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Central Excise - Case Laws
Showing 181 to 200 of 81789 Records
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2025 (2) TMI 8
100% EOU - Cenvat credit on various input services under the Cenvat Credit Rules, 2004 - applicability of time limitation - appellant could not make oral submissions and make effective representation before the authority - violation of principles of natural justice - HELD THAT:- From the facts of this appeal, it appears that input services viz., Rent a cab, Personal insurance, Air Travel Agent's services, Business Auxiliary Services, Commercial or Industrial Construction Services, Information Technology Software Services, etc. were not allowed by the Revenue for availment of Cenvat credit of the service tax paid on the ground that these were not related to the manufacture of their final products. These services appear to be activities forming part of the Appellant’s manufacturing business. However, the Appellant has not furnished any reply to the Show Cause Notice dated 04.09.2014 issued and not attended the personal hearing granted by the Original Adjudicating Authority.
The Appellant has reversed the credit voluntarily in respect of Rent-a-Cab service and also on personal insurance service which is not interfered with.
Conclusion - i) The definition of 'input service' prior to 01.04.2011 included activities related to business, requiring examination of eligibility based on this definition. ii) The burden of proof regarding Cenvat credit eligibility lies with the claimant. iii) Interest and penalties are not applicable if Cenvat credit is merely taken and not utilized, subject to verification.
The impugned Order-in-Original passed by the Commissioner of Central Excise, Puducherry cannot be sustained and so ordered to be set aside by way of remand. The Appellant is directed to produce all the relevant documents on the basis of which they have taken the Cenvat credit on various input services. It need not be reiterated that while adjudicating the issue of eligibility of the Cenvat credit on various input services as above strict observance of the principles of natural justice have to be complied with - appeal allowed by way of remand.
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2025 (2) TMI 7
CENVAT Credit - disallowance of credit towards transportation and difference in the amount received from the insurance company - credit on labour cost - time limitation - Penalty imposed under section 11AC of the Act.
Credit towards transportation and difference in the amount received from the insurance company - HELD THAT:- There is no reason to interfere with the findings that the ingredients to avail credit of duty of goods brought back to the factory, as contemplated under Rule 16(1) were not satisfied. The appellant having wrongly availed the benefit of the credit on the service tax paid on transportation charges is liable to reverse the said amount along with interest.
The loss due to damaged goods was valued at Rs. 4,83,825/- and against the same appellant received the insurance claim of Rs. 5,60,555/-, however, they reversed the credit on the amount of Rs. 4,83,825/- and failed to reverse the balance amount of credit of Rs. 11,793/- on the differential amount of Rs. 76,730/-. Therefore, the appellant was liable to reverse the credit of Rs. 11,793/- wrongly retained by them. In fact, the appellant had agreed and actually paid the Cenvat credit of Rs. 3,067/- along with interest and penalty, but failed to pay the balance amount of Rs.8,726/-. There seems to be no error in the demand raised and confirmed in this regard.
Reversal of the Cenvat credit in respect of labour cost - HELD THAT:- The appellant in their synopsis had submitted that they received a sum of Rs. 5,60,555/- towards the insurance claim which consisted cost of material of Rs. 4,83,825/- and the cost of labour of Rs. 1,56,717/-. From their own submissions, it is apparent that the amount received from the insurance company included the cost of labour and consequently, they were required to reverse the same.
Time limitation - HELD THAT:- The allegation of wilful suppression to evade payment of duty has been made out and therefore, the invocation of the extended period of limitation is justified in the facts of the present case.
Penalty imposed under section 11AC of the Act - HELD THAT:- The penalty imposed under section 11AC of the Act on account of suppression of facts so as to evade duty liability is mandatory and there is no reason to interfere with the same - The action/inaction on the part of the assessee points to the intent to evade duty and the same is writ large in the present case as though ER-1 Returns were filed by the appellant, however, the fact of availing the Cenvat credit on transportation charges was missing deliberately as the appellant knew that the activity carried out by them and did not amount to manufacture which is further evident by not availing the Cenvat credit in terms of Rule 16(1).
Conclusion - i) The appellant having wrongly availed the benefit of the credit on the service tax paid on transportation charges is liable to reverse the said amount along with interest. ii) The amount received from the insurance company included the cost of labour and consequently, they were required to reverse the same. iii) The allegation of wilful suppression to evade payment of duty has been made out and therefore, the invocation of the extended period of limitation is justified in the facts of the present case. iv) The penalty imposed under section 11AC of the Act on account of suppression of facts so as to evade duty liability, the same is upheld.
Appeal allowed in part.
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2025 (2) TMI 6
CENVAT credit - whether the appellant was required to reverse the credit taken on the capital goods or pay duty on the transaction value at the time of clearance? - HELD THAT:- From the worksheet enclosed along with the show- cause notice, it is seen that the capital goods were purchased in the year 1994-1995, 1995-1996, 1996-1997, 2002-2001, 2001-2002, 2002-2003, 2003-2004, 2004-2005, 2005-2006, 2006-2007 and were cleared to M/s. Volvo India Pvt. Ltd. under the Invoice No .236 dated 04.05.2007 on payment of duty of Rs.80,53,153/- on the transaction value of Rs.7,76,47,919/-, but the credit availed on these capital goods was Rs.1,14,06,152/-. The claim of the appellant is that these capital goods were put to use and were not cleared ‘as such’, hence, question of reversal of credit does not arise.
In the present case, since the Department does not dispute the fact that the goods were cleared after being put to use, the question of considering the capital goods cleared ‘as such’ for the purpose of reversal of credit cannot be sustained. Moreover, the Commissioner (Appeals) in the impugned order clearly notes that Notification No.39/2007 Central Excise (NT) dated 13.11.2007, the benefit of payment of amount equal to the cenvat credit taken on the said capital goods reduced by 2.5% for each quarter of a year or part thereof from the date of taking the credit has been provided for on removal of the capital goods being used, but holds that this benefit is available only from 13.11.2007 onwards.
Conclusion - There are no reason to deny the benefit of depreciation to the used capital goods for discharging the duty on the reduced value at the time of clearance.
The impugned order is set aside and the appeal stands allowed.
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2025 (2) TMI 5
Valuation of Excise duty - inclusion of amortized value of the moulds to the assessable value of the goods manufactured and cleared by the Appellant using the moulds - HELD THAT:- Larger Bench decision relied by the Revenue in the matter of M/s Mutual Industries Ltd. [2000 (3) TMI 74 - CEGAT, COURT NO. I, NEW DELHI], though the issue was amortization of mould, it was specific to the issue that whether the proportion of such inclusion need to be made even when after successive income tax depreciation, cost of the mould became zero. On that issue, it is held that cost of such mould has to be included in such value. However, the Larger Bench decision is not relevant considering the facts and circumstances of present case. As regards reliance on the M/s Bhor Industries Ltd., the customer of the appellant supplied 'Dies and tools' to the job worker without amortizing the cost of the same. However, in Appellant’s case, adjudication authority admits that the original equipment manufacturers (OEMs) being the customers of the Appellant have amortized the cost of the mould supplied by them and hence the above judgment cannot be applied to the facts of the present case.
As regarding the reliance on the decisions of the Larger Bench in the matter of M/s. Mutual Industries Ltd. Vs. Collector of Central Excise, Mumbai [2000 (3) TMI 74 - CEGAT, COURT NO. I, NEW DELHI], the movement of mould were neither undertaken under the job work challan nor the job worker amortize the value of the free issue material. However, in the present case, movement of mould from OEMs to the appellant was under job work challan and further the value of the mould in the present case is amortized, while clearing the final product, which includes the intermediate product manufactured and supplied by the appellant.
The impugned order confirming the demand along with the interest and imposition of penalty is unsustainable.
Conclusion - The intermediate product manufacturers are not liable for duty on free supply inputs when the final product manufacturer avails credit under the MODVAT Scheme.
Appeal allowed.
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2025 (2) TMI 4
Determination of the appropriate rate of interest on the refund of a pre-deposit made by the appellant during an investigation - Clandestine manufacture and removal - HELD THAT:- In the present case impugned order clearly observes that the amount that was deposited by the appellant at the time of visit of officers to their premises was appropriated by the Original Authority. The amount so appropriated acquired the character of duty, the moment it is appropriated against the demand made. In case of Mafatlal Industries [1996 (12) TMI 50 - SUPREME COURT], Hon’ble Supreme Court has observed 'Section 11B of the Central Excises and Salt Act and Section 27 of the Customs Act, both before and after the 1991 (Amendment) Act are constitutionally valid and have to be followed and given effect to. Section 72 of the Contract Act has no application to such a claim of refund and cannot form a basis for maintaining a suit or a writ petition. All refund claims except those mentioned under Proposition (ii) below have to be and must be filed and adjudicated under the provisions of the Central Excises and Salt Act or the Customs Act, as the case may be. It is necessary to emphasise in this behalf that Act provides a complete mechanism for correcting any errors whether of fact or law and that not only an appeal is provided to a Tribunal - which is not a departmental organ - but to this Court, which is a civil court.'
Even if the amount is considered to be refund of deposit then also the same has to be refunded under section 11B as the said section has provided for the refund of deposit lying in account current.
All the refunds which are filed under the Central Excise Act, 1944 in terms of the decision of Hon’ble Supreme Court in case of Mafatalal Industries and the above provisions whether of the duty, interest or any deposit made are governed by the provision of Section 11B of the Act. The interest thus gets governed by the provisions of Section 11BB as has been held by Hon’ble Supreme Court in case of Ranbaxy, [2011 (10) TMI 16 - SUPREME COURT]. There has been exception carved out only for determination of relevant date for determining the period for which interest is to be paid in respect of deposit made as per Section 35F for filing the appeal before an appellate authority. Section 35FF provides that interest would be paid from the date of deposit made under Section 35F.
Conclusion - Statutory provisions must be adhered to when determining interest rates on refunds. The interest rate of 6% as granted by the adjudicating authority upheld.
Appeal dismissed.
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2025 (1) TMI 1439
CENVAT Credit - electricity generated by the respondent's captive power plant and subsequently cleared to the Haryana State Electricity Board (HSEB) was used in the manufacture of final products within the factory - suppression of facts or not - extended period of limitation - HELD THAT:- The dispute in the present case is that the electricity generated in captive plant was not used in or relation to manufacture of final products within the factory of production but was sold to HSEB whereas learned Tribunal did not decide this dispute and held that there is no dispute with regard to the appellant receiving same quantity of electricity which was cleared to the Electricity Board, therefore, the issue in dispute was never decided by the learned Tribunal.
The matter was remanded for reconsideration of whether the electricity was used in manufacturing within the factory, as required for credit eligibility.
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2025 (1) TMI 1438
CENVAT Credit - whether the appellant is entitled to the benefit of CENVAT Credit under the CENVAT Credit Rules, 2004, despite having claimed depreciation on the same capital goods under Section 32 of the Income Tax Act, 1961? - violation of Rule 4(4) of the CENVAT Credit Rules, 2004 - HELD THAT:- The admitted fact on record is that the appellant availed CENVAT Credit on capital goods to the tune of Rs. 6,36,381 in the year 2001-02 and Rs. 2,25,141/- during the year 2002-03. During the course of audit of the financial and excise records of the appellant conducted by Central Excise audit team, it was observed by the audit party that the assessee had simultaneously claimed the benefit of depreciation on the capital goods in their financial accounts as well as Income Tax returns for the relevant years. And admittedly, it was only when it was pointed out to the appellant that they had availed two benefits, the appellant revised their Income Tax return for the year 2003-04 on 31.05.2005 whereas the period in dispute was 2001-02 and 2002-03.The net result is that during the financial years 2001-02 and 2002-03, the appellant had availed and utilized CENVAT Credit on the capital goods and simultaneously claimed benefit of depreciation on these capital goods under Section 32 of the Income Tax Act, 1961 in their Income Tax returns for the assessment years 2002-03 and 2003-04 and the benefit of said depreciation was never surrendered by them as they had neither filed the revised Income Tax returns for the assessment years 2002-03 and 2003-04 nor they had discharged the liability of additional income tax, which would have accrued on account of surrender of benefit of depreciation, so claimed, during the above assessment years.
As per the legal provisions, the CENVAT Credit was not allowable to the appellant on the capital goods since they claimed depreciation on these goods in their books of accounts and Income Tax returns for the year 2001-02 and 2002-03 and as per Rule 4 (4) of CENVAT Credit Rules, 2002/2004, the appellant did not fulfil the condition for allowing the CENVAT Credit, therefore, became liable for recovery of CENVAT Credit wrongly taken or erroneously refunded under Rule 14 of the CENVAT Credit Rules, 2004.
There are no infirmity in the impugned order dated 25.01.2011 passed by the learned Customs, Excise and Service Tax Appellate Tribunal - appeal dismissed.
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2025 (1) TMI 1437
CENVAT Credit - Ammonium Sulphate used in urea under Rule 6(3) of CENVAT Credit Rules was or was not required to discharge any duty during the impugned period during May 2015 to March 2016 - HELD THAT:- It finds that issue is no more res-integra and has been recently decided based on various other case laws in HINDUSTAN CHEMICALS COMPANY VERSUS COMMISSIONER OF C.E. & S.T. -SURAT-II [2024 (5) TMI 459 - CESTAT AHMEDABAD] in which inter alia, it was held by Division Bench of CESTAT Ahmedabad that the Ammonium Sulphate being a by-product arising out of manufacture of final product, namely Potassium Cyanides and Sodium Cyanides, will not be liable for payment of any amount in terms of Rule 6(3) of the Cenvat Credit Rules, 2004.
Conclusion - Ammonium Sulphate, as a by-product from manufacturing Potassium Cyanides and Sodium Cyanides, was not liable for payment under Rule 6(3) of the CENVAT Credit Rules.
Appeal allowed.
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2025 (1) TMI 1436
Re-determination of valuation of the goods i.e. parts/components manufactured by the appellant in terms of Section 4(1)(b) of the Central Excise Act, 1944 read with Rules 6 and 11 of the Central Excise Valuation Rules, 2002 along with penalty - whether the notional cost of design and drawings provided free of cost by MSIL to the appellant should be included in the assessable value for excise duty purposes? - HELD THAT:- The issue raised was whether the notional cost of specifications in the form of drawings and designs supplied free of cost by Maruti to the potential vendors should be included in the assessable value of the parts or components manufactured by the vendors and cleared to Maruti for their motor vehicles. To appreciate the issue the Principal Bench considered the provisions of Section 4 of the Central Excise Act and Rule 6 of the Central Excise Valuation Rules, 2000 and also distinguished the decision of the Tribunal in the case of COMMISSIONER OF CENTRAL EXCISE JAMSHEDPUR VERSUS TATA MOTORS [2008 (12) TMI 129 - CESTAT KOLKATA] and concluded that the notional cost of drawings and designs supplied free of cost by Maruti to the vendors cannot be included in the assessable value of the parts and components manufactured by vendors and cleared to Maruti for the purpose of payment of central excise duty.
It is also pertinent to take note of the fact that the Principal Bench had noted the distinction between the mere specification and detailed engineering drawing as considered by the Tribunal in the earlier decision in M/S. MANGALORE REFINERY & PETROCHEMICALS LIMITED. VERSUS THE COMMISSIONER OF CUSTOMS MANGALORE. [2012 (9) TMI 712 - CESTAT, BANGALORE], where the Tribunal has held that there is a distinction between mere specifications and detailed engineering drawing. It is only the latter which is covered under rule 9(1)(b)(iv) of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 (which is now rule 10(1)(b)(iv) of the 2007 Customs Valuation Rules).
Conclusion - The specifications in the nature of design/drawings provided by MSIL were merely layout or dimensions of the desired parts and components as they have to be necessarily manufactured as per the requisite dimensions so that they can be fitted in the vehicle manufactured by the Maruti.
Appeal allowed.
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2025 (1) TMI 1372
Valuation - Demand of differential central excise duty - inclusion of the notional cost of drawings and designs supplied free of cost by Maruti Suzuki India Pvt Ltd. in the assessable value of parts and components of motor vehicles manufactured by the appellant and cleared to Maruti Suzuki India Limited - HELD THAT:- The issue raised in the case of Denso India Pvt Ltd. [2024 (3) TMI 686 - CESTAT NEW DELHI] was whether the notional cost of specifications in the form of drawings and designs supplied free of cost by Maruti to the potential vendors should be included in the assessable value of the parts or components manufactured by the vendors and cleared to Maruti for their motor vehicles. To appreciate the said issue, the Principal Bench considered the provisions of section 4 of the Central Excise Act, 1944 and Rule 6 of the Valuation Rules and observed that anything which is supplied by the buyers to the manufacture before even identifying the potential seller/ manufacturer cannot be treated as additional consideration for sale. It was, therefore, held that something can be treated as an additional consideration for sale of goods only when there exists a contract of sale or an agreement to sale between two parties and in terms thereof the buyer pays something over and above the price agreed - The Tribunal, therefore, concluded that the drawing and designs supplied by MSIL at the time of identification and short listing of potential vendors for supply of parts and components, the provisions of section 4 1(b) of the Act read with Rule 6 of the Valuation Rules, could not have been invoked as no consideration was received by the vendors from MSIL.
It is also pertinent to take note of the fact that the Principal Bench had noted the distinction between mere specification and detailed engineering drawing as considered in the earlier decision in Mangalore Refinery & Petrochemicals Ltd. Vs. CC, Mangalore [2012 (9) TMI 712 - CESTAT, BANGALORE], where the Tribunal has held that there is a distinction between mere specifications and detailed engineering drawing. It is only the latter which is covered under rule 9(1)(b)(iv) of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 (which is now rule 10(1)(b)(iv) of the 2007 Customs Valuation Rules).
Conclusion - The notional cost of MSIL's specifications should not be included in the assessable value of the final products manufactured by the appellant.
The impugned order is set aside - Appeal allowed.
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2025 (1) TMI 1371
Demand of differential duty - difference in sales figures reflected in the assessee’s ER – 1 Returns filed and the sales figures reported in their Balance Sheet - invocation of extended period of limitation - suppression of facts or not - HELD THAT:- From the documents placed on record, in the reply to the SCN, it is revealed that during the visit of the officers of DGCEI in 2010 and subsequent resumption of records from JFSPL and its suppliers of raw materials, the Show Cause Notice dated 16.04.2014 relating to the period June 2009 to December 2010 came to be issued. It is also asserted that the said agency had looked into the ER – 1 Returns, Books of Account including balance sheet, etc. and, at no point of time did they raise any query as regards the alleged removal of TMT bars or billets without payment of duty. From the OIO, it is found that the Authority has tried to negate the above contention on the ground that the DGCEI’s case was based on specific intelligence to the effect of the assessee taking credit without actual receipt of material as against which, the present case was one of clandestine removal; and therefore, the extended time limit has been correctly invoked.
It is clear that the time limit would start ticking when the Revenue came to know about the manufacturing activity of the appellant and that was the time when the show cause notice should have been issued and the Revenue having failed to do so, they cannot therefore allege suppression on the part of the appellant and invoke the extended time limit. Hence, the ratio of the said order is squarely applicable here also, in the case on hand, since from the date of visit/verification of records by DGCI in 2010 and the date of SCN, more than three years have lapsed. Hence, the same clearly is hit by the time limitation.
Conclusion - The extended period for demanding duty is only applicable when there is clear evidence of fraud, collusion, or willful suppression of facts. Mere discrepancies in records, especially when previously examined by authorities, do not justify invoking the extended period.
The impugned order is set aside - appeal allowed.
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2025 (1) TMI 1370
Suo-moto abatement of duty for the days when the machines were sealed by the Department and not in operation - SCN demanded Central Excise duty of Pan Masala for the whole month even when the machines were remained non-operational - HELD THAT:- From the perusal of the order and facts of the appeal it emerges that demand of Central Excise duty has been confirmed on the machines for the days for which they have remained non-operational. It is also found that nowhere in the impugned order-in-original it has been mentioned by the adjudicating authority that appellant has not followed the laid-down procedure in the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008. Whenever the appellant wanted to stop working of a number of machines, due intimation has been given to the Department and the machines were sealed by the jurisdictional Superintendent of the range and whenever the machines were made operational, the appellant have informed the department and they have started operating the machine only after the officers have de-sealed the machines.
So, it is apparent from the reading of Rule 10 of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 that abatement for the period of non-working of the machines is provided in Rules with certain conditions.
This Tribunal in the case of M/s. PM Products vs. CCE, Ahmedabad [2023 (9) TMI 1370 - CESTAT AHMEDABAD] has held that the appellant is eligible for abatement and under no circumstance full duty can be demanded for the period when the machines were not in operation.
Conclusion - The essence of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 is that the manufacturer has to pay duty for the operational days of the machines, and since the appellant has deposited the proportionate amount of duty for working days of the machines, the Central Excise duty cannot be demanded for the period when the machines remained non-operational.
Appeal allowed.
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2025 (1) TMI 1369
Refund of an amount deposited by the appellant during the course of an investigation - entitlement to interest on that refund - HELD THAT:- In the present case impugned order clearly observes that the amount that was deposited by the appellant at the time of visit of officers to their premises was appropriated by the Original Authority. The amount so appropriated acquired the character of duty, the moment it is appropriated against the demand made.
In case of Mafatlal Industries [1996 (12) TMI 50 - SUPREME COURT], Hon’ble Supreme Court has observed that 'While the jurisdiction of the High Courts under Article 226 - and of this Court under Article 32 - cannot be circumscribed by the provisions of the said enactments, they will certainly have due regard to the legislative intent evidenced by the provisions of the said Acts and would exercise their jurisdiction consistent with the provisions of the Act. The writ petition will be considered and disposed of in the light of and in accordance with the provisions of Section 11B.'
Conclusion - The appellant was entitled to interest on the refunded amount at the rate prescribed under Section 11BB of the Central Excise Act, 1944, from the date of deposit to the date of actual refund.
There are no merits in the appeal - appeal dismissed.
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2025 (1) TMI 1319
CENVAT Credit - input service - Goods Transport Agency (GTA) service for outward transportation during the period April, 2017 to June, 2017 - HELD THAT:- The authorities below have recorded that they did not find any documentary evidence to establish that the transfer of property had taken place on reaching premises of buyer. The purchase orders and tax invoices placed on record by the appellant as annexures to the appeal and noticed that no separate amount has been charged by the appellant from its customer for delivery of the goods upto the customer’s place. Purchase orders contained terms like ‘Freight: paid by the supplier’, ‘Freight: inclusive’ or ‘Freight:N.A;. In the tax invoices and the challans, the mode of despatch has been mentioned as ‘by road’ without reference to any separate amount of freight or transportation.
Conclusion - In the facts of the case herein, ‘place of removal’ is the premises of buyer and not the factory gate of the appellant. Therefore, the appellant is entitled to take credit of Service Tax paid on GTA service for outward transportation of the goods.
Appeal allowed.
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2025 (1) TMI 1318
Wrongful availment of CENVAT Credit - input service tax credit document did not contain the name and correct address of the assessee - invocation of extended period of limitation - HELD THAT:- The Original Authority has held that the manner in which the ineligible credit was availed by the appellant clearly pointed to the fact that the recovery of such credit warranted invocation of extended period of limitation. The above logic for invoking the extended period of limitation cannot be accepted, since the law does not provide for any implied or hidden aspects or on assumptions or presumptions; any action proposed to be taken should be specific based on the action or inaction on the part of the assessee. Hence, the manner of availing credit may invite actions which ultimately result in recovery of the same, but however, the same could only be done in the manner known or prescribed under law.
The Hon’ble Supreme Court in the case of LARSEN & TOUBRO LTD. VERSUS COMMISSIONER OF C. EX, PUNE’II [2007 (5) TMI 1 - SUPREME COURT] has clearly held that the extended period of limitation entails both civil and criminal consequences and therefore must be specifically stated in the SCN.
There is no specific allegation as to suppression or fraud in the SCN. There cannot also be any scope to allege so, since as early as 2012 itself, the department had conducted an audit [CERA] wherein the same query was raised, which has also been replied to by the appellant. Admittedly, nothing is brought out on record to indicate as to what prevented the Revenue from issuing the show cause notice immediately, after noticing the wrong availment etc. during audit. Also, why or what prompted them to wait for three more years to issue the show cause notice, also remains conspicuous. More than these, even when the same was brought to the notice through their reply to the SCN, the same has not been considered at all.
Conclusion - The Revenue has not satisfactorily proved the invoking of extended period of limitation while raising the impugned demand and the order that has upheld the above demand cannot sustain, for which reason, the same is set aside on limitation alone.
Appeal allowed.
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2025 (1) TMI 1317
Interest on the refunded amount deposited as a pre-deposit under the erstwhile provisions of Section 35F and Section 35FF of the Central Excise Act, 1944 - HELD THAT:- In the present case appellant had deposited the amounts by way of reversal of entries in the CENVAT account on 15.11.2007. These amounts were appropriated by the adjudicating authority vide order in original dated 29.05.2009. After appropriation the amounts deposited acquired the character of duty. The order of appropriation was upheld by the Commissioner (Appeal). Subsequently Tribunal allowed the appeal filed by the appellant leading to present proceedings of refund.
From the perusal of the above section 35F it is evident that the amounts deposited in terms of this section are noting but duty. The use of phrase in this section “pending the appeal, deposit with the adjudicating authority the duty demanded.” Further from the perusal of Section 35 FF it is evident that in case the appeal is finally decided in favour of the appellant hen the amount, so deposited under Section 35 F shall be refunded along with interest for period after expiry of period of three months from the date of communication of order of Appellate Authority at the rates specified as per section 11BB.
In case of RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. [2011 (10) TMI 16 - SUPREME COURT] Hon’ble Supreme Court has held that 'the liability of the revenue to pay interest under Section 11BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund under Section 11B(1) of the Act and not on the expiry of the said period from the date on which order of refund is made.'
Interpreting the above decision of Hon’ble Supreme various benches of tribunal have concluded in the favour of the grant of interest form the date of deposit and at the rate of 12% (though not provided by the statute or any Notification issued in terms of Section 11BB or Section 35FF of the Central Excise Act, 1944). However it may also be noted that these decisions were in respect of the deposits made when there was no separate provision for refund of deposits along with interest. In that situation courts and tribunals were allowing interest from the date of deposit till the date of refund and were also prescribing the rate of interest as deemed fit.
Conclusion - The appellant was not entitled to interest on the refunded pre-deposit amount, as the refund was made within the statutory period, and the applicable provisions did not mandate interest payment.
There are no merits in the appeal - appeal dismissed.
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2025 (1) TMI 1316
Refund of Excise duty paid for the period when the factory belonging to the appellant was closed due to the order of the Hon’ble Supreme Court - HELD THAT:- The issue in the present appeal is squarely covered by the decision of the Hon’ble Tribunal in appellant’s own case [2015 (9) TMI 514 - CESTAT AHMEDABAD]. In the above matter, Tribunal held that 'There is no bar on reopening of the factory in Rules 2008, which is a subsequent event. Further, the appellant in its letter dated 8.2.2011 categorically stated that they were giving intimation of closure of the factory-as required under the Rules, would be implied surrender of registration. It is already observed that in the present case, taking into account of order of Hon’ble Supreme Court, notification of Ministry of Environment and Forest, and the letter dated 8.2.2011 of the appellant to close down their factory and further consequence of surrender of registration may not be followed due to subsequent order dated 17.2.2011 of Hon’ble Supreme Court, the appellant should not be penalized by rejecting the refund claims, for the reason, they had re-opened the factory and such reading of the said provision, would be totally unjust, improper and against all cannons of natural justice and fair play.'
There are no reason to take a different view in the matter. Considering the above, since the factory was closed in deference of the Hon'ble Apex Court's order, the appellant is eligible for refund of duty paid in advance for the period from 09.02.2011 to 16.02.2011 8(eight) days.
Conclusion - The appellant is eligible for a refund of the duty paid in advance for the eight-day period when the factory was closed. Manufacturers should not be penalized for following judicial orders, and procedural requirements should be interpreted in light of fairness and justice.
Appeal allowed.
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2025 (1) TMI 1257
Recovery of Central Excise Duty with interest and penalty - Clandestine Removal - opportunity to cross-examine the witnesses was not provided - denial of access to necessary documents - violation of principles of natural justice - HELD THAT:- It is true that the CESTAT has remanded the matter to the respondent No. 2 to supply the documents sought for by the petitioner as well as to provide the opportunity of cross-examination of the witnesses in compliance with the provisions of section 9D of the Central Excise Act,1944. The respondent No. 2, pursuant to the order of remand made by the Tribunal, issued the notice to 10 witnesses to remain present on 21.08.2024, however, on 21.08.2024, none of the ten witnesses remained present nor any request was made for adjournment, or any submissions were made by any of the witnesses. The respondent No. 2 therefore, recording the statement made by learned advocates appearing for the petitioner for hearing, proceeded to adjudicate the show-cause notice.
It appears that the respondent No. 2 has taken into consideration all the grievances of the petitioner with regard to the violation of principle of natural justice which are again reiterated in this petition. Be that as it may, it is not required to entertain this petition on the ground of breach of principle of natural justice in view of the above observation made by respondent No. 2 which may be considered by the CESTAT in the appeal which may be filed by the petitioner under section 35E of the Central excise Act,1944.
Conclusion - i) The petitioner's grievances regarding natural justice and document access should be addressed by the CESTAT. ii) The petition is not entertained though it may be maintainable under Article 226 of the Constitution of India with liberty to the petitioner to approach CESTAT challenging the impugned Order-in-original. iii) It is also observed that the time spent by the petitioner before this Court to be considered as bona fide by the CESTAT, if the petitioner file appeal before the Tribunal in accordance with law within four weeks from today without raising issue of delay.
Petition disposed off.
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2025 (1) TMI 1256
Entitlement to interest on the refund of a pre-deposit amount made in 2012, which was refunded following a favorable appellate decision in 2018 - interpretation and application of Sections 35F and 35FF of the Central Excise Act, 1944, as they existed prior to and after the amendments introduced by the Finance Act, 2014 - HELD THAT:- From the perusal of the section 35F it is evident that the amounts deposited in terms of this section are noting but duty. The use of phrase in this section “pending the appeal, deposit with the adjudicating authority the duty demanded.” Further from the perusal of Section 35 FF it is evident that in case the appeal is finally decided in favour of the appellant hen the amount, so deposited under Section 35 F shall be refunded along with interest for period after expiry of period of three months from the date of communication of order of Appellate Authority at the rates specified as per section 11BB.
It is observed that while making the above substitution w.e.f. 06.08.2014 specifically by proviso to Section 35F and Section 35FF, it has been stated that the amount deposited under Section 35F of the Act, prior to commencement of Finance Act, 2014, will be governed by provision of Section 35F as it existed before the commencement. In view of the specific provision made in the Act, the refund claim of the deposit made will have to be considered in terms of Section 35FF as it existed on the date of deposit and the interest will be paid at the rate specified in Section 11BB after expiry of three months from the date of communication of the order of the Appellate Authority till the date.
Reliance placed on the decision of the Hon’ble Supreme Court in the case of Sandvik Asia [2006 (1) TMI 55 - SUPREME COURT]. Interpreting the above decision of Hon’ble Supreme various benches of tribunal have concluded in the favour of the grant of interest form the date of deposit and at the rate of 12% (though not provided by the statute or any Notification issued in terms of Section 11BB or Section 35FF of the Central Excise Act, 1944). However it may also be noted that these decisions were in respect of the deposits made when there was no separate provision for refund of deposits along with interest. In that situation courts and tribunals were allowing interest from the date of deposit till the date of refund and were also prescribing the rate of interest as deemed fit.
Conclusion - The appellant was not entitled to interest on the refunded amount as the refund was made within the statutory period, and the applicable legal provisions did not support the appellant's claim for interest from the date of deposit.
Appeal dismissed.
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2025 (1) TMI 1255
Confiscation of seized goods - provisional release on payment of redemption fine - penalty under Rule 25 of Central Excise Rules, 2002 - HELD THAT:- Since the main appellant has settled the issue under SVLDR Scheme, penalty imposed on co-noticees being the CEO and Managing Director of the main noticee is unsustainable.
Similar issue decided in decision of the Tribunal in the matter of V K Agarwal Vs. CC, New Delhi [2023 (9) TMI 178 - CESTAT NEW DELHI] wherein it is held that 'without considering the directions given in the remand order and allowing cross examination, Commissioner has imposed penalties on the appellant, just for reason that the appellant did not settle the issue along with others under SVLDRS. Such approach of Commissioner cannot be justified. Even if the appellant has not approached under SVLDRS, Commissioner should have adjudicated as directed by Tribunal. No justification for imposition of penalty on reconsideration as per order of Tribunal is forthcoming.'
Conclusion - When a demand is settled under the SVLDR Scheme, penalties on co-noticees should not be sustained.
Since the issue is squarely covered by the decision of the Tribunal in the matter of VK Agarwal, there are no reason to differ - appeal allowed.
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