SUNSUI INDIA LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) M /s. Sunsui (India) Ltd. (appellants in E/2106/2002/NB) were engaged, in the manufacture of wrist watches and alarm clocks of Headings 91.02/91.05 of the Central Excise Tariff Schedule and were availing the facility of MODVAT/CENVAT credit. Watches and clocks of MRP not exceeding Rs. 500/ - were exempted from payment of duty under Notification No. 6/2000 -C.E., dated 1 -3 -2000. The issue involved in this case is whether the appellants were liable to reverse MODVAT/CENVAT credit amounting to Rs. 4,22,434/ - which they had already availed in respect of duty -paid inputs lying as such in stock as on 29 -2 -2000 as well as duty -paid inputs contained in the final products lying in stock as on the said date and cleared at 'Nil' rate of duty (under the above Notification) on or after 1 -3 -2000. The original authority, following the Tribunal's Larger Bench decision in Khanbhai Esoofbhai v. Collector [1999 (107) E.L.T. 557] and the CBEC Circular No. 591/28/2001/C.E., dated 16 -10 -2001, held that the assessee was liable to reverse the above credit and to pay interest on the amount under Rule 57AH. That authority also imposed a penalty of Rs. 5000/ - on the party under Rule 173Q. The first appellate authority upheld the decision of the original authority insofar as it related to the credit taken on the inputs lying as such in stock as on 29 -2 -2000. This credit amounted to Rs. 3,00,173/ -. In respect of the remaining credit amounting to Rs. 1,22,261/ - which was taken on the input contained in the finished products which were lying in stock as on 29 -2 -2000 and were removed at 'Nil' rate of duty under the above Notification on or after 1 -3 -2000, the appellate authority decided in favour of the assessee by following the decision of the Tribunal's Larger Bench in C.C.E. v. Ashok Iron and Steel Fabricators [2002 (140) E.L.T. 277]. Both the authorities rejected the assessee's claim that the demand was time -barred. However, the Commissioner (Appeals) set aside the penalty imposed on the assessee by the original authority. He also upheld the demand of interest. The assessee's appeal is against the demand of Rs. 3,00,173/ - with interest, while the Revenue's appeal (E/2022/2002) is against the order of the Commissioner (Appeals) vacating the demand of Rs. 1,22,261/ - and setting aside the penalty.

(2.) HEARD both sides. Ld. Consultant for the assessee submitted that the issue involved in this case was squarely covered in their favour by the Tribunal's Larger Bench decision in Ashok Iron and Steel Fabricators (supra). The said decision required to be followed in the instant case in the absence of any stay of operation of the decision, by the Supreme Court. Ld. Consultant also relied on the judgment of the Kerala High Court in C.C.E., Cochin v. Premier Tyres Ltd. [2001 (130) E.L.T. 417] as also on the decision of the Hon'ble Supreme Court in C.C.E. v. Dai Ichi Karkaria Ltd. [1999 (112) E.L.T. 353 (S.C.)]. Ld. DR, on the other hand, submitted that the decision of the Tribunal's Larger Bench in the case of Raghuvar (India) Ltd. v. C.C.E. [2002 (140) E.L.T. 280] had to be followed in the instant case. On the limitation issue, ld. DR submitted that, as the return for the month of March 2000 had been submitted by the assessee on 5 -4 -2000, the limitation period of one year had to be reckoned from that date and, accordingly the demand raised in the show cause notice dated 21 -3 -2001 was well within the time limit of one year laid down under Rule 57AH. The consultant argued that the period of limitation had to be reckoned from 5 -3 -2000, the date on which the assessee had submitted their return for the month of February 2000. This argument was on the basis that the demand of Cenvat credit was in respect of the stock lying as on 29 -2 -2000. Ld. Consultant contended that the demand raised on 21 -3 -2001 was beyond the limitation period of one year commencing on 5 -3 -2000.

(3.) WE have carefully examined the record of the case and considered the submissions. What appears to us is that, prior to 1 -3 -2000, M/s. Sunsui (India) Limited had taken and utilized credit of the duty paid on those inputs which were as such lying in stock as on 29 -2 -2000 as well as those inputs which were contained in the finished products lying in stock as on 29 -2 -2000. Apparently the said finished products as well as the finished products manufactured from the inputs of the first category (i.e., inputs which were lying as such in stock on 29 -2 -2000) were cleared on or after 1 -3 -2000 at "nil" rate of duty under Notification No. 6/2000 -C.E., dated 1 -3 -2000. The amount of credit relating to the first category of inputs is Rs. 3,00/173/ - and that relating to the second category is Rs. 1,22,261/ -. The lower appellate authority has upheld the demand of the former and vacated that of the latter. In their appeal against the order of the Commissioner (Appeals), the assessee has relied mainly on the Tribunal's Larger Bench decision in Ashok Iron and Steel Fabricators (supra). In the Revenue's appeal, it has been submitted that they have not accepted the said decision of the Larger Bench and have preferred appeal against it to the Supreme Court. Ld. DR, however, has not claimed that there is any stay of operation of the Tribunal's decision.