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Central Excise - Case Laws
Showing 1 to 20 of 80318 Records
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2024 (4) TMI 1011
100% EOU - Levy of Excise Duty on wastages - shortages are to be considered as handling loss as claimed by the appellant - extension of benefit of no duty or liable to pay duty on these admitted losses/shortages - Time Limitation - HELD THAT:- From the N/N. 23/2003-CE dated 31.3.2003 and the provisions at para 6.8 of the Foreign Trade Policy clearly mentions that the DTA clearances include Scrap/waste/remnants arising out of production process or in connection therewith may be sold in DTA, as per SION notified under Duty Exemption Scheme, on payment of concessional duties as applicable, within overall ceiling of 50% of FOB value of exports. In respect of items not covered by norms, DC may fix ad-hoc norms for a period of six months and within this period, norms should be fixed by Norms Committee. Ad-hoc norms will continue till such time norms are fixed by Norms Committee. Sale of waste / scrap / remnants by units not entitled to DTA sale, or sales beyond DTA sale entitlement, shall be on payment of full duties. Scrap / waste / remnants may also be exported.
In the present case, it is an admitted fact that the goods were manufactured and cleared but were found short either while loading or transportation or for various other reasons which have not been explained or have any norms in the industry that envisages such shortages/losses etc; the fact that they have approached the Development Commissioner/DGFT substantiates the Revenue’s argument that there was no concept of wastages or losses allowed to the Appellant.
Since it is an admitted fact that neither the Development Commissioner nor the DGFT have fixed any norms in spite of their repeated representations, the question of allowing these wastages as ‘handling losses’ is not within the purview of the Department. Therefore, the appellant is liable to pay duty on these wastages/losses. The eligibility of concessional duty is available, provided the DTA clearances are within 50% of overall ceiling of the FOB value of exports. The appellant claims that their clearances are within this 50% limit and if so, they are eligible for the benefit of the concessional rate of duty. Notification No.4/2006 dated 01.03.2006 is not relevant for 100% EOU.
Time Limitation - HELD THAT:- It is an admitted fact that the shortage was detected by the Department only on 25.08.2011 and the show-cause notice was issued on 29.01.2014 which is within 5 years of the date of knowledge. In fact, no return was filed explaining the shortages and it was noticed only after visiting the unit and the return was filed at a later date. The Hon’ble Supreme Court in the case of THE COMMISSIONER OF CENTRAL EXCISE VERSUS M/S. MEHTA & CO. [2011 (2) TMI 2 - SUPREME COURT] held that A bare perusal of the records shows that the aforesaid reply was sent by the respondent on receipt of a letter issued by the Commissioner of Central Excise on 27-2-1997. If the period of limitation of five years is computed from the aforesaid date, the show cause notice having been issued on 15-5-2000, the demand made was clearly within the period of limitation as prescribed, which is five years.
Based on the above the demand is within 5 years from the date of knowledge and therefore the claim of the appellant that it is time barred is unacceptable.
The demand of duty upheld but the benefit of the Notification No.23/2003-CE dated 31.03.2003 extended, without extending the benefit of SAD since the appellant has not proved that VAT has been discharged on these shortages. The matter stands remanded for redetermination of duty after extending the benefit of Notification 23/2003-CE dated 31.03.2003.
The appeal is allowed by way of remand.
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2024 (4) TMI 1010
Classification of goods - agglomerate plastic granules - classifiable under Heading 39159029 as waste, paring and scrap of plastic, or as polymers of ethylene in primary form under 39019090? - availability of concessional rate of 5% under Notification No. 21/2002-Cus., dated 01.03.2022 - HELD THAT:- The chapter heading 3915 does not apply to waste, parings and scrap of a single thermoplastic material transform into primary form and for such material the appropriate heading is 3901 to 3914. A perusal note would indicate that the terms primary form applies to lumps, powder and granules. The chemical examiners report clearly holds that the goods are single thermoplastic material and are in form of lumps, powder granules etc. The chemical examiner further holds that the goods are in primary form. In these circumstances, the attempts to sustained classification of goods under heading 3915 cannot be upheld. In terms of Notes 6 and 7 and in terms of the chemical examiner report, it is apparent that the goods are not classifiable under heading 3915 being of single thermoplastic material in primary form.
If single thermoplastic material is transform into primary form from waste scrap, it would remain classifiable under heading 3901 to 3914. Thus, it is apparent from the explanatory note of HSN that the impugned goods cannot be classified under heading 3915 and have to be classified under heading 3901 to 3014 depending on the material. In the instant case, the Chemical Examiner Reports have clearly indicated that the material is polyethylene and it is in primary form.
In this instant case, the goods being polyethylene are classifiable under heading 3901 - there are no merit in the impugned order and the same is set aside - appeals are allowed.
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2024 (4) TMI 1009
CENVAT Credit - inputs and input services used for the generation of electricity which, later on, is cleared to its sister unit situated at Urse free of cost - reversal in terms of provisions of Rule 6(3A) of Cenvat Credit Rules, 2004 with interest and penalty - HELD THAT:- In the case in hand there is no such allegation about sale of electricity in the show cause notices but authorities below have proceeded on the premise that during this period the appellant had sold the electricity to MSEDCL also. As per records, during the period in issue the electricity was supplied only to the sister unit at Urse and that too free of cost and in an identical situation this Tribunal in appellant’s own case M/S. FINOLEX INDUSTRIES LTD. VERSUS COMMISSIONER OF CGST, KOLHAPUR [2023 (3) TMI 1478 - CESTAT MUMBAI] has held that no reversal needs to be made in respect of electricity supplied to their sister concern by the appellant. In that appeal at some point of time the electricity was also sold to MSEDCL, therefore for calculation purposes the matter was remanded back to the adjudicating authority but since in the case in hand there is no allegation of sale of electricity to MSEDCL in the show-cause notice therefore no remand is required.
In yet another decision the Hon’ble Rajasthan High Court, in the matter of COMMISSIONER OF CENTRAL GOODS AND SERVICE TAX, JAIPUR VERSUS SHREE CEMENT LIMITED [2018 (9) TMI 822 - RAJASTHAN HIGH COURT] where the facts were almost similar, while dismissing the Appeal filed by Revenue, held that the decision of the Hon’ble Supreme Court in the matter of M/S. MARUTI SUZUKI LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, DELHI-III [2009 (8) TMI 14 - SUPREME COURT] will not apply and the view taken by the Tribunal is just and proper that the cenvat credit of inputs and input services used in the power generated in the captive power plant and transferred to the sister concern is admissible to the assessee since the input and input services were ultimately used in the manufacture of dutiable final products either by the assessee or by their sister concern.
The appellants are entitled to cenvat credit on inputs and input services used for production of electricity which is transferred to its sister unit at Urse free of cost - the impugned order is set aside - appeal allowed.
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2024 (4) TMI 1008
Recovery of amount of CENVAT Credit short reversed/not paid by the Noticee alongwith interest and penalty - exempt goods or not - benefit under Notification No. 12/2012-CE dated 17.03.2012 (Sr. No. 179) - assessment in case two options available - revenue neutrality - Extended period of Limitation - HELD THAT:- The amount of CENVAT credit available on the inputs and the amount which needs to be paid as duty on the final products cannot determine whether the goods are dutiable or exempted. If, duty is paid, even if it is one rupee, the goods are duty paid and it is immaterial how much, if any, CENVAT credit on inputs or input services was available. Therefore, the goods cleared by the appellant claiming the benefit of Notification No. 12/2012-CE (Sr. No. 179) are clearly exempted goods as the appellant had claimed the benefit of exemption notification and should have been considered as such while calculating the amount of CENVAT credit to be reversed under rule 6(3A) of CCR.
The alternative submission of the appellant is that it can now re-assess the duty, forego the exemption notification 12/2012-CE, and claim CENVAT credit of the duty paid on its inputs - HELD THAT:- It is true, that if more than one options are available, the assessee can choose what is most beneficial to it. If it chooses wisely, it will gain and if it does not choose wisely, it will lose. In this case the appellant had made the choice while self-assessing the duty. Assessment including self-assessment is appealable before the Commissioner (Appeals) and there is nothing on record to indicate that the appellant had appealed against its assessment - the contention of the appellant cannot be accepted.
In ITC LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA -IV [2019 (9) TMI 802 - SUPREME COURT] the Constitution Bench of the Supreme Court held that all assessments, including self assessment, can be assailed before the Commissioner (Appeals). There are no provision under which the assessee can retrospectively revise its own self-assessment.
Revenue neutrality - HELD THAT:- The concept of revenue neutrality was only brought in through a series of judicial pronouncements for the limited purpose of determining if the assessee could have had “an intention to evade” to justify invoking extended period of limitation while raising the demand under section 11A. The settled legal position is that if the entire exercise is otherwise revenue neutral, the assessee could not have had any intention to evade and, therefore, extended period of limitation cannot be invoked. So far as the normal period of limitation is concerned, revenue neutrality or even revenue negativity makes no difference to the application of the provisions of the law.
Extended period of limitation - HELD THAT:- It is for the department to prove that one of the elements required to invoke the extended period of limitation were present in the case. It makes no difference if the assessee is operating under self-assessment as every assessee operates by self-assessment. It must also be noted that if the excise returns require information in a particular form and once it has been provided as required, the assessee has no further responsibility - Indisputably, the entire period of demand in this case is beyond the normal period of limitation and hence the demand is time barred.
The impugned order is set aside - appeal allowed.
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2024 (4) TMI 962
CENVAT Credit - mentioning of wrong address in the invoice - HELD THAT:- The orders dated 22.08.2019 and 20.08.2020 are hereby quashed and set aside. The matter is remanded back to the adjudicating authority-Additional Commissioner of CGST and Central Excise who shall decide the proceedings on remand, after giving fullest opportunity to the petitioner, without in any way being influenced by this order and on merits. None of the findings and observations recorded in this order would in any manner influence or prejudice either side.
Application disposed off.
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2024 (4) TMI 961
CENVAT Credit - Input service distribution - credit distributed by M/s. Parle Biscuit Private Ltd. i.e. ‘inputs service distributor’ to the appellant, a contractual manufacturer/job worker, for the period prior to 01.04.2016 is in accordance with Rule 7 of CENVAT Credit Rules, 2004 as prevailing at the relevant time or not - HELD THAT:- Prior to 01.04.2016 also, Rule 7 allows distribution of credit to ‘its manufacturing units.’ Here the words used are ‘its manufacturing units’ which, in absence of anything contrary, cannot be said to be limited to ‘manufacturing unit’ owned by Parle Biscuits only. The first principle of interpretation is that the words used in any statute have to be interpreted without adding any words. The term ‘its manufacturing unit’ has certainly a wider term to include an outside manufacturing unit or the job worker. Another thing which supports my aforesaid view is the Registration Exemption Notification issued in the year 2001 under Rule 9(2) of Central Excise Rules, 2001 which provides for exemption from registration of the authorised person to manufacture goods on behalf of principal manufacturer - As per the agreement between appellant and Parle Biscuits, they were receiving the raw materials from them and finished goods were processed at their factory with their won labour but Trademarks of Parle Biscuits were cleared on payment of duty to the depot of Parle Biscuits.
Number of decisions have been placed on record by the learned Counsel in support of her submission that even prior to 01.04.2016 Rule 7 ibid permitted distribution of credit by the Input Service Distributor even to contract manufacturer or the job worker. I have gone through all the decisions. In my view the issue involved herein is no more res integra in view of those decisions and in particular the reference answered by the Larger Bench of the Tribunal on the very same issue in the matter of the M/S. KRISHNA FOOD PRODUCTS, MS. MARIAMMA R. IYER AND M/S. PARLE BISCUITS PVT LTD. VERSUS THE ADDITIONAL COMMISSIONER OF CGST & C. EX [2021 (7) TMI 296 - CESTAT NEW DELHI] in which it has been held even in terms of the provisions of rule 2(m) and rule 7 of the CENVAT Rules, as they stood prior to 01.04.2016, the appellant could distribute CENVAT credit in respect of the service tax paid on inputs services to its manufacturing units, including a job workers.
M/s Parle Biscuits Pvt Ltd. i.e., the input service distributor has rightly distributed the Credit to the appellant and the appellant is justified in availing the same - the impugned order is set aside - appeal allowed.
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2024 (4) TMI 960
MODVAT Credit - proper duty paying documents or not - challans-cum-invoices issued by M/s. SAIL, do not contain the duty payment details - HELD THAT:- N/N. 15/1994-C.E.(N.T.) dated 30.03.1994 provides relaxation to avail MODVAT Credit on the basis of challans-cum-invoices issued by stockyards of manufacturers subject to the condition that such challans-cum-invoices shall contain all the duty payment particulars. In the present case, it is alleged that the challans-cum-invoices based on which the appellant availed credit did not contain the details of payment of duty and accordingly, the MODVAT Credit has been disallowed.
There is no allegation in the Show Cause Notice or the impugned Order-in-Original that the appellant had not received the goods in the premises of the factory. There is no allegation that the supplier viz. M/s. SAIL has not made payment of duty. If there was any doubt regarding payment of duty by M/s. SAIL, then the Department should have demanded the duty from M/s. SAIL and not from the appellant. As far as the appellant is concerned, they have received the goods into the factory on payment of appropriate duty and utilized the same in the manufacture of their finished products based on the challans-cum-invoices issued by the depots of M/s. SAIL. Thus, we observe that there is no dispute regarding the duty-paid nature of the goods.
The substantive benefit of MODVAT Credit cannot be denied due to procedural lapses.
Thus, the substantive benefit of MODVAT Credit cannot be denied on the ground of procedural lapses. Accordingly, the appellant is eligible for the MODVAT Credit on the basis of the challans-cum-invoices issued by the depots of M/s. SAIL - the impugned order is set aside.
Appeal allowed.
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2024 (4) TMI 959
Non-payment of duty fixed for the month of March 2000 - Compounded Levy Scheme - invoking the proviso to Section 11A of the Central Excise Act, 1944 alleging suppression of fact - extended period of limitation - HELD THAT:- It is observed from the Show Cause Notice that the demand has been raised by invoking the provisions of Section 11A of the Act and penalty has been imposed for contravention of the provisions of Section 11A on the ground that the appellant had mala fide intention to evade the payment of duty.
The appellant has declared the non-payment of duty for the month of March 2000 in the return filed by them. They have not suppressed any information from the Department. The Show Cause Notice was issued by invoking the proviso under Section 11A on the ground that the appellant had deliberately not paid Central Excise Duty. No suppression of fact with intention to evade payment of duty exists in this case. The appellant has declared all the information in their RT-12 return and the Notice has also been issued upon scrutiny of the RT-12 return filed by the appellant for the month of March 2000. Accordingly, the extended period of limitation as provided under proviso to Section 11A is not invokable in the present case.
The demand has been raised by invoking the proviso to Section 11A of the Act. As the ingredients for invoking proviso to Section 11A does not exist in this case, the demand confirmed in the impugned order is not sustainable on the ground of limitation.
The demand confirmed in the impugned order set aside on the ground of limitation - appeal allowed.
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2024 (4) TMI 958
SSI Exemption - clubbing of clearances of four units - dummy unit created for the purpose of claiming benefit of SSI exemption - Confiscation of the goods and imposition of redemption fine - HELD THAT:- Though the units were jointly managed by way of common employee, common workers, common marketing set-up etc., the benefit of SSI exemption notification was claimed individually by each of one of them. M/s Precision Equipment Co. was started in the year 1991 as proprietary firm under the proprietorship of Shri Rajubhai Jaisinghani. Later on, one by one other firms were created. Another allegation of the Revenue is that all the units were so much interdependent on each other that production and marketing were commonly managed by Proprietors and Directors of the firm and there is financial flow back between them.
It is found that all the units have their own separate and independent existence. M/s Precision Equipment Co. was a proprietorship firm of Shri Rajubhai Jaisinghani, M/s Pratik Enterprises was a proprietorship firm of Shri Bhagubhai Prajapati, M/s Precision Industries was a proprietorship firm of Shri Prembhai Manuskhani and M/s Precision Rotogravure pvt. Ltd. had three directors viz. (i) Rajubhai Jaisinghani, Shri Bhagubhai Prajapati and Shri Prembhai Mansukhani. Separate Locations, Central Sale Tax Registration Certificate, Gujarat Commercial Tax Registration Certificate, separate Electricity Meters and separate Bank Accounts. Appellants also produced before us their separate profit & loss accounts, balance sheets, Audit reports, VAT return filed by them, sample bank account statements, purchase accounts and sales accounts.
In the present matter it is admitted fact by the revenue itself that M/s Precision Industries had bought raw materials and got finished goods manufactured on Job Work Basis. The Job Workers had also accepted that they had done job work of M/s Precision Industries also. The officers had also visited the premises of all units and found that all the units have separate existence and have separate premises and independent electricity connection etc. Some processes were being done outside the premises on job work basis by the said units, which were also confirmed by the job workers.
In the present case the individual manufacturing appellants have independent identities since the Revenue could not establish that their books of accounts are common, that their bank accounts are common, that their registration with Income Tax, Sales Tax are common and that there is common funding and that there is mutuality of interest and that there is financial flowback. In the absence of any such evidence, it is held that the manufacturer units are independent units and therefore, their clearances could not be clubbed together. Therefore, the issue of clubbing the clearances is not sustainable in the absence of concrete and corroborative evidences.
Confiscation of the goods and imposition of redemption fine - HELD THAT:- Confiscation of the goods which were not available is not legal and correct, therefore consequently redemption fine was not warranted as held in the Larger Bench’s judgment in the case of SHIV KRIPA ISPAT PVT. LTD. VERSUS COMMISSIONER OF C. EX. & CUS., NASIK [2009 (1) TMI 124 - CESTAT MUMBAI].
The impugned order is set aside - appeal allowed.
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2024 (4) TMI 951
Violation of principles of natural justice - opportunity of personal hearing, not provided to petitioner - exemption for the services provided to the Government - attachment of Bank Accounts of petitioner - HELD THAT:- This issue has already been decided by the Division Bench of the Principal Seat of this Court in W.P.No.24996 of 2019, dated 30.11.2022, wherein, similar contractors are directed to approach the appellate authority and it was held that wherever the Orders-in-Original have been passed, the respective petitioners are given liberty to file statutory appeal before the Appellate Authority subject to the compliance of the other requirements of pre-deposit the amount as is contemplated under Section 35F of the Central Excise Act, 1944 as made applicable to the Finance Act, 1994, within a period of thirty (30) days from the date of receipt of a copy of this order.
This writ petition is disposed of with a liberty to the petitioner to file a statutory appeal before the Appellate Authority concerned within a period of four weeks from the date of receipt of a copy of this order.
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2024 (4) TMI 904
Maintainability of petition - alternative appeal - waiver of pre-deposit - seeking the petitioner be relegated to appeal jurisdiction under Section 86 of the Finance Act, 1994 and direct the Tribunal to grant waiver of pre-deposit - HELD THAT:- An alternative efficacious remedy is available to the petitioner wherein, the petitioner has already filed his appeal. The very fact that the petitioner has already filed the appeal, precludes this Court from now examining this matter in writ jurisdiction. The petitioner cannot be allowed to be sitting on the fence. The filing of this petition is nothing but an after thought as the petitioner wants to escape the liability of payment of pre-deposit, which is mandated by law.
In a catena of judgements, the Supreme Court and various High Courts have categorically held that the condition of the pre-deposit cannot be waved/modified by the High Court in its extraordinary discretionary writ jurisdiction. Any discretion to be exercised by the writ Court is judicial in nature and is required to be exercised only in accordance with law. If the High Courts were to interfere/tinker with the amount of pre-deposit to be deposited, the entire provision of pre-deposit would become otiose.
A Division Bench of this Court in Shri Subhash Jain v. Commissioner of Central Goods And Service Tax [2023 (4) TMI 52 - ALLAHABAD HIGH COURT] has categorically held that in case of Central Excise Act the Courts does not have the power to waive the pre- deposit. The Division Bench of Bombay High Court in Kantilal Bhaguji Mohite v. Commr of C. Excise & Service Tax, Pune-III [2019 (2) TMI 1029 - BOMBAY HIGH COURT] has similarly laid down the ratio with regard to waiver of pre-deposit.
The judgements in Shri Subhash Jain and Kantilal Bhaguji Mohite are binding - this petition has no merit - petition dismissed.
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2024 (4) TMI 903
CENVAT Credit - inputs - respondent does not possess any furnace to use such inputs in or in relation to manufacture of final product - whether for the purpose of eligibility of Cenvat Credit, the classification of the input is irrelevant? - burden of proof upon the respondent to establish that the goods covered under Central Excise Tariff sub-heading No.72044100 procured by the respondent treating them as `inputs’ has been used in the manufacture of finished products without requiring a furnace in the factory - HELD THAT:- As a general proposition, the Tribunal may be right that the classification issue will not be a relevant issue for the purpose of claiming of Cenvat credit. However, when an issue is argued before this Court at the instance of the assessee and the revenue, the Court is bound to consider the same.
Having said so, it is now require to examine whether the Tribunal was right in allowing the assessee’s appeal - In paragraph 13 of the impugned order, the Tribunal has taken note of the factual position and found that the assessee had purchased goods from SAIL and others and they have been subjected to heating, straightening to make them suitable for rolling and sometimes cut to sizes and then rerolled to manufacture their final products and the rolling mill installed by them have the capacity to roll such items. This factual position appears to have not been shown to be wrong by the Department.
Further, the Tribunal has noted that the respondent’s rolling mill has the capacity to roll such items and the Department has not produced any evidence to counter the claim. The argument on behalf of the revenue before is by referring to the observations made by the adjudicating authority in paragraph 6.2 of the order-in-original dated 13th February, 2017. However, the said observation is not relatable to the respondent assessee since the adjudicating authority after referring to the classification under Tariff Item No.72044100 makes an observation that for manufacture of MS Flat/Bar, MS Channel, MS Round, MS Angle, MS Ribbed Bar etc. There is a requirement of ingots and billets. However, this observation made by the adjudicating authority does not relate to the factual position of the assessee’s case.
Thus, there are no question of law much less substantial questions of law arising for consideration - appeal dismissed.
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2024 (4) TMI 902
CENVAT Credit - removal of capital goods as waste and scrap - waste and scrap of fire brick after use in the kiln during the period 2010-11 (upto February 2015) - Rule 3 (5A) of Cenvat Credit Rules, 2004 - HELD THAT:- Rule 3 (5A) of Cenvat Credit Rules, 2004, though provides that in case of removal of capital goods as waste and scrap, the assessee is required to pay the duty after reducing 2.5% per quarter for the period of use of capital goods. However, the appellant have taken the support of decision of BIRLA CORPORATION LTD. VERSUS COMMR. OF C. EX., RAIPUR [2002 (11) TMI 239 - CEGAT, COURT NO. IV, NEW DELHI] which deals with the provisions of 57S (2)(c) of Central Excise Rules, 1944 which provides that in case of removal of capital goods as waste and scrap, the assessee is required to pay the duty after reducing 2.5% per quarter for the period of use of capital goods.
The appellant have taken the support of decision of Birla Corporation Limited which deals with the provisions of 57S (2)(c) of Central Excise Rules, 1944 where it was held that where capital goods are sold as waste and scrap, the manufacturer shall pay the duty leviable on such waste and scrap.
It can be seen that the provisions for payment of duty on waste and scrap of capital goods in both the above rules are almost Pari-Materia, therefore, the decision of Birla Corporation is applicable.
In view of the above decision the principal bench of Tribunal held that the use of fire brick which is dismantle from the under shell of kiln is not liable to duty as waste and scrap. Since the fact of the present case is identical to the above decision and considered view taken by the Tribunal on the identical facts, the duty on waste and scrap is not liable to be paid.
In the present case also the appellant is not liable to pay the duty confirmed by the lower authority - the impugned order is set aside. Appeal is allowed.
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2024 (4) TMI 901
Reversal of CENVAT Credit - Interest liability on Reversal - reversal of proportionate input credit relating to the exempted goods cleared every month properly during the periods from November 2007 to January 2011 and from November 2008 to December 2010 - Rule 6(3)(a) and Rule 6(3)(ii) of CENVAT Credit Rules - HELD THAT:- The appellant’s claim that sufficient balance was available in CENVAT Credit account to reverse the credit and no pecuniary benefit was derived in any manner has not been contested by Revenue. Under the CENVAT credit scheme there was no co-relation of the raw material and the final product, and the manufacturer is entitled to use the credit at any time thereafter when making payment of excise duty on the excisable product. The government has not been deprived of duty on the date it became due as sufficient credit was available to take care of the debits made even without taking the disputed credit into account.
The Hon’ble High Court of Karnataka in COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX LARGE TAXPAYER UNIT, BANGALORE VERSUS M/S BILL FORGE PVT LTD, BANGALORE [2011 (4) TMI 969 - KARNATAKA HIGH COURT] has examined the judgment of the Hon’ble Supreme Court in UOI AND ORS. VERSUS IND-SWIFT LABORATORIES LTD. [2011 (2) TMI 6 - SUPREME COURT] and distinguished the same. The Hon’ble High Court held that when the assessee has not taken the benefit of the CENVAT credit, there is no liability to pay interest. Once the credit entry was reversed, it is as if the CENVAT credit was not available.
Also, no interest is payable in the circumstances and the question of imposition of a penalty does not arise.
The impugned orders are hence set aside, and the appeals are allowed.
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2024 (4) TMI 900
Refund of accumulated credit - appellant who pays service tax under reverse charge mechanism can also be called ‘output service provider’ or not - manufacturer of goods having ‘nil’ tariff rate of duty is eligible for Cenvat Credit at all.
Refund claim - HELD THAT:- The comprehensive coverage of MODVAT was achieved by 1996-97 by introduction of Central Value Added Tax (CENVAT).Later CENVAT scheme also allowed credit of services and the basket of inputs, capital goods and input services could be used for payment of both central excise duty and service tax. Thus, it does not stand to reason, for denying input tax credit and its refund in certain situations, on the ground that the legal provisions of such a refund is not applicable to such other persons, who have been made liable to pay service tax under Section 68(2) ibid.
Further, it is also found that the above issue is no more open to dispute as in the appellants’ own case COMMISSIONER OF CE & SERVICE TAX, KOLHAPUR VERSUS ROYAL FOODSTUFF PVT. LTD. [2018 (8) TMI 601 - CESTAT MUMBAI], the Tribunal has held that they are eligible to refund of CENVAT credit under Rule 5B ibid and distinguished the other cases where the Tribunal had ordered for dismissal of the appeals filed by the appellants.
Eligibility to CENVAT credit to a manufacturer of goods having ‘nil’ tariff rate of duty - HELD THAT:- The provisions under Sub-rule (6)(v) to Rule 6 clearly provide that the restriction or denial for non-availability of Cenvat credit under various sub-rules of Rule 6 shall not be applicable for manufacture of exempted goods which are cleared for export. Thus, the findings of the learned Commissioner (Appeals) in denial of Cenvat credit on the ground that the appellants being manufacturer of Nil rated goods, would stand covered by the restriction under Rule 6(1) ibid is incorrect and is not legally sustainable.
Furthermore, the above issue is no more res integra in view of the judgement delivered by the Hon’ble High Court of Bombay in the case of UNION OF INDIA VERSUS SHARP MENTHOL INDIA LTD. [2011 (4) TMI 27 - BOMBAY HIGH COURT] where it was held that since the exempted menthol crystals as well as dutiable peppermint oil manufactured out of duty paid menthol have been exported by the assessee, the provisions of Rule 6(1) to 6(4) of the 2004 Rules are not applicable and as per Rule 5 of 2004 Rules, the assessee was entitled to avail the Cenvat credit of duty paid on menthol used in the manufacture of exempted menthol crystals and utilize the said credit for payment of duty on clearance of peppermint oil either for home consumption or for export. In the present case, since the peppermint oil has been exported on payment of duty, the assessee was entitled to claim rebate of the duty paid on peppermint oil.
Thus, it is found that there are no strong grounds to deny refund of CENVAT credit under Rule 5B of CENVAT Credit Rules, 2004. Consequently the impugned order dated 29.09.2015 is not legally sustainable.
The appellants are eligible for total refund of CENVAT credit of Rs. 12,65,459/- in respect of the claims given - the impugned order is set aside - appeal is allowed in favour of the appellants.
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2024 (4) TMI 899
Short payment of Central excise duty - reversal of irregular credit - revenue neutrality - difference in book stock and physical stock - Proof of replacement of goods - Extended period of Limitation.
Short payment of duty - stock transfer of goods to their sister concern - HELD THAT:- Demand has been raised on the appellant holding that certain elements of cost have not been added while ascertaining the assessable value. It is observed that the department has not adduced any evidence to the effect that which cost was not included and why such cost is to be included. In the absence of any specific cost not added in the assessable value by the appellant, we observe that the allegation of the department is not substantiated.
Revenue Neutrality - HELD THAT:- The entire exercise is revenue neutral and thus the demand is liable to be set aside on this ground alone - reliance placed on the decision of this Tribunal in the case of M/S. HINDALCO INDUSTRIES LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, BHUBANESWAR-II [2023 (5) TMI 720 - CESTAT KOLKATA] wherein on similar facts, this Tribunal has held that when the entire exercise is revenue neutral, the demand is not sustainable as the duty paid will be available as credit for their sister unit and there is no loss of revenue to the exchequer.
The demand confirmed in the impugned order on this count is not sustainable and accordingly, the same is set aside.
Short payment of duty on the goods sent free of cost to customers - HELD THAT:- The appellant has adopted the valuation method of 110% of the cost, to pay duty on the free supplies to customers - it is observed that when similar goods are not sold by the appellant, the valuation adopted by the Appellant is valid and thus we hold that there is no short payment of tax. Accordingly, the demand confirmed in the impugned order on this count is not sustainable and hence the same is set aside.
Denial of CENVAT Credit taken on the goods rejected by the customers and returned to the supplier and subsequently replaced - HELD THAT:- When the goods are purchased as inputs but are later returned for being defective and are replaced by the supplier, credit cannot be denied to the supplier. In support of this contention reliance placed on the decision of the Tribunal in the case of ERICSSON INDIA PVT. LTD. VERSUS COMMISSIONER OF C. EX. & S.T., JAIPUR [2014 (10) TMI 896 - CESTAT NEW DELHI], Approved in COMMR. OF C. EX. & S.T., JAIPUR-I VERSUS ERICSSON INDIA PVT. LTD. [2018 (1) TMI 1266 - RAJASTHAN HIGH COURT].
Proof of replacement of goods - HELD THAT:- It is observed that the SAP entries will prove that the goods retuned have been replaced or not. However, credit on the goods returned cannot be denied to the appellant on only procedural ground. Accordingly, the demand confirmed in the impugned order on this count is not sustainable and hence the same is set aside.
Denial of CENVAT Credit related to services not used in relation to manufacture of final products - HELD THAT:- It is observed that the credit in this case has been availed by the Appellant on certain installation and other services which were availed in respect of Erection, Commissioning, Installation provided by the Appellant at the head office. It is observed that there is no specific finding in the impugned order for denial of this credit to the appellant. Accordingly, the appellant is eligible for this credit.
Demand of duty on account of difference in book stock and physical stock in respect of Plate Hardox and MS Plate - HELD THAT:- The duty has been demanded from the appellant on the assumption that the said goods have been removed without payment of duty. We observe that the department has not produced any evidence to substantiate the allegation that the goods have been clandestinely removed by the Appellant without payment of duty. It is a settled law that no demand can be raised without any evidence or proof of clandestine removal. Since there is no evidence available on record to substantiate the allegation of clandestine removal, the demand confirmed in the impugned order on this count is not sustainable and accordingly the same is set aside.
Since the demands of central excise duty and the reversal of Cenvat Credit confirmed in the impugned order are held to be not sustainable, the question of demanding interest and imposing penalty on the appellant does not arise.
The impugned order is set aside - appeal allowed.
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2024 (4) TMI 860
Reversal of proportional CENVAT Credit - manufacture as well as trading activity - demand on the ground that the sale of tyre tube and flap in set to their depot is a trading activity which as per amendment made on 01.04.2011 such trading activity is a exempted service accordingly proportionate credit is required to be reversed - HELD THAT:- The activity of selling the tyre duly fitted with tube and flap whether a trading activity or otherwise is pending before the Hon’ble Supreme Court in appellant’s own case in SLP (CE) No. 34310-34311/2011 wherein two orders were issued by the Hon’ble Supreme Court dated 14.10.2011 and 08.11.2011. In view of this position unless it is decided that the activity is a trading activity or otherwise the consequential liability of proportionate credit in respect of service tax cannot be concluded.
Moreover the appellant have vehemently argued that the quantification of proportionate credit is incorrect, this is also reason that the matter needs to be reconsidered as regard the correct quantification of the demand. In this position the entire matter on all the issues need to be reconsidered only after the outcome of the Hon’ble Supreme Court judgment in the appellant’s SLP pending.
The impugned order is set aside - Appeal is allowed by way of remand to the adjudicating authority for passing a fresh order.
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2024 (4) TMI 859
Refund claim - rejection on the grounds of unjust enrichment - requirement to be credited to Consumer Welfare Fund constituted under Section 12C of Central Excise Act 1944 - HELD THAT:- It is quite evident that the appellant has categorically stated in the letter that they are charging the central excise duty from their customer, while maintaining the selling price at the same level by increasing the discount given from 40% to 52.10%. Undisputedly appellant himself admits that they are charging the central excise duty from their customers. That being so the burden of duty paid has been passed on the customer. The reason for giving additional discount to the customers can be many including the product competitiveness.
Appellant have argued that they had increased the discount percentage on the goods so that the burden of duty is not passed on. However this argument though attractive is without any merits. From the table in para 4.11 it is evident that for determination of the assessable value they have claimed deduction of 40% or 52.10% whereas the price of the goods to the customer remained the same. What they have recovered from the customers is the price of the goods and not the cum duty price. Above analysis clearly establishes that the appellant has passed on the burden of the duty paid on to their customers.
In case of COMMISSIONER OF C. EX., MUMBAI-II VERSUS ALLIED PHOTOGRAPHICS INDIA LTD. [2004 (3) TMI 63 - SUPREME COURT], Hon’ble Supreme Court has held even on merits, the respondent has failed to make out a case for refund. Since relevant factors stated above have not been examined by the authorities below, we do not find merit in the contention of the respondent that this Court should not interfere under Article 136 of the Constitution in view of the concurrent finding of fact.
If on examination of facts and documents the conclusion is that burden of the duty has been passed on to the customers the refund could not have been directed to the appellants but would have to be credited to the consumer welfare fund.
There are no merits in this appeal - appeal dismissed.
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2024 (4) TMI 858
Levy of Excise Duty - appellant has retained certain portion of freight without paying the same to the transporters on such freight amounts retained - place of removal - Extended period of limitation - HELD THAT:- It is seen from the record that the appellant is paying VAT at their factory gate as is evidenced by the invoices enclosed with the appeal papers. Therefore, ‘the place of removal’ in this case would be the factory gate of the appellant. This issue is no more res integra. The Hon’ble Supreme Court in the case of COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE, NAGPUR VERSUS M/S ISPAT INDUSTRIES LTD. [2015 (10) TMI 613 - SUPREME COURT] has held The fact in the present case 'deliverable state of goods, arises only at the time of safe delivery of goods at the customers' premises specified in the purchase order However, with reference to section 24 of the Sales of Goods Act, it was observed that in the instant case the property in the goods have passed only at the site of buyer. Therefore such place constitutes the 'place of removal of goods for section 4 of the Central Excise Act.
Extended period of Limitation - HELD THAT:- There are substantial force in the appellant’s contention that the issue was that of interpretation and was resolved only after the judgment of the Hon’ble Supreme Court in Ispat Industries case. Therefore, the confirmed demand for the extended period is liable to be set aside on account of limitation also.
The appeal is allowed both on merits as well as on account of limitation.
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2024 (4) TMI 819
Refund of Excess duty, claimed pursuant to finalisation of provisional assessments - duty burden has already been passed on to the ultimate consumer at the time of clearance of goods or not - principles of unjust enrichment - HELD THAT:- In the respondent’s own case PRINCIPAL COMMISSIONER OF CENTRAL TAX VERSUS M/S. VIKRANT TYRES LTD, [PRESENTLY KNOWN AS JK TYRES AND INDUSTRIES – PLANT-I] [2021 (10) TMI 586 - KARNATAKA HIGH COURT], the Hon’ble High Court Karnataka considering more or less similar arguments and scrutiny of the claims from the angle of applicability of unjust enrichment and the refund sanctioned by the Revenue to the respondent from time to time, held that The authorities have admitted that the credit notes were issued by the assessee to their dealer representing various discounts which have been actually passed on, in accordance with marketing circulars/policies. It is also observed that on verification of sample depot invoices at the time of completion of provisional assessment, that the assessee has not issued any cenvatable invoice from the depot which are prescribed document for availment of cenvat credit under Cenvat Credit Rules, 2004. Thus, it cannot be held that the assessee has not subjected to the test of unjust enrichment.
The said judgment of the Hon’ble High Court is binding on all concerned being the judgment of the jurisdictional High Court in view of the judgment of the Larger Bench of the Tribunal in J.K. TYRE & INDUSTRIES LTD. VERSUS ASST. COMMR. OF C. EX., MYSORE [2016 (11) TMI 911 - CESTAT BANGALORE]. Besides, the aforesaid judgment of the Hon’ble Karnataka High Court has been accepted by the Revenue.
The impugned order of Learned Commissioner(Appeals) is upheld and the Revenue’s appeals being devoid of merit are dismissed.
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