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Central Excise - Case Laws
Showing 101 to 120 of 82127 Records
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2025 (5) TMI 2094
Scope of SCN - Original Authority exceeded the scope of the Show Cause Notice (SCN) by raising new grounds not originally proposed in the SCN - Process amounting to manufacture or not - activity of fitting fuel adaptors to diesel cars - HELD THAT:- Apparently, the Original Authority has made out a new case in the Order-in-Original No.05/2014 dated 04.02.2014 wherein he has confirmed the demands as proposed in the Show Cause Notice though the proposals in the Show Cause Notice were totally different. There was no proposal in the Show Cause Notice to the effect that the process undertook by the appellant was incidental or ancillary to the completion of the final product; had the same been put across in the SCN, the appellant would have explained the nature of work carried on by it and hence, the resultant finding in the Order-in-Original is not what was originally proposed in the Show Cause Notice.
Further, it is also found that the fuel adaptors are used not in all the cars but specifically in diesel cars. In the Order-in-Appeal, the Commissioner has very conveniently ignored the above contention of the appellant but, however, has only addressed the issue of the Show Cause Notice, has held that the requirements under Section 11A(1) of the Central Excise Act, 1944 stood satisfied and has thus justified the same without getting into the merits of the proposal in the Show Cause Notice. Therefore, the findings in the Order-in-Original are clearly beyond the scope of Show Cause Notice. Further, the Commissioner though has confirmed the demand of differential duty and interest, but the fact remains that the assessee had paid the duty along with interest much before the issuance of Show Cause Notice. For this reason, the First Appellate Authority has deleted the penalty under section 11 AC of the Central Excise Act, 1944, which means that the fact of issuance of show cause notice was in essence for appropriation of the duty remitted.
Even on merits, firstly there is no supporting evidence to justify that the fuel adaptors were the essential part of the cars; we have to set aside this finding since, as even recorded in both Order-in-Original and Order-in-Appeal, Fuel Adaptors are fixed only to the diesel version of the cars. It is not at all the case of the Revenue that the appellant manufactured only diesel version of cars. There is also no denial by the Revenue as to the payment of service tax for the service since the activity carried on by the VDC was claimed to be a service, in good faith, by the appellant. Hence, an activity of fixing an accessory to the specific cars could not amount to ‘manufacture’, inviting the levy under Central Excise Act, 1944.
Conclusion - i) The Original Authority's adjudication was invalid as it exceeded the SCN's scope. ii) The activity of fitting fuel adaptors did not constitute manufacture under the Central Excise Act.
Insofar as the demand of differential duty and interest are concerned, cannot sustain and the same is therefore set aside - appeal is allowed.
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2025 (5) TMI 1993
Entitlement to interest on refund of amounts deposited under protest or during the pendency of proceedings under the Central Excise law - HELD THAT:- Though the issue of grant of interest on the pre- deposits has been a subject matter of litigation for long, in a recent judgment in the case of Goldy Engineering Works [2023 (7) TMI 715 - DELHI HIGH COURT], Hon’ble Delhi High Court has put to rest the different interpretations on this issue holding that interest is governed only by two provisions i.e. Section 11BB and Section 35FF of the Central Excise Act; in the case of refund of deposit made during the investigation or during the proceedings shall be governed by Section 11B and accordingly, the interest shall be governed by Section 11BB. Hon’ble Apex Court in [2025 (4) TMI 1186 - SC ORDER] has affirmed the decision of the Hon’ble Delhi High Court and thus, the decision has become the law of the land.
The decision of the Hon’ble Delhi High Court, also being upheld by the Hon’ble Apex Court, is squarely applicable to the instant case.
Conclusion - The interest on delayed refunds under the Central Excise Act is strictly governed by Sections 11B and 11BB, requiring a formal refund application and limiting interest to delays beyond three months from the date of such application. Deposits made during proceedings but not under Section 35F do not attract interest from the date of deposit.
Appeal dismissed.
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2025 (5) TMI 1992
Applicability of principle of restitution - Amount of National Calamity Contingency Duty (NCCD) paid by the appellant by utilizing Cenvat credit - contravention of the amended proviso to Rule 3(4) of the Cenvat Credit Rules, 2004, constitutes a "duty" or merely a "deposit" with the Government - time limitation - HELD THAT:- The Appellant had wrongly deposited the amount by way of Cenvat credit long before the dispute arose, thus the amount is construed as a Deposit and since it has been retained by the Department for a long period thus, the Appellant is entitled to claim interest from the date of deposit itself. The principle of restitution is crucial in this case. Restitution ensures that when an erroneous or unjust act results in one party benefiting at the expense of another, the benefiting party must restore what was wrongfully retained. In this case, since the Government retained the ₹38,72,24,971/- wrongfully, it must compensate the Appellant by granting interest for the period during which the money remained with the Government. Although the Appellate Authority has accepted that Doctrine of Restitution is applicable in the present case but has failed to actually apply the doctrine in its true essence. The Department’s prolonged retention of the amount deprived the Appellant of its rightful funds, and the Appellant should be compensated for this deprivation.
The interest should be payable to the Appellant for the entire period during which the refund amount remained deposited with the Government Exchequer, which is from the date of making the deposit till the date of refund of such deposit - As the refund amount remained with the Government for a prolonged period, the failure to grant interest for the entire duration is unjustified and legally unsound.
Conclusion - The amount paid by the appellant using Cenvat credit for NCCD was a deposit, not duty; that refund claims for such deposits are not barred by limitation under Section 11B; and that the appellant is entitled to interest on the entire refund amount from the date of erroneous deposit till the date of refund. The interest granted only on 7.5% of the amount under Section 35F was held to be erroneous and set aside. The principles of restitution and prevention of unjust enrichment underpin these conclusions.
The impugned order is set aside - appeal allowed.
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2025 (5) TMI 1991
Interest for the irregularly taken and utilized cenvat credit for the intervening period - interpretation of Rule 14 of the CENVAT Credit Rules, 2004 (CCR) - HELD THAT:- Before the amendment brought was with effect from17.3.2012, this issue of cenvat credit being ‘taken’ or ‘utilized’ was subject matter of litigation, and was resolved by Tribunals and Courts that so long as the cenvat remains in the balance, it cannot be taken as utilized and accordingly, no interest is required to be paid.
The Karnataka High Court in the case of CCE&ST LTU Bangalore Vs Bill Forge Pvt Ltd. [2011 (4) TMI 969 - KARNATAKA HIGH COURT], has held that 'by taking such credit, if he had not paid the duty which is legally due to the Government, the Government would have sustained loss to that extent. Then the liability to pay interest from the date the amount became due arises under Section 11AB, in order to compensate the Government which was deprived of the duty on the date it became due. Without the liability to pay duty, the liability to pay interest would not arise. The liability to pay interest would arise only when the duty is not paid on the due date. If duty is not payable, the liability to pay interest would not arise.'
In the present case, for the period subsequent to 1.3.2015, the appellants are covered by the amendment brought in. For the period prior to this date, the cited case law of Bill Forge would be applicable. The legislative intent gets clarified by the amendment brought in with effect from 1.3.2015, wherein the decision is to refrain from charging the interest if the amount remains unutilized even after being taken. In order to come to this conclusion, the factual details have to be considered as to whether the cenvat credit balance carried is sufficient to meet the reversal requirement. In the present case, as per the Table given above, it is seen that the amount being carried forward as Cenvat Credit is much more than the reversed amount. The Revenue has not brought to the contrary.
No interest is required to be paid by the first appellant for the Cenvat Credit already reversed by them before issue of SCN. The impugned order is set aside. Consequently, the penalties imposed on the appellants 1, 2, and 3 are also set aside.
Conclusion - The interest liability for wrongly availed CENVAT credit arises only upon utilization of such credit, and mere wrongful availment followed by prompt reversal does not attract interest or penalty absent fraud or suppression.
Appeal allowed.
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2025 (5) TMI 1990
Determination of the appropriate rate of value addition for the purpose of claiming exemption under N/N. 33/1999-CE, dated 08.07.1999, as amended by N/N. 18/2008-CE, dated 27.03.2008 - rejection of appellant's claim for a higher rate of value addition certified by the statutory auditors - HELD THAT:- As per para 5.1.9 of CAS-6. the freight subsidy received by the appellant is not includable to arrive at the total freight which is to be added for arriving at the cost of material - the freight subsidy received by the appellant are not includable to arrive at the freight cost. Thus, the statutory auditor has rightly arrived at the freight cost while determining at the special rate.
The next element in dispute is the cost of abnormal waste that has arisen during the course of initial process of manufacturing. The appellant submitted that during the course of initial manufacturing because of some fault in the machines excess waste has occured. This was rectified later and the wastage became normal in the subsequent years. The appellant submitted that as per para 5.4 of CAS-6 such abnormal waste cost is not includable in the cost of material - the Ld. Commissioner, Central Excise, Guwahati, has recalculated the value addition at his own without following the Statutory Auditor’s Certificate and Cost Accountant’s Certificate and re-calculated the value addition at 36.81% and rejected the application of for special rate of value addition vide the impugned Order dated 26.05.2010.
Conclusion - On examination of the two main ground on which the value addition has been reduced by the Ld. Commissioner, it is found that the method adopted by the Ld. Commissioner is not inconsonance with the principles of accounting standards. Accordingly, there are no merit in the finding of the Ld. Commissioner in re calculating the value addition as 36.81%. As there is no ground for rejecting value addition arrived by the appellant on the basis of the Certificate issued by the Statutory Auditor, the appellant is eligible for the value addition of 82.29% as claimed by them on the basis of the Statutory Auditor's certificate and other supporting documents.
Appeal allowed.
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2025 (5) TMI 1909
Area based exemption - Fixation of the special rate of value addition under N/N. 56/2002-CE dated 14.11.2002 (as amended by N/N. 19/2008-CE NT dated 27.3.2008) for a pharmaceutical manufacturer - appellants claimed special rate of value addition, in terms of Para 2.1 of the notification, at 76.56% whereas the Respondent fixed the Special rate of Value Addition at 72.16% - HELD THAT:- The fixation of value addition is in terms of the Notification No.56/2002-CE dated 14.11.2002, as amended Notification No. 19/2008-CE NT dated 27-3-2008.
While Considering the Value of Sales, whether the value shown in financial records be taken or the value under Section 4A less abatement be taken? - HELD THAT:- As per the explanation below para 4 of the notification prescribes that the actual value addition in respect of said goods shall be calculated on the basis of the financial records of the preceding financial year. we find that the adjudicating authority observes that the explanation to Para 2.1 provides that for the purpose of this Paragraph, the actual value addition in respect of the said goods shall be calculated on the basis of the Financial Records of the preceding financial year; thus as per the provisions, the calculation for fixation of Special Rate under Notification No. 56/2002-CE dated 14.11.2002, as amended, is to be done as per the figures of the Audited Balance Sheet/Financial Records of the unit. In view of the explicit provision in the Notification, it is found that the commissioner was correct in taking the value as per financial records and the appellant’s contention in this regard are not acceptable.
Whether Excise duty and Cess should be excluded or included in the sales figure? - HELD THAT:- The notification provides unequivocally that Excise duty, Value Added Tax and other indirect taxes, if any, paid on the goods shall be excluded. Therefore, the contention of the appellant is not legally acceptable. The adjudicating authority was correct in excluding them.
While arriving at the value of Clearances, the value of samples distributed free of cost should be excluded as they are not sold or a notional value on pro rata basis be considered? - HELD THAT:- The notification wishes to benefit the manufacturers who achieve a value addition and the value addition is invariably achieved by sales and not by free distribution. When the notification speaks of sales, it means sale only but not free distribution. When it says ‘value’, it is the value but not ‘notional value or proportionate value or ‘pro rata value. Commissioner also finds that the appellant has not brought on record any document evidencing the actual sale of samples and thus fetching any sales realisation. Therefore, as held by the adjudicating authority, inclusion of ‘notional value’ or ‘pro rata value’, is beyond the scope of the Notification No.56/2002-CE dated 1411.2002, as amended, for the purpose of calculation of value addition.
While arriving at the cost of the raw material, whether 'Octroi, 'Transport & Coolie charges' must be included or excluded? - HELD THAT:- The explanation under notification provides that sales value needs to be arrived Less Cost of raw materials and packing material consumed in the said goods. The ‘cost’ would mean the cost in the hands of the appellant. He has borne all the expenses like, octroi, coulee charges, freight inwards etc in procuring the raw material all of which add to the cost of such procurement. Therefore, there is no point in arguing that the same be excluded from the cost of raw material. In the general understanding also, value addition is grossly the difference between gross turnover and all expenses. Therefore, there is no logic in the argument of the appellant.
While taking the value of inventory, whether the value of Work in progress be considered for inclusion or not? - HELD THAT:- The learned commissioner was right in including the work in progress in the inventory. The adjudicating authority has discussed each of the elements that go in to the calculation of the value addition and has given logical reasoned findings referring to accounting standards. The appellants, other than making bland averments, have not given any convincing reasons to buttress their argument. In view of the above, there is no reason as to why it is required to interfere with the impugned order.
Conclusion - i) The Commissioner's fixation of the special rate of value addition at 72.16% upheld, rejecting the appellant's claim of 76.56%. ii) The demand related to non-utilization of CENVAT credit was set aside. iii) The demand related to excess self-credit was ordered to be recalculated according to the fixed special rate. iv) Penalties imposed were set aside.
Appeal allowed in part.
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2025 (5) TMI 1908
Dismissal of the appeal preferred by the Appellant as an appeal filed beyond the statutory time limit prescribed in statute - HELD THAT:- Indisputably, the fact is that the appeal has been dismissed by the Commissioner Appeals on a finding that “ on the other hand, from the copy of the impugned order it is clear that the same has been dispatched on 23.07.2015. This being so, the claim of the Appellant that the date of receipt of the impugned order is 18.05.2016 is a misstated claim and therefore lacks merit.”
The very same issue had come up for consideration by the Hon’ble Chhatisgarh High Court in a tax appeal in the case M/s. Vijay Pratap vs. CCE & ST, Chhattisgarh, [2025 (3) TMI 963 - CHHATTISGARH HIGH COURT] Chattisgarh High Court, where after framing a substantial question of law as ““Whether the Customs, Excise & Service Tax Appellate Tribunal is justified in dismissing the appeal preferred by the appellant and affirming the order of Commissioner of Central Excise (Appeals) by holding that Commissioner of Central Excise (Appeals) has rightly dismissed the appeal of the appellant being barred by limitation, by recording a finding which is perverse to the record?”, the Judgement was rendered.
It is found from the facts of the appeal at hand, the appellate authority in his findings reproduced supra that from the copy of the impugned order it is clear that the same has been dispatched on 23.07.2015, has thus merely relied on the date of despatch and as such, there is no evidence on record to demonstrate the proof of delivery of the subject order and that the appellant was communicated with the adjudication order passed.
Conclusion - The limitation period for filing an appeal under Section 35(1) of the Central Excise Act begins only upon effective communication of the order to the aggrieved party.
The matter is remitted to the Commissioner (Appeals) for adjudicating the appeal on its merits in accordance with law and adhering to the principles of natural justice - Appeal allowed by way of remand.
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2025 (5) TMI 1907
Miscellaneous application under Section 35B of the Central Excise Act, 1944 - change of the management of the company - Clearance of blended yarn - nil rate of duty under Notification No. 30/2004-CE - availing Cenvat Credit on inputs - demand of duty alongwith interest and penalty - HELD THAT:- We find that the identical matter has been considered by two coordinate benches of the Tribunal; by Mumbai Bench in the case of M/s Jet Airways (India) Limited vs. Commr of Service Tax-V, Mumbai [2023 (5) TMI 767 - CESTAT MUMBAI] and Hyderabad Bench in the case of Icomm Tele Ltd. vs. Commr of Central Tax, Puducherry [2023 (10) TMI 1344 - CESTAT HYDERABAD]. It is pertinent to refer the findings of Mumbai Bench of the Tribunal in the case of M/s Jet Airways (India) Limited (supra), wherein it was ordered that the appeals stand abated once the Resolution Plan has been approved by NCLT and the CESTAT has become functus officio in the matters relating to this appeal.
By following the ratio of the above said decision and upon taking note of the fact that the NCLT has approved the resolution plan, we are of the considered view that the present appeal stands abated as the CESTAT has become functus officio in the matter relating to the present appeal.
The appeal is disposed of as abated. Miscellaneous application is also disposed of accordingly.
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2025 (5) TMI 1906
Utilization of CENVAT Credit - Department entertained a view that in view of the name change, the appellants are not entitled to utilize the credit lying in the records - disallowance of credit on the ground that there was no stock of inputs and as such requirement of 10(1) & 10(3) of the CENVAT Credit Rules, 2004 was not fulfilled - HELD THAT:- On going through the provisions of Rule 10, it is apparent that the said Rule is applicable only in the cases where a manufacturer of the final products shifts his factory to another site or the factory is transferred on account of change in ownership or on account of sale, merger, amalgamation, lease or transfer of the factory to a joint venture with the specific provisions for transfer of liabilities of such factory. It is found that the case of the appellant is of a simple change of name which is not disputed by the Department. The appellant submits that they have got the name changed from M/s TDT Copper Limited to M/s Alchemist Metal Limited w.e.f. 06.11.2009. On the advice of the Department, they have got the registration changed in the name of M/s Alchemist Metal Limited. The Authorized Representative for the Revenue argues that the letter which the appellant claims to have been received by them advising them to change the registration certificate is not on record.
On going through the record of the case that the Revenue vide letter dated 23.12.2009 put the appellants to notice that the registration number of TDT obtained in 1999 was not issued by them.
The impugned orders rely on contradictory assumptions that the appellants were not given registration in 1999 and that they have surrendered their registration on their volition in 2009. It is apparent from the records of the case that the appellants, vide letter dated 18.12.1999, have applied for the registration in the name of TDT; therefore, even if the registration in the name of TDT has not been given, though applied for, it can be understood that such registration is either accorded or deemed to have been accorded - the argument of the Department that the registration was not issued in 1999 does not appear to be correct.
It is not the case of the department that the appellant has taken ineligible CENVAT Credit either by not receiving the inputs, or by diverting the same after receipt or by claiming the same suddenly after considerable lapse of time. The fact that Credit lying in balance as on 2003 is not disputed; the claim of the appellants that the unit was closed for 4/5 years is not controverted. The substantial benefit of CENVAT Credit cannot be denied for procedural Lapses, if any, though it is found that none in the instant case. It being so, no case is made out for denying the credit to the appellants.
Conclusion - The impugned orders have been passed invoking Rule 10 of CENVAT Credit Rules, 2004, the case of the appellant is not that of change of ownership or transfer of factory; to that extent, the provisions of Rule 10 are not applicable. The impugned orders do not deny the credit on any other ground.
Appeal allowed.
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2025 (5) TMI 1905
Entitlement to refund of education cess and secondary & higher education cess - duty paid on outward freight - assessable value - exemption Notification No. 56/2002-CE - HELD THAT:- We further find that this Tribunal in the case of M/s Cadila Pharmaceuticals Ltd vs. CCE & ST, J&K [2025 (1) TMI 1561 - CESTAT CHANDIGARH] has also followed the decision of M/s Ind Swift Labs Ltd [2023 (9) TMI 962 - CESTAT CHANDIGARH] case and dismissed the appeals of the assessee.
Therefore, issue on refund of education cess and secondary & higher education cess, by following the ratios of the above cited decisions, we hold against the appellant.
Regarding refund on account of duty paid on outward freight - We find that in the present case, the sale was effected on FOR basis and no separate freight charge was charged from the buyer and the freight was included in the assessable value as shown in the invoices which have been produced before us.
We also find that this issue is covered by the judgment of the Hon’ble High Court of Himachal Pradesh in the case of M/s Inox Air Products Pvt Ltd [2024 (4) TMI 32 - HIMACHAL PRADESH HIGH COURT], wherein the Hon’ble High Court has held that when there is FOR sale and the assessable value includes freight charge also, in that situation, the assessee is entitled to the CENVAT Credit of service tax.
Thus, duty paid on outward freight element which is included in assessable value, we hold that the appellant is entitled to get the refund of the same.
Both the appeals are partially allowed in the above terms.
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2025 (5) TMI 1904
Process amounting to manufacture or not - purification and reclamation processes applied to waste oil - Payment of applicable customs and central excise duties - applicability of relevant tariff classification - Processed oil qualifies as dutiable fuel oil under Chapter sub-heading 27101950 or remains classified as waste oil under 27109900 - HELD THAT:- Undisputed facts of the case are that the appellants procured waste oil on payment of duty which are subjected to the process of purification and the resultant oil is sold as pure fuel oil. It is the Revenue’s allegation that when the waste oil is subjected to processes such as filtration, purification, distillation, etc., resulting into fuel oil which becomes usable, hence, a new product emerges with different characteristics and accordingly chargeable to excise duty.
The issue is no more res-integra and covered by a recent judgment of the Tribunal in the case of Alicid Organic Industries Ltd. V. CCE & ST, [2022 (8) TMI 163 - CESTAT AHMEDABAD].
More or less, a similar view has been expressed by this Tribunal in Southern Refineries Ltd. V. CCE, Thiruvananthpuram [2024 (6) TMI 1038 - CESTAT BANGALORE].
Hence, activities of reclaiming and purifying waste fuel oil do not constitute manufacture and are not dutiable under Central Excise law
Thus, we do not find merit in the impugned orders, hence same are set aside and the appeals are allowed with consequential relief, if any, as per law.
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2025 (5) TMI 1755
Availment of Cenvat Credit on sugar cess - non-consideration of provisions of sub-section (4) of Section 3 of the Cess Act, which is for the purpose of levy and collection of cess - HELD THAT:- The substantial questions of law were considered by this Court in the case of Commissioner of CGST & Central Excise, Kolkata South, GST Bhawan Vs. M/s. Diamond Beverages Pvt. Ltd.[2025 (5) TMI 1219 - CALCUTTA HIGH COURT] and the appeal filed by the revenue was dismissed and the substantial questions of law were answered against the revenue.
Thus, this appeal has to be dismissed and accordingly the same is dismissed and the substantial questions of law are answered against the revenue.
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2025 (5) TMI 1754
Removal of 650 PCC Poles lying outside the factory premises without proper documentation and duty - embossing of the manufactured PCC Poles with the mark "WBSEDCL" constitutes branding, qualifying for SSI exemption or not - mismatch in ER-1 and ER-3 returns - invocation of extended period of limitation.
Removal of 650 PCC Poles lying outside the factory premises without proper documentation and duty - HELD THAT:- For the contention of duty liability on the broken poles amounting to Rs.2,46,722/- it is not agreed with the contention of the Revenue. For such 933 broken poles worked out in accordance with the number of poles supplied to WBSEDCL during the period 2008-09 and 2013-14 (upto November), it is not disputed that the products have no market value. The products cannot be considered as manufacture till the stress test is successfully undertaken, hence no duty would be payable on such destroyed goods lost in the testing process. In this regard, it is noted that the appellant has also contended that they admitted their lapse by not applying for remission of duty under Section 5 of the Central Excise Act in respect of such destroyed/damaged poles. For this reason, there is no revenue implication for this and we do not find any malafide on the part of the appellant in the matter.
Embossing of the manufactured PCC Poles with the mark "WBSEDCL" constitutes branding, qualifying for SSI exemption or not - HELD THAT:- There are no merit in the plea of the Revenue that embossing with WBSEDCL, rendered the manufactured goods as branded products, thereby denying them the SSI exemption - The embossing cannot be considered as a brand name and it would only seek to indicate exclusivity to suggest that such poles belong to WBSEDCL. It is also on record that WBSEDCL for themselves are not engaged in selling of such PCC Poles to other persons in the course of trade. Therefore, the said mark is indicative only of the sole ownership and exclusivity of use of such PCC Poles by WBSEDCL.
Mismatch in ER-1 and ER-3 returns - invocation of extended period of limitation - HELD THAT:- The show cause notice has been issued to the appellant incorporating the extended period of limitation. It is an admitted position that the ER-1 was regularly filed on which basis, the show cause notice itself has been issued. Under these circumstances no clause for suppression/misstatement can be invoked and extended period of limitation will not be applicable. It is therefore clear that the period upto January 2013 is barred by limitation and therefore the demand for the period 2009-10 to 2013-14 upto November 2013 on this count would not survive.
Conclusion - i) The demand relating to removal of poles outside factory premises without documentation set aside as the duty was paid and no malafide was found. ii) The duty demand on broken poles destroyed in testing rejected. iii) The denial of SSI exemption due to embossing overturned. iv) The demand based on return mismatches was barred by limitation and therefore unsustainable.
Appeal allowed.
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2025 (5) TMI 1753
Demand duty under rule 8 of the Valuation Rules - goods partly consumed within the factory of production and partly transferred to the sister unit - principle of revenue neutrality - violation of Section 11A (11) of Central Excise Act, 1944 - HELD THAT:- A perusal of the provisions of Rule 8 as above, gives clear understanding that the said Rule covers only cases where the assessee clears entire production for captive consumption and there are no clearances outside the factory. In the instant case, the fact that the appellant clears partly for home consumption and partly to their sister concern at Agartala, is not denied. Therefore, we find that the case of the appellant is not covered by the un-amended Rule 8 till 22-11-2013.
We fail to understand as to what prevented the department from obtaining a valid CAS-4, if need be, by getting the accounts of the appellant audited by a Cost Accountant. That not being done, it has to be concluded that the value adopted by the revenue, without any scientific ascertainment logically explained, cannot be relied upon.
We are of the considered opinion that Show cause Notice is the foundation of the edifice of any case. It is required to build all the arguments and reasoning that the department wishes to use in its favour be mentioned in the Show Cause Notice. Show Cause Notice stands on the premises on which it is built. No supplementing at the stage of adjudication and appeal is permissible.
Thus, we find that the invocation of Rule 8 of Central Excise Valuation (Determination of Price of Excisable goods) Rules, 2000 is incorrect for the period before 22-11-2013. Though, the said Rule is applicable for the period after 22-11-2013, the valuation arrived at the 110% of price at which the appellant cleared the goods to their sister concern, in place of cost of production arrived on the basis of CAS-4 as contemplated in the Rule, during the entire period, is not acceptable. Therefore, we are of the considered opinion that the Rule 8 is not applicable for certain part of the impugned period i.e. up to 22-11-2013 and unscientific and extra-legal method of calculation for the entire period vitiated the proceedings. We find that impugned orders passed in such a manner cannot be sustained. For this reason, we find that all the case laws cited by the learned AR are not applicable to the facts of the case and therefore, cannot be relied upon. As we find that the appellants succeed squarely on merits, we find it not necessary to go into the other legal submissions on revenue neutrality, delayed adjudication etc. However, we find that as the demand is not sustained, there is no scope for affirming the penalties imposed.
In view of our discussion and findings, as above, we allow the appeal, with consequential relief, if any, as per law.
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2025 (5) TMI 1752
Disallowance of Cenvat credit benefits - inputs service - compare the provisions of rules 2(l) of the Cenvat Credit Rules, 2004, as well as Section 17 (i.e. Clause (d) of sub-Section 5 of Section 17) of the CGST Act, 2017 - peri materia or not? - HELD THAT:- Since the matter is in the third round of litigation, we therefore make it incumbent upon the Commissioner to decide the matter within three weeks of receiving the order. Learned Advocate shall be free to make any further submissions if so desired.
Appeal allowed by way of remand.
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2025 (5) TMI 1751
Demand duty, along with interest and penalty - "Centrifugal Power Driven Pumps Vertical Type / Horizontal Type for handling water” - eligible for the benefit of concessional rate of duty under Notification No. 10/2006-C.E. and Notification No. 12/2012-C.E. - HELD THAT:- It is observed that prior to the introduction of the 8-Digit Code in the Tariff, the appellant had been classifying the impugned goods under the Tariff Item No. 8413.11. Thereafter, the appellant has classified the said goods under Tariff Item No. 84137094 since Centrifugal Pumps of “Vertical Type" were been specifically mentioned therein. In any case, it is not disputed that the Centrifugal Pumps manufactured by the appellant are used primarily for handling water and hence, classification could also be made under the Tariff Entry 84137010. But in either case, whether the classification is under 84137010 or 84137094, the benefit provided under the said Notification shall be available to the goods manufactured by the appellant as both these entries are falling under the Tariff Heading 8413.
In view of the above, we find that the goods manufactured by the appellant, namely, “Centrifugal Power Driven Pumps (Horizontal and Vertical) used primarily for handling water” are eligible for the benefit of concessional rate of duty as prescribed under Notification No. 10/2006-C.E. dated 01.03.2006 (Sl. No. 17) and Notification No. 12/2012-C.E. dated 17.03.2012 (Sl. No. 235), as amended, as has been availed by the appellant. Consequently, we hold that the demand of central excise duty confirmed in the impugned order is not sustainable.
Since the demand of duty itself has been held as unsustainable, the question of demanding interest or imposing penalties does not arise.
In the result, we set aside the impugned order and allow the appeal, with consequential relief, if any, as per law.
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2025 (5) TMI 1750
Availing credit of duty paid on inputs and capital goods as well as the credit of service tax paid on input services in terms of the provisions of CENVAT Credit Rules, 2004 - Segregation of services used between trading activity and manufacturing activity - monthly statutory ER-1 and ST-3 returns duly - reversal of credit attributable exclusively to trading activity - demand along with interest and penalty - extended period for recovery - HELD THAT:- It is not the case that the appellants are only importing and selling Coil Formers, IDM-12 etc. and are not manufacturers of final products. Had that been the case, the revenue could have alleged that CENVAT Credit rules do not envisage availing of credit of service tax paid on input services received for purchase and sale of goods by a dealer/trader. However, this is not the case of the Revenue. The appellants submit that the Rules envisage a person who is a manufacture of final products cum service provider, manufacturer of final products cum service provider cum seller of goods etc.
We observe that in the present case, the issue involved is whether the entire quantum of CENVAT Credit availed on input services can be denied where some services have been used towards trading. We observe that “trading” activity as an exempted service under Rule 2(e) of CENVAT Credit Rules, 2004 has been inserted only w.e.form 01.04.2011. Thus, we observe that for the period prior to 01.04.2011, ‘trading’ cannot be considered as an exempted service. The question of reverse of CENVAT Credit will arise only when it is established that the appellant has been providing dutiable and exempted services and availed CENVAT Credit in respect of input services which are used exclusively for providing exempted output services. In such cases where the appellant has provided both dutiable and exempted services, the provisions of Rule 6 has to to be invoked to quantify the reversal of credit required. We observe that in the impugned order, it is categorically held that Rule 6 of the CENVAT Credit is not applicable in this case.
Since “trading” activity as an exempted service under Rule 2(e) of CENVAT Credit Rules, 2004 has been inserted only w.e. form 01.04.2011. Thus, we observe that for the period prior to 01.04.2011, there is no requirement for reversal of credit availed on input services even if part of the said input services are used for “trading” activity prior to 01.04.2011. Further, we the Appellant has suo moto reversed CENVAT Credit amounting to Rs. 22,534/- along with interest of Rs. 2,903/- that is exclusively used for the ‘trading’ activity during the relevant period. Such reversal was made on 04.12.2009, i.e., prior to the issuance of the underlying SCN dated 28.01.2011. The quantification of such reversal is also duly supported by a CA certificate.
We observe that the issue is no longer res integra inasmuch as the Hon’ble CESTAT has consistently held that there is no provision for disallowance of credit availed prior to 01.04.2011 availed on service tax paid on input services which also were utilized for trading activity.
We observe that the entire proceedings have been initiated against the Appellant in order to deny the CENVAT Credit under Rule 2(l) and Rule 3 of the CENVAT Credit Rules, 2004 by invoking Rule 14 of the Credit Rules merely because the Appellant along with its primary activity of manufacturing ferrite products carried out ‘trading’ activity which during the relevant period. Therefore, it was held that since the law does not provide for any mechanism to reverse such CENVAT Credit attributable to an activity that is neither a manufacturing activity nor a service, the complete CENVAT Credit availed on input services has been denied.
Further, we observe that the Appellant has duly reversed the credit attributable to the “trading” activity along with interest, it would be construed as if the Appellant has not availed any credit on such “trading” activity. In this regard, reliance is placed on the decision of the Hon’ble Supreme Court in the case of Chandrapur Magnet Wires (P) Ltd. v. Collector of Central Excise, Nagpur [1995 (12) TMI 72 - SUPREME COURT].
In the instant case, we observe that the Department has neither established as to how the CENVAT Credit is not admissible to the Appellant nor invoked Rule 6 of Credit Rules. Thus, we observe that in a case where the Department has failed to establish that CENVAT Credit is not admissible and Rule 6 also not being applicable, the hold that he entire proceedings initiated by invoking Rule 14 of the Credit Rules is void-ab-initio and the impugned Order is liable to be set aside.
Thus, we hold that the denial CENVAT Credit confirmed in the impugned order is legally not sustainable and hence we set aside the same. Since, the appellant is eligible to avail the credit, the question of demanding interest or imposing penalty does not arise and hence we set aside the same.
In the result, we set aside the impugned order and allow the appeal filed by the appellant with consequential relief, if any, as per law.
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2025 (5) TMI 1749
CENVAT credit of excise duty paid on maize starch for manufacture of Baking powder - entitlement for concessional rate of duty @ 1% or 2% for Custard powder and Icing sugar - demand of excise duty on corn flour treating it as maize starch - suppression of facts with intent to evade payment of duty - invocation of extended period of limitation - levy of penalty under Rule 26.
CENVAT credit of excise duty paid on maize starch for manufacture of Baking powder - only ground for denial of credit is that it cannot be extended for the period prior to Excise Registration - HELD THAT:- It is a settled principle in law that the benefit of credit cannot be denied to a manufacturer for the period prior to Registration - In a catena of decisions, the Courts and the Tribunal have consistently allowed Cenvat credit on inputs and input services prior to registration - there are no hesitation in holding that the denial of cenvat credit is not tenable and hold that the appellant is entitled for Cenvat credit as claimed by them on the raw materials used in the manufacture of Baking Powder.
Entitlement for concessional rate of duty @ 1% or 2% for Custard powder and Icing sugar - HELD THAT:- The appellant did not dispute the excisability of Custard powder and Icing sugar, but they claimed the effective rate of 1% from 01.03.2011 to 16.03.2012 and 2% from 17.03.2012 as per Notification No.01/2011-CE dated 01.03.2011 as amended. Even though the adjudicating authority has recorded the above claims of the appellant, he has not given any findings while passing the order but simply confirmed the duty as proposed in the show cause notice.
It is noticed that Custard powder is specifically classifiable under Tariff Item 2106 90 80 of Central Excise Tariff and the show cause notice also adopted the same and hence we find force in the claim of the appellant and accordingly the custard powder manufactured by the appellant is entitled for 1% rate prescribed under Sl.No. 19 of Notification No. 01/2011-CE dated 01.03.2011 upto 16.03.2012 and then 2% with effect from 17.03.2012 - With regard to the claim of concessional rate for icing sugar, it is observed that there is no merit in the claim of appellant as it is neither a food mix nor ready to eat packaged food as specified in Sl. No. 22 of the above notification.
There is a demand of duty on Drinking Chocolate manufactured amounting to Rs.33,415/- for the period from 2009-10 to 2013-14. The Appellant has not submitted any arguments relating to the dutiability or otherwise on this commodity. As such, it is taken that the duty on the commodity has been accepted by the appellant.
Demand of duty on corn flour - HELD THAT:- The appellant vide their reply to Show Cause Notice contended that the Barnd Name "Bakers" is registered for Corn Flour only and no prudent person manufacturing maize starch would approach the Registrar of Trade Mark and get Bakers Trade Mark for Corn Flour. Further, they contended in the reply that if it is maize starch as claimed by the Department then there is no brand name for maize starch and in such case duty demand on the ground of other man's brand name does not survive. However, the Adjudicating Authority has not examined the above points but simply confirmed the demand.
Demand of excise duty on corn flour treating it as maize starch - HELD THAT:- It is evidenced from the records that the appellant market the product as corn flour and it is specifically covered under Tariff Item 1102 20 00, and hence we have no hesitation in accepting the classification adopted by the appellant - The demand of duty on Corn Flour is not legally sustainable and hence set aside. As the demand itself is not sustainable, the question of imposition of penalty does not arise.
Suppression of facts with intent to evade payment of duty - invocation of extended period of limitation - HELD THAT:- It has been a well settled law, that in matters relating to technical interpretation and classifications, suppression of fact / wilful misstatement has to be used with utmost caution and justification. Since, we have held that the classification adopted by the department is not sustainable and the other products attract concessional rate as contended by the appellant, the allegation of intention to evade payment of duty does not survive.
The demand for the normal period of one year alone would survive. However, it is noticed that though the notice was issued on 07.05.2014, a corrigendum was issued on 14.11.2014 by modifying various paras of the notice thereby resulting in increasing the duty amount demanded and hence, the corrigendum date would be taken as the date of show cause notice. Consequently, the entire demand made in the Show Cause Notice No. 04/2014 dated 07.05.2014 as amended by corrigendum dated 14.11.2014 is beyond the time limit of one year as demand of duty covered the period from 2009-10 to 14.08.2013 and therefore, the entire demand made in this notice is hit by time limit. However, the demand made in the periodical notices are within the time limit.
Levy of penalty under Rule 26 - HELD THAT:- Once extended period is not invokable, the question of imposing mandatory penalty under Section 11AC does not arise. Further, when the entire demand under Notice No. 04/2014 dated 07.05.2014 is set aside, the question of imposing any penalty does not arise - During the period covered under the periodical notices, Section 11AC prescribes equal amount of penalty only in cases of suppression with intention to evade and in the cases of periodical notices no such penalty can be imposed. Accordingly, the penalty imposed under Section 11AC for the periodical notices set aside - When the penalty on the firm is set aside for the reasons stated above, imposition of penalty on the partner of the appellant firm is also not justified.
Conclusion - i) The appellant is liable to pay excise duty on Baking Powder, Custard Powder, Icing Sugar, and Drinking Chocolate, but is entitled to Cenvat credit on inputs for Baking Powder and concessional duty rates on Custard Powder. The demand on Corn Flour was set aside. ii) The extended period for demand and penalty was not invokable due to absence of wilful suppression. Consequently, penalties imposed were set aside, including on the individual partner.
Appeal allowed in part.
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2025 (5) TMI 1748
CENVAT credit on cement used and laying down of foundation or making structures for support of capital goods - Rule 2(k) of Cenvat Credit Rules, 2004 - HELD THAT:- Admittedly, in the show cause notice, it has been recorded that the cement, TOR steel, Structural steel were used by the appellants in fabrication/manufacture of capital goods and structure for supporting the plant and machinery. The said view has been affirmed by the Larger Bench of this Tribunal in the case of Manglam Cement Ltd. Vs. CCE [2018 (3) TMI 1547 - CESTAT NEW DELHI - LB], wherein this Tribunal has observed that 'we are of the considered opinion that the eligibility to duty credit of the disputed good cannot be denied. Such eligibility either as 'capital goods (accessories) or as 'inputs' has been examined and upheld by various decisions of the Hon'ble apex court and the Hon'ble High courts as above.'
As the cement and steel items which have been used by the appellants for fabrication/manufacture of capital goods and structure for support of plant and machinery do qualify as inputs in terms of Rule 2(k) of Cenvat Credit Rules, 2004.
Conclusion - The cement and steel items used for fabrication or manufacture of capital goods and supporting structures qualify as inputs under Rule 2(k) of the Cenvat Credit Rules, 2004, entitling the appellants to Cenvat credit.
The Cenvat Credit cannot be denied to the appellants. Accordingly, the impugned orders deserve no merits, therefore, the same are set aside - Appeal allowed.
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2025 (5) TMI 1747
Refund claim for payment of excess duty - export duty charged on the basis of Wet Metric Tonne (WMT), instead of Dry Metric Tonne (DMT) - without assigning any reason and in terms of Section 17 (5) of the Customs Act, 1962 - HELD THAT:-The assessments of shipping bills have been done under Section 17 (4) of the Act and further Section 17 (5) mandates that if any order is passed under Section 17 (4) of the Act, the proper officer is duty bound to pass a speaking order of re-assessment within 15 days of the order passed under Section 17 (4) of the Act.
Admittedly, in the case in hand, no order under Section 17 (5) of the Act has been passed.
Thus, the appellant has no reason to challenge the assessment of the shipping bills. Therefore, the reasons for denying the refund to the appellant are not sustainable.
Hence, we set aside the impugned order and direct the adjudicating authority/proper officer to pass a speaking order under Section 17 (5) of the Act and thereafter, if any refund claim is maintainable, the same is be decided in accordance with law.
In these terms, the appeal is partly allowed.
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