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Central Excise - Case Laws
Showing 41 to 60 of 81787 Records
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2025 (3) TMI 897
Liability of Central Excise Duty - appellants used aromatic compounds captively within the factory - benefit provided under N/N. 67/95-C.E. dated 01.03.1995 is applicable to the intermediate product - HELD THAT:- The CBEC vide Circular No. 495/61/99-CX.3 dated 22.11.1999 has clarified that manufacturing activity undertaken by the Agarbatti producers are a trade secret and composition contained therein are never disclosed to outside parties.
The said Circular dated 22.11.1999 was further clarified by the CBEC vide subsequent Circular No. 989/13/2014 dated 07.11.2014, clarifying that in cases where, on the basis of evidence, it is established that such intermediate compounds are capable of being marketed, the same will be excisable, irrespective of whether the compound is actually marketed or otherwise. In the case in hand, the Department has relied upon certain invoices to demonstrate that the aromatic compound is capable of being bought and sold in the open market for a consideration. However, on perusal of sample copy of the invoices relied upon by the Revenue, we find that chemical composition of aromatic compound was not mentioned in those invoices and also the composition of such intermediate product used by the appellants was also not considered by the Department, in order to conclude that the self-same aromatic compounds used by the appellants for the intended purpose, is marketable. Since the aromatic compound used by other Agarbatti manufacturers and those used by the appellants were not examined by the Department to ascertain the chemical composition and other parameters, the Department’s stand in demanding the Central Excise duty on such intermediate goods i.e. aromatic compound cannot be sustained, inasmuch as it cannot be said that such use of aromatic compounds by the appellants captively, are capable of being marketed.
Conclusion - i) The aromatic compounds used by the appellants within their factory for manufacturing Agarbatties are not liable for Central Excise duty. ii) The benefit under N/N. 67/95-C.E. is applicable to the aromatic compounds used captively. iii) The aromatic compounds do not qualify as 'manufacture' under Section 2(f) of the Central Excise Act, 1944, for the purpose of excisability. iv) The Department failed to demonstrate the marketability of the aromatic compounds used by the appellants, thus they are not excisable.
The impugned order is set aside, and the appeal is allowed in favor of the appellants.
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2025 (3) TMI 841
Wrongful availment of CENVAT credit on ineligible capital goods taken during the period May 2013 to March 2014 - capital goods or not - MS Angles, MS Plates, MS Channels, MS Sheets, and HR Bars, which are used as components and spares for machinery - HELD THAT:- Rule 2 (a) (A) (iii) merely stipulates that capital goods means components, spares and accessories of the goods specified at (i) and (ii). It does not contain any stipulation as to the chapter headings to which such components, spares and accessories should pertain. Thus, the definition of capital goods squarely covers components, spares and accessories of the goods falling under chapter 82, 84, 85, 90, heading number 68.05 grinding wheels and the like, and parts thereof falling under heading 6804 of the First schedule to the Excise Tariff Act and pollution control equipment. It is evident that in the absence of any prescribed headings to which such components, spares and accessories should pertain, the claim of the appellant that the impugned goods are covered under the definition of capital goods merits acceptance.
This tribunal finds that the adjudicating authority has erred in rendering a finding that the appellants had raised contradictory claims. The adjudicating authority has failed to appreciate that the appellants had only claimed that the components, spares and accessories of the goods specified at (i) & (ii) of the definition of capital goods as given at Rule 2 (a) (A), are chapter agnostic and are thus covered under the definition. It was never a contradictory claim as found by the adjudicating authority and such a finding as upheld by the appellate authority, is wholly untenable.
This Tribunal also finds that it is settled law that the scope of entry “components, spares and accessories” in the definition of capital goods is not restricted to the components, spares and accessories falling under Chapter 82, 84, 85 or 90 of CETA, 1985 alone but covers all spares, components and accessories of specified goods irrespective of their classification under any chapter and is thus not chapter specific. The reliance placed by the Appellant on the decision in CCE &ST Vs. India Cements Ltd., [2014 (7) TMI 881 - MADRAS HIGH COURT] and India Cements Vs CESTAT, Chennai [2015 (3) TMI 661 - MADRAS HIGH COURT] and Mangalam cement limited versus CC, Jaipur (1), [2018 (3) TMI 1547 - CESTAT NEW DELHI - LB] is apposite.
The impugned order in appeal upholding the demand of the adjudicating authority and imposing penalty cannot sustain and is liable to be set aside.
Conclusion - Irrespective of the classification of components, spares and accessories, when those are fitted to the machines/machineries of the above eligible Chapters, the same should also be considered as capital goods for availment of Cenvat credit of Central Excise duty paid thereon.
The impugned order set aside - appeal allowed.
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2025 (3) TMI 828
Removal of certain machineries, imported without payment of Customs duty and Excisable goods procured without payment of Central Excise duty under 100% EOU scheme from their premises to other GTA unit without following any procedure and without payment of due duties - levy of penalty in terms of Section 112 and 117 of the Customs Act and Rule 27 of the Central Excise Rules, 2002 - contravention of the provisions of N/N. 52/2003-Cus and 22/2003-CE - HELD THAT:- Undisputed fact is that the appellant had removed the goods-capital goods received under EOU scheme without payment of customs duty/Central Excise duty outside their bonded premises to the premises of DTA. The said premises where these goods were found in any way does not belong appellant. These machines were found in the premises of M/s D&Y Technologies Pvt. Ltd., whom appellant claim to be a job-worker. M/s D&Y Technologies Pvt. Ltd. even if job-worker on principal to principle basis and separate entity having no relationship with the appellant the renewal of these capital goods to their premises has been done in contravention of the provisions of Notification No 52/2003-Cus and 22/2003-CE. Admittedly, M/s D&Y Technologies Pvt. Ltd. is also not EOU unit for a bonded premises removal of these goods in contravention of the provisions of the EOU scheme and the benefit executed by the appellant in this regard.
It is quite evident that the there was no permission to remove the capital goods – machines from the premises of the EOU to any other place as claimed by the appellant. Further even the claim made by the appellant that they had cleared the said machines to the premises of job worker under a bonafide interpretation of the permission granted is also belied by the job work challans. It is clearly mentioned on the format of challan itself that these challans are meant only for removal of “inputs/ partially processed inputs”. The claim made by the appellant of bonafides does not carry any weight and needs to be rejected.
There are no merits in these submissions as the seized machines were confiscated by order dated 31.03.2017 and allowed to be redeemed on payment of redemption fine of Rs.75,10,000/-. The said order of confiscation and redemption has been upheld by the Appellate Authority. Both the orders were passed prior to the date of permission - undisputedly the goods has been removed in contravention of provisions of Notification No.52/2003-Cus and 22/2003-CE from the premises of the EOU to DTA unit of the unconcerned party. There are no merits in the submissions of the appellant. The demand for duty in respect of these goods needs to be upheld.
The claim to the depreciation has been rightly rejected by the Original Authority by observing that the depreciation could have been allowed only when the said goods were cleared after obtaining approval from the Commissioner and after payment of due customs duty. In absence of any such procedure being followed, there are no merits in the said claim of the appellant.
Reliance is placed by the appellant in the case of M/s D&Y Technologies Pvt. Ltd. was not part of the alleged contraventions made by the appellant. He has dropped the penalties imposed. Dropping of penalties imposed on M/s D&Y Technologies Pvt. Ltd. cannot said to be clean chit given to the appellant in matter of clearance without following the due procedure.
The order of confiscation of these machines upheld but the redemption fine reduced from Rs.75,10,000/- to Rs.50,00,000/- - Penalties imposed on the appellant was alleged for the above contraventions leading to evasion of duties needs to be upheld.
Conclusion - i) Strict compliance with procedural requirements is necessary to avail benefits under exemption schemes. ii) The confiscation of goods, the demand for duties and interest, and the imposition of penalties upheld. The redemption fine reduced from Rs. 75,10,000/- to Rs. 50,00,000/-.
Appeal allowed in part.
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2025 (3) TMI 826
Liability of appellant, as a job worker, to pay excise duty - activities of converting lead scrap into lead alloy ingots - Processes undertaken by the appellant as a job worker amounts to manufacture or not - applicability of Rule 4(5)(a) of the CENVAT Credit Rules, 2004 - extended period of limitation - HELD THAT:- Rule 4(5) specifically states that CENVAT Credit is allowable if any input or capital goods after being partially processed, are sent to a job worker for further processing, testing, repair, re-conditioning, or for the manufacture of intermediate goods necessary for manufacture of final products, etc. From the chain of events, it is clear that the lead scrap and other raw materials supplied by EIL are in the nature of inputs (semi-processed).
The Larger Bench of the Tribunal in the case of Wyeth Laboratories Ltd. vs Collector of Central Excise, Mumbai [2000 (7) TMI 109 - CEGAT, NEW DELHI], had held that waste & scrap could be sent to a job worker for purpose of processing and manufacture of intermediate products which could be further put to use in the manufacture of final product at the end of the principal manufacturer. The said rule obligates that the goods that are sent by the principal manufacturer without payment of central excise duty, are subsequently returned for further processing to the principal manufacturer for utilization in the final product (viz. lead storage battery, in the present case), within the specified period.
Also, with respect to the Standard Input Output Norms (SION), we take note of the appellant’s assertion that quality of lead scrap is an important variable and is necessary for consideration to arrive at the recovery percentage (based on thorough testing of waste and scrap) as undertaken by EIL in their R&D section. The percentage of recovery would depend on the lead content in the waste and scrap and the nature of the scrap, like lead scrap or dross or sludge etc. There cannot therefore be a fixed one-to-one formula. Thus as for the Department’s contention on the recovery part and adoption of the SION norms to the present matter is concerned, it cannot be doubted that the recovery percentage would vary from case to case, more so when the scrap supplied is not the kind of standard scrap as enumerated in the norms as has also been duly tested and certified by the R&D wing of EIL at the time of supply. We further note that the kind of scrap indicated in the norms is well-defined and clearly states of its constitution, etc.
In view of the fact that the goods were supplied in terms of job challans issued under rule 4(5)(a) ibid, the purchase orders as supplied by EIL indicating recovery percentages in addition to other details, we are of the view that there is no case made out for demand of duty of excise, if any, from the job worker.
There is also no merit in the department’s proposition in denying the appellant the job work status by imputing that the lead converted from lead scrap could not be cleared from their end upon payment of central excise duty as the said amounts to manufacture - the claim of the Department disentitling the waste and scrap for the benefit of Rule 4(5)(a) of the Cenvat Credit Rules, 2004 does not stand to any merit - there are no justification for the demand of duty or imposition of penalty on the appellant in the matter.
Conclusion - i) Job work under Rule 4(5)(a) does not require the processes to amount to manufacture under Section 2(f) of the Central Excise Act. The responsibility for duty liability lies with the principal manufacturer, not the job worker. ii) There is also no merit in the department’s proposition in denying the appellant the job work status by imputing that the lead converted from lead scrap could not be cleared from their end upon payment of central excise duty as the said amounts to manufacture.
Appeal allowed.
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2025 (3) TMI 779
Rejection of claim of the Petitioner for CENVAT Credit of the countervailing duty (CVD) paid on the imported capital goods - whether the Petitioner can avail CENVAT Credit for the CVD qua the imported capital goods in terms of Rule 4 of the CENVAT Credit Rules, 2004? - HELD THAT:- In Osram Surya [2002 (5) TMI 49 - SUPREME COURT] the Supreme Court was seized with the question whether manufacturers who had imported goods prior to the amendment to Rule 57-G of the Central Excise Rules, 1944, could claim MODVAT credit post the said amendment. Vide the amendment to Rule 57-G, the manufacturers could avail credit only within a period of six months from the date of issuance of documents mentioned in the proviso to the said Rule. Relying on the said amendment, the claims of the Appellants therein were rejected by the revenue authorities as being time barred. The Appellants challenged the said decision. In the said challenge, the Supreme Court held that credit cannot be sought beyond the period of six months, though the import was made prior to the amendment. Further, the manufacturers’ vested rights prior to the amendment in claiming the credit was held not to be affected by the amendment. However, the said amendment did limit the time within which the same could be claimed.
The Supreme Court also clarified the retrospective and prospective effect of the said amended proviso to Rule 57-G of the 1944 Rules. Thus, as per the Supreme Court the limitation introduced via amendment to the Rule 57G would be applicable against any manufacturer claiming credits after the said amendment came into force.
In Philips India [2005 (2) TMI 399 - CESTAT, MUMBAI] the CESTAT, Mumbai was dealing with similar facts wherein the Appellant therein had imported certain capital goods under the EPCG Scheme and failed to fulfill the export obligations under the said scheme. The goods were exported in the year 1994-1995 and the applicable duty was paid only after the order of the Settlement Commission. Thereafter, a claim was raised for CENVAT Credit in May, 2003 which was rejected by the Commissioner of Customs inter alia on the ground that the same is time barred.
In Global Ceramics [2019 (5) TMI 1432 - DELHI HIGH COURT] the Court was dealing with CENVAT Credit in respect of inputs for the domestic market which is governed by Rule 4 (1) of the CENVAT Credit Rules. In the present case, the Court is dealing with CENVAT Credit in respect of capital goods under Rule 4 (2) of the CENVAT Credit Rules. Further, it is noted that the Court did not discuss the decision of the Supreme Court in Osram Surya (supra) wherein it is clearly held that the second proviso to Rules 57-G of the 1944 Rules (which is identical to the third proviso to Rule 4 of the CENVAT Credit Rules) would be applicable qua manufacturers claiming credit after introduction of the said proviso. Thus, the limitation introduced via the amendment would affect any claim raised after the amendment came into effect.
In the facts of the present case, the Petitioner did not by itself voluntarily deposit the duty and penalty. The admitted position is that out of nine EPCGs, qua four EPCGs, the export obligation was not fulfilled. A substantial period of time i.e., 8 years was given to the Petitioner for fulfilling its export obligations. Extension of two years was also given qua certain EPCGs. After the said extended period had also expired, the show cause notice was issued. The DRI then started investigation in respect of the unfulfilled export obligation. Even at that stage, the customs duty along with interest was not paid by the Petitioner. Only after the investigation was started, the Petitioner tendered the said amount in order to avoid prosecution and approach the Settlement Commission. The confiscation of goods also could not also take place as the goods were no longer available for confiscation which is clearly captured in the order of the Settlement Commission.
Conclusion - i) The Settlement Commission's order is correct and that the Petitioner's claim for CENVAT Credit is rightfully rejected as time-barred. ii) The Settlement Commission's decision upheld, emphasizing the finality of settlement proceedings under Section 127 (j) of the Customs Act.
The Settlement Commission’s order does not warrant any interference - Petition dismissed.
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2025 (3) TMI 778
Review of refund claim which was already granted - Determination of physician samples - Rule 4 or Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - rejection of refund claim partly as being time barred and rejection of balance amount stating that valuation of physical samples were to be determined under Rule 4 of the Valuation Rules 2000 - applicability of CBEC Circular dated 25.4.2005 - HELD THAT:- This is a case where the appellant initiated a refund claim based on Boards Circular. It was for the department to examine the claim from all angles, on fact and law, and issue a SCN if they choose to reject the claim. In doing so they were obliged to bring out all the objections that they had in sanctioning the claim, so that the noticee could effectively respond to the allegations being made at one go. Piecemeal issue of SCN or adjudication cannot be done. It is not the departments case that the second round of appeal was caused by the Lower Authority going beyond the remit of the First Appellate Authority’s order. The Hon’ble Supreme Court in Gangai Vinayagar Temple Vs Meenakashi Ammal, [2009 (9) TMI 1095 - SUPREME COURT], held that res judicata is an ancient doctrine of universal application and permeates every civilised system of jurisprudence. This doctrine encapsulates the basic principles in all judicial systems which provide that an earlier adjudication is conclusive on the same subject-matter between the same parties.
The issue could not have been reopened again in an appeal by the same Authority, nor could fresh issues which were omitted to be alleged in the first round of appeal be added in the second round, multiplying the litigation. A decision or order made by an Authority of competent jurisdiction is final, unless it is modified or reversed in appeal. The well settled principles of res judicata debars an Authority from exercising its jurisdiction to determine the lis if it has attained finality between the parties. This is based on public policy in order to put an end to litigation. Further no man should be vexed twice for the same cause.
Revenue should not have reviewed and taken up the refund orders in appeal when they did not challenge the order of the First Appellate Authority which partly allowed the appeal leading to the sanction of the refund - The binding nature of the first appellate order on the parties to the litigation would endure, as it had not been appealed against, even in circumstances where the basis of which it was made is subsequently held to be an incorrect application of the relevant tax law. To do otherwise is in breach of judicial discipline and is destructive of the basic principles of the administration of justice.
Conclusion - i) The department's attempt to reopen settled issues without challenging the first appellate order was procedurally improper and legally unsound. ii) The Tribunal set aside the impugned order, allowing the appeals and granting the appellant eligibility for consequential relief.
Appeal allowed.
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2025 (3) TMI 777
100% Export Oriented Unit (EOU) - liability to pay duty on inputs used in the manufacture of final products cleared in the Domestic Tariff Area (DTA) without payment of duty - violation of N/N. 52/2003-Cus dated 31.03.2003, without invoking Section 28 of the Customs Act, 1962, or Section 11A of the Central Excise Act, 1944 - invocation of extended period of limitation.
Whether the appellant is liable to pay duty on the inputs utilised in the manufacture of the final products which are cleared under DTA without payment of duty availing the benefit of various exemption notifications? - HELD THAT:- In view of the N/N. 52/2003-Cus dated 31.03.2003, since the goods have been cleared under DTA without payment of duty, the observation of the Commissioner that duty foregone on the inputs utilized in the manufacture of the above exempted products has to be discharged by the appellant needs to be sustained. The claim of the counsel that they fall under the main clause of the notification and the question of reading the proviso into the main clause cannot be accepted in view of the fact that the proviso to the main clause has to be necessarily read with the main clause which brings in certain restrictions in the situations referred in the main clause.
The Hon’ble Supreme Court in the case of Union of India vs. VKC Footsteps India Pvt. Ltd. [2021 (9) TMI 626 - SUPREME COURT] while dealing with the interpretation of the proviso to Section 54(3) oof the CGST Act observed that 'Rule 89(5) is consistent with Section 54(3) of the CGST Act.'
Thus, there are no reason to accept the contention of the learned counsel that the proviso is independent of the main clause para 3 of the Notification 52/2003.
Whether the provisions of conditions of notification 52/2003 can be invoked to demand the duty when these conditions are violated without invoking Section 28 of the Customs Act, 1962 or Section 11A of Central Excise Act, 1944? - HELD THAT:- The Supreme Court of India in the case of Moser Baer India Ltd. vs. Commissioner of Customs, Noida [2015 (11) TMI 137 - SUPREME COURT] while dealing with invocation of extended period in terms of the bond executed by an 100% EOU observed that 'the goods are used for the purpose for which they are imported. If the perception of the Revenue was that these are not captive goods or the benefit of Notification No. 53/97 is not available to the assessee, the period of limitation started at the threshold and therefore, on the facts which were known to the Revenue the Show Cause Notice could have been issued within a normal period of limitation prescribed under Section 28 which was six months at the relevant time.'
Thus, there is no question of violation of any of the conditions of the Notification since they had legitimately availed the benefit of the exemption Notifications. This aspect was known to the department and hence, the question of invoking extended period does not arise. Since the show-cause notice was issued on 11.05.2011, the demand for the normal period alone is to be sustained.
Conclusion - i) The demand for duty on inputs used in the manufacture of goods cleared in DTA without payment of duty upheld. ii) The duty demand on inputs for the normal period upheld, rejecting the extended period invocation.
Appeal allowed in part.
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2025 (3) TMI 776
Clandestine removal - discrepancy between ER-1 and ER-4 Returns - typographical error in ER 4 - extended period of limitation - HELD THAT:- Admittedly, the entire proceedings have been initiated on account of audit taken up in May 2015. The audit team has issued Spot Memo on 09/5/2015 raising the issue that ER-4 Returns are showing higher quantity of sales as against the quantity shown in the ER-1 Returns. Audit has pointed out that the difference between these figures is to tune of 945.900 MT. The appellant submitted their explanation on 19/06/2015 stating that while filing the ER-4 for the month of January 2014, instead of typing 10 MT, they have typed the same as 100 MT because of which the excess quantity of 90 MT has been shown in the ER-4 Returns.
In respect of 755.900 MT, they have explained that the scrap generated in the course of manufacture has been shown in the ER-4 under the sales column but has been consumed by them captively for re-cycling the same. Since the ER 4 Return does not have any specific column to show such captively consumed figures, they have shown the same in the Sales column.
The entire demand has been confirmed based solely on the basis of audit objection, without giving due consideration to the documentary evidence placed by the appellant. Therefore, on this count itself, the confirmed demand is not sustainable.
Time limitation - HELD THAT:- It is found that by way of Spot Memo dated 09/5/2015, the issue about the differential 946 MT was raised by the audit team for which the appellant has filed their reply on 19/6/2015. Therefore, the Department has come to know about the issue on 19/06/2015 itself. However, they have waited for next nearly two years to issue the Show Cause Notice by invoking the extended period, without showing as to what kind of investigation was taken up during the intervening period. Moreover, it is found that the difference in quantification of demand has been gathered from ER-1, ER-4 and ER-6 Returns which have been filed by the appellant. All these facts go on to show that the Department has not made out any case of suppression on part of the appellant - the demand set aside even on account of limitation.
Conclusion - i) The demand based on an alleged discrepancy between ER-1 and ER-4 Returns is not sustainable due to a lack of corroborative evidence of clandestine clearance. ii) The demand is time-barred, as the Department failed to issue the Show Cause Notice within the appropriate timeframe without justification.
The appeal is allowed both on account of merits as well as on account of time bar.
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2025 (3) TMI 741
Clandestine removal - Time limitation for issuance of SCN - issuance of show cause notice much belatedly on 28.9.2020 after invoking the extended period despite starting the investigation in the month of May, 2016 itself - suppression of facts or not - discharge of burden of establishing beyond reasonable doubt the clandestine manufacture and removal of alleged assembled T.V. sets from the warehouse/godown at Bhiwandi - it was held by CESTAT that 'Once the issue has been settled by the Settlement Commission on an application filed by an assessee, the adjudicating authority in different proceedings for different show cause notice concerning same assessee cannot base its adjudication on the findings recorded by the Settlement Commission. Therefore, the Adjudicating Authority is not justified.'
HELD THAT:- There are no good reason to interfere with the impugned order dated 15-10-2024 passed by the Customs, Excise and Service Tax Appellate Tribunal, West Zone Bench at Mumbai.
Appeal dismissed.
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2025 (3) TMI 740
Short payment of duty under provisions of Section 11A(1) of the Central Excise Act, 1944 alongwith interest as per provisions of Section 11AB of Central Excise Act 1944 - benefit of Notification No. 23/2003-CE dated 31.03.2003 claimed for the DTA clearances done - HELD THAT:- It is settled preposition in law that the exemption Notification need to be interpreted strictly according to wordings of the notification. Hon’ble supreme Court has in case of Dilip Kumar & Company [2018 (7) TMI 1826 - SUPREME COURT (LB)] observed that 'Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification.'
The basic of the EOU scheme is for promotion of the exports. From para 6.8 of the Foreign Trade Policy reproduced above it is quite evident that the entire production of the EOU is to be exported and the DTA sales are permitted in certain specific conditions subject to the restrictions and conditions imposed. The Exemption N/N. 23/2003-CE which is in respect of the DTA sales made by an EOU needs to be considered in an strict manner in accordance with the scheme. The appellant soon after starting their EOU started clearance of the scrap/ goods in DTA. The intentions of the appellant by making such huge clearances of scrap and goods within a period of less than a year from the date of setting of EOU and starting export production and clearances is itself indicative of the ill intentions of the appellant.
For the reason that the appellant has deposited the entire amount of duty along with the interest during the investigation and prior to issuance of Show Cause notice the proceedings in respect of the amounts so deposited could not have been initiated against the appellant and the same should have been closed as per law.
Penalty has been imposed upon these appellants only on the basis of the statement of Appellant 2 without recording any act of omission or commission committed by the appellant 2, 3 and 4 leading to the holding that the goods were liable for confiscation. The penalty has been imposed only for their knowledge about the activities of Appellant 1, which evidently they would have acquired in normal course of business. Penalty under Rule 26 could not have been imposed for the reason of knowledge but could have been imposed only for positive acts of omission or commission, for which the goods were held liable for confiscation. In absence of any positive findings recorded in the impugned order to this effect, there are no merits in the penalties imposed under rule 26 on the employees of the Appellant.
Conclusion - i) Demand of duty and interest is upheld and also the appropriation of the same against the amounts already deposited prior to the issuance of show cause notice. ii) Penalties imposed under Section 11AC of The Central Excise Act, 1944 read with Rule 25 of the Central Excise Rules, 2002 and FTP is set aside. iii) Penalties imposed upon Appellant 2, Appellant 3 and appellant are set aside.
Appeal allowed in part.
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2025 (3) TMI 739
Failure to discharge monthly payment of duty under Rule 8(3A) of the Central Excise Rules, 2002 - HELD THAT:- The issue involved in this matter has been decided by the Hon’ble Gujarat High Court in the case of Indsur Global Limited Vs. Union of India,2014 (12) TMI 585 - GUJARAT HIGH COURT] and Sandley Industries Ltd. Vs. Union of India, [2015 (10) TMI 2455 - PUNJAB & HARYANA HIGH COURT] wherein provision of Rule 8(3A) of Central Excise Rules, 2002 was held ultra virus. Therefore, no demand can be raised against the Appellant and the decision of the Hon’ble Gujarat High Court in the case of Indsur Global Limited was taken up by the Revenue before the Hon’ble Supreme Court in UNION OF INDIA & ORS. VERSUS INDSUR GLOBAL LTD. [2024 (7) TMI 1559 - SC ORDER (LB)], Larger Bench of the Supreme Court disposed of the SLP filed by the Revenue as not pressed.
Under these circumstances, the decision of the Hon’ble Gujarat High Court in the case of Indsur Global Ltd. is holding the field. Accordingly, relying on the decision of Hon’ble Gujarat High Court in the case of the Indsur Global Ltd., the demand against the Appellant is not sustainable. Consequently, no penalty is imposable.
Conclusion - The demand and penalties based on Rule 8(3A) were not enforceable, as the rule was declared ultra vires.
The appeal filed by the Appellant is allowed.
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2025 (3) TMI 738
Delay in adjudicating the Show Cause Notice (SCN) issued to the appellant - Clandestine manufacture and removal - demand based on the electricity consumption - HELD THAT:- The SCN was issued in this case on 3.12.2009 and the appellants filed replies on 1.1.2010 and 7.1.2010. Thereafter, the personal hearing was held nine years later on 29.1.2019 and in connection with the personal hearing, the appellant made some additional submissions dated 23.1.2019. The impugned order was passed on 22.2.2019 after the personal hearing. From these dates, it is evident that the appellants had been prompt and vigilant in replying to the SCN and no reason whatsoever is given in the impugned order for not adjudicating the matter immediately and to have waited for over nine years just to fix the personal hearing.
The SCN was issued under section 11A in 2009 before the time limit for deciding the SCNs was introduced in 2011. Even if no limitation is prescribed under the law, then too the adjudicating has to be done within a reasonable period.
Whether the limitation would also apply to cases where the SCN had already been issued? - HELD THAT:- The Statute of Limitation, being a procedural law, would apply to pending cases as well with the rider that if something had already expired under the previous law, the new limitation would not revive it. So long as the issue is alive, the new limitation would apply. The date of cause of action is irrelevant to the limitation - Even if the limitation is counted reckoning the date of amendment of section 11A on 8.4.2011, the date of the impugned order 22.2.2019 is clearly time barred and there is no explanation in the order for the inordinate delay. If we consider that there was no limitation at all, even then the delay of almost ten years is passing the order with no reasons whatsoever recorded for the delay cannot be sustained.
Conclusion - The impugned order set aside due to the unreasonable delay in adjudication, granting consequential relief to the appellant.
The impugned order cannot, therefore, be sustained and needs to be set aside on this ground alone regardless of the merits of the case - appeal allowed.
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2025 (3) TMI 677
Levy of excise duty - clearance of zinc scrap - clearance of structural grills - reversal of Cenvat credit on inputs cleared 'as such' - invocation of the extended period of limitation.
Whether the demand for excise duty on the clearance of zinc scrap is justified? - HELD THAT:- The appellant has purchased zinc ingots for the manufacture of their final product namely galvanized steel structural. These zinc ingots were used for the purpose of galvanization and the appellant has availed Cenvat credit on the zinc ingots. The appellant has cleared the final product namely galvanized steel structure on payment of duty. However, they have not paid the Excise Duty on the zinc scarp emerged during the course of manufacture - the zinc scrap emerged during the course of manufacture are chargeable to Central Excise Duty. However, it is observed that the appellant has cleared the zinc scrap on the delivery challan and as not discharged Central Excise Duty on the same. Accordingly, the Lower Authorities have rightly confirmed the demand of Excise duty of Rs.8,25,921/- along with interest on the zinc scrap cleared without payment of duty.
Whether the demand for excise duty on the clearance of structural grills is sustainable? - HELD THAT:- The appellant has not raised any invoice for the clearance of steel structural to their civil division. The steel structural were cleared without payment of duty. They have issued non-returnable delivery challan and cleared the goods without payment of duty. Thus, it is observed that the appellant is liable to pay duty on the steel structural cleared to their Fabrication Division - the appellant has cleared the steel structural grill to their own Fabrication Division under a delivery challan without payment of duty. Thus, the appellant is liable to pay duty for the clearance to the structural grills made to their fabrication division - the Lower Authorities have rightly confirmed the demand of Rs.1,68,936/- on the clearance of steel structural.
Whether the demand for reversal of Cenvat credit on inputs cleared 'as such' is valid? - HELD THAT:- The appellant has cleared inputs’ as such’ without reversal of the Cenvat credit availed on the same, on 27.11.2009. The appellant has given the explanation that non-reversal has happened due to change in personnel, due to the amalgamation of the Appellant’s company with M/s.Crown Fabricators (P) Ltd., the explanation of the Appellant not acceptable. The appellant is liable to reverse the Cenvat credit availed on the inputs when the same are cleared ‘as such’. As the appellant has not reversed the credit availed on the inputs, the Lower Authorities have righty confirmed the demand.
Invocation of the extended period of limitation - HELD THAT:- The entire issue has come to the light only on the basis of the investigation conducted by the Headquarters preventive unit. The appellant has not disclosed these details in any of the returns filed by them. Thus, the suppression of facts with an intention to evade payment of duty has been established in this case and hence the extended period has been rightly invoked.
Conclusion - i) The Lower Authorities have rightly confirmed the demand of Excise duty of Rs.8,25,921/- along with interest on the zinc scrap cleared without payment of duty. ii) The Lower Authorities have rightly confirmed the demand of Rs.1,68,936/- on the clearance of steel structural. iii) The appellant is liable to reverse the Cenvat credit availed on the inputs when the same are cleared ‘as such’. As the appellant has not reversed the credit availed on the inputs, the Lower Authorities have righty confirmed the demand. iv) The suppression of facts with an intention to evade payment of duty has been established in this case and hence the extended period has been rightly invoked.
The impugned order is upheld and the appeal filed by the appellant is rejected.
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2025 (3) TMI 676
CENVAT Credit - inputs - MS Angles, Channels, HR Coils, and Flange Beams used in the fabrication of an Electric Overhead Travelling (EOT) Crane - HELD THAT:- The appellant has availed Cenvat credit in respect of MS Angles, Channels, HR Coils, Flange Beams etc. used as inputs in the EOT Crane which were used within the factory of production. These items are components, spares and accessories of the capital goods of the EOT crane and hence they are eligible as inputs under Rule 2(K) used for the fabrication of the capital goods. Accordingly, these items MS Angles, Channels, HR Coils, Flange Beams etc. are eligible inputs under Rule 2(K) of Cenvat credit Rules and accordingly, the appellant is eligible to avail input credit.
Hon’ble Madras High Court in the case of M/S. THIRU AROORAN SUGARS, M/S. DALMIA CEMENTS (BHARAT) LTD. VERSUS CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, THE COMMISSIONER OF CENTRAL EXCISE [2017 (7) TMI 524 - MADRAS HIGH COURT] where it was held that 'whether the "user test is applied, or the test that they are the integral part of the capital goods is applied, the assessees, in these cases, should get the benefit of Cenvat credit, as they fall within the scope and ambit of both Rule 2(a)(A) and 2(k) of the 2004 Rules.'
Conclusion - The appellant is eligible for the inputs credit availed on MS Angles, Channels, HR Coils, Flange Beams etc. and the impugned order denies the credit cannot be suitable.
Appeal allowed.
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2025 (3) TMI 675
CENVAT Credit - nexus of input service with output on which duty liability was, admittedly, discharged under Central Excise Act, 1944 - HELD THAT:- On a perusal of the facts, as well as submissions, it is seen that the decision of the Tribunal in M/S HINDUSTAN COCA-COLA BEVERAGES PVT. LTD. VERSUS PRINCIPAL COMMISSIONER, CGST, NOIDA [2024 (7) TMI 1599 - CESTAT ALLAHABAD] has, in identical circumstances, held that the taking of credit under rule 7 of CENVAT Credit Rules, 2004 is not be ascertained for eligibility in the hands of the manufacturing unit.
The impugned order is set aside to allow the appeal.
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2025 (3) TMI 625
Validity of SCN which is issued in favour of the respondent making a demand for Rs. 4.70 crore by the appellant herein - HELD THAT:- On fair reading of the said notice, it appears that there is no whisper as to how Rs. 4.7 crore the respondent company need to pay or the appellant-herein is entitled to the said claim by way of service tax. Though it is reflected in the show cause appended with the appeal, the said show cause notice pertains to imposition of Rs. 4.7 crore but no ground is mentioned.
This court is of the opinion that the appeal needs no interference from this Court and hence the appeal stands dismissed being devoid of merit. As a sequel, stay, if any, stands vacated.
Application closed.
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2025 (3) TMI 624
Classification of goods - Eco Bath Towelette - Whether the classification of Eco Bath Towelette is under Chapter Heading 3402 9091 as classified by the Appellant or as Other Bath Preparations under Chapter Heading 3307 3090 as contended by the Department? - invocation of Extended period of limitation - HELD THAT:- Though the appellant was all along contending that its products are also based on organic surface-active agents, but the CRCL report clearly indicate that provisions of Chapter Note 3 are not satisfied. As such, its classification under Chapter 34 is ruled out. Further, examination of the test reports by the IIT, Madras and PSGTECHS could not throw any light as to the satisfaction of the conditions specified in Chapter Note 3 of Chapter 34. The CRCL report is very categorical that the product had not satisfied the conditions of Chapter Note 3 of Chapter 34. The product is to be classified under CETH 3307 in terms of the above test report. As such, there is nothing much left for us to dwell upon the classification dispute and accordingly, the classification of the impugned goods under CTH 3307 as proposed by the Department upheld.
Invocation of Extended period of limitation - imposition of penalty under Section 11 AC of the Central Excise Act, 1944 - HELD THAT:- It is a well settled principle that invocation of larger period is not a rule but an exception, wherein, there should be ample justification to invoke the same. That too, while dealing with an indirect tax, it has to be exercised with utmost caution - It is also on record that the Appellant has disclosed all relevant information in their packaging, marketing brochures etc. It is only upon a highly technical test result, despite rival claims from both sides, the re-classification has been proposed and re-determined. The Appellant has also taken a legal opinion initially, a fact deposed before the investigation itself and taken due cognisance in the impugned order. Thus, the appellant has discharged the onus, if any, at their end and cannot be saddled with an allegation that they have suppressed any fact or wilfully mis-stated to attract invocation of proviso to Sec. 11A of the Act or the penalty under Sec. 11AC of the Act.
Conclusion - i) The CRCL report is very categorical that the product had not satisfied the conditions of Chapter Note 3 of Chapter 34. The product is to be classified under CETH 3307 in terms of the above test report. ii) The extended period for demand and penalties was unjustified, limiting the demand to the normal period of limitation.
Appeal allowed in part.
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2025 (3) TMI 623
Eligibility to avail CENVAT credit, while transferring the capital goods which are cleared as such in the same financial year - HELD THAT:- As per Rule 4(2)(a) of CENVAT Credit Rules, 2004, CENVAT credit in respect of capital goods is permitted of the whole amount of duty paid on such capital goods in the same financial year, if such capital goods are cleared as such in the same financial year. Following the above, the Appellant is eligible for claiming the entire CENVAT credit as claimed by them. Hence the impugned order confirming demand and imposing penalty is unsustainable and is set aside.
Appeal allowed.
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2025 (3) TMI 569
CENVAT Credit - input services - Business Auxiliary Services, Clubs and Association, Storing and Warehousing, Maintenance and Repair etc. - period from May 2011 to September 2013, August 2015 to August 2016 and January 2017 to June 2017.
AMC & Warranty Charges - HELD THAT:- The AMC may have a nexus to the sale of Office Machines (traded goods) but it is not integrally connected with the business of the manufacture of the appellants machines, up to the place of removal. Service Tax paid on AMC charges, does not represent tax paid on the input service in relation to its manufacturing unit as no such input service is availed by the manufacturing unit. Hence the cost of the input service does not form a part of the assessable value of the final product cleared from the manufacturing unit, to be eligible for the benefit of CENVAT Credit. Extending the credit of tax paid on a service, which is not a cost incurred by the manufacturing unit, and is rendered beyond the point of removal of the final product, would be contrary to the scheme of CENVAT Credit Rules - CENVAT credit is not eligible on input services attributable to exempted goods / trading activity and is a principle in built into the very structure of the CENVAT scheme. Goods after manufacture and clearance from the place of removal become traded goods, hence the responsibility is all the more on the appellant to prove the eligibility of the input service as credit for the manufacturing unit. The Ld. Original Authority has therefore rightly held that AMC is not an eligible input service for the manufacturing unit at Puducherry.
Denial of credit due to a lack of separate charge/ break up of tax paid on warranty services for manufactured goods and AMC services for traded goods between the manufacturing unit and the HO - HELD THAT:- The grant of tax credit impacts revenue collection, hence an assessee who claims a tax benefit must show not only eligibility but also that he adheres to the provisions of the said scheme. Entitlement means rights of certain benefits and privileges. This entitlement to credit follows from complying with the conditions and is subject to the restrictions contained in the Act and Rules.
In the case of Competent Authority Vs Barangore Jute Factory [2005 (11) TMI 490 - SUPREME COURT], it has been held by the Hon'ble Apex Court that where statute requires an act to be done in a particular manner, the act has to be done in that manner alone. The onus of proof while claiming the benefit of a scheme provision is on the assessee. It is for him to show that he is compliant to the same.
The appellant has failed to establish its case on this issue and hence its appeals in this regard fails and the confirmation of demand relating to AMC and warranty charges [Management, Maintenance or Repair Services] with respect to the manufacture unit is sustained.
Business Auxillary Service - HELD THAT:- The issue is squarely covered by assessee's own identical case for the previous period, which has not been appealed against and hence the disputed issue has attained finality.
Import of Services and Blanks - HELD THAT:- The services received from the Appellant from dealers situated outside India in the form of market research data and consultancy services has been held to be sales promotion activity and is covered under the inclusive part of the definition of “input service” as defined under Rule 2(l) of CCR 2004. Reliance in this regard is placed on Essar Steel India Ltd. vs Commissioner of C. Ex. & S.T., Surat-I [2016 (4) TMI 232 - CESTAT AHMEDABAD]. The service is hence eligible for input service credit.
Club and Association Service - HELD THAT:- The appellant has submitted that the issue of availment of CENVAT credit on Service Tax paid on corporate membership with various chambers and associations has been decided in favour of the assessee. Reliance is placed on decisions wherein CENVAT credit on membership obtained in chambers and association has been allowed. Reference can be made to M/S RELIANCE INDUSTRIES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX, LTU, MUMBAI [2016 (8) TMI 123 - CESTAT MUMBAI] and ITC LTD. VERSUS COMMISSIONER OF CENTRAL TAX, BANGALORE NORTH, COMMISSIONER OF CENTRAL EXCISE, SERVICE TAX AND CUSTOMS, BANGALORE-IV [2022 (3) TMI 501 - CESTAT BANGALORE].
Storing and warehousing - HELD THAT:- The demand has been raised in the first SCN and not subsequently and the amount involved is very paltry. The credit is hence allowed.
Extended period of limitation - HELD THAT:- Although there was no major interpretative issue involved regarding the issue of AMC it forms a part of many input services that were contested and where suppression was alleged in the SCNs. However, these services except the issue of AMC were finally decided in favour of the appellant. There does not appear to be any deliberate attempt to evade duty. Nothing has been shown from which an inference of guilty intention can be discerned and hence the extended period cannot be invoked. The demand for the extended period does not survive and is set aside.
Conclusion - i) The input services must be integrally connected to the manufacturing process to qualify for CENVAT credit. ii) The appellant's claim for CENVAT credit on Business Auxiliary Services accepted, due to the finality of the issue in previous orders. iii) CENVAT credit for Import of Services and Blanks allowed, recognizing them as sales promotion activities. iv) The appellant's claim for CENVAT credit on Club and Association Membership Services accepted, despite noting the lack of specific evidence on their use. v) The credit for Storing and Warehousing Charges allowed, due to the minor amount involved. vi) The demand for the extended period set aside, finding no deliberate attempt to evade duty.
Appeal allowed in part.
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2025 (3) TMI 568
Method of valuation - to be valued under Rule 8 & 9 or Rule 10 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000? - clearance of goods to inter-connected undertakings - HELD THAT:- The appellants had mentioned the name of the inter-connected undertaking M/s Shree Vaishnav Ispat Private Limited, in the Form 3CD of Income Tax return for the year 2008-09 at Sl. No.18 being the person specified in terms of the requirement of Section 40A(2)(b) of the Income Tax Act, 1961. Therefore, the appellants and M/s Shree Vaishnav Ispat Private Limited have become related persons and the value for the purpose of central excise duty is 110% of the cost of production as per Rule 8 & 9 of the Rules of 2000. In this regard, we find that Section 40A of the Act of 1961 deals with ‘Expenses or payments not deductible in certain circumstances’. This sub-section (1) to Section 40 ibid provides the powers for the Assessing officer when he determines that any expenditure is excessive or unreasonable and beyond the legitimate needs of the business or profession of the assessee, then he may disallow such deduction - There is no provision under which mention of a name of a legal person under the Income Tax Act, would enable such persons to be treated as ‘related person’ under the Central Excise law. In the absence of specific determination of the relationship between the appellants and the interconnected undertaking, being related to each other in terms of Section 4(3) of the Central Excise Act, 1944, there are no merits in the impugned order insofar as it has treated the transaction between these two, as related party transaction.
It is nowhere discussed in the impugned order or any evidence produced by the authorities below to state that the appellants and their interconnected undertaking are related in terms of the above provisions of the Central Excise statute. Therefore, on this ground alone the impugned order is liable to be set aside and it does not stand the scrutiny of law.
In the case of Gajra Gears Private Limited [2015 (2) TMI 1090 - CESTAT NEW DELHI], the Co-ordinate Bench of the Tribunal has held that valuation of goods between inter-connected undertaking shall be determined as prescribed under Rule 10.
In the case of Ramsons Casting Private Limited [2016 (12) TMI 908 - CESTAT MUMBAI], the Co-ordinate Bench of the Tribunal has held that in the absence of evidence, even if two companies are operated as ‘interconnected undertakings’, they cannot be treated as ‘related person’ for valuation purpose and the transaction value cannot be rejected.
Conclusion - i) The inter-connected undertakings are not automatically related persons for valuation purposes unless they meet the specific criteria outlined in the Central Excise Act. ii) The valuation of goods between inter-connected undertaking shall be determined as prescribed under Rule 10.
The impugned order is set aside - appeal allowed.
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