2024 (4) TMI 222 - AT - Central Excise

Utilization of credit of Education Cess (EC) and Secondary Higher Education Cess (SHEC) towards the liability of excise duty denied - invocation of extended period of limitation - mis-leading declaration - suppression of facts or not - HELD THAT - The appellant consciously took the benefit of the notification no.12/2015 for the purpose of utilizing the EC and SHEC towards payment of excise duty, which otherwise was not permissible. But deliberately did not comply with the conditions specified for such utilization, which required that the credit of EC and SHEC paid on inputs or capital goods received in the factory of manufacture of final products on or after the 1st day of March, 2015 could be utilized for the payment of duty of excise. The appellant cannot bifurcate the benefit, which was granted under the notification and avail the same but ignore the conditions specified for such utilization and hence, the invocation of the extended period of limitation was justified - It is settled law that a party cannot approbate and reprobate at the same time. Reference made to decision of the Apex Court in the case of SHYAM TELELINK LTD. NOW SISTEMA SHYAM TELESERVICES LTD. VERSUS UNION OF INDIA 2010 (10) TMI 1017 - SUPREME COURT , laying down that the person taking advantage under an instrument, which both grants a benefit and imposes a burden, cannot take the benefit without discharging the burden. It was, therefore, not permissible for the appellant to avail the benefit of utilization under the notification without discharging the burden of declaring with reference to the cutoff period prescribed therein. Reliance placed by the appellant on the decision of the Metco Roof Pvt. Ltd. 2021 (7) TMI 766 - CESTAT CHENNAI , where the learned Single Member, although upheld the demand raised as legal and proper, however, rejected the levy of penalty as unwarranted, since the issue is of interpretational nature. With due respect, it is begged to differ from the view taken by the learned Single Member in Metco Roof Pvt. Ltd. as the consistent view of the department and the Tribunal and as upheld by the Delhi High Court in Cellular Operators Association of India 2018 (2) TMI 1264 - DELHI HIGH COURT that two cesses i.e. EC and SHEC and the excise duty and the service tax had been treated as different and separate and cross utilization was never permitted. Though the decision of the Delhi High Court is under challenge before the Apex Court in CELLUALAR OPERATORS ASSOCIATION OF INDIA SOCIETY VERSUS UNION OF INDIA ORS. 2018 (8) TMI 2150 - SC ORDER , however, no stay of the impugned order has been granted. Even prior to the decision in Cellular Operators Association of India 2018 (2) TMI 1264 - DELHI HIGH COURT Ahmedabad Bench of the Tribunal in M/S FIELDMAN ENGINEERS PVT. LTD. VERSUS C.C.E. AND S.T. -RAJKOT 2018 (5) TMI 183 - CESTAT AHMEDABAD has specifically held that cenvat credit lying in balance in the account of Higher Secondary Education Cess and accumulated before 1.3.2015 can be used only for discharge of Cess as provided under the rules and cannot be used for discharging the liability of excise duty. The appellant though made a declaration that EC and SHEC is being used in payment of excise duty as per the notification no.12/2015 but that was an incomplete declaration with intent to mis-lead the Department. Once the appellant was utilizing the EC and SHEC towards payment of excise duty by virtue of the liberty granted under the notification, it is the bounden duty to disclose as to whether the credit of the two cesses paid on inputs or capital goods was received on or after 1.3.2015. However, the appellant did not disclose whether the amount was received prior to the cut-off date or after 1.3.2015, knowing that the amount received prior to the said date could not have been adjusted towards the liability of excise duty and deliberately made bald reference to the notification. The reliance placed by the learned Authorised Representative on the decision of the Apex Court in M/S CONTINENTAL FOUNDATION JOINT VENTURE SHOLDING, NATHPA HP VERSUS COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH-I 2007 (8) TMI 11 - SUPREME COURT holding that suppression means failure to disclose full information with intent to evade payment of duty, squarely covers the present case. In that view, the extended period of limitation has been rightly invoked. There are no error in the impugned order and the same is hereby affirmed - appeal dismissed.

Summary

Issues involved: Appeal against denial of credit of Education Cess and Secondary Higher Education Cess for excise duty liability.

Summary:

Issue 1: Invocation of extended period of limitation
The appellant appealed against the denial of credit of Education Cess (‘EC’) and Secondary Higher Education Cess (‘SHEC’) for excise duty liability, arguing that the extended period of limitation cannot be invoked when the demand basis is disclosed in filed returns. The appellant relied on a decision to support their case. However, the respondent contended that the appellant's declaration in the returns was incomplete and deliberately suppressed facts to evade duty payment. The Tribunal found the appellant's declaration misleading and upheld the invocation of the extended period of limitation based on the deliberate non-compliance with conditions for credit utilization.

Issue 2: Compliance with Cenvat Credit Rules
The Tribunal highlighted the amendment in the Cenvat Credit Rules, 2004, specifying conditions for utilizing Education Cess and Secondary Higher Education Cess for excise duty payment. The appellant's declaration indicated utilization of the Cess for duty payment, but failed to comply with the conditions specified in the amendment. The Tribunal emphasized that the appellant cannot selectively avail benefits under the notification while ignoring the prescribed conditions, citing legal precedents to support the decision.

Conclusion:
The Tribunal affirmed the order denying credit of Education Cess and Secondary Higher Education Cess for excise duty liability, stating that the appellant's misleading declaration and deliberate non-compliance justified the invocation of the extended period of limitation. The appeal was dismissed, upholding the decision of the Authorities below.

Note: The judgment was pronounced on 3rd April, 2024 by Hon’ble Ms. Binu Tamta, Member (Judicial) at CESTAT New Delhi.