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Central Excise - Case Laws
Showing 361 to 380 of 81813 Records
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2024 (12) TMI 738
Clandestine manufacture and removal of goods without keeping record - whole case has been made out on the basis of certain documents recovered from the possession of third party who claims to be accountant at the residence of the co-appellant - Admissibility of evidence without cross-examination of witnesses - violation of the provisions of Section 9 D of the erstwhile Central Excise Act, 1944.
Whether in the absence of giving cross-examination to the witnesses, whose statements have been relied upon to implicate the appellants in the proceedings, is admissible or not? - HELD THAT:- The statements recorded during the course of investigation in the absence of any examination in Chief, thereafter, cross examination to the appellants are not sustainable. Therefore, on the basis of the statements, which have been relied upon by the authorities below, the demand cannot be raised.
Whether the documents recovered from the possession of the third party and without any corroboration thereof, can the demand be raised against the appellants? - HELD THAT:- Whole of the demand raised against the appellant is without proper investigation and without any corroborative evidence/documents or otherwise, the allegation against the appellants on the clandestine manufacture and clearance of the goods, is not sustainable.
Whether the investigation done is not proper and having lacuna and as any suppliers/buyers/transporters or any documents, which could have been visited easily from the name and address and available on record, the demand can be raised against the appellants or not? - HELD THAT:- Although the Revenue was having every documents which were recovered from the possession of Shri Sati Ram to allege clandestine manufacture and removal of goods, but the investigation did not bother to corroborate the evidence by way of verifying the veracity of the documents from supplier of the raw materials, buyer of the finished goods, transporter or commission agent etc. or other, whose details were available in those documents - whole of the investigation is faulty and on the basis of the faulty investigation, it cannot be alleged that the appellants were engaged in the activities of clandestine manufacture and clearance of excisable goods.
There are no merit in the impugned order, therefore, the proceedings against the appellants are not sustainable and no demand can be raised against the appellants. Consequently, no penalties are imposable on the appellants.
The impugned order set aside - appeal allowed.
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2024 (12) TMI 737
Duty demand on excess storage of Fatty Acid - confirmation of demand is on the basis of the report received from the Delhi Commissionerate indicating that the Appellants have sold substantial quantity of goods at much lower price in the guise of stock transfer to M/s. Mayur Sales Corporation and M/s. Sunrise Enterprise, which were found to be nonexistent - HELD THAT:- The officers of the Delhi Commissionerate conducted verification and found that the two dealers namely, M/s. Mayur Sales Corporation and M/s. Sunrise Enterprise were nonexistent. Thus, it is observed that there is no truth in the submission of the appellant that no verification was conducted by the department to ascertain the existence of the two dealers. As the verification conducted by the officers of Delhi Commissionerate revealed the nonexistence of the two dealers, the demand confirmed on account of undervaluation of the goods cleared to these two dealers in the impugned order, is sustainable. Accordingly, the demand of Rs.5,68,101/- confirmed in the impugned order along with interest upheld. As the suppression of value has been established, the penalty equal to the duty imposed upheld on this count.
Benefit of the N/N. 10/96-CE dated 23.07.1996 - HELD THAT:- The appellant would not be eligible for the benefit of notification 10/96-CE, to the extent of clearance of traded goods cleared during the period mentioned supra, proportionately. Accordingly, the denial of the benefit of notification 10/96-CE for all the goods manufactured and cleared is legally not sustainable. The benefit of notification 10/96-CE is not available to the appellant proportionately to the extent of value of the traded goods cleared by the appellant in the containers and jars. From the impugned order, we observe that demands of Rs.27,92,810/- and 50,95,061/- has been confirmed by denying the exemption 10/96-CE for all the goods. In view of the observations, the benefit is to be denied only proportional to the value of the traded goods. As the segregation of value of traded goods has not been done in the impugned order, these demands set aside and this issue remanded back to the adjudicating authority to deny the benefit of notification 10/96-CE proportional to the value of traded goods cleared by the appellant during the period in which traded goods were cleared in tin containers from 29.05.2008 and in poly jars from 01.04.2008.
Demand of duty of Rs.53,38,184/- on account of Clandestine Removal of 1157.346 MT of Fatty Acid in the guise of Refined Palm Oil - HELD THAT:- The conclusion in the Order-in-Original that laboratory register shows content of FFA (Free Fatty Acid) range 4.8 to 5.6% in crude palm oil in majority cases does not in any way proof that RPO (D)/RPO(F) which are admittedly inferior quality RPO is Fatty Acid not RPO. It is observed that the Annexure C-6 does not reflect any comparison of the document mentioned in the Para iv of the impugned order. The said annexure refers to four seized documents namely 3/BBRL/FY08 and 19/BBRL/FTY/08 to 22/BBRL/FTY/08.In fact there is no record of a comparison of the said documents as referred to the order-in-original - the conclusion arrived at by the adjudicating authority that Fatty Acid has been removed in excess is totally baseless - there is no such comparative chart and department has failed to provide even an iota of proof as to excess removal of Fatty Acid or removal of Fatty Acid in the garb of RPO.
The allegation of clandestine clearance is of serious nature and hence there should be tangible evidence of clandestine manufacture and clearance and not merely inferences or unwarranted assumptions. In the present case, it is observed that the demand has been confirmed purely on assumption basis. There is no evidence of actual removal of unaccounted finished goods from the factory without payment of duty. No finished goods cleared clandestinely has been recovered outside the factory. The department has not identified any purchasers of the clandestinely cleared finished goods. There is no corroborative evidence in the form of receipt of sale proceeds, whether by cheque or by cash, of such goods by the manufacturer or persons authorized by him - In the absence of any such evidence to support the clandestine clearance, we hold that the demand of Rs.53,38,184/- confirmed in the impugned order on account of clandestine clearance is not sustainable.
Penalties imposed on the Directors of the appellant-company - HELD THAT:- The penalty has been imposed for their role in the commission of the alleged offence. From the findings, it is observed that the allegation of under valuation of goods cleared to non-existent dealers has been sustained. The allegation of irregular availment of the benefit of exemption notification 10/96-CE is partly sustained and the allegation of clandestine removal of goods is not sustained. Considering the roles played by the appellants, it is observed that the penalties imposed on the Directors of the appellant company is on the higher side, which need to be reduced in proportion to the offence committed - the penalties imposed Shri. Deepak Keshan and Shri. Rahul Nangalia Directors of the Appellant-company, reduced from Rs.1,00,000/- to Rs.50,000/- each.
Application disposed off.
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2024 (12) TMI 736
Entitlement to Cenvat credit on the strength of an endorsed bill of entry - Rule 9 of Cenvat Credit Rules, 2004 - HELD THAT:- There is catena of judgments wherein this issue has been considered and it was held that even on the endorsed bill of entry, the cenvat credit is admissible.
In the case of M/s. Darshan industries [2003 (9) TMI 696 - CESTAT, MUMBAI], the Hon’ble Tribunal has held that 'We are in complete agreement with the view taken by the Rajasthan High Court in holding that on the basis of the endorsed invoices issued by the intermediatory purchaser and the invoices issued by the manufacturer, the assessee shall be entitled to claim the credit on the goods, on which the manufacturer has paid the duty.'
In view of the judgment, it is settled that even on the strength of endorsed bill of entry, cenvat credit is admissible.
It is found that it is not only the endorsed bill of entry but the respondent were issued importer invoice also which is otherwise a valid document for availing the cenvat credit in terms of Rule 9 of Cenvat Credit Rules, 2004. Therefore, since, the respondent are also receiving the importer’s invoice, the cenvat credit is admissible. Accordingly, the view that there is absolutely no infirmity in the impugned order.
Hence, the impugned order is upheld - Revenue’s appeal is dismissed.
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2024 (12) TMI 735
Reversal of Cenvat credit in terms of Rule 6(3)(i) of CCR - non-maintenance of separate accounts for dutiable and exempted goods - tooling fixtures - HELD THAT:- The identical issue as involved in the present case was already decided in favour of the assessee in the case of Needle Industries (India) Private Ltd. Versus Commissioner of Central Excise, Salem [2014 (8) TMI 980 - CESTAT CHENNAI] where it was held that 'these items are intermediate products captively used in the manufacture of dutiable final product and therefore, Cenvat credit cannot be denied.'
It is observed that the Appellant is also eligible to avail Cenvat Credit in terms of CBEC Circular No. 665/56/2002-CX dated 25.09.2002 wherein it was clarified that Cenvat credit should not be denied on the capital goods used in manufacturing of intermediate goods exempt from payment of duty which are used captively in the manufacture of finished goods chargeable to duty.
The demand raised cannot sustain and requires to be set aside - Since the demand itself cannot be sustained, the invocation of extended period and imposition of penalty does not arise.
The impugned Order-in-Original No. 02/2016(CE) dated 29.01.2016 is set aside - appeal is allowed.
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2024 (12) TMI 734
Classification of goods - animal feed supplements which contains ingredients such as calcium, magnesium, phosphorus, vitamin B12 and vitamin D3 - to be classified under Heading 3003 or 3004 of Schedule to Central Excise Tariff Act, 1985? - HELD THAT:- The subject goods are having nutrient supplements which do not find any mention in British Pharmacopoeia or Indian Pharmacopoeia and which are not prescribed by veterinary doctors for cure of any ailment and that though the doses are prescribed, that does not mean that they are medicaments.
The original authority has in order-in-original impugned, has rejected the applicability of this Tribunal’s decision in the case of DABUR INDIA LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, JAIPUR [2005 (2) TMI 196 - CESTAT, NEW DELHI] only for the reason that in the case of Dabur India Ltd. laboratory report was available and in the present case laboratory report is not there. Such ground for holding that the finding of this Tribunal in the case of Dabur India Ltd. are not applicable in the present case is not sustainable.
Hon’ble Supreme Court in the case of PUMA AYURVEDIC HERBAL (P) LTD. VERSUS COMMISSIONER OF C. EX., NAGPUR [2006 (3) TMI 141 - SUPREME COURT] had held that the burden to show correct classification lies on Revenue. It is found that Revenue has not discharged such burden in the present case. Right from the initial stages of dispute, appellant has been claiming that the issue is no more res integra and settled in favour of the appellant through final order of this Tribunal in the case of Dabur India Ltd. In the said decision, similar products were held to be animal feed supplements.
Thus, the classification adopted by the appellant under Heading 2309 and under Tariff Item No.23099090 is appropriate classification for animal feed supplements - the impugned order is set aside - appeal allowed.
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2024 (12) TMI 733
Recovery of central excise duty - evasion of payment of duty on the quantity of SKO which was cleared from refinery for intended purpose of distribution under public distribution system - willful suppression, misdeclaration of facts and circumstances with an ulterior motive to defraud the government exchequer - Time limitation - HELD THAT:- Hon’ble Supreme Court in Nizam Sugar Factory vs. Collector of Central Excise, A.P. [2006 (4) TMI 127 - SUPREME COURT] has held that when the first show cause notice was issued, all the relevant facts were in the knowledge of authorities and that while issuing the second and third show cause notices, the same and similar facts would not be taken as suppression of fact on the part of the assessee as these facts were already in the knowledge of the authorities. Therefore, Hon’ble Supreme Court has held that in respect of second and third show cause notices, there was no suppression of fact on the part of the appellant. It is noted that in the above stated show cause notices dated 27.01.2016 and 22.12.2017 the same facts as that in show cause notice dated 30.01.2015 were stated and was stated that there were suppressions of fact.
Hon’ble Supreme Court has held that in respect of second and third show cause notices, there was no suppression of fact on the part of the appellant. It is noted that in the above stated show cause notices dated 27.01.2016 and 22.12.2017 the same facts as that in show cause notice dated 30.01.2015 were stated and was stated that there were suppressions of fact.
In the present case the goods were intended for use in public distribution system. There is no evidence that there was any clandestine removal of the goods by any of the authorities. There was no end-use condition required for availment of exemption. It is noted that intermixing was inevitable - Revenue also did not draw samples and obtain a report from Central Revenue Laboratory as to the content of SKO in intermix.
By following the judgment in the case of State of Haryana vs. Dalmia Dadri Cement Ltd. [1987 (11) TMI 94 - SUPREME COURT] it is held that there was no case for recovery of central excise duty on SKO after SKO was cleared for the intention of use in public distribution system by availing exemption allowing full exemption of duty.
Appeal allowed.
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2024 (12) TMI 732
Valuation of Excise Duty - inclusion of cost of certain inputs supplied by the principal manufacturer to the job worker (appellant) in the assessable value of the goods manufactured by the job worker and supplied to their principal manufacturer and the principal manufacturer cleared the final products on payment of duty - HELD THAT:- It is found that the facts of this case is exactly identical to the facts in the case of Hon’ble Supreme Court judgment in International Auto Limited [2005 (3) TMI 132 - SUPREME COURT] inasmuch as the appellant is job worker manufacturing the excisable goods using their own components and parts and some of the parts are supplied by the principal manufacturer on which the Cenvat credit was availed by the principal manufacturer. After the manufacture of job work goods the appellant have cleared the same to the principal manufacturer and the principal manufacturer in turn used the job work goods or cleared as such on payment of excise duty. It is this fact, in context of which the Hon’ble Supreme Court held that since the principal manufacturer has cleared the ultimate goods on payment of duty, the value of parts supplied by the principal manufacturer of the job worker is not includible in the assessable value of the job work goods in the hands of the job worker.
In the present case also the cost of the parts supplied by the principal manufacturer is not includible in the assessable value of the job workers. Therefore, the demand raised on the appellant who is a job worker, is not sustainable - the impugned order is set-aside - Appeal is allowed.
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2024 (12) TMI 731
Levy of Central Excise duty - amount of sales tax remitted to the appellants under Incentive Scheme 2001 for Economic Development of Kutch District - extended period of limitation.
HELD THAT:- The issue that whether under the Incentive Scheme-2001, on the Sales Tax remittance by the State Government, the said Sales Tax amount though collected from the buyer of the goods, is includable in the assessable value of the excisable goods for the purpose of charging Excise Duty has been consistently settled in Welspun Corporation Ltd [2017 (5) TMI 177 - CESTAT MUMBAI] where it was held that 'In the instant case as already discussed above it is not that Sales Tax was not only payable but in fact it stood actually paid, as the remission was nothing but the incentive or capital subsidy which the State Government granted with respect to the investment made by the appellants in the earthquake ravaged region of Kutch of State of Gujarat. Instead of recovering Sales Tax and then refunding the same as capital subsidy, the State Government had remitted the same to appellants. Consequently like CST since VAT which was payable was actually paid the same is required to be excluded from the transaction value.'
The facts are absolutely identical that the assessee’s units are located in Kutch District and they are availing the Incentive Scheme-2001, similarly like in the present case. Therefore, the facts and legal issues involving in the above cases are exactly identical, in the facts of the present case. Therefore, applying the ratio of the above judgment, the issue is no longer res-integra. Hence, the demand is not sustainable.
The impugned orders are set aside. Appeals are allowed.
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2024 (12) TMI 669
Maintainability of petition - availability of alternative remedy - Compliance with directions issued by the Customs Excise & Service Tax Appellate Tribunal in the impugned order - absence of the cross-examination of the witnesses - violation of principles of natural justice - HELD THAT:- It was incumbent upon the respondent No. 2 to comply with the directions issued by the Tribunal, irrespective of the delay in conduct of cross-examination. The Tribunal has categorically observed that the adjudicating authority is to grant cross-examination of the persons as has been indicated in paragraph No. 4 of the order and subsequently, grant four weeks’ time to the petitioners to file a detailed reply. Both the directions of the Tribunal are not followed by the respondent No. 2 in letter and spirit and as such, the impugned order-in-original is liable to be quashed and set aside only on that ground.
Availability of alternative efficacious remedy to challenge the impugned order - HELD THAT:- It is true that alternative efficacious remedy to challenge the impugned order would be to prefer an appeal before the Tribunal, however, as the respondent No. 2 has failed to comply with the directions issued by the Tribunal and the matter is pending before this Court since 2022, the matter is heard on merits and requested learned advocate of Respondent to take instructions for disposal of the matter, if remand is made by this Court.
The impugned order-in-original is hereby quashed and set aside and the matter is again remanded back to the respondent No. 2. The respondent No. 2 shall comply with the directions of the order dated 01.05.2024 passed by the Tribunal and as the matter is very old, give priority to the same and pass fresh denovo order after giving an opportunity of hearing to the petitioners and compliance of the directions given by the Tribunal within a period of six months from the date of receipt of copy of this order.
Petition disposed off by way of remand.
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2024 (12) TMI 668
Process amounting to manufacture or not - process of coating uncoated paper - denial of CENVAT credit availed by the appellants when tax (duty) itself was not payable - impugned order exceeded the scope of the Show Cause Notices or not - interest and penalties.
HELD THAT:- There is no discussion in the Show Cause Notice on the unavailability of CENVAT credit to the appellant. Utilization of CENVAT credit was not disputed by the Department at any given point of time. There is a reference while recording the statement of Shri D.N. Ram, Deputy Manager (Excise) and Authorized Signatory of the appellant, as to why the appellants were taking full CENVAT credit on those inputs which are used in the goods which they claim as not amounting to manufacture, there is no discussion in the Show Cause Notice as to why the appellants are not eligible to avail credit and there is no proposal to deny the availment of CENVAT credit to the appellants.
Interestingly, instead of countering the submissions of the appellant and instead of highlighting any allegations in the SCN, on the issue of inadmissibility of credit, Commissioner observes that this response from the noticee only blandly refutes the allegation of SCNs but does not present any cogent legal argument in support of the contention that the noticee was eligible to take the credit and use it for the purpose for which it actually got used; on the other hand, the reply makes incorrect assertions; it is incorrect for the noticee to state that the SCNs have no alleged that the CENVAT has been incorrectly taken; the SCNs have made the point that the CENVAT has been incorrectly taken and utilized and have raised a demand under Sec 11A accordingly.
There is no reference to Rule 14 which empowers the Department to recover CENVAT credit wrongly taken or erroneously refunded. The entire tone of the Show Cause Notice was to recover the duty paid on the finished goods utilizing the CENVAT credit. This being the position, it is correct on the part of the appellants to say that the impugned order has travelled beyond the Show Cause Notice. When the duty was not payable on the final products cleared by the appellants, it is immaterial whether such duty was paid through cash or by CENVAT credit - the Show Cause Notice does not refer to Rule 14 of CENVAT Credit Rules and does not even speak the language of the Rule that such and such amount of credit is not admissible to the appellants.
The impugned order is set aside - appeal allowed.
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2024 (12) TMI 667
Refund of CENVAT balance lying as unutilized credit on the date of exercising the option of exemption notification shown in RG23A Part I and II registers since July 2004 - Denial of Refund claim on the ground that the amount had lapsed as per Rule 11(3) of the CENVAT Credit Rules, 2004 - whether the amended Rule 11(3) will apply to the CENVAT credit balance available in the appellant books prior to insertion of Rule 11(3)?
HELD THAT:- CENVAT schema is in the nature of a benefit/ concession provides for assessee’s to avail credit of duty paid on goods and services, as provided for in the statute. The credit accumulated can be set off on final duty to be paid against goods and services. Once the assessee avails of the scheme then rights to avail of the credit accrue to the assessee. Unless the provision of law is specifically modified taking away this right, the assessee cannot be denied the same. In the present case, there are nothing in the amended provision of Rule 11 of CCR, 2004, to show that the intention of the legislature was to effect the existing rights of the assessee’s to enjoy the credit already accumulated.
In the case of EICHER MOTORS LTD. VERSUS UNION OF INDIA [1999 (1) TMI 34 - SUPREME COURT], it has been held that the rights of credit facilities accrued under existing law are not to be altered.
Furthermore, in COLLECTOR OF CENTRAL EXCISE, PUNE VERSUS DAI ICHI KARKARIA LTD. [1999 (8) TMI 920 - SUPREME COURT], the Hon'ble Supreme Court held that 'It should also be noted that there is no corelation of the raw material and the final product, that is to say, it is not as if credit can be taken only on a final product that is manufactured out of the particular raw material to which the credit is related. The credit may be taken against the excise duty on a final product manufactured on the very day that it becomes available.'
The impugned order is set aside and the appeal is allowed.
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2024 (12) TMI 666
Recovery of cenvat credit with interest and penalty - manufacture of Excisable goods or not - applicability of section 11 D of the Central Excise Act, read with the provisions of rule 25 &/or rule 27 of the Central Excise Rules 2002, read with section 11 AC of the Central Excise Act, 1944 - whether the appellant actually received the excisable goods from Koolmint at its factory on which credit was availed and whether they could be subjected to the provisions of section 11 AC read with rule 15 of the Central Excise Rules? - invocation of Extended period of limitation.
HELD THAT:- There is no satisfactory explanation emanating from the evidence on record or the response of Koolmint to such a wide variation of consumption data, except for a bland statement stating that wherever the average consumption of electricity per KG was higher, it indicated the use of DG set for longer period of time. That being so, we note from records that in March 2003, the average consumption of electricity per KG was 810KWH, while the 50 KW generator was made use of for 30.10 hours and 8KW generator for 11.20 hours, likewise in January 2004, average consumption of electricity was 18744 KWH per KG, while both the 50 KW generator and 8KW generator were operational merely for 25 hours. That being the factual position, on record the argument of the appellant is not borne out to be true and is therefore clearly unsustainable and lacking merit. For the reason, the appellant’s plea is unacceptable.
The premise, therefore that electricity consumption was low and refuting it by claiming consumption of electricity produced by the DG sets is not at all satisfactorily forthcoming. The appellant have not placed any other argument to refute the said contention of the department. The plea of the appellant that they used to work on electricity generated from the DG sets is a bland statement and lacks any evidence/credence in support.
The show cause notice clearly makes meticulous recordings of the time period for which the generator was run incorporating even law timelines of 5, 10, 15 or 20 minutes. The fact that that casts a strong shadow of doubt on the veracity of these figures is that at all places these figures are recorded in odd numbers and multiples of 5. Isn’t it quirky that not even on a single occasion did the DG set operate for a length of time in a multiple of an even integer - There is no worthwhile claim of any manufacturing activity being undertaken, out of power generated by the operation of the DG sets. Moreover, the said statement of Sri Agarwal has neither been refuted, nor retracted till date. Thus the submission by the appellant does not lend any credence to the argument made in defence by them rather goes into strengthen the department’s claim casting serious aspersions on the appellants claim for manufacture of finished goods used as inputs by their family concern. This is moreso when an analysis of stated manufacture is undertaken with energy source being power generated by DG sets vis a vis that supplied by Assam State Electricity Board.
The thick web of mutuality of interest is therefore quite evident between the different businesses of noticees. No formal agreement of any quantity discounts are placed on record, particularly so when almost the entire quantity (99%) said to be produced was indicated as sales to only one firm i.e. the appellant Kaizen Organics Pvt. Ltd. - While there is no significant and satisfactory evidence, to establish the to and fro movement of raw materials and finished goods, the availment of cash refund and Cenvat credit by the appellant amounts to extreme misuse of policy provisions in good measure. To further accentuate their undue pecuniary gains by way of illegal reflection of quantity and recourse to discounts not backed by a shred of evidence, is a clear pointer to the ill machinations and sinister design of the appellant and reinforces the common saying that greed and deceit have no ends and are a bottomless pit.
Extended period of limitation - HELD THAT:- The fact that the basic foundation of such database was set up on the edifice of fraud and deception, treachery and deception renders such reports/returns as ab initio void and a nullity in law. No shelter can be claimed under the guise of having tendered such returns to the department. For its contumacious conduct the appellant despite filing of such returns shall indeed be liable to all consequences in law including that of imposition of penalties. On the principle that fraud vitiates everything and in view of the matter, no illegality surfaces out of the department’s action in the matter and the department was completely justified in invoking extended period of limitation.
Applicability of Section 11 D of the Central Excise Act - HELD THAT:- There are no hesitation in stating unequivocally that the appellant is certainly guilty of all charges that have been made out against them. The false and manipulated receipt and dispatch entries, cannot plug-in and come to the rescue of the appellants. Such record keeping is ab initio null and void. It stems from falsehood and forgery. There is no merit in the appellant’s plea as regards the proposition of Section 11 D of the Central Excise Act as it is established from records that the amount of ₹9560962 was collected by the appellant Koolmint under the guise of Central Excise duty and therefore the provisions of section 11 D ibid are squarely applicable.
The goods said to be manufactured were not manufactured, there being no requisite infrastructure to undertake said manufacture, the appellant could not have collected any duty in terms of section 3 of the Central Excise Act and the amount so collected is clearly recoverable from the appellant.
There are no infirmity, or any illegality in the order passed by the learned Commissioner, The impugned order is required to be maintained - appeal dismissed.
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2024 (12) TMI 665
CENVAT Credit - input services - Business Support Service - Management Consultancy Service - Guest House Service - Event Management Service - Outdoor Catering Service - Commercial or Industrial construction Service - Real estate Service - credit claimed on photocopy of invoices and invoices issued on Bangalore address, but credit claimed at Ahmedabad - Credit availed without valid documents - Credit availed on invoices with different address.
Credit on Business Support Service - demand has been confirmed in the impugned order holding that there needs to be a service provider and a service receiver providing services as described in the definition of Business Support Service, in return of a consideration - HELD THAT:- The issue is not res-integra in as much as the Tribunal in the case law relied upon by the appellant in the matter of M/S AMARA RAJA POWER SYSTEMS LTD. & ANOTHER. & M/S AMARA RAJA ELECTRONICS LTD. VERSUS THE COMMISSIONER C&C. E, TIRUPATHI [2015 (12) TMI 1558 - CESTAT HYDERABAD] has decided in the favour of the assessee and held that 'The said issue, whether the transactions are services or not, should be agitated by the department against service providers viz. ARBL and MPPL, from whom the service tax has been collected. Credit cannot be denied at the service recipient’s end, alleging that no service has been provided.'
When ARBL and MPPL have paid service tax under the category of BAS/BSS, the strong inference that can be drawn is that they have provided services as per the invoices raised by them. Revenue has not been able to adduce any evidence that there is no service rendered. The said issue, whether the transactions are services or not, should be agitated by the department against service providers viz. ARBL and MPPL, from whom the service tax has been collected. Credit cannot be denied at the service recipient’s end, alleging that no service has been provided - thus, it is now settled law irrespective of the fact whether or not the impugned service was eligible to Cenvat Credit in any matter where the question involved is whether or not the impugned service/ inputs were liable to tax, if the tax paid by the service provider/ supplier of inputs is not questioned at the end of service provider/ supplier of inputs, the same cannot be challenged at the recipient’s end - Credit allowed.
Credit on Management Consultancy Service - HELD THAT:- The issue is not res-integra as the same has already been decided in the assessee’s favour by coordinate bench of this Tribunal in the matters of PAREKH PLAST (INDIA) PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, VAPI [2011 (6) TMI 595 - CESTAT, AHMEDABAD], MODERN PETROFILS VERSUS COMMISSIONER OF C. EX., VADODARA [2010 (7) TMI 319 - CESTAT, AHMEDABAD], that when the invoices are in the name Head Office, the credit cannot be denied to the unit where the services have been utilized. It is further found from the invoices produced by the appellant that in the invoices raised by the service providers, the service provided to the appellant unit has been separately mentioned - Further, it is already a settled law that the credit cannot be denied merely on the ground that the assessee had taken credit on photo-copies, where the veracity of credit itself was not disputed. Thus, the credit of Rs. Rs. 91,43,339/- impugned in the appeal has been correctly availed by the appellant and the impugned order is set aside on this count.
Credit claimed on photocopy of invoices and invoices issued at different address- Rs. 47,85,079/- - HELD THAT:- It has already been held that the Cenvat credit cannot be disallowed on these grounds. Accordingly, the demand on this count is quashed.
Credit claimed without valid documents - HELD THAT:- The coordinate bench of this unit in the matter of PIRAMAL GLASS PVT LTD VERSUS C.C.E. & S.T. -SURAT-I [2021 (9) TMI 1198 - CESTAT AHMEDABAD] has already decided that the claim cannot be denied if the credit on common services has entirely been used in one unit. There is no allegation in the impugned order that the impugned services were not eligible for Cenvat credit. The credit cannot be denied to the appellant merely for the reason that the GAR -7 challan is in the name of Bangalore unit, which is also their head office.
Credit on Guest House Service - HELD THAT:- The term ‘input service’ contained in Cenvat Credit Rules, 2004, contains certain exclusion clause. Clause (C), inter alia, excludes travel benefits extended to employees on vacation such as Leave or Home Travel Concession, when such services are used primarily, for personal use or consumption of any employee. Accordingly, if the guest houses were utilized by the Assessee for extending benefit to the employees, for the personal use or consumption, the Assessee was not entitled to avail Cenvat credit thereof. This, even Assessee does not dispute. The case of the Assessee, however, is that, none of the guest houses were used for the personal use or consumption of the employees. In order to test this premise, Tribunal itself formulated the test that those guest houses which are situated next to the manufacturing unit of the Assessee, would qualify for the benefits - even the coordinate bench of this Tribunal has held the Cenvat credit on Guest House service eligible in the case law MAFATLAL INDUSTRIES LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE & ST, AHMEDABAD [2020 (6) TMI 61 - CESTAT AHMEDABAD] cited by the appellant. Accordingly, Cenvat credit on this ground is allowed and impugned order is set aside.
Credit on Event Management Service - HELD THAT:- Revenue has no locus-standi to deny the Cenvat credit in de-novo proceedings. Accordingly, Impugned order is set aside on this ground.
Credit availed on invoices with different address - HELD THAT:- On going the through the invoices, it is found that some of the invoices have been raised in the name of units which are their sister concerns but have different identity. Accordingly, it is held that only invoices which are in their own name or their Bangalore Head Office are eligible for Cenvat credit. Cenvat Credit on other invoices is disallowed. The appellant will produce the necessary documents for verification. The Cenvat credit taken against the invoices which do not pertain to them, or their head office cannot be considered to be bonafide and accordingly, the appellant will also pay the applicable interest and equal penalty under Section 78 of the Finance Act, 1994.
Outdoor catering Service - HELD THAT:- The appellant has engaged services of outdoor catering to their employees and submitted that as their factory is located 35 km away from the city. that there are no eating arrangements around factory area and hence they availed the service of outdoor catering to provide food to the employees. However, the Cenvat credit on these services was denied on the ground that the services provided was only a welfare activity and no nexus to the manufacturing activity - the impugned order is set aside.
Credit on Commercial or Industrial Construction Service - HELD THAT:- The appellant has submitted that they have already reversed the demand of Rs. 22,590/- confirmed in the order. However, the appellant will be required to pay the interest applicable under Section 75 and penalty under Section 78 of the Finance Act, 1994 if not paid earlier.
Credit on Real estate Service - it has been alleged that this real estate service has no nexus to the business activity - HELD THAT:- The matter has already been decided in favour of the assessee by CESTAT Mumbai bench in the case of DBOI GLOBAL SERVICES PVT LTD VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI [2016 (11) TMI 521 - CESTAT MUMBAI] holding that real estate services for leasing renting etc. are related to business activities. Accordingly, the impugned order set aside on this ground.
The demand of Cenvat credit of Rs 1,01,671 availed on invoices with different address and the demand of Rs. 2,590 on account of Commercial or Industrial Service is confirmed - Rest of the demands as raised in the impugned order-in-original is set-aside.
The impugned order-in-original is modified to the above extent and the appeals are disposed of.
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2024 (12) TMI 598
Reversal of Cenvat credit for common inputs and input services used for electricity generation - procedure as per Rule 6 (3) of the Cenvat Credit Rules not followed - non-maintenance of separate records - levy of penalty - HELD THAT:- The issue involved in the present case is vis-à-vis reversal of Cenvat credit availed in respect of common input and input services used for generation of electricity, which is partly consumed captively and partly wheeled out is no longer res-integra and Hon’ble Supreme Court in the case of M/S. MARUTI SUZUKI LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, DELHI-III [2009 (8) TMI 14 - SUPREME COURT] have held that 'assessee is entitled to credit on the eligible inputs utilized in the generation of electricity to the extent to which they are using the produced electricity within their factory (for captive consumption). They are not entitled to CENVAT credit to the extent of the excess electricity cleared at the contractual rates in favour of joint ventures, vendors etc., which is sold at a price.'
In the present case, it is observed that appellant has reversed an amount of Rs. 44,05,397/- which has been appropriated by the Original Authority, this reversal was made even prior to issuance of show cause notice. If this reversal was the actual reversal was to be made in terms of Rule 6 (3) of the Rules and in view of the decision of Hon’ble Supreme Court in the case of M/s Maruti Suzuki Ltd. then there could have been no case for imposition of penalty.
The impugned order do not record anything with regard to correctness of this amount as it confirms the demand by application of 6% of the value of the electricity wheeled out. In case for ascertaining the credit amount that was to be reversed by the appellant. The matter is being remanded to the Original Authority in case the amount is within the amount already reversed, the proceedings should be closed without any final liabilities.
Appellant has raised various issues which are not considered for the reason that the issue is squarely covered by the decision of Hon’ble Supreme Court referred above.
Appeal is partly allowed and remanded back to the Original Authority.
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2024 (12) TMI 597
Rectification of mistake application regarding payment of interest on Cenvat credit - error apparent on the face of record or not - HELD THAT:- As per facts of the case, the appellant has a prima facie case of time bar, however, since the appellant are not contesting the payment of Cenvat Credit of Rs. 60,15,116/- paid under Rule 6 (3) of Cenvat Credit Rules, 2004, the said payment was mentioned, however it is clear that the entire case was time barred and for this reason only, the entire penalty was also set aside. Once, the demand itself is hit by time bar, consequential interest is also not payable.
Therefore, the submission of Learned Counsel agreed to the extent this Tribunal has demanded the interest on the payment of Cenvat Credit of Rs. 60,15,116/- the order bears an error apparent on record which needs to be rectified.
The appellant is not liable for payment of interest on the amount of Cenvat Credit of Rs. 60,15,116/-. Accordingly, demand of interest is set aside - ROM application is allowed.
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2024 (12) TMI 596
Entitlement to interest on delayed refund under Section 11BB of the Central Excise Act, 1944 - relevant time period - Calculation of the period for which interest on delayed refund is payable - HELD THAT:- Undisputedly while remanding the matter back to the original authority in the present case of refund claim filed on 30.04.2010. While remanding the matter back to the original authority direction was given to decide the claim as per the directions contained in earlier order dated 07.10.2016 relied upon. In that order tribunal had specifically directed for grant of interest after three months from the date of filing of the refund claim therein i.e. 07.11.2007.
In the present case instead of following the said direction new refund claim was got filed on 15.07.2021 after finalization of assessment and impugned order seeks to allow interest only for the period after three months from the that date. The impugned order has been passed contrary to the directions contained in the order dated 07.10.2016 and order dated 09.11.2018, and should be set aside for this reason itself.
The entire proceedings in the present case emanate from the refund claim filed by the appellant on 30.04.2010 - Appellant shall be entitled for the refund for the period starting from 30.07.2010 as claimed by the appellant - appeal allowed.
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2024 (12) TMI 594
Eligibility of CENVAT Credit on inputs and input services used for trading activities - invocation of extended period of limitation - exempt service or not - appellants have filed this appeal on the sole ground that the proviso clause appended to Section 11A of the Central Excise Act, 1944 cannot be invoked against the appellants, inasmuch as there is no element of suppression, willful mis-statement, collusion etc., with the intent to evade the Government revenue.
HELD THAT:- It is found that based on the Books of Account maintained by the appellant, the Audit Wing of the Department had pointed out the mistake regarding irregular availment of the CENVAT Credit on the inputs used in the trading activity. Since the appellants have maintained adequate records to capture the details of CENVAT Credit, it cannot be said that availment of CENVAT Credit on the trading activity was owing to the reason of fraud, collusion, willful mis-statement etc.
Hon'ble Madras High Court in the case of Shriram Value Services Pvt. Ltd. [2019 (8) TMI 1174 - MADRAS HIGH COURT] has also held that in the facts and circumstances of the case, extended period of limitation cannot be invoked for confirmation of the demands beyond the normal period provided under Section 11A of the Act 1944.
The judgment of Hon'ble Delhi High Court in the case of Lally Automobiles Ltd. [2018 (7) TMI 1679 - DELHI HIGH COURT] relied upon by the learned AR for the Revenue is distinguishable from the facts of the present case, inasmuch as in the said decided case, the assessee-appellant did not maintain any record to demonstrate taking of CENVAT Credit of central excise duty paid on the inputs, which were used for providing the trading activity. In the case in hand, since the appellants had maintained their Books of Accounts, capturing the details of CENVAT Credit taken on the inputs, the show-cause notice was required to be issued for the normal period provided under subsection (1) of Section 11A of the Central Excise Act, 1944 and the extended period of limitation cannot be invoked for effecting such recovery.
There are no merit in the impugned order, insofar as it has confirmed the adjudged demands by invoking the extended period of limitation. Therefore, the impugned order, to that extent, it has confirmed the adjudged demands beyond the normal period of limitation, is set aside and the appeal to such extent is allowed in favour of the appellants.
Appeal allowed.
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2024 (12) TMI 593
Denial of CENVAT Credit - input services - direct sale points in Kolkata can be considered as place of removal for the goods manufactured in the factory premises or not - HELD THAT:- The issue as to whether the factory premises of the appellant or the direct shop at Kolkata would be the place of removal of the goods was the issue that arose for consideration before the Allahabad Regional Bench of the Tribunal in M/S INDIA YAMAHA MOTOR PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE & CGST, GAUTAM BUDH NAGAR [2023 (10) TMI 1464 - CESTAT ALLAHABAD] where it was held that 'Once it is established that the appellant were paying duty on the value at which the bikes were sold from the direct shop at Kolkata then there cannot be any reason for not allowing the Cenvat Credit in respect of the services received at depot.'
The factual position in the appeal decided by the Allahabad Bench and the present appeal is identical. In fact, the appellant in both the appeals is India Yamaha Motor Private Limited.
There are no good reason to take a different view from the view taken in Allahabad Bench of the Tribunal and, accordingly, it is held that the place of removal would be the direct shop at Kolkata and not the factory premises.
The impugned order dated 31.10.2016 passed by the Commissioner is, accordingly, set aside - the appeal is allowed.
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2024 (12) TMI 528
Process amounting to manufacture or not - strapping together of ‘tyres’, ‘tubes’ and ‘flaps’, referred to as ‘TTF’, at the premises of another for despatch of this particular combination of goods to dealers for catering to replacement market for bus/lorry operators - CESTAT had set aside the demand - HELD THAT:- The Customs, Excise And Service Tax Appellate Tribunal has not committed any error in law or fact.
The Civil Appeals are accordingly dismissed.
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2024 (12) TMI 527
Undervaluation relating to stock transfer to their own unit - Undervaluation relating to sale to sister unit, M/s Aarem Chemicals Private Limited - Demand confirmed on short receipt of methanol and have taken cenvat cedit on quantity shown in the invoices - Denial of CENVAT Credit on the ground that this input has been used for manufacture of final product, hence do not qualify as input in terms of Rule 2 (k) of the Cenvat Credit Rules, 2004 - Demands sought to be confirmed by way of impugned order by disallowing the cenvat credit, which was taken on the basis of endorsed invoices/Xerox copies/endorsed bills of entry - Demand confirmed against the appellant on account of shortages of finished goods found during the course of physical stock verification - Revenue neutrality - Penalty on appellant.
Undervaluation relating to stock transfer to their own unit - HELD THAT:- The appellant is clearing the goods for sale to their sister unit and clearing a some part of the goods for captive consumption to their own unit for stock transfer. Therefore, the decision in the case of IOCL [2023 (5) TMI 436 - CESTAT KOLKATA] is squarely applicable to the facts and circumstances of the case and the duty cannot be demanded in terms of Rule 8 of the Valuation Rules, accordingly, the demand of Rs.1,94,02,717/- is not sustainable. Moreover, it is a situation of revenue neutrality.
Undervaluation relating to sale to sister unit, M/s Aarem Chemicals Private Limited - HELD THAT:- The fact is further noted that the value of Formaldehyde and Melamine has been taken incorrectly by the Department as the cost prices which kept fluctuated and the Department took the balance sheet figures, which included miscellaneous overhead, but the Adjudicating Authority has taken the balance sheet figures, which does not represent appropriate value, the said figures are much lesser than the actual figures adopted by the appellant for some of the financial years in question and the Revenue has taken the higher figures shown in the balance sheet for whole of the period and there was a decrease in conversion cost for strong bond M-3 due to market forces as BIFR proceedings are going against the appellants. In that circumstances, the goods were sold on price justified by the Chartered Accountant on the basis of the records and the prices taken by the Adjudicating Authority without going any justification on higher figures found during the year, are not sustainable - The fact is also noted that whatever duty has been paid by the appellant, the same is available as cenvat credit to their sister unit. In that circumstances, it is a situation of revenue neutrality. Therefore, the demand is not sustainable as no malafide intention can be alleged against the appellant. Therefore, the demand of Rs.52,28,055/- is also not sustainable.
Demand confirmed on short receipt of methanol and have taken cenvat cedit on quantity shown in the invoices - HELD THAT:- The said issue has been examined by this Tribunal in the case of Hindustan Petroleum Corporation Limited [2015 (1) TMI 24 - CESTAT MUMBAI], wherein this Tribunal has held 'there may be variation in the transportation of the quantity of the goods accordingly, transit loss is allowable. Hence, I hold that the appellant is entitled for input credit as shown in the invoices. Accordingly, the impugned order is set aside and the appeal and stay application are allowed with consequential relief, if any.' - the demand confirmed in the impugned order amounting to Rs.1,15,616/- is also not sustainable and hence, set aside.
Denial of CENVAT Credit on the ground that this input has been used for manufacture of final product, hence do not qualify as input in terms of Rule 2 (k) of the Cenvat Credit Rules, 2004 - HELD THAT:- This input has been received by the appellant for research and development purposes in their factory itself. The research and development activity is also a part of the manufacturing activity, therefore, it cannot be said that the said input has not been used for manufacture of their final product as held by this Tribunal in the case of Sudarshan Chemicals Industries Limited [2010 (5) TMI 746 - CESTAT MUMBAI], wherein this Tribunal has observed 'the appellants are entitled for CENVAT credit availed on such inputs which went for testing and analysis to manufacture the final product. The CENVAT credit on capital goods used in R & D section is also entitled as the same has been used in or in relation to the manufacture of the final product' - the Cenvat Credit of Rs.2,50,647/- cannot be denied to the appellant. Accordingly, the demand confirmed against the appellant is set aside.
Demands of Rs.14,86,640/- and Rs.34,88,013/- sought to be confirmed by way of impugned order by disallowing the cenvat credit, which was taken on the basis of endorsed invoices/Xerox copies/endorsed bills of entry - HELD THAT:- It is found that the appellant’s sister unit, M/s Aarem Chemicals Private Limited has imported the goods and endorsed the bills of entry and issued invoices in favour of the appellant and the appellant has taken the cenvat credit thereon. The similar issue came up before the Hon’ble Allahabad High Court in the case of Uni Cast Private Limited [2015 (10) TMI 375 - ALLAHABAD HIGH COURT], wherein the Hon’ble High Court has observed 'The fact that the invoice did not indicate the name of the appellant was only a procedural lapse, which was rectified by the endorsement made by the manufacturer in favour of the applicant. Such endorsement made cannot make the document invalid and, consequently, we are of the opinion that endorsement made by the manufacturer in favour of the applicant on the bills raised by the supplier does not make the invoice invalid and the applicant is entitled to avail Modvat credit.'
As it is not disputed by the Revenue that the appellant has not received the goods against the endorsed Bills of Entry/Xerox copies of the Bills of Entry/endorsed Invoices and the same has been used in the manufacture of final product and there is no allegation of diversion of the said goods pertaining in the above documents, the cenvat credit cannot be denied to the appellant, therefore, the appellant is entitled to take the cenvat credit of Rs.14,86,640/- and Rs.34,88,013/- on the basis of endorsed Bills of entry/endorsed invoices/Xerox copies of Bills of Entry.
Demand confirmed against the appellant on account of shortages of finished goods found during the course of physical stock verification - HELD THAT:- It is found that method of stock verification has been disputed by the appellant as stock verification, was not done physically, it was done on estimation basis by dip method and no Panchnama or weighment slips has been prepared to show the physical stock taking by the investigating team and in such a short span of time, stock verification of huge quantity is not possible. In that circumstances, the allegation of shortage of finished goods is not sustainable. It is also found that during the course of investigation, certain updation of books of accounts were also not considered as 158 MTs Formaldehyde is attributable to non-updation of books of accounts on the date of physical stock taking, as a result thereof, the quantity issued for captive consumption being 155 MTs could not be considered by the Department - the allegation of shortages of the finished goods is not sustainable in the absence of any corroborative evidence brought on record by the Revenue i.e. how much clearances were made and what is the method of transportation and what are the mode of the recipient of the goods - In that circumstances, the demand of Rs.14,04,491/- is not sustainable.
Penalty on appellant - HELD THAT:- As the demand of duty is not sustainable against the appellant, no penalty is imposable on the appellants.
Appeal disposed off.
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