Commissioner of Central Excise vs Gupta Steel

J.M. Panchal, J.—The respondent is engaged in the manufacture of excisable goods i.e. Iron & steel scrap and other ferrous and nonferrous materials obtained by breaking of old ships. The respondent was availing Cenvat credit under Rule 57AB of the erstwhile Central Excise Rules, 1944 (now Rule 3 of Cenvat Credit Rules, 2002). The respondent is importing old ships for breaking and is availing of the credit of additional custom duty paid on the ships as Cenvat credit, and is utilizing the same for fulfilling the duty liability at the time of clearance of its final products.

Three show cause notices under Rule 57AH (now Rule 12 of Cenvat Rules) read with Section 11A and Section 38A of the Central Excise Act, 1944 and interest u/s 11AB of the Central Excise Act, 1944, were issued to the respondent-assessee for having wrongly taken credit of additional custom duty paid on bunker, foodstuff etc. The Assistant Commissioner confirmed the demand raised in the show-cause notices vide Order in Original No. BVR/46-48/2003, dated March 31, 2003. Aggrieved by the said order, the assessee preferred an appeal before the Commissioner (A), Central Excise, Rajkot, who rejected the appeal by order dated July 18, 2003. Thereupon, the assessee preferred an appeal before CESTAT, WZB, Mumbai. The appeal was dismissed by order dated October 31, 2003.

Thereafter the, Assessee filed an application for rectification of mistake, and pointed out that points regarding non-chargeability of interest on unutilized Cenvat credit were not considered. The CESTAT, Mumbai allowed the application by order dated January 4, 2005. Aggrieved by the said order, the appellant has filed the instant appeal.

This Court has heard Mr. J.M. Malkan, learned Assistant Solicitor General of India, at length and in detail.

The finding recorded by the Tribunal is as under:

We have considered the rival submissions. We find that while it has been held that fuel oil and food stuff on board ship are not inputs required directly or indirectly or in relation to manufacture of scrap emerging from the breaking of the ship, and therefore, not eligible for Modvat credit, there is no specific finding on whether interest can be levied on the amount of credit, which has been directed to be reversed. The direction for reversal itself would establish the correctness of the contention of the submissions that the credit was not availed by them but lying unitized. In these circumstances charging of interest on the amount of credit lying unutilized is not correct in law. We, therefore hold that the applicants are not liable to pay interest on the Amount of credit, which was lying unutilized and which has been ordered to be reversed.

The learned Counsel for the appellant could not point out any infirmity in the order referred to above. Under the circumstances, the substantial question of law, as suggested by the appellant, does not arise for consideration of this Court.

The appeal, therefore, fails and is dismissed.