appellate Tribunal, the appellant never relied upon the said letter. Secondly, the said letter specifically refers to the mineral oil. If the appellant wanted to rely upon the said letter, it was for the appellant to produce the said letter before the Appellate Tribunal and satisfy the Tribunal that the lubricating base oil is also a mineral oil. The question of fact whether the lubricating base oil is mineral oil or not cannot be adjudicated upon in this appeal for the first time."
Noting that the case laws cited by the appellant were not precedents, the same were held to be of no assistance to the appellant.
Concluding that no substantial question of law arises in appeal, the same was dismissed.
(See 2017-TIOL-2151-HC-MUM-CX)
