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Central Excise - Case Laws
Showing 1 to 20 of 81316 Records
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2024 (12) TMI 10
Clandestine manufacture and removal - alleged fraudulent availment of cenvat credit on the strength of invoices issued by their Unit-II located at Coimbatore without actually receiving the goods - levy of penalty on the appellants - HELD THAT:- The appellant’s factory was visited on 14.09.2005 on the basis of intelligence about indulgence in clandestine manufacture and clearance of electrical stampings and parts of motors and also fraudulent availment of cenvat credit on invoices without receiving the inputs. Voluminous records have been seized during the search operation and subsequently statements of various persons including the employees of the appellant have been recorded. The evidences that have been brought on record revealed that the appellant has indulged in clandestine manufacture and clearance of the excisable goods without payment of duty; also in the truck load cleared excess quantity of goods than the quantity mentioned in the invoices for clearance.
The argument of the appellant that only on the basis of these statements and without any corroborative evidence from the suppliers of raw materials, consumption of electricity, purchaser of the goods since not investigated and brought on record, the confirmation of the demands and recovery of cenvat credit alleging fraudulent availment cannot be sustained. Similar arguments have been raised by the appellant before the Special Court for Economic Offences at Bangalore which has been dealt at length and ultimately the Court analysing the evidences and statements of witnesses called for who were subjected to examination-in-chief and cross-examination, and also referring to various documentary evidences placed before the Court by the prosecution and taken on record, arrived at the conclusion that there had been manufacture and clandestine clearance of excisable goods and consequently convicted all the accused who are appellants.
The requirement of evidence to prove a case in a criminal case is more rigorous than in comparison to confirmation of demand by the adjudicating authority on the principle of preponderance of probability. In the present case, on a trial to criminal liability, the Court has arrived at the conclusion that there has been evidence of clandestine manufacture and clearance of the goods and fraudulent availment of cenvat credit which rests on the evidences and the witnesses who have admitted before the Court in addition to their admission before the authorities which have been recorded under Section 14 of the Central Excise Act, 1944. The argument of the learned advocate disputing the said evidences cannot be acceptable. Further, it is found that the learned Commissioner analysing the records recorded a detailed finding which corroborates the statements furnished by the witnesses. Therefore, the contention of the appellant that allegation of clandestine clearance of goods cannot be sustained is also devoid of merit.
The confirmation of demand of duty on goods manufactured and cleared clandestinely amounting to Rs.27,46,833/- confirmed in the impugned order with interest and equivalent penalty under Section 11AC of the Central Excise Act, 1944 is upheld. Also, wrong availment of cenvat credit of Rs.2,72,388/- only on the basis of invoices without receipt of inputs confirmed in the impugned order with interest and equivalent penalty under Rule 15(2) of Cenvat Credit Rules, 2004 read with Section 11AC of Central Excise Act, 1944 is upheld.
The penalty imposed on the other appellants viz. Mr. G.R. Govindarajan, Managing Director, Mr. S. Rajamannar, CEO, Mr. R. Rajendran, Manager-Accounts and Mr. R.N. Ramesh, In-charge of Despatches under Rule 26 of the Central Excise Rules, 2002 is upheld but reduced to Rs.25,000/- each in respect of Mr. G.R. Govindarajan, Managing Director, Mr. S. Rajamannar, CEO; to Rs.5000/- each in respect of Mr. R. Rajendran, Manager-Accounts and Mr. R.N. Ramesh, In-charge of Despatches. Similarly, the penalty imposed under Section 26 of Central Excise Rules, 2002 on M/s. Raaja Magnetics (RML-II), Coimbatore is reduced to Rs.25,000/- to meet the ends of justice. Penalty imposed under other provisions on all appellants are set aside.
The impugned order is modified to the above extent - the appeals filed by the appellants are disposed of.
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2024 (12) TMI 9
Admissibility of CENVAT Credit availed on inputs at B-59 transferred to Unit B-165 - credit on inputs used in the final product not amounting to manufacture - credit on rejected goods and procedural discrepancies.
Admissibility of the credit availed on inputs received in their factory and later transferred to their other Unit B-165 having separate Central Excise registration - HELD THAT:- The appellant had accounted for the receipt of the inputs and its transfer to their other Unit at B-165 under proper challans which have been accounted there in their records, later consumed in the manufacture of finished goods cleared for export on payment of duty. Thus, the entire movement of the inputs from the stage of receipt at B-59 till the clearance of the final product on payment of duty from B-165 had been duly recorded. On going through the said documents, it is opined that the appellant could able to establish the receipt and transfer of inputs and its proper use at Unit B-165 to the satisfaction of the authority. In these circumstances, there is no justification for denial of the cenvat credit of Rs.72,97,860/- merely because necessary permission was not obtained for clearance of finished goods on payment of duty from Unit B-165 , instead of bringing it back to their Unit at B-59.
CENVAT credit of Rs.18,24,719/- availed on inputs that were used in the manufacture of finished goods was denied on the ground that the process of conversion of inputs into final products does not amount to ‘manufacturer’ - HELD THAT:- This issue has been considered by this Tribunal in their own case and it has been observed that the process viz. drilling, burr removal, grinding, blackening etc. as per the specification of customers undertaken by the appellant result into the emergence of a new product having distinct identity, use and hence amount to manufacture, vide Final Order [2023 (10) TMI 958 - CESTAT BANGALORE]. Thus, the credit on this count is also admissible.
Admissibility of cenvat credit of demand of Rs.5,60,978/- on rejected goods - HELD THAT:- Credit cannot be denied merely on the ground of affixation of wrong seal indicating the receipt of returned goods at Unit B-165, which pertains to B-49, when the documents submitted reveal that the rejected goods were duly received recorded as inputs and reprocessed and cleared on payment of duty on the processed goods.
Extended period of limitation - penalty - HELD THAT:- The demand pertains to the period December 2004 to July 2005 and the show-cause notice was issued on 08.08.2007 invoking suppression of facts which cannot be sustained when all movements of inputs from B-59 to B-165 had been duly recorded by the Appellant and clearance of finished goods effected on payment of appropriate Central Excise duty. Therefore, the demand is also barred by limitation and cannot be sustained. Further, we find that the transfer of raw materials and utilisation of credit availed on inputs used in the manufacture of finished goods later cleared on payment of duty relate to the appellant’s own units at B-59 and B-165, therefore imposition of penalty on the appellant also cannot be sustained.
The impugned order is set aside - appeal is allowed.
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2024 (12) TMI 8
Liability to pay Excise duty on the scrap/waste generated during the job work - whether the appellant who is the principal manufacturer and has sent these raw materials to the job workers for conversion in terms of Notification No. 214/86-CE dated 25.03.1986, is required to pay Central Excise duty in respect of waste and scrap generated at the job workers factories and cleared by the job workers without payment of duty for the disputed period? - HELD THAT:- The Tribunal Chennai vide its Final Order No. 41199/2024 dated 10.09.2024 [2024 (9) TMI 1245 - CESTAT CHENNAI] has decided the issue in favour of the assessee.
The Impugned Order dated 15.03.2016 of the Commissioner of Central Excise (Appeals-I), Chennai cannot sustain and so ordered to be set aside - Appeal allowed.
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2024 (12) TMI 7
Default in timely payment of duty on goods cleared - Contravention of Rule 8(3A) of the Central Excise Rules, 2002 (Rules) - extended period of limitation - penalty - period from April 2011 to July 2011 and August 2011 to December 2011 - doctrine of merger - HELD THAT:- The issue as to whether the Assessee can utilise the CENVAT credit toward payment of duty when in default is no more res integra and many judicial authorities have held that the provision of Rule 8(3A) of Central Excise Rules, 2002 as ultravires to the Main Act. The Hon’ble Gujarat High Court in the case of M/s. Indsur Global Ltd. Vs. UOI [2014 (12) TMI 585 - GUJARAT HIGH COURT] struck down the condition in Rule 8(3A) for payment of duty “without utilizing the CENVAT credit” as unconstitutional and invalid.
It is found that the Department had preferred an appeal against the decision passed in Indsur Global Ltd. before the Hon’ble Supreme Court. The Ld. Counsel for the appellant has submitted before us that the appeal filed by the Department in Indsur Global Ltd. has been disposed by the Hon’ble Apex Court in UNION OF INDIA & ORS. VERSUS INDSUR GLOBAL LTD. [2024 (7) TMI 1559 - SC ORDER (LB)]. The appeal was referred to the Lok Adalat proceedings before the Hon’ble Supreme Court and settlement has been arrived at. The effect is that the stay order having merged with the order of settlement, stands vacated. The decision rendered by the Hon’ble High Courts of Gujarat and Madras in the above cases would revive and be in force as a precedent.
The demand raised alleging violation of Rule 8(3A) cannot sustain and requires to be set aside. Ordered accordingly. Since the demand itself does not sustain, the invocation of extended period and imposition of penalties does not arise.
The impugned order is set aside - appeal allowed.
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2024 (12) TMI 6
CENVAT credit - denial of credit paid by sender units, based on the allegation that sender units inflated the value of Soap Noodles stock transferred to the appellants, as compared to the cost of such materials debited by each of the sender units, and the appellants took excess credit - recovery alongwith interest and penalty - whether appellant is entitled to take Cenvat credit of duty paid on inputs in terms of Rule 3 of Cenvat Credit Rules, 2004 or not? - HELD THAT:- Admittedly, the appellant has paid duty on the invoices issued by the sender unit of 115% / 110% of the cost of production in terms of Rule 8 of Valuation Rules, therefore, the appellant is entitled to take cenvat credit of what duty they have paid.
The said issue has been examined by the Hon’ble Punjab & Haryana High Court in the case of VG. STEEL INDUSTRY VERSUS CCE [2011 (5) TMI 154 - PUNJAB AND HARYANA HIGH COURT], wherein the Hon’ble High Court has observed 'even if the duty has been paid in excess of the amount finally held to be payable, unless the excess duty paid has been refunded, the assessee could claim cenvat credit as the department could not get the duty twice'.
Thus, the appellant has correctly taken the cenvat credit as higher duty paid by the supplier which has not been challenged by the Revenue and not the higher duty paid has been refunded to the sender unit.
The Cenvat credit of duty paid on procurement of inputs is admissible and cannot be asked to reverse. In these circumstances, no penalty can be imposed on the appellants - the impugned order is set aside - appeal allowed.
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2024 (12) TMI 5
CENVAT Credit - input services - Air Travel Agent service - Architect service - Business Support Service - Clearing & Forwarding service - Club Membership service - Telephone service - GTA service - Housekeeping service - Design & Development service - Chartered Accountant Services - Sponsorship services - Outdoor Catering services - denial of credit on the ground that the disputed services are not in conformity with the definition of ‘input service’ as per Rule 2(l) of the CENVAT Credit Rules, 2004 - period of dispute involved in the present case is from January, 2005 to January, 2014 - HELD THAT:- The case of the appellants is covered under both the un-amended as well amended definition of ‘input service’. Such definition clause, effective upto 31.03.2011, has specifically provided the phrase “activities relating to business”, for consideration of certain taxable services as ‘input service’, for the purpose of availment of CENVAT Credit of Service Tax paid thereon. Since the appellants are a corporate entity and maintained adequate records to demonstrate that the expenses incurred were in context with the services used by them for their business activities, the disputed services received prior to 01.04.2011 should be considered as input service for the purpose of taking of CENVAT Credit of Service Tax paid thereon.
The definition of ‘input service’ was substituted by Notification No. 03/2011-C.E. (N.T.) dated 01.03.2011 w.e.f. 01.04.2011. The effect of the substituted definition is that the phrase “means” was enumerated in the said definition clause, which covers any services used directly or indirectly, in or in relation to manufacture of the final products and clearance of the finished products upto the place of removal for consideration as ‘input service’. Since such definition clause is very wide and cover various services for consideration as input service, narrow interpretation cannot be placed to deny the benefit of CENVAT Credit availed by the appellants on the disputed services - the CENVAT Credit availed by them on the disputed services are in fact, input services and denial of the benefit of such credit in terms of Rule 14 of the CENVAT Credit Rules, 2004 read with Section 11A of the Central Excise Act, 1944, shall not stand the scrutiny of law.
Considering the submissions of the appellant that they are not contesting the credit of Service Tax paid by them on cable operator service and rent-a-cab service, we hold that the appellants are liable to reverse the CENVAT Credit amounting to Rs.68,709/- availed on such services. Learned Advocate fairly concedes that the said amount of Rs.68,709/- has already been reversed by the appellants. Since such aspect of reversal is required to be examined at the original stage, the original authority is directed to examine such reversal of CENVAT Credit.
The impugned order to the extent it has denied the CENVAT Credit benefit amounting to Rs. 9,49,18,339/- is set aside and appeal to such extent is allowed in favour of the appellants - the original authority should examine the records to ascertain whether, the CENVAT Credit amounting to Rs.68,709/- has already been reversed by the appellant and if such amount had already been reversed, no proceedings shall be initiated by the Department for recovery of the same from the appellants.
Appeal disposed off.
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2024 (12) TMI 2
Valuation of goods transferred to sister units - clinkers transferred by the appellant to their sister concern - to be valued under Rule 4 or Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000? - Revenue Neutrality - Extended period of limitation - suppression of facts or not.
HELD THAT:- This Tribunal in appellant’s own case for their own unit for the period from March 2011 to November 2013 held that Rule 4 read with Rule 11 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 be adopted following the judgment of the Larger Bench of the Tribunal in the case of Ispat Industries case [2007 (2) TMI 5 - CESTAT, MUMBAI-LB]. This Tribunal in M/S. ULTRATECH CEMENT LTD., (UNIT: RAJASHREE CEMENT WORKS), VERSUS COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS [2024 (1) TMI 663 - CESTAT BANGALORE] observed 'we have no hesitation to hold that the appropriate rules for determination of the assessable value of the goods for the transferred clinkers to sister units will be Rule 4 read with 11 of the Central Excise Valuation Rules, 2004 rather than Rule 8 of the Central Excise Valuation Rules, 2000 for the period in question.'
Revenue Neutrality - HELD THAT:- The appellant has argued that the aspect of revenue neutrality is not considered while deciding the case for earlier period. In support, they have referred to the judgment of the Hon’ble Supreme Court in Nirlon Ltd.’s case [2015 (5) TMI 101 - SUPREME COURT]. It is found that the said argument of the learned advocate is misplaced and the principle of law laid down by the Hon’ble Supreme Court has been misunderstood in ascertaining the correct method of valuation applicable for clearance of goods to own unit on stock transfer basis.
The revenue neutrality is not a statutory concept but a principle of equity developed by courts as a mitigating factor in appreciating the intention of the persons while applying the principle of law to a particular situation to determine the reason for non-payment of duty. Revenue neutrality cannot be considered as an incentive not to follow the statutory provision governing principle of valuation solely on the ground that the other unit could avail the benefit of credit of the differential duty payable.
Extended period of limitation - suppression of facts or not - HELD THAT:- This Tribunal for the earlier period while applying the principle of valuation under Rule 4 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 to the circumstances of the case has set aside the demand for the extended period of limitation holding that the same cannot be applicable to cases involving interpretation of statutory principles of valuation and in absence of suppression or misdeclaration of facts on the part of the assessee.
Appeal is modified to the extent of setting aside the demand for the extended period of limitation and the demand with interest to be confirmed for the normal period of limitation. All these appeals are remanded to the adjudicating authority to redetermine the assessable value applying the principle of Rule 4 read with Rule 11 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 and compute the differential duty with interest for the normal period. As the issue pertains to interpretation of provision of Central Excise (Valuation) Rules, 2000 imposition of penalty is also not warranted and accordingly not sustainable, hence, set aside.
Appeal disposed off by way of remand.
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2024 (11) TMI 1342
Levy of penalties - wrong availment of CENVAT credit based on fraudulent invoices without receiving goods by the assessee - HELD THAT:- Evidently, Rule 26(2) of the Central Excise Rules provides for imposing penalty on any person who either issues an excise duty invoice without delivery of goods specified therein or abets in making any such an invoice or any other document or abets in making any such document on the basis of which a user of the invoice or the document is likely to take or has taken ineligible benefit under the Act or Rules. In this case, the allegation in the SCN as well as affirmation in the impugned order is that the assessee had taken CENVAT credit on the strength of fraudulent invoices issued by M/s Ridhi Sidhi without supplying of the goods - The role of Shri Prem Jain is as the Director of the assessee and the role of Shri Gyan Jain is as the General Manager of the assessee. Neither the assessee nor Shri Prem Jain nor Shri Gryan Jain have either issued invoices or abetted issuing of the invoices according to the show cause notice or the impugned order. Therefore, Shri Prem Jain and Shri Gyan Jain are not covered by Rule 26 (2).
Rule 15A of CCR, provides for penalty for violations of CCR not elsewhere specified. The CCR provide for availment of CENVAT credit by an assessee subject to some conditions and after following certain procedures. If there are violations of CCR, they can be violations by the assessee - There is also no provision for imposing penalty upon the Director or the General Manager or other functionary of assessee under the CCR. Rule 15A of CCR, therefore, also does not apply to the Director or General Manager of the assessee.
Thus, neither Rule 26 (2) of Central Excise Rules, 2002 nor Rule 15A of CCR under which the penalty was imposed on Shri Prem Jain and Shri Gyan Jain apply to the facts of this case. The penalty imposed on them cannot be sustained as it is imposed without any authority of law - It also needs to be pointed out that while penalties were imposed under two different Rules [Rule 26(2) of the Central Excise Rules and Rule 15A of CCR ] the quantum of penalty imposed under each of them has also not been indicated in the order of the Additional Commissioner which was upheld by the impugned order by the Commissioner (Appeals).
The impugned order is set aside insofar as it relates to the penalties imposed on Shri Prem Jain and Shri Gyan Jain - Appeal allowed.
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2024 (11) TMI 1341
Liability of Appellant to pay Central Excise duty on pre-budgeted stock of branded garments lying in its godown after it has been made taxable by N/N. 12/2011 dated 01.03.2011 - HELD THAT:- The brand names were put by the job-workers and not by the Appellant on the garments manufactured and cleared at the job workers end.
For excise taxable events it is manufacturing itself that would determine the taxability but duty can be levied and collected at a later stage for convenience of administration and removal can be made taxable event in terms of Rule -9A of Central Excise Rules, 1944.
It would be worthwhile to mention that Rule 9-A that was meant for determination of the date of duty and tariff valuation has been deleted from the statute book since 2001 with introduction of New Central Excise Rules in place of old Rules of 1944 and therefore, by invoking the same, duty liability cannot be fastened on the Appellant on the basis of removal of goods from godown when these were already cleared upon payment of NIL rate of duty prevailing then.
The impugned order is set aside - appeal allowed.
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2024 (11) TMI 1340
Benefit of N/N. 33/2022-CE dated 09.07.2012 - liability to pay Education Cess and Secondary Higher Education Cess - recovery alongwith interest and penalty - HELD THAT:- The issue of liability to pay Education Cess as well as Secondary Higher Education Cess in the facts of the present case involves interpretation of statute which issue is sub-judice, before the Hon’ble Apex Court. When such is the case, no mens rea could be attributed to the Taxpayer, especially since the appellant is claimed to have remitted the disputed cess of Rs.88,494/- along with applicable interest thereon vide Challan No. 21 dated 27.10.2014 and hence, there is no scope to burden the appellant with penalty under Section 25 ibid.
The impugned order is set aside - matter remanded back to the Original Authority who shall wait for the verdict of the Hon’ble Apex Court in the case of SRD Nutrients Pvt. Ltd. [2022 (1) TMI 615 - SUPREME COURT] - appeal disposed off by way of remand.
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2024 (11) TMI 1339
Default in payment of duty beyond 30 days from the due dates - bar to utilize the Cenvat Credit - violation of Rule 8(3A) of CCR - Extended period of limitation - penalty - period from January 2011 to March 2014 - HELD THAT:- The issue as to whether the Assessee can utilise the CENVAT credit toward payment of duty when in default is no more res integra and many judicial authorities have held that the provision of Rule 8(3A) of Central Excise Rules, 2002 as ultra vires to the Main Act. The Hon’ble Gujarat High Court in the case of M/s. Indsur Global Ltd. Vs. UOI [2014 (12) TMI 585 - GUJARAT HIGH COURT] struck down the condition in Rule 8(3A) for payment of duty “without utilizing the CENVAT credit as unconstitutional and invalid.
It is found that the Department had preferred an appeal against the decision passed in Indsur Global Ltd. before the Hon’ble Supreme Court. The Ld. Counsel for the appellant has submitted before us that the appeal filed by the Department in Indsur Global Ltd. has been disposed by the Hon’ble Apex Court [2024 (7) TMI 1559 - SC ORDER (LB)]. The appeal was referred to the Lok Adalat proceedings before the Hon’ble Supreme Court and settlement has been arrived at. The effect is that the stay order having merged with the order of settlement, stands vacated. The decision rendered by the Hon’ble High Courts of Gujarat and Madras in the above cases would revive and be in force as a precedent. Under such circumstances, the judgements referred by the Ld. AR does not support the cause of revenue.
The demand raised alleging violation of Rule 8(3A) cannot sustain and requires to be set aside. Ordered accordingly. Since the demand itself does not sustain, the invocation of extended period and imposition of penalties does not arise - the impugned order is set aside - appeal allowed.
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2024 (11) TMI 1338
Levy of central excise duty - debonding of a 100% EOU unit to DTA, on finished and semi-finished goods, which are either exported on bond or cleared in domestic market on payment of excise duty, during 18.12.2012 (cutoff date) to 15.02.2013 (final exit order) - HELD THAT:- The issue of non-payment of central excise duty on final goods on debonding is settled in favour of appellant. Also, prima facie, the other issue that no duty is payable on semi-finished goods is settled in favour of appellant in terms of decisions relied upon in paragraph 2 above. However, it is seen that although the Learned Commissioner took verification report dated 20.01.2017 from jurisdictional office, the same was not furnished to the appellant.
The Hon’ble Supreme Court in KOTHARI FILAMENTS & ANR. VERSUS COMMISSIONER OF CUSTOMS (PORT) KOLKATA & ORS. [2008 (12) TMI 28 - SUPREME COURT] has held that documents relied upon in the adjudication order are required to be supplied to the appellant in terms of principles of natural justice. There are considerable force in appellant’s submission that question of demand of excise duty does not arise if goods are exported which fact can be verified from the CA certificate dated 15.11.2016 which was submitted before the Learned Commissioner, however, the same was not considered. The same needs to be considered.
The matter needs to be reconsidered by the Learned Commissioner/ adjudicating authority by (i) providing the letter dated 20.01.2017 issued by the jurisdictional Assistant Commissioner to the appellant; and (ii) considering the CA certificate dated 15.11.2016 to ascertain claim of export of goods, along with other evidence which may be put on record by the appellant.
The impugned order is set aside and the appeal allowed by way of remand to the adjudicating authority for passing a fresh order.
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2024 (11) TMI 1279
Maintainability of appeal - monetary limit invloved in the appeal - Activity amounting to manufacture or not - HELD THAT:- In terms of National Litigation Policy, this appeal is required to be dismissed on this count alone.
The issue involved in this case is as to whether activity undertaken by the appellant amounts to manufacture or not. In case it amounts to manufacture, the appellant would be required to pay Excise Duty of Rs.8,57,549/- as confirmed by the Adjudicating Authority.
It is found that the Commissioner (Appeals) has given a very detailed findings and has made a considered decision to allow the appeal filed by the respondent. There are no reason to interfere with the same.
The appeal filed by the Revenue is dismissed.
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2024 (11) TMI 1278
Valuation of captively consumed goods - valuation of goods is required to be determined on the basis of cost of production, as prescribed by the Institute of Cost & Works Accountants of India in the Cost Accounting Standard-4 (CAS-4), in accordance with Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 read with Section 4 (1)(b) of theCentral Excise Act, 1944 or not - denial of CENVAT credit to recipient sister units - penalty under Section 11AC of the Central Excise Act, 1944 - HELD THAT:- It is an admitted fact on record that the appellants have themselves computed the differential duty liability and also paid the same along with interest, upon finalization of the books of accounts in form CAS-4 for effecting supply of goods to their sister units. The differential duty was paid and the same was invoiced to the sister units, by issuance of the supplementary invoices. Rule 9 of the Rules of 2004, has prescribed various documents, based on which CENVAT credit shall be taken by the manufacturer. Sub-rule (1)(b) of Rule 9 ibid recognizes ‘supplementary invoice’ as the proper document for availment of CENVAT credit based thereon. However, there is an embargo being created in the said sub-rule that whenever any additional amount of duty became recoverable from the manufacturer of excisable goods on account of any non-levy or short levy, by reason of fraud, collusion or any wilful misstatement or suppression of facts or contravention of any provisions of statute, then taking of CENVAT credit of such additional duty is prohibited.
In the present case, the books of accounts for the year 2011-2012 were required to be finalized by September, 2012, which was in fact complied with by the appellants inasmuch as such compliance part has not been disputed by the department. Further, we also notice that in the letter dated 15.05.2014, the jurisdictional Range Superintendent had informed his counterpart in the Audit wing, mentioning that the audit para does not appear to be sustainable and that based on the statement along with invoices particulars furnished by the sister units, the draft SCNs were prepared by him. Thus, under such circumstances, it cannot be said that the appellants had suppressed any material particulars to the department or indulged into any malpractice, with an intent to evade payment of additional amount of Central Excise duty.
In view of the fact that issuance of supplementary invoices by the units in H-25 and B-82/1, are the prescribed documents under Rule 9 of the Rules of 2004, denial of the CENVAT credit to the recipient units cannot be questioned inasmuch as there is no element of fraud, collusion, wilful misstatement etc., in making payment of such additional duty into the Government exchequer. Therefore, we are also of the considered opinion that taking of CENVAT credit by the recipient units viz., E-60,61,62 and B-82/1 on the basis of the supplementary invoices issued by the manufacturing units is in conformity with the CENVAT statute.
There are no merits in the impugned orders, insofar as confirmation of the adjudged demands on the appellants are concerned - Therefore, the impugned orders are set aside - the appeals are allowed in favour of the appellants.
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2024 (11) TMI 1220
Clandestine manufacture and removal - substantial electricity consumption - no other corroborative evidences - Revenue faied to rebut the claims made by the appellant - penalty imposed on the Director Mahabir Prasad Rungta - HELD THAT:- Since the search had commenced suddenly without any notice, there would be no chance for the appellant to hide these factual evidences. But no evidence towards stock of raw materials, consumables, in-process stock or finished goods stocks have been found or recorded in the Panchanama. The panchnama nowhere indicates anything to suggest that manufacturing activities were noticed by the investigating team at the time of their surprise visit. Even in the six trucks loaded with materials, while it is being claimed by Revenue that they are finished goods by nature, the appellants have countered the same stating that these trucks were carrying scrap arising out of Kilns being fabricated and installed in the factory.
Coming to the evidence on account of the data of sales said to be obtained from the CPU and based on the emails [forensically inspected], there is no clarity as to when the CPU was seized, and if seized, whether Panchanama was prepared towards the same is not coming out anywhere - The date of signing and date of printing gives raise to serious doubt towards the very veracity of the Revenue’s claim. Added to this is the fact is the issue of retraction of the initially recorded statement of the officers of the appellant.
The Electricity consumption used for arriving at the clandestine manufacture has been countered by the appellant to make their submission that since Kilns were being fabricated and installed in the factory premises, the electricity was being used. The Dept has not come out with any detailed analysis to negate the claim of the appellant.
The proceedings are purely based on presumptions and assumptions without proper back up corroborative evidence.
The issues raised by the Revenue have been answered satisfactorily by the appellant, thereby shifting the onus to prove the clandestine manufacture / clearance on to the Revenue. But neither corroborative evidence, nor any counterpoint have been brought in by the Revenue to fortify their claim - Appeal allowed on merits.
Penalty on Director Mahabir Prasad Rungta - HELD THAT:- Since the confirmed demand is not sustainable against the main appellant Shriram Power & Steel Pvt. Ltd., on merits the penalty imposed on the Director Mahabir Prasad Rungta also does not legally sustain. Accordingly, the penalty imposed on him is set aside.
The impugned order is set aside - appeal allowed.
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2024 (11) TMI 1219
Denial of CENVAT credit - input services - godown rent - loading, unloading, freight, painting and other miscellaneous expenses - HELD THAT:- The present demand is a statement of demand subsequent to a show cause notice dated 04.10.2016. It is noted that the said show cause notice dated 04.10.2016 culminated in M/S. WHEELS INDIA LTD. VERSUS COMMISSIONER OF CGST & CE, PUNE-I [2022 (9) TMI 735 - CESTAT MUMBAI].
On going through the said final order, it is noted that cenvat credit availed by the appellant on input services such as godown rent, unloading, loading etc. were held to be eligible input services for the appellant and cenvat credit was allowed to the appellant.
The impugned order is set aside - appeal allowed.
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2024 (11) TMI 1218
Conversion of 100% EOU into DTA - denial of CENVAT Credit - non-registration of debonded EOU - denial of credit u/r 10 of CENVAT Credit Rules, 2004 - denial of transfer of PLA balance of debonded EOU to CENVAT credit of DTA.
Denial of CENVAT credit of Rs. 10,77,05,805/- on allegation of non-registration of debonded EOU - HELD THAT:- The appellant provided all possible disclosures in their application. Pursuant to this letter, the department issued amended central excise registration certificate on 11-03-2013. In this background, when the appellant made all disclosures in their application and amended central excise registration was issued, we do not find any merit in confirming the demand on allegation of non-registration - there are force in appellant’s arguments that the department is taking contrary stand as at one hand it is denying credit on the ground that DTA excise registration does not bear address of debonded EOU but at the same time has accepted payment of central excise duty on the clearance made from the premises of EOU.
When the appellant provided re-defined boundaries for amended registration in their application and basis the said application revised excise registration was issued, merely non mentioning of the specific plot number cannot lead to denial of credit - there are force in appellant’s arguments that it is a settled law that registration of premises is not a pre-requisite for availing credit.
It was held in the case of MPORTAL INDIA WIRELESS SOLUTIONS (P.) LTD. VERSUS COMMISSIONER OF SERVICE TAX [2011 (9) TMI 450 - KARNATAKA HIGH COURT] that 'In the absence of a statutory provision which prescribes that registration is mandatory and that if such a registration is not made the assessee is not entitled to the benefit of refund, the three authorities committed a serious error in rejecting the claim for refund on the ground which is not existence in law.'
Also, the appellant’s submission that substantial benefit of credit cannot be denied for procedural lapse is a settled preposition of law as has been held by various decisions including the Bombay High Court decision in COMMISSIONER OF CENTRAL EXCISE, NAGPUR, VERSUS M/S. LARSEN & TOUBRO LTD., THE CUSTOM EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, MUMBAI [2022 (1) TMI 665 - BOMBAY HIGH COURT] - thus, the demand do not sustain.
Denial of credit of Rs. 4,21,16,159/-, under Rule 10 of CENVAT Credit Rules, 2004 - HELD THAT:- On a bare perusal of provision of Rule 10 of CCR it can be seen that the said provision can be invoked in specific circumstances like shifting of manufacturing unit at another site of transfer of factory due to change of ownership, sale, merger, amalgamation, lease or transfer of the factory to a joint venture. Herein, the appellant has merged adjacent debonded EOU into their DTA unit for which clearly provision of Rule 10 of CCR cannot be invoked and therefore, no demand can sustain under Rule 10 of CCR.
The appellant converted its EOU unit into DTA and during the said conversion transferred the balance CENVAT credit of EOU into DTA. There are force in appellant’s arguments that during conversion of unit from DTA to EOU or from EOU to DTA there is no bar on transfer of CENVAT credit.
The issue at hand pertains to conversion of EOU to DTA, it is observed that there is no provisions under the law which bars debonded EOU unit to avail credit in its DTA unit post conversion - the demand of Rs. 4,21,16,159/-, cannot sustain.
Denial of transfer of PLA balance of Rs. 7,89,895/- of debonded EOU to CENVAT credit of DTA - HELD THAT:- The PLA is nothing, but appellant’s own money lying in balance which can be utilized at a future event for payment of excise duty. Herein, transiting of credit into DTA unit, on merger of EOU into the said DTA, also serves the same purpose. Also, since the Leaned Commissioner admits that the appellant is entitled for refund of the same, transiting the credit in DTA unit has no revenue impact. As has been held in JAY SHREE TEA & INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX., KOLKATA [2005 (8) TMI 189 - CESTAT, KOLKATA] pending utilization of the PLA amount towards excise duty, the department has no claim over such amount. As such, demand on this issue is not sustainable.
Thus, no demand can sustain. Accordingly, the impugned order is set aside and the appeal allowed with consequential reliefs, if any.
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2024 (11) TMI 1181
Maintainability of appeal - monetary limit fixed by the Board for filing appeal - HELD THAT:- In view of the Circular dated 2-11-2023 issued by the Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes & Customs fixing the monetary limit upto Rs.2 Crore so far as filing the appeal before the Supreme Court is concerned, these appeals are not pressed.
The appeals are accordingly disposed of as not pressed, in view of the monetary limit fixed by the Board. However, the questions of law, if any, are kept open.
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2024 (11) TMI 1180
Refund of unutilized CENVAT credit under Rule 5 of CCR 2004 - rejection on the ground that physical export is essential for a refund under Rule 5 ibid and the warehousing procedure did not confer any export benefit to the DTA supplier - procedural infirmities viz. the copy of ARE1 of the export warehouse has not been marked after endorsement by the customs to the range officer in charge of the factory - HELD THAT:- The SCN has pointed to certain procedural defects and the fact that the appellant appears to have sold the goods domestically to the export warehouse from where the ultimate exports were made. Thus as far as the appellant is concerned the clearance remained domestic clearance only, which has not been specified as the clearances due to which the unutilised credit of the Cenvat account can be refunded under the provisions of rule 5 of CCR 2004. The OIO has further found that the appellant herein has not engaged in any manufacturing activity to claim refund under Rule 5 of CCR 2004.
The impugned order has also cited the Tribunal decision in Commissioner Vs Tiger Steel Engineering [2010 (7) TMI 324 - CESTAT, MUMBAI]. The facts in the said case are not identical as they relate to the case of an appellant who made supplies to a SEZ unit, who in turn used the goods as raw materials and the resultant final products were exported or cleared to DTA. In this case the fact that the goods are subsequently physically exported by the export warehouse under ARE-1 procedure as laid down under rule 20 of Central Excise Rules read with notification No.46/2001 - Central Excise (N.T.) dated 26/06/2001 and is not in dispute.
In its judgment in K.P. Verghese v. Income Tax Officer, Emakulam and Another, [1981 (9) TMI 1 - SUPREME COURT], the Hon’ble Apex Court held that for the purpose of interpretation of a taxing statute, the fiscal philosophy, a feel of which is necessary to gather the intent and effect of its different clauses, should be applied.
It is found that in the case of a beneficial provision for the export of goods the law should be read liberally. When dealing with a complex economic policy a pragmatic and beneficial solution is to be adopted. As per Circular No. 581/18/2001 CX Dt. 29.06.2001, it has been clarified that refund under Rule 5 of the CCR, 2004 is admissible for supplies to export warehouses also. In such a situation when the ultimate export of the goods are not contested, the refund should be allowed to a DTA unit, even if the physical export was not done by the unit itself, but by the exporter who is registered under Rule 20 of C. Ex. Rules, 2002 and is availing a mechanism provided for as per Boards Circular. Moreso when Rule 5 of CCR, 2004, does not differentiate between deemed exports and physical exports and grants the benefit to any products / goods cleared for export.
The impugned order is set aside and the appeals are allowed.
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2024 (11) TMI 1179
Application of exemption under exemption N/N. 12/2013-CE dated 17.03.2012 at Sr. No. 332 read with List 8 - “paints” applied/coated on wind mills for giving protection to non-conventional energy device - HELD THAT:- The parts and component of the main unit namely “wind operated electricity generator” are those articles which along with others would make up the whole and those were constituents or components or a member of the original unit/goods but “paint” is something which is applied externally on the whole unit or goods to provide it protection, beauty and perfection. It would be like skin of an organic living being and therefore in the inorganic articles, it acts in the same manner as ‘skin’ has acted in organic leaving organism.
It would be a futile discussion to enter into an argument saying that skin neither helps in pumping the blood in the heart or digesting the food or the like, for which human being can also be considered as a human being without a skin covering its body. In the same manner paints are used to all components as an essential requirement for its protection & safety and as an auxiliary requirement to retain its life and beauty. Disallowing exemption to ‘paints’, which are applied to exempted goods would be like removal of skin from a human being so as to treat him as skinless individual that can only be possible when he/she is kept in a hospital.
The paint is a “part and parcel” or an “essential feature” of an element or to say an essential or integral feature of a component as a whole. In a manufacturing industry also, powder coating and painting are used at completion of finishing processes and if the goods are exempted from payment of duty at the time of manufacture, it would also be applied to the goods having colour on it, which could be either an external coating or an internal ingredient and therefore, we consider painted wind mills also as wind operated electricity generator irrespective of its colour to which benefit of exemption notification was all along available and it would be immaterial to bring into it an artificial distinction as to if it is to be treated as ‘component’ or ‘parts’ since it is integral to the products itself.
The reference made to Hon'ble Bombay High Court order in JOTUN INDIA PRIVATE LIMITED, VERSUS THE UNION OF INDIA THROUGH THE SECRETARY OF FINANCE, DEPARTMENT OF REVENUE, NEW DELHI, THE STATE OF MAHARASHTRA, THE MAHARASHTRA AUTHORITY FOR ADVANCE RULING FOR GOODS AND SERVICES TAX, MUMBAI, THE MAHARASHTRA APPELLATE AUTHORITY FOR ADVANCE RULING FOR GOODS AND SERVICES TAX MUMBAI, [2022 (12) TMI 1135 - BOMBAY HIGH COURT] by learned Departmental Representative for the Respondent-Department, since confined to the limited power available under writ jurisdiction, which is completely different from appellate jurisdiction, it is not required to venture into discussion on the applicability of that judgment to the issue which is extraneous to the issue raised here since Hon'ble Court had refrained itself from giving any finding on the observation of the Authority for Advance Ruling that paint is not a part.
The order passed by the Commissioner of Central Excise & GST, Pune-I vide Order-in-Original No. PUN-EXCUS-001-COM-022-17-18 dated 24.04.2018 is hereby set aside - Appeal allowed.
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