9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (8) TMI 1328 - AT - Central ExciseEligibility for input Cenvat credit and its utilisation for payment of duty demanded on job worked goods - invocation of Extended period of limitation - levy of fines and penalties. Whether the Appellant is eligible to the input Cenvat credit and its utilisation for payment of duty demanded on job worked goods? - HELD THAT - There is no evidence on record to show that the goods have been directly received by the Appellant on the directions of the principals. The Appellant (A1) has failed to comply with Rule 9(5) of CCR as they have failed to maintain proper records for the receipt, disposal, consumption and inventory of the inputs in which the relevant information regarding the value, duty paid and Cenvat credit taken and utilised, the persons from whom such inputs are procured is recorded and the burden of proof regarding the admissibility of Cenvat credit shall lie upon the manufacturer which is the Appellant (A1) in this case. It is a settled law that adjustment of Cenvat credit of inputs is permissible whenever demand is made by the Department on the final manufactured goods. The Appellant (A1) is eligible to avail Cenvat Credit on the inputs used in the manufacture of job worked goods provided the suppliers of these raw materials endorse the documents in favour of the Appellant (A1) and subject to verification of the duty paid nature of input invoices / documents / Bills of Entry, which were already submitted to the Adjudicating Authority. In paragraph 46.15 of the Order of Adjudicating Authority, it was mentioned that all the documents in five spiral bound booklets for examining the Appellant s eligibility for input Cenvat credit were sent to the Assistant Commissioner of Central Excise, Coimbatore-II division for conducting verification - As there is a considerable delay, verification of the documents submitted to be got completed within a period of 6 months from the date of communication of this order. Whether Extended Period is invokable or not considering the evidence and facts in this appeal? - HELD THAT - The Appellants have not given the true picture of the activity carried out by them on job work. It is also to be noted that the Appellant (A1) has not paid service tax till the raising of the Audit objection in March 2012 though they have started job work production for the suppliers of raw materials from June, 2010. Neither they have paid excise duty nor service tax during this period. The details relating to manufacture of excisable goods on job work basis out of the raw materials supplied by the traders and non-payment of central excise duty thereon was not disclosed by the Appellant (A1) either in the ER-1 Returns filed or by service tax payment or in any other manner - Even, the conduct of appellant defies logic when they have not discharged the excise duty on job worked goods but were paying on its own production of identical goods. In view of the above detailed reasoning, it is held that larger period has been rightly invoked. Whether the imposed fines and penalties are justifiable or not? - HELD THAT - There are no merit in submission of Shri Vikas Sanghrajka (A5), Executive Director of Appellant (A1) that they were under mistaken impression that job work activity undertaken by them would not be manufacturing activity when they have obtained registration and treating the identical activity as manufacture. He is well aware that there was no difference between the manufacturing activity in respect of their own goods and the job work done in respect of suppliers goods - As in charge of day to day activities of the company, he is accountable for deliberate and well planned contravention of the provisions of law in job work manufacture and clearance of the excisable goods without payment of duty. The statement of Smt. Libra, Director of Appellant (A1) to the effect that the company had made incorrect mention of the activity as cutting with an objective to limit duty liabiity supports wilful contravention of law to evade payment of applicable excise duty. Thus, he has played a crucial role in facilitation of removal of excisable goods manufactured on job work without payment of duty. The Appellants (A2-A4) had connived in the commission of offence of non payment of duty on the job worked goods and so are liable to penalty under the Rule 26 (1) of the Central Excise Rules, 2002 - however, the penalties imposed are on the higher side and to meet the ends of justice, the same are reduced. The appeals are partly remanded and partly allowed.
Issues Involved:
1. Eligibility of input Cenvat credit and its utilization for payment of duty on job worked goods. 2. Invocation of the extended period for demand. 3. Justifiability of the imposed fines and penalties. Issue-wise Detailed Analysis: 1. Eligibility of Input Cenvat Credit and Its Utilization: The Appellant (A1) commenced manufacturing in 2009-2010, paying excise duty after crossing the SSI exemption limit. From June 2010, they manufactured roofing sheets on a job work basis for A2-A4. The Department initiated an investigation, concluding that A1 should pay duty on job worked goods, leading to a demand of Rs.4,53,45,054/-. The Appellant argued that they were eligible for Cenvat credit on inputs received with duty-paid documents, citing various judicial precedents and CBEC Circular No. 962/05/2012-CX8 dated 28.03.2012. The Tribunal found that the Adjudicating Authority dismissed their eligibility without proper verification. It was held that Cenvat credit should be allowed on inputs used in the manufacture of final products to discharge output duty liability. The case was remanded to the Adjudicating Authority for verification of duty-paid documents and re-quantification of duty liability after adjusting eligible Cenvat credit. 2. Invocation of Extended Period: The Appellant started job work in June 2010 but neither paid service tax nor excise duty until an audit objection in March 2012. The Tribunal noted that the Appellant suppressed the fact of manufacturing profiled roofing sheets, misleading the Department by describing the activity as mere cutting. The Tribunal upheld the invocation of the extended period, stating that the Appellant's conduct indicated suppression of facts with intent to evade duty. Consequently, the demand of duty and imposition of mandatory penalty was deemed legal and proper. 3. Justifiability of the Imposed Fines and Penalties: The Tribunal found that the penalties imposed on A2-A5 were on the higher side. It was noted that A5, the Executive Director, and A2-A4, the suppliers of raw materials, played crucial roles in the evasion of duty. The penalties were reduced to Rs.10,00,000/- for A5 and Rs.5,00,000/- each for A2, A3, and A4. The Tribunal also held that A1 was eligible to claim a refund of the service tax paid on job work. Summary: i. The duty demand and invocation of the extended period were upheld against A1 and in favor of the Department. ii. A1 was deemed eligible for Cenvat credit on inputs used in job worked goods, subject to verification of duty-paid documents, and the issue was remanded for re-quantification of duty liability. iii. A1 was entitled to claim a refund of the service tax paid on job work. iv. The penalties imposed on A2-A5 were reduced as specified. The appeals were partly remanded and partly allowed with consequential relief as per the law.
|
