Failure to discharge applicable duty on the samples drawn for internal testing and control purposes - non-maintenance of proper records to account for the samples drawn for internal testing purposes and for control purposes - Extended period of limitation - HELD THAT:- On going through the SOPs that it is mentioned at Para 3.2 that after completion and review of the batch, the samples shall be discarded; a clear procedure for the destruction of samples drawn is given at Para 3.2.1. It is clear from the internal records maintained by the appellants that samples drawn are destroyed and therefore, the same would not have been cleared outside the factory - as long as the samples are not cleared outside the factory premises, no duty is payable by them.
It is found that Department’s contention that the appellants have not maintained appropriate records and therefore, in terms of Para 3 of Chapter 11 of Supplementary Instructions, duty requires to be paid, is not acceptable. Understandably, there are no records prescribed for this purpose. The internal records maintained by the appellants have to be taken into consideration. On the basis of the records available, it is found that the appellants have maintained records as far as the control samples are concerned and as far as internal samples are concerned, it can be gleaned from the Standard Operating Procedures adopted by the appellants that the samples are either consumed in the course of testing or destroyed. In the absence of any contrary proof put forth by the Revenue, the claim of the appellants cannot be brushed aside - as long as the samples are not cleared outside the factory, no duty is payable.
Extended period of limitation - HELD THAT:- The Principal Bench in the case of SHYAM SPECTRA PRIVATE LIMITED (FORMERLY CITYCOM NETWORK PRIVATE LIMITED) VERSUS COMMISSIONER OF SERVICE TAX, DELHI II [2024 (8) TMI 95 - CESTAT NEW DELHI] held, following the decision of the Hon’ble Calcutta High Court, in the case of INFINITY INFOTECH PARKS LTD. VERSUS UNION OF INDIA [2014 (12) TMI 36 - CALCUTTA HIGH COURT], held that when a notice is issued in support of transactions spread over a period of time and it is found that the extended period of invocation has been invoked, the notice cannot be treated as within limitation for some of the same transaction, once it is found that the extended period of limitation is not invocable.
Wrongful availment and utilization of CENVAT Credit representing Additional Duty of Customs and CVD on imported goods in the month of September 2011 - contravention of Rule 3(4) of the CENVAT Credit Rules, 2004 and Para 2B of Notification No. 20/2007-C.E. dated 25.04.2007.
HELD THAT:- The Respondent has received capital goods in four bills of entry and they had taken the credit of CVD on the dates on which the goods were received. However, due to ignorance, they did not take the credit of the additional duty of customs, and when they came to know that such credit was admissible, they took credit of the entire amount in the month of September 2011.
Rule 4(2)(a) of the CENVAT Credit Rules, 2004 prescribes the availability of CENVAT Credit on capital goods and it stipulates that CENVAT Credit in respect of capital goods shall be taken only for an amount not exceeding 50% of duty; as per Rule 4(2)(b) of these Rules, the balance amount of credit may be taken in any subsequent financial year. In terms of Rule 4(2)(a) of these Rules, in respect of capital goods received at any point of time in a given financial year, the CENVAT credit shall be taken only for an amount not exceeding 50% of duty paid on such capital goods in the same financial year - there are no provision under the CENVAT Credit Rules, 2004 which debars a manufacturer from taking the credit if by some reason they fail to avail the credit immediately on receipt of the capital goods.
Since the Respondent has availed the credit belatedly, they have utilised this credit for payment of duty after September 2011. Thus, they got less refund for the period after September 2011. Thus, there is no violation of condition 2B of the Notification No. 20/2007-C.E. dated 25.04.2007. Accordingly, there is no merit in the allegation of the Revenue that the Respondent has received excess refund during the period prior to September 2011.
The alleged inadmissible credit taken in September 2011 has been proposed to be recovered under Rule 14 of the CENVAT Credit Rules, 2004 read with Section 11A of the Central Excise Act, 1944 - the alleged credits taken by the Respondent belatedly were not in contravention of any of the provisions of CENVAT Credit Rules, 2004. the Credit availed can be considered as irregular only if it is taken in contravention of any of the provisions of CENVAT Credit Rules, 2004. Since the credit taken is not found irregular, Rule 14 of CENVAT Credit Rules, 2004 read with Section 11A of the Central Excise Act, 1944 cannot be applied for recovery of the credit in this case.
There are no merit in the submissions made by the Revenue that the Respondent has availed wrong/irregular credit - there are no merit in the contention of the Revenue that the Respondent has received excess refund as they have availed the credit belatedly - the ld. adjudicating authority has rightly passed the impugned order allowing the belated credit availed by the Respondent - the appeal filed by the Revenue is dismissed.
Condonation of delay of 528 days in filing SLP - HELD THAT:- The reasons assigned for seeking condonation of delay are neither satisfactory nor sufficient in law to be condoned - the applications seeking condonation of delay are dismissed - these Special Leave Petitions also stand dismissed.
Requirement to deduct entire excise duty while computing the amount, if value addition is in terms of para 6.5 of the Notification - freight and transit are part of the sale price as appellant’s sales are for destination sales or not.
Whether the entire excise duty is to be deducted while computing the amount, if value addition is in terms of para 6.5 of the Notification? - HELD THAT:- The issue decided in the case of KANGARO INDUSTRIES LIMITED VERSUS CCE, JAMMU [2017 (11) TMI 90 - CESTAT CHANDIGARH] where it was held that 'when an amount of duty is refunded to the assessee, under Notification No. 1/2002- C.E., the same has to be deducted from the excise duty paid by the appellant while arriving at actual value addition'.
Whether freight and transit are part of the sale price as appellant’s sales are for destination sales? - HELD THAT:- The issue decided in the case of KANGARO INDUSTRIES LIMITED VERSUS CCE, JAMMU [2017 (11) TMI 90 - CESTAT CHANDIGARH] where it was held that 'the freight outward is includible in the sale value.'
The impugned orders are not sustainable in law therefore, set aside - appeal allowed.
Valuation - inclusion of value of clearance of exports made by the appellant for which duty was not paid by availing exemption under N/N. 30/2004-CE dated 09.07.2004, while reversing the credit of inputs taken, as per Rule 6 of CCR 2004 - HELD THAT:- The issue stands covered by the decision in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS DRISH SHOES LTD. [2010 (5) TMI 334 - HIMACHAL PRADESH HIGH COURT], wherein the Hon’ble High Court has analyzed the issue as to whether credit is eligible on the duty paid on inputs and input services used in the manufacture of exempted goods which are exported - it was held that even if the exempted goods are exported, credit is eligible.
Once the issue does not sustain on merits the question of examining the dispute relating to interest and penalty does not arise.
The demands cannot be sustained. The impugned orders are set aside - Appeal allowed.
Requirement of pre-deposit under Section 35F of Central Excise Act, 1944 - Invocation of Section 11D of Central Excise Act, 1944 for recovery of amount - It is submitted that the allegation in the SCN is that the appellant collected an amount of Rs.1 crore by raising supplementary invoices by representing the amount as excise duty only for the purpose of passing on the burden of predeposit so as to facilitate M/s.Renold to take the credit.
HELD THAT:- When the assessee fails to deposit with the Central Government the duties of excise or any amount collected representing excise duty has to deposit it to the Government. In other words, if an assessee collects excise duty or any amount representing excise duty cannot retain it. For eg:-- if an assessee wrongly collects central excise duty on exempted goods has to deposit the amount collected as duty with the Government. If not paid to Government, Section 11D can be invoked to recover such amount. In the instant case, the appellant has made predeposit of Rs.1 crore and later issued supplementary invoices passing on the burden of the duty paid by them as predeposit to M/s.Renold. The deposit made by them is still with the Government.
The appeal in which they had made the predeposit has attained finality wherein the demand, interest and penalties have been entirely set aside on merits as well as on issue of limitation. Consequently, the appellant would be eligible for refund of predeposit of Rs. 1 crore made by them. The appellant has not applied for refund and does not intend to claim refund of the predeposit made.
The intention of predeposit is to protect the revenue involved in the appeal and making the recovery of the demand easy and hassle free in case the demand is confirmed in favour of Revenue. The amount is deposited with the Central Government towards the demand impugned in the appeal. In case the demand is confirmed the deposit attains the character of duty / tax and is recovered / adjusted. There is no requirement of further recovery proceedings in regard to predeposit. On the contrary, when the demand is set aside, an assessee can obtain refund of the predeposit. The assessee need not take the course of Section 11B of Central Excise Act, 1944, to obtain refund of predeposit. A mere request letter would be sufficient. The restrictions of time bar and unjust enrichment are not applicable for refund of predeposit making it easy and hassle free. This is because the predeposit is just an amount deposited. It would thus appear that predeposit is of a flexible nature.
The demand raised in the SCN is invoking Section 11D and not invoking Rule 14 of Cenvat Credit Rules, 2004. The confirmation of demand under Section 11D cannot be on the allegation that the appellant has facilitated availment of ineligible cenvat credit. Section 11D will be applicable only when the Central Excise duty is collected but not deposited with the Government or any amount representing Central Excise is collected and not deposited with the Government.
The impugned order is set aside - The appeal is allowed.
Denial of CENVAT credit - Input services - allegation that certain input services do not qualify to be input services under Rule 2 (l) of Cenvat Credit Rules 2004 - Rental charges for EOU - Confirmation of demand Rs.1,50,278/- alleging that certain input services which have been used commonly for DTA unit and EOU - Credit taken without documents - Time Limitation - penalties.
Input services - Period prior to 01.04.2011 - HELD THAT:- The period of dispute is prior to 01.04.2011 as well as after. The definition of input services prior to 01.04.2011 has already been reproduced above. The said definition uses the words “activities relating to business”. The definition was wide enough to include almost all services. The appellant is eligible for the credit availed on services like outdoor catering services, courier service, civil construction services, logistic services, custom house agent services, insurance services availed for the period prior to 01.04.2011. All these services fall in the inclusive part of the definition of input services. It is therefore found that the appellant is eligible for credit for all these services prior to 01.04.2011.
Input services - Period after 01.04.2011 - HELD THAT:- After 01.04.2011 the definition excludes services in the nature of outdoor catering services, insurance and civil construction services. The Ld. Counsel for appellant has submitted that they have reversed the credit for the period after 01.04.2011 with regard to these services. It is also submitted that the appellant is not contesting the issue on eligibility of credit on services like outdoor catering, civil construction, insurance (hospital) for the period after 01.04.2011. The demand confirmed for the period after 01.04.2011 on this issue is upheld.
Write off of obsolete items is set aside for the period prior to 01.03.2011 as well as for period after 01.03.2011 - HELD THAT:- The demand in respect of the issue on write off of obsolete items is set aside for the period prior to 01.03.2011. However, the demand for the period after 01.03.2011 is sustained. The appellant has reversed the credit of Rs.27,36,474/- being after 01.03.2011. They are liable to pay duty after 01.03.2011 only. The demand confirmed on this issue is Rs.72,36,340/-. The amount confirmed in excess of Rs.27,36,474/- along with interest is set aside. The penalty on this issue is set aside.
Rental charges for EOU - HELD THAT:- The amount has been reversed by the DTA unit and has been re-availed by the EOU. The appellant has submitted that they are not contesting this issue. For this reason, the demand in respect of rental charges is upheld.
Confirmation of demand Rs.1,50,278/- alleging that certain input services which have been used commonly for DTA unit and EOU - HELD THAT:- Applying the ratio laid in the decision in the case of Dashion Ltd., (supra) the demand cannot sustain - the demand cannot sustain and requires to be set aside.
Credit taken without documents - HELD THAT:- From the facts, it is seen that this allegation has been raised when the credit lying with debonded EOU was transferred to DTA unit - The department is of the view that since the unit had availed the credit as EOU unit, even though it has been debonded and become a DTA unit, the credit cannot be transferred. The same issue has been analyzed and decided by the Tribunal in the case of M/S. WIPRO LTD. VERSUS COMMISSIONER OF GST & CENTRAL EXCISE, CHENNAI [2023 (6) TMI 237 - CESTAT CHENNAI], wherein it was held that the credit carried forward to the DTA unit after de-bonding cannot be denied - the denial of credit alleging that the transferred credit has been availed without documents cannot sustain and require to be set aside.
It also needs to be noted that part of this demand relates to credit availed in respect of inputs at the time of de-bonding. The adjudicating authority as well as the Tribunal denied the eligibility of credit on inputs availed by EOU consequent to de-bonding. The appellant preferred an appeal before the Hon’ble Jurisdictional High Court and the issue was held in favour of the appellant. Thus, the issue as to whether credit can be availed on inputs at the time of de-bonding stands settled in favor of appellant. The Hon’ble High Court in the appellant's own case M/S. AVO CARBON (INDIA) PVT. LTD. M/S. STANADYNE AMALGAMATIONS (P) LTD VERSUS CCE, CHENNAI-II [2017 (4) TMI 428 - CESTAT CHENNAI], Chennai considered the issue and held as under to conclude that the credit on inputs is eligible at the time of debonding.
Time Limitation - penalties - HELD THAT:- Show Cause Notice and Statement of demand are issued for the period 2009-10 to 2012-13. Part of the demand falls within the extended period. In the present case, the issues are mostly interpretational in nature - The issue with respect to credit on various input services is also interpretational in nature, as an amendment was introduced in the definition on inputs services w.e.f. 01.04.2011. Further, there is no positive act of suppression established against the appellant. Show cause notice has been issued based on the objections raised by the audit. As and when pointed out, the appellant has reversed the credit in respect of the issue of write off as well as ineligible input services post 01.04.2011 - there are no grounds for invoking the extended period. The issue of limitation is answered in favour of the assessee and against the Revenue. For the same reasons, the penalties imposed are also set aside.
CENVAT Credit - invoices issued before the introduction of time limit for credit availment - HELD THAT:- Admittedly for two invoices issued on 28.06.2014 and 01.07.2014 credit of ₹13,59,600/- each was taken by the Appellant, as revealed from the show-cause notice. These invoices would go to show that by the time N/N. 21/2014-CE (NT) was brought into force on 01.09.2014, the said period of six months was not over but because of the fact that during those period no specific time limit was prescribed to avail the credit, denial of the same credit for the invoice issued prior to the effective date would naturally be in violation of the statutory provision contained in Section 38A of the Central Excise Act, 1944.
To bring more clarity to the issue the same can be explained by placing an example that instead of invoice being issued on 01.07.2014, had it been issued on 07.01.2014, period of six months would have expired by the time N/N. 21/2014-CE (NT) was brought into force on 01.09.2014. It is apparently for this reason that consistent decision is passed by this Tribunal that the same N/N. 21/2014-CE (NT) is applicable to the invoices issued post N/N. 21/2014-CE (NT) - the Appellant having availed credit on these two invoices on 31.01.2015, since within six months of 01.09.2014, is entitled to the credits availed by it.
The order passed by the Commissioner of CGST & Central Excise (Appeals), Nashik is hereby set aside - Appeal allowed.
100% EOU - refund of accumulated CENVAT Credit - refund claim rejected because the Respondent has not complied with the conditions prescribed in Notification No. 5/2006-CE(NT) dated 14.03.2006 issued under Rule 5 of Cenvat Credit Rules, 2004 - Applicability of National Litigation Policy - HELD THAT:- As per the submission of the learned Counsel for the Respondent, the amount of refund involved in the present appeal is totally amounting to Rs.48,38,722/- is below the monetary limit as prescribed under instructions dated 22.08.2019 issued by the CBIC; whereas the submission of the learned AR for the Revenue is that the Department has challenged the entire impugned order and therefore, the case is not covered under National Litigation Policy. After considering the submissions of both the parties, it is decided to decide the present appeal against the impugned order in its entirety without going into the question of National Litigation Policy.
The terms of ‘input service’ as defined under Rule 2(l) of the Cenvat Credit Rules, 2004 uses terms ‘means’ and ‘includes’ in the definition. First leg of the definition i.e. the 'means' portion would cover every service used directly or indirectly, in or in relation to manufacture of final products and clearance of final products from the place of removal and the 'inclusive’ part is illustrative and certainly is not exhaustive.
Each of the input service involved in the present case has been held to be ‘input service’ in view of the various decisions relied upon by the Respondent - the eligibility of Cenvat Credit cannot be questioned in refund proceedings in view of the decision in the case of COMMISSIONER, SERVICE TAX COMMISSIONERATE VERSUS M/S HCL COMNET SYSTEM & SERVICES LTD., NOIDA [2017 (12) TMI 1661 - ALLAHABAD HIGH COURT].
As regards the refund in respect of the invoices addressed to the corporate office at Gurgaon instead of manufacturing premises, it is found that it is only a technical lapse and substantive benefits cannot be denied for procedural irregularities.
There is no infirmity in the impugned, the same is upheld - appeal of Revenue dismissed.
Denial of CENVAT credit under Rule 14 of Cenvat Credit Rules, 2004 with proposal to impose penalties and recover interest - denial on the ground that input service invoices did not have registration number of service provider - HELD THAT:- In respect of cenvat credit of Rs.26,445/- there are allegations that registration number of service provider is not available. It is noted that there are no allegations that the services provided through the said invoices were not received by the appellant nor there are allegations that the said services did not suffer service tax. It is, therefore, held that the appellant was eligible for cenvat credit of Rs.26,445/-.
It is further found that cenvat credit of Rs.60,776/- was denied to the appellant on the ground that the invoices were having the address of office and not that of factory - there are plethora of judgments of this Tribunal and higher courts that on such ground, cenvat credit cannot be denied so long as there are no allegations that the services or the goods were not received in the factory and the goods and services did not suffer service tax or central excise duty, as the case may be. In the present case, I find that there are no allegations that the goods and services did not suffer tax or duty. Therefore, the appellant was eligible to avail cenvat credit of Rs.60,776/-.
CENVAT credit of Rs.4,68,680/- was availed of service tax paid on rent paid by the appellant after the year 2001 when they made application for inclusion of additional premises into the approved plan of the factory - the appellant was eligible for cenvat credit of Rs.4,68,680/-.
It is further noted that the disputed cenvat credit of Rs.1,24,044/- also involved service tax or central excise duty on MS angles and electrodes. It is noted that learned AR has relied on ruling by Hon’ble Bombay High Court in the case of MANIKGARH CEMENT VERSUS COMMISSIONER OF CUS. & C. EX., NAGPUR [2017 (7) TMI 1117 - BOMBAY HIGH COURT] wherein in the year 2018, it was held that central excise duty paid on welding electrodes used for repair and maintenance of plant and machinery is not admissible for availment of cenvat credit - the appellant was eligible for cenvat credit of Rs.1,24,044/-.
Thus, the appellant was eligible for cenvat credit of Rs.26,445/-, Rs.60,776/-, Rs.4,68,680/- and Rs.1,24,044/- - appeal allowed.
Appropriate forum - Jurisdiction of the High Court under Section 35G of the Central Excise Act, 1944 regarding excisability of goods - whether the activity of Respondent-Assessee is manufacturing activity for the purpose of levy of excise duty under the said Act? - HELD THAT:- On a conjoint reading of Section 35G(1) read with 35L, there are no doubt that since the issue involved in the present appeal relates to whether the activity of Respondent-Assessee is manufacturing or not so as to be liable for excise duty, it is a question relating to excisability of goods and, therefore, the appropriate Court for filing the appeal to challenge the Tribunal’s order would be Supreme Court and not this Court.
The reliance placed by counsel for Appellant-Revenue on the decision of Andhra Pradesh High Court and the Supreme Court in the case of COMMR. OF C. EX., HYDERABAD-IV VERSUS SHRIRAM REFRIGERATION INDUSTRIES [2008 (5) TMI 290 - ANDHRA PRADESH HIGH COURT] and COMMR. OF C. EX., HYDERABAD VERSUS SHRIRAM REFRIGERATION INDUSTRIES [2023 (2) TMI 213 - SUPREME COURT] is not appropriate. The Andhra Pradesh High Court and the Supreme Court in Shriram Refrigeration Industries (supra) were considering the provisions of Sections 35G and 35L as existing prior to insertion of sub-section (2) in Section 35L by Finance (No. 2) Act 2014 with effect from 6th August 2014 and amended provision was not the subject matter of consideration.
The appeal is not maintainable before this Court - the Appellant is permitted to present the same before the Supreme Court.
Penalty on co-noticee for goods purchased from main noticee - case of appellant is that only because the appellant had not filed declaration under the scheme, the penalty imposed against them cannot sustain on the ground that the penalty against the main noticee has been set aside - HELD THAT:- The main appellant M/s. Ogun Steel Rolling Mills (P) Ltd. has opted for SVLDR Scheme and have been issued Discharge Certificate. As per Section 124 (1) (b) of the Finance Act, 1994, if only penalty is in dispute and the duty demand is NIL, then such penalty shall be waived under the scheme. The relief under Section 124 (1) (b) is not subject to the satisfaction of the Designated Committee and it is as per the provisions of the scheme. In case, the appellant had filed declaration, the Committee would not have any option but to grant relief under Section 124. The filing of declaration is only procedural option to be made by the appellant.
The very same issue has been considered by the Tribunal in the case of M/S JPFL FILMS PRIVATE LIMITED, JALAN JEE POLYTEX LTD., KAVITA INTERNATIONAL AGENCY, KULDEEP SINGH, DP SINGH, R KNITFAB, PERFECT DESIGNER, VK KALRA, RELIANCE INDUSTRIES LIMITED, KANPUR WOOL INDUSTRIES, SWASTIK TRADING CO., APEX CORPORATION AND MANSA TRADERS VERSUS COMMISSIONER OF CENTRAL EXCISE, LUDHIANA [2023 (12) TMI 304 - CESTAT CHANDIGARH]. It was held by the Tribunal that when the main appellant has been granted immunity and relief from penalty under Section 124 of the SVLDR Scheme, the assessee, against whom penalty has been imposed in the very same proceedings, cannot be denied relief of penalty merely because they have not filed declaration under the scheme.
Taking note of the fact that the main appellant has settled the dispute under SVLDR Scheme and only penalties have been imposed against these appellants, the penalty imposed against these appellants also require to be set aside.
The impugned orders are set aside to the extent of setting aside the penalty imposed against these appellants - Appeal allowed.
100% EOU - Non-compliance with the conditions of the Notification No.31/2007--CE (NT) dt. 2.8.2007 for supply of the items to the DTA unit - non-submission of CT--1 certificate as required under Notification No.31/2007 dt. 2.8.2007 - time limitation - penalty on Managing Director - HELD THAT:- From the conditions and procedure of the notification explained above, it can be seen that the condition is to make sure that the finished goods which are manufactured by the duty free inputs are used for export only. In the present case, the appellant has cleared the hangers to the DTA customers who have exported the goods along with garments. The Department has not made any allegation that the goods manufactured by the appellants have not been exported. The only allegation is that they have not complied with the procedure of removal of goods on the basis of CT--1 certificates. The appellant has explained the difficulty of procuring the CT1 certificate during the disputed period - the appellant has furnished Form--H which is sufficient to prove that the goods cleared from the factory have been sold to the DTA customers only for the purpose of export. The document in the nature of Form--H establishes that sale of the goods is in the course of transaction of export of goods.
The very same issue in respect of clearances of hangers to the domestic exporters and non--production of CT--1 certificates was examined by the Tribunal in the case of RAMANI PLASTICS PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE CHENNAI-I [2015 (1) TMI 988 - CESTAT CHENNAI] where it was held that 'The Commissioner (Appeals) observed that there is procedural lapse in so far as the goods were not directly exported but through merchant exporter. The Board has clearly clarified that this facility is not available to the supplies made to any other domestic manufacturer who may or may not export its finished products. In the present case, it is observed from the record that the merchant exporter exported the goods which was not disputed at any point of time.'
Time Limitation - HELD THAT:- The entire allegation is with regard to non--compliance of the procedure. There were audits conducted who have not objected to the clearances made to DTA exporters. The appellant has been making repeated representations to higher authorities informing inability to furnish CT1 certificates. Later, the notification No.20/2015(NT) dt.24.09.2015 was issued wherein the requirement of CT--1 certificate was omitted. All these would go to show that there no ingredients for invoking the extended period. The show cause notices are time--barred. The issue on limitation is also answered in favour of the appellant.
Penalty on Managing Director - HELD THAT:- The penalty imposed on Shri Atul Bhayani, Managing Director is set aside.
The impugned orders are set aside - Appeal allowed.
Supply of gear boxes to Mega Power Projects - Availing exemption benefit without fulfilling the conditions stipulated in the exemption Notification No. 06/2006-C.E. dated 01.03.2006 - appellant could not produce evidence to confirm that the contracts were entered into under international competitive bidding and the appellant has not submitted the certificates issued by the appropriate authority for availing the benefit of the exemption Notification - HELD THAT:- The documents as required under the conditions of Notification No. 06/2006-C.E. have been submitted. In respect of all these projects, the appropriate authority has certified that they are Mega Power Projects. There is no dispute regarding receipt of the goods by the concerned projects. Appropriate certificate, as required under the Notification, has been submitted. Wherever there is some variation in the certificate issued, they have submitted additional evidence to establish that the goods were supplied to Mega Power Projects as certified by the Project Authority. Thus, the appellant has fulfilled the conditions stipulated in the Notification No. 06/2006-C.E. dated 01.03.2006.
Another ground raised by the ld. adjudicating authority in the impugned order to deny the benefit of the exemption Notification is that the goods manufactured by the appellant do not fall under Heading 98.01 as mentioned in the Notification No. 21/2002. In this regard, it is observed that Notification No. 21/2002 exempts all goods supplied against international competitive bidding. The goods cleared by the appellant under Chapter Heading 8483 are also covered within scope of the Notification No. 21/2002. Thus, the appellant fulfilled all the conditions as stipulated in the Notification No. 06/2006-C.E. dated 01.03.2006, as amended, for availing the benefit of the said Notification.
The appellant is eligible for the exemption and they have rightly cleared the goods without payment of duty by availing the benefit of the exemption Notification No. 06/2006-C.E. dated 01.03.2006. Thus, the demand of central excise duty confirmed in the impugned order by denying the benefit of the exemption Notification is not sustainable and hence, we set aside the same - Since the demand of duty itself is held to be not sustainable, the question of demanding interest and imposing penalty does not arise.
Adjustment of refund against duty demand - Refund of additional amount deposited based on High Court order - HELD THAT:- Going back to the legality of issue of adjustment of refund against duty demand, that has become infructuous in view of the order passed by the Hon'ble Supreme Court as no amount, by way of reversal of CENVAT Credit on removal of capital goods, is held to be payable after the same is paid on its depreciated value. What remains here to be seen is that on the basis of Appellant’s request letter dated 12.12.2023 the entire amount of ₹18,38,774/- (13.5 lakhs + 4.88 lakhs paid earlier) is required to be refunded to the Appellant within 15 days of receipt of such request letter in view of Board Circular dated 10.03.2017, falling which interest under Section 11BB is also payable but as could be noticed here, no order was passed by the Refund Sanctioned Authority in that respect.
The most important point that would be required to be determined by this forum is concerning its jurisdictional competency to deal with such an issue that occurred subsequent to passing of order by the Commissioner (Appeals), which is assailed herein.
This Tribunal which has denied the relief granted by the Commissioner (Appeals) to the Appellant, is duty bound to enforce the order passed by the Hon'ble Supreme Court as contained in order 2(a) of the said Enforcement Order 1954 and therefore, in exercise of the power conferred on this Tribunal under Rule, 41 of the CESTAT (Procedure) Rules, 1982, that provides in a way for implementation of order.
Appellant is entitled to get refund of payment of ₹18,38,774/- against demand raised for inadmissible credit taken by the Appellant alongwith applicable interest and for this purpose the order passed by the Commissioner (Appeals) is hereby set aside - Appeal allowed.
Classification of goods supplied to the Indian Railways - major items manufactured are brake systems, HVAC, couplers, doors, pantographs etc. - to be classified under Chapter 86 or under chapters 84, 85 etc.? - Extended period of limitation - interest - penalty.
Classification of goods - HELD THAT:- The discussion on pantographs and its parts occurs at para 26 of the impugned order and is very cryptic. It accepts that pantograph and its parts are exclusively used in railways or tramway locomotives, however it states that the classification of any item under the Central Excise Tariff is not guided by usage or application of the goods but guided by the notes prescribed under Section / Chapters of the Schedule to the Central Excise Tariff, 1985.
Revenue has failed to establish its case for classification of pantographs and its parts under CTH 8535. The order is cryptic and non-speaking on the issue. A lack of reasoning in an order makes it difficult for Appelate Authorities to discharge their appellate function properly.
Extended period of limitation - HELD THAT:- It is not merely a blame worthy act that would trigger the evocation of the extended period of limitation, something more is required. The act should have been done with the intention to evade payment of duty. There is a positive finding of intended duty evasion has not been arrived at in the impugned order. Hence the demand of duty for the extended period must fail.
Interest - HELD THAT:- The appellant is liable to pay duty for the normal period. Further whenever the payment of interest is mandated by statute, it automatically comes into play, when the happening or non-happening of an event mentioned in the relevant section of the statute occurs. The liability gets extinguished only when the statutory payments are made as required by the statute. A similar issue relating to payment of interest under the Central Excise Act was examined by the Hon’ble Supreme Court in COMMISSIONER OF CENTRAL EXCISE, PUNE VERSUS M/S SKF INDIA LTD. [2009 (7) TMI 6 - SUPREME COURT] wherein it was held that interest was payable even in a case of short payment of duty which was indeed completely unintended and without any element of deceit etc. We thus find that the appellant is lawfully bound to pay interest on the duty demanded, and that interest is leviable on delayed or deferred payment of duty for whatever reasons.
Penalty - HELD THAT:- It is found that revenue has not made out a case of a blame worthy act with intention to evade payment of duty, hence the question of penalty does not arise and the same is set aside.
Extended period of limitation - suppression of facts or not - Classification of RAB - to be classified as concentrated sugar syrup under ETI 1702 90 90 as ‘other sugar syrups not containing added flavouring or colouring matter’ or not - benefit of excise exemption under the Notification dated 16.03.1995 denied on the ground that RAB was captively used in the manufacture of rectified spirit (non excisable commodity) - HELD THAT:- It would be seen from a perusal of sub-section (1) of section 11A(1) of the Central Excise Act that where any duty of excise has not been levied or paid, the Central Excise Officer may, within one year from the relevant date, serve a notice on the person chargeable with the duty which has not been levied or paid, requiring him to show cause why he should not pay amount specified in the notice - The proviso to section 11A(1) of the Central Excise Act stipulates that where any duty of excise has not been levied or paid by reason of fraud or collusion or wilful mis-statement or suppression of facts or contravention of any of the provisions of the Act or the Rules made there under with intent to evade payment of duty, by the person chargeable with duty, the provisions of the said section shall have effect as if, for the word ‘one year’, the word ‘five years’ has been substituted.
It needs to be noted that the show cause notice did allege that suppression of facts by the appellant was with an intent to evade payment of central excise duty but such a finding has been recorded by the Commissioner. This apart, there is no discussion in the order as to why the appellant suppressed facts with an intent to evade payment of excise duty. The reply filed by the appellant on this aspect has not been considered at all by the Commissioner. The appellant had pointed out in reply to the show cause notice that the issue involved was complex in nature and the department also was not sure about the classification of RAB - The contention raised by the appellant have not been considered at all by the Commissioner. It was imperative for the Commissioner to have examined the aforesaid facts placed on record by the appellant as the consideration of the same was necessary for recording a finding one way or the other regarding invocation of the extended period of limitation.
The provisions of section 11A (4) of the Central Excise Act, which are as similar to the provisions of section 11A(1) of the Central Excise Act, came up for interpretation before the Supreme Court in PUSHPAM PHARMACEUTICALS COMPANY VERSUS COLLECTOR OF C. EX., BOMBAY [1995 (3) TMI 100 - SUPREME COURT]. The Supreme Court observed that section 11A(4) empowers the Department to reopen the proceedings if levy has been short levied or not levied within six months from the relevant date but the proviso carves out an exception and permits the authority to exercise this power within five years from the relevant date in the circumstances mentioned in the proviso, one of it being suppression of facts. It is in this context that the Supreme Court observed that the act must be deliberate to escape payment of duty.
There can be a difference of opinion between the department and Revenue and an assessee may genuinely believe that it is not liable to pay duty. On the other hand, the department may have an opinion that the assessee is liable to pay duty. The assessee may, therefore, not pay duty in the self-assessment carried out by the assessee, but this would not mean that the assessee has wilfully suppressed facts. To invoke the extended period of limitation, one of the five necessary elements must be established and their existence cannot be presumed merely because the assessee is operating under self assessment.
In the present case, all that has been stated in the impugned order, even in the absence of any allegation in the show cause notice regarded intent to evade duty, is that since the appellant suppressed facts, the provisions of the extended period of limitation contemplated under the proviso to section 11A(1) of the Central Excise Act would be applicable since such suppression of facts was with an intent to evade payment of duty. The extended period of limitation could not have been invoked in the present case even if the returns were self assessed.
Thus, as the extended period of limitation contemplated under the proviso to section 11A(1) of the Central Excise Act could not have been invoked, the impugned order dated 09.05.2019 passed by the Commissioner deserves to be set aside as the entire demand is covered under the extended period of limitation.
The impugned order dated 09.05.2019 passed by the Commissioner is, accordingly, set aside - appeal is allowed.
Jurisdiction to issue SCN - authority issuing show cause notice is different from adjudicating authority - Denial of CENVAT Credit.
Jurisdiction to issue SCN - appellant has alleged that show cause notice was issued by Assistant Commissioner, Circle-Jaipur B, CGST Audit Commissionerate, Jaipur and thus, its adjudication by Deputy Commissioner, CGST, Division-G, Jaipur, i.e. adjudicating authority, is without jurisdiction - HELD THAT:- The allegation challenging the jurisdiction is not sustainable. The adjudication authority despite being different from one which issued the said show cause notice is held to have the competent jurisdiction.
CENVAT Credit - duty paying documents - HELD THAT:- An invoice issued by the service provider is sufficient to prove the admissibility of Cenvat credit of input services. Further, reference is also made to Rule 4A of the Service Tax Rules, which provides that any person who provides taxable service, on completion of the said service, shall issue an invoice or bill not later than thirty days from the date of completion of such taxable service or receipt of payment, whichever is earlier.
In the present case, apparently the invoices were issued in the name of other plants of the appellant instead of being in favour of appellant. But it is also an admitted fact that the invoices were found accounted in the books of appellant, NEI Jaipur. Revenue has produced no evidence to prove that the units whose name were mentioned on the invoices had accounted those invoices in their books of accounts. Revenue has also failed to produce any evidence to prove that the input services were received by other units of NEI that the Jaipur unit. The burden was of the Revenue/department.
The deficiency noticed in the invoices is held to not be enough to deny the benefit of Cenvat credit in view of the proviso to Rule 9(2) of the Credit Rules. The invoices on record have all such details as mentioned above. Inasmuch as in the present case, the invoices with incorrect address issued by the input service providers contain all the requisite particulars as required under the proviso to Rule 9(2), therefore, Cenvat credit cannot be denied to the appellant. In fact, Rule 9(2) nowhere requires mentioning the address of service recipient. The proviso to Rule 9(2) of Credit Rules kicks in only when the conditions under Rule 4A of Service Tax Rules, 1944 read with Rule 9 of the Credit Rules, are not fulfilled entirely. Thus, denial of credit is not sustainable.
Appellant has also placed on record the CA certificate issued by Ashok Kanodia & Co., wherein it is certified that the Cenvat credit of Rs.12.62,017 was only availed by the appellant and not by any other unit of NEI. It is already held above that it is an admissible evidence. As a settled law, credit is a indefeasible and vested right, once there is no dispute on its entitlement.
The Supreme Court disposed of the appeal due to low tax effect, as the impact of taxation was less than Rs.2 Crores. Any legal questions arising from the appeal can be raised in another case.
CENVAT Credit - input service - place of removal - services received for the purposes of export of the finished goods - HELD THAT:- The issue has been examined by this Tribunal in the respondent’s own case COMMR. OF CENTRAL EXCISE, CUS. & SERVICE TAX, BHUBANESHWAR-I M/S. NALCO LTD. [2024 (8) TMI 593 - CESTAT KOLKATA] for the another unit, wherein this Tribunal has observed 'Since the fact of taking the Cenvat Credit on a monthly basis on account of such ISD invoices was very much reflected in the ER-1, the Department cannot take the stand that Respondent has suppressed any fact.'
The respondent is entitled to the Cenvat Credit of the service in question as “input service” in terms of Rule 2 (l) of the Cenvat Credit Rules, 2004 - there are no infirmity in the impugned order - appeal dismissed.
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