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Central Excise - Case Laws
Showing 441 to 460 of 81317 Records
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2024 (8) TMI 474
Refund of CVD and SAD in respect of payment of custom duty for regularizing excess import under advance authorization prior to introduction of GST regime - duty liability was finalized and paid after the introduction of GST - HELD THAT:- The appellant have claimed the refund of Cenvat of CVD and SAD in terms of Section 142 (3) of CGST, 2017 - From Section 142 (3) of CGST, 2017 it is clear that an assessee who is eligible for Cenvat credit and unable to take the credit due to GST regime after 01.07.2017 shall be eligible for the cash refund. In the present case the CVD and SAD was paid which is admissible as Cenvat credit to the appellants under the existing law i.e. Cenvat Credit Rules, 2004. Secondly the said amount is refundable to the appellants as per various judgments cited by the learned Counsel support the case of the appellant.
Whether the appellant’s claim of CVD and SAD is hit by Rule 9 (1) (b) or(bb) of Cenvat Credit Rules, 2004? - HELD THAT:- Firstly there is no demand notice in respect of CVD and SAD which was paid by the appellants on their own and also no adjudication as regard the suppression fact, therefore, in absence of any charge by way of show cause notice or adjudication thereof, the allegation of suppression of fact only to invoke Rule 9 (1) (b) or(bb) of Cenvat Credit Rules, 2004 is on assumption and presumption which cannot be accepted. Moreover, the payment of CVD and SAD is not towards the non-payment of duty by suppression of fact - In the present case the advance license is on record and since there was excess import as compared to the eligible under advance license the appellant have discharged the duty of CVD and SAD suo moto for which no offence was made out by the department. Therefore, in this fact, no suppression of fact is involved. Consequently, penal provision under Rule 9 (1) (b) or (bb) shall also not apply.
It is found that except the legal issue there is no discussion about the fact, documents and verification thereof, hence the matter needs to be remanded for this limited purpose for processing the refund claim of the appellant - the impugned order is set aside - appeal allowed by way of remand.
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2024 (8) TMI 473
CENVAT Credit - Removal of capital goods - Depreciation - date from which the deduction of 2.5% has to be applied - whether the amount arrived at by the appellant for clearances of capital goods on which credit was availed is correct or whether the demand of differential duty alleging that the appellant has to apply 2.5% deduction only on 50% of the credit availed from the date of availing credit is legal and proper? - Rule 3 (5) and Rule 3 (5A) and Rule 4(2) of CCR - time limitation.
Department has worked out 35% (for the second 50%) as against the allowable deduction of 37.5% calculated by appellant from the date of availing the credit which is 22.11.2008.
HELD THAT:- The provisions under Rule 3 (5)/3(5A) as noticed above would show that, the words used are from the date of availing credit. Though the capital goods are received in the factory and the appellant may have put to use, the legislature in Rule 3 (5A) has consciously used the words “from the date of availing the credit”. It has not used the words ‘from the date on which the capital goods were put to use’ or from the date of receiving the capital goods in the factory. It can be seen that the date of availing the credit has been made the relevant date for applying the deduction of 2.5%. The appellant has sought to apply the deductions on 100% from the date of availing the initial credit itself.
It may be true that though capital goods are received at the same time, Rule 4 (2) restricts the availment of credit to 50% of the duty paid on capital goods in a financial year. The legislature while introducing Rule 3 (5A) was fully conscious of the existence of Rule 4 (2) also. Nothing can be read to be added in to the provisions of law, when the ordinary meaning does not give rise to any ambiguity.
Though the Ld. Consultant relied upon the decision in the case of MAHINDRA UGINE STEEL CO. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE & ST, NASHIK [2019 (2) TMI 755 - CESTAT MUMBAI], the facts of the case are not so clear as to whether the issue considered is the same.
Time Limitation - HELD THAT:- Though department has invoked the extended period there is no positive act of suppression established against the appellant. The entire figures have been taken from the accounts maintained by the appellant. As the appellant had paid the amount as calculated by them and also filed ST3 returns reflecting such reversal of credit on capital goods, there are no grounds bringing out wilful suppression of facts on part of the appellant. The show cause notice is time barred.
The appellant succeeds on the ground of limitation. The impugned order is set aside on the ground of limitation - appeal allowed.
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2024 (8) TMI 472
Denial of interest on the alleged delayed sanction of refund - HELD THAT:- On perusal of the SCNs dt. 31.03.2015 and 04.11.2015, it is not found that even though the appellant had filed a refund claim, the show cause notice proposed to reject the refund claim alleging that the appellant is not eligible for the benefit of exemption under Notification No.30/2004. After due process of law, the original authority considered the issue as to whether the appellant is eligible for the benefit of notification and held the issue against the appellant. The original authority held that the appellant is not eligible for benefit of exemption and the duty paid is in order. Consequently, the refund was rejected. Against this, the appellant filed appeal before the Commissioner (Appeals) who vide order dt. 23.08.2018 held that the appellant is eligible for the benefit of exemption of the notification and that they are not liable to pay the CVD. Consequently, the Commissioner (Appeals) remanded the matter to verify as to whether the claim of refund is hit by unjust enrichment. In such de novo order, the original authority held that after verification of details from the Range officer concerned, it is established that the duty element is not passed on to another.
There are no ground to accept the argument of the appellant that they are eligible for interest on the refund by considering the date of filing the original refund claim. In regard to the periods for July 2016 to September 2016 as well as October 2016 to June 2017, the Ld. Consultant has brought to our notice that the refund claims were filed on 27.06.2017 and 16.10.2017 respectively. The Department has not issued any SCN at all for these periods.
The appellant is eligible for interest on the delayed payment of refund from the date immediately after the expiry of 3 months from the date of Order-in-Appeal dt. 23.08.2018 in terms of Section 11BB of Central Excise Act, 1944. The appellant would be eligible for interest at the rate applicable as per the relevant notification issued under Section 11BB of Central Excise Act, 1944.
Appeal allowed in part.
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2024 (8) TMI 471
Classification of goods - Health mix - Dia Mix - Dia Food - Ragi Malt - Badam Mix - instant food preparations - Valuation of the goods under section 4A of CEA 1944 - non-clubbing of value of clearances made by SHFPL with that of SFPPL, with the goods having been manufactured in the same factory and clearing the same clandestinely - Invoking the extended period of time along with imposition of penalties.
Classification of the impugned goods - Health Mix - HELD THAT:- Health Mix classified by revenue under heading 1904 1090 of CETA 1985: The appellant has stated that health mix consist of 82% of cereals of different varieties, 12% of pulses and 2% on nuts namely ground nuts, cashew nut and Badam, 3% sugar and 1% cardamom. Admittedly all the above products are grounded and pulverized and made into a powder or to a flour floor form and mixed to constitute a health mix which is a food substitute. The end product is neither in the form of flakes or grain or in a grain worked form. He hence stated that the question of classifying the same under CH 1904 is ruled out since that Chapter covers only products in flakes or grain form - with revenue changing its own earlier classification proposal, the duty demanded during the impugned period cannot be sustained.
Dia Mix and Dia Food - It has been brought to notice by the appellant that the demand for the said goods was dropped and the classification left open vide OIO No: 33-34 / 2016 dated 21.07.2016. Hence it is found that the classification made and the duty demanded during the impugned period for the said goods also cannot be sustained.
Ragi malt/ Badam mix - While revenue classified the product under heading CH 2106 1000 of CETA 1985, for the subsequent period it had given up the above classification and dropped the proceedings vide OIO No. 33-34 / 2016 dated 21.07.2016. In later proceedings the classification of ‘Badam mix’ was confirmed under heading 2106 9099 vide OIO No. 59/2017 dated 21.06.2017. In the OIO No. 12/2021 dated 22/03/2021 the respondent classified ‘Ragi malt’ under CH 1901 9090 and thus revenue has abandoned the earlier classification under CH 21061000 for both the products. This being so, the demand for the impugned period, on the said goods, fail.
The department has failed to discharge the burden of proof regarding the classification of the impugned goods, thereby the demand for duty made in the said orders must fail along with the penalties etc.
Once the duty on the goods are found to have been wrongly confirmed and merits to be set aside, the revised valuation of the goods and the issue of clubbing of clearances from the same factory also does not survive.
The impugned orders are set aside - Appeal allowed.
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2024 (8) TMI 394
Reversal of proportionate CENVAT credit - generation of electricity - CENVAT credit of Counterveiling Duty (CVD) on import of Coal - quantum of power wheeled out to sister units - it was held by High Court that 'there are merit in the position that electricity captively generated is an input, wherever used by the assessee concerned. The use of the term ‘captive’ is, in our view a qualification of the location where it is generated and not of the location where it is used.'
HELD THAT:- No case for interference is made out in exercise of our jurisdiction under Article 136 of the Constitution of India.
The Special Leave Petitions are, accordingly, dismissed.
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2024 (8) TMI 393
Rejection of refund claim of Cenvat Credit of CVD and SAD paid by the appellant in terms of Section 142(3) of CGST Act, 2017 - lower authorities have rejected the claim on the ground that the refund of Cenvat is not appearing under Clause (a) to (f) of Section 11 B (2) - HELD THAT:- Since, the refund was otherwise not admissible in cash in respect of Cenvat credit but by virtue of Section 142 (3), the assessee is eligible for refund. Therefore, Clause (a) to (f) are not relevant for the purpose of refund of Cenvat credit in terms of Section 142 (3). Accordingly, on this ground the refund was wrongly rejected.
From Section 142(8)(a) of CGST Act, 2017 it is clear that it provides that any amount of tax which was recoverable under the existing law before 01.07.2017 and the same is recovered, the amount recovered shall not be admissible as input tax credit under this Act. There is no ambiguity in the provision that any amount of tax paid under the existing law as was done in the present case no input tax credit is admissible. Here we are dealing with the Cenvat credit and not with the input tax credit - the finding of both the lower authorities dealing with the Section 142(8)(a) of the CGST Act, 2017, for rejecting the present refund claim is absurd and absolutely illegal. Therefore, on this ground also refund could not have been rejected.
As regard the contention of the lower authorities that since the amount of service tax was paid on pursuance by the audit party, the refund is inadmissible - it is found that neither any show cause notice for recovery of the service tax invoking any extended period was issued nor adjudication of such proceeding was done. Therefore, in not paying the service tax, no mala fide intention or suppression of fact is involved. Therefore, merely because the appellant have paid the service tax on pursuance by the audit will not be a reason for denying the refund under Section 142.
However, except the grounds for rejection no other issues have been dealt by the sanctioning authority such as admissibility of the input service for Cenvat credit, unjust enrichment and relevant documents verification. Accordingly, the matter deserves to be remanded to the adjudicating authority only for the limited purpose, as discussed.
The impugned order is set aside - Appeal is allowed by way of remand to the adjudicating authority.
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2024 (8) TMI 316
Applicability of ratio of the judgment in GHANASHYAM MISHRA AND SONS PRIVATE LIMITED THROUGH THE AUTHORIZED SIGNATORY VERSUS EDELWEISS ASSET RECONSTRUCTION COMPANY LIMITED THROUGH THE DIRECTOR & ORS. [2021 (4) TMI 613 - SUPREME COURT] - respondent/company has been subjected to CIRP proceedings under the provisions of the Insolvency and Bankruptcy Code, 2016 - NCLT, Ahmedabad admitted the respondent to CIRP proceedings - resolution plan was approved and an amount of Rs.157 Lakhs was provided towards making the payments to operational creditors including Government dues, which have been claimed/lodged - no claims of the appellant(s)/Department made in respect of the Assessment Years under consideration in these appeals.
HELD THAT:- These Civil Appeals stand disposed of in terms of the aforesaid judgment of this Court.
The question of law on the merits of the case is, however, left open.
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2024 (8) TMI 315
Fixation of special value addition rate for the Financial Year 2010-11 - area-based exemption under N/N. 32/99-CE dated 08.07.1999, as amended by N/N. 17/2008-CE dated 27.03.2008 and N/N. 31/2008-CE dated 10.06.2008 availed - whether fixation of special rate can be rejected merely because the sale value is arrived at from the audited financial statements of the Company by apportioning the same to respective units on the basis of their stock transfer ratio or not?
HELD THAT:- This issue is no longer res integra as this Tribunal has decided the same issue in the case of M/S HINDUSTAN UNILEVER LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX, DIBRUGARH [2023 (10) TMI 991 - CESTAT KOLKATA] - in the decision cited, the methodology for arriving at the sale value from the audited financial statements of the company by apportioning the same to the respective units on the basis of stock transfer ratio has been accepted and special rate has been fixed accordingly.
Therefore, by relying on the above decision, it is held that the impugned orders rejecting the special rate are legally not tenable and accordingly, the same is set aside.
The impugned order set aside - appeal allowed.
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2024 (8) TMI 314
Clandestine removal - demand based on the electrical consumption - average electricity consumption was worked out for four months - period August 2009 to November 2009, May 2010 to October 2010 and December 2010 to February 2011 - cross-examination of officials was sought, but no opportunity provided - violation of principles of natural justice - HELD THAT:- The Tribunal and High Court have consistently taken the view that what has been given as a electricity consumption based on a formula by Dr. Batra cannot be applied to all the manufacturers having various capacities and different machineries to arrive at the quantification of production. Therefore, this method of ascertaining the clandestine manufacture based on the electricity consumption was discarded by the Tribunals and the High Court.
In the present case, the Revenue has not applied any formula given by Dr. Batra, IIT professor, but has actually worked out the electrical consumption for the five months period starting from November 2010 to March 2011 and then worked out the average consumption. This consumption has been used to arrive at the quantification of manufacture for the other period under question. Therefore, the appellant cannot be agreed that the cited case law of R.A. Castings would be applicable in the present case.
There are force in the appellant's argument that the statements recorded by various officials have been relied upon by the Revenue while framing their allegations and also while confirming the demand. It is also on record that the Appellant has asked for crossexamination of certain persons which was not granted at the time of adjudication proceedings.
The Hon’ble Punjab and Haryana High Court in the case of M/S G-TECH INDUSTRIES VERSUS UNION OF INDIA AND ANOTHER [2016 (6) TMI 957 - PUNJAB & HARYANA HIGH COURT] held 'it would be open to the assessee to seek permission to cross-examine the persons who have made the said statements, should it choose to do so. In case any such request is made by the assessee, it would be incumbent on the adjudicating authority, i.e., on Respondent No. 2 to allow the said request, as it is trite and well-settled position in law that statements recorded behind the back of an assessee cannot be relied upon, in adjudication proceedings, without allowing the assessee an opportunity to test the said evidence by cross-examining the makers of the said statements.'
Thus, the appellant should be given an opportunity to cross-examine the persons who had recorded their statements before the investigating officials. Hence, the matter is remanded to the Adjudicating Authority.
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2024 (8) TMI 313
CENVAT Credit - capital goods or not - MS Sheets, Plates, Angles, Technological Structures, foundation bolts and nuts and railway sleepers falling under Chapter 72, 73 & 68 - period May 2008 to January 2013 - time limitation.
CENVAT credit on storage bunker - HELD THAT:- The definition of capital goods includes storage tank. Merely because, the bunker is used for temporarily holding the raw materials, it cannot be said that it does not serve the purpose of storage - the credit in regard to storage bunker is eligible.
CENVAT Credit on certain items used in the nature of support structure for Bag Filters, Hoppers for Spark Arrestor and structure for dust silos - HELD THAT:- It can be seen that pollution control equipment falls within the definition of capital goods. The said equipment cannot be put into effective use without being embedded to earth. There are various parts which have to be assembled and connected at site using steel structures. The items which are used for holding and connecting the various parts of the pollution control equipment and other machines which is eligible for credit.
CENVAT Credit on Cable tray - HELD THAT:- The cable trays are used for holding electrical cables of the machines and are accessories of capital goods. The credit is eligible.
CENVAT Credit on sub-station electrical equipment - HELD THAT:- Certain items have been used for sub-station electrical equipment which is not eligible for credit.
CENVAT Credit on Earthing Material - HELD THAT:- This is also used for electrical protecting wiring and therefore not eligible for credit.
CENVAT Credit on Galvanised Structure - HELD THAT:- The end use of this item is for electrical equipment in main receiving sub-station. The said invoice is not eligible for credit.
CENVAT Credit on electrical power and main receiving sub-stations - HELD THAT:- These items are not eligible for credit.
CENVAT Credit on GI earthing wire - HELD THAT:- The items in the nature of GI earthing wire used for electrical protective earthing which is not eligible for credit.
CENVAT Credit on DCS System Spares - HELD THAT:- The description of item is ‘DCS System Spares’ which is used for electrical equipment in main receiving sub-station is not eligible for credit.
Duplication of invoice - HELD THAT:- It is noted that it is a duplication of Sl.No. 289 and for this reason, this invoice dated 03.04.2010 is not eligible for credit.
CENVAT Credit on GI Earthing Strip - HELD THAT:- The items described are ‘GI Earthing Strip’ which is used for protective wiring and electric equipment which is not eligible for credit.
CENVAT Credit on items used are for electrical installation and protective wiring, etc. - HELD THAT:- The items used are for electrical installation and protective wiring, etc., is not eligible for credit.
CENVAT Credit on on railway sleepers - HELD THAT:- In the present case, the appellant has availed credit on railway tracks as well as concrete sleepers. The credit availed on concrete sleepers would not be admissible. In Annexure 1 of the Chartered Engineer Certificate, the details of the credit availed in respect of railway sleeper and concrete sleeper has been given. On perusal, the concrete sleeper in this Annexure is not eligible for credit. On merits, the issue of eligibility of credit on concrete sleepers is held in favour of revenue and against the assessee.
The Tribunal in the case of Singhal Enterprises Private Limited [2016 (9) TMI 682 - CESTAT NEW DELHI] had occasion to consider the issue of eligibility of credit wherein the user test was put into application to allow the credit. The Tribunal relied upon the decision in the case of Rajasthan Spinning & Weaving Mills Ltd. [2010 (7) TMI 12 - SUPREME COURT] and held that when steel plates, MS Channels, Sheets are used for fabrication of capital goods or for putting the capital goods into effective use, the credit is eligible.
Time Limitation - HELD THAT:- On perusal of the Show Cause Notice, apart from a vague allegation that appellant has suppressed facts with intention to evade duty, there is no positive act of suppression established against the appellant. The appellant has filed periodical returns disclosing the credit availed. Several audits were conducted. The appellant being a Public Sector Undertaking there cannot be any wilful intention to evade payment of duty as decided in the case of CISF Unit [2019 (2) TMI 1175 - CESTAT NEW DELHI] - The decision in the case of Uniworth Textiles Ltd. [2013 (1) TMI 616 - SUPREME COURT] has held that there has to be wilful suppression with intent to evade payment of duty. On the totality of facts, and following the decision, the demand raised invoking the extended period cannot sustain.
Appeal allowed in part.
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2024 (8) TMI 312
Classification of goods - HDPE pipes - classifiable under Chapter heading 3917 or not - applicability of exemption under N/N.6/2006-CE dt. 01.03.2006 upto 16.03.2012 and under N/N.12/92-CE dt. 17.03.2012 - HELD THAT:- The earlier show cause notice issued to the appellant with the detailed facts alleging that the appellant is not eligible for exemption as per Notification No.6/2012-CE or 12/2012-CE has been decided by the Tribunal holding that the appellant is eligible for the benefit of exemption.
The said decision passed by the Tribunal in M/S JAIN IRRIGATION SYSTEMS LTD VERSUS COMMISSIONER OF CENTRA EXCISE, COIMBATORE [2015 (10) TMI 1336 - CESTAT CHENNAI] where it was held that 'The notification had flown under clause (6) of CTH 9801. Reference to CTH 9801 finds place in Notification No.6/2006-CE, dated 1-3-2006 as well as Notification No.12/2011-C.E., dated 7-3-2012. Reading of the customs notification, tariff heading, nature of goods cleared and Central Excise notifications enables to hold that the goods cleared by appellant were meant for drinking water supply project only. The goods so used was certified by the appropriate authority. Therefore in absence of any contrary evidence, the goods cleared by appellant cannot be denied exemption.'
The demand cannot sustain - The impugned order is set aside - The appeal is allowed.
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2024 (8) TMI 311
Refund in cash of service tax paid under reverse charge mechanism post 01.07.2017 under the existing law - Section 142 (3) of CGST Act, 2017 - HELD THAT:- Reliance placed by DR on the judgment of Hon’ble High Court of Jharkhand in the case of M/S RUNGTA MINES LIMITED VERSUS THE COMMISSIONER OF CENTRAL GOODS & SERVICE S TAX AND CENTRAL EXCISE, THE COMMISSIONER (APPEALS) , CENTRAL GOODS & SERVICES TAX AND CENTRAL EXCISE, 2, THE ASST. COMMISSIONER, CENTRAL GOODS & SERVICES TAX AND CENTRAL EXCISE, DIVISION I, JHARKHAND [2022 (2) TMI 934 - JHARKHAND HIGH COURT] is appropriate to appreciate the applicability and the scope of Section 142(3). A plain reading of Section 142(3) evidences that Section 142(3) does not confer a new right, which never existed under the existing law, if the person is not entitled for any right including refund under the existing law.
The ratio of the above judgement squarely applicable to the facts of the instant case as regards Section 142(3) of the Act. In the above judgement it was held that provisions of CGST Act do not cover any such situation relating to any consequences due to inter parte acts and omissions. It was also held that in that case as per the petitioner, the entire problem has cropped up due to non-receipt of invoice in original from port authorities although the port services were availed and payments for the same were made.
In the present case also i.e. JSW Cement Pvt Ltd., the issue has cropped up because of late receipt of invoices bills in the last week of July 2017 in respect of input services received during the period March 2017 to June 2017 as admitted by the appellant. Therefore, as held in the Rungta Mines the late receipt of invoices is essentially between the appellant and its service provider and the tax collecting authorities had nothing to do in the matter. It was also held in Rungta Mines, that appellant never had a right to claim refund under the existing law. Thus, the Rungta Mines decision is exactly applicable to the instant case.
There is no infirmity in the order passed by the Commissioner (Appeals), upholding the order of the Original Authority, who had rejected the claim of refund in cash filed by the appellant - the appeal filed by the appellant is liable to be dismissed - Appeal dismissed.
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2024 (8) TMI 310
CENVAT Credit - capital goods or not - Chartered Engineer’s certificate submitted by the appellant is sufficient to discharge the responsibility placed on appellant under Rule 9(5) of CCR 2004 or not - whether the case is no longer res-integra in view of the order passed by the Tribunal in their own case M/S. BERRY ALLOYS LIMITED VERSUS COMMISSIONER OF CENTRAL TAX, VISAKHAPATNAM-I [2022 (5) TMI 797 - CESTAT HYDERABAD]? - levy of penalty.
HELD THAT:- There is some force in the arguments made by the Learned DR that the rules applicable for the period in the present appeal were not same and therefore on that ground alone said order should not be made applicable to the present appeal. It is further found that the Tribunal has observed that receipt of goods and thereafter their use for fabrication as per Chartered Engineer’s certificate is not contested, whereas, in the present case, the use is being doubted in the Order-in-Original upheld by the Commissioner (Appeals), in as much as the said certificate was considered as not sufficient to prove whether they were actually utilised in the fabrication of the capital goods or otherwise. Therefore, Rule 9(5) of CCR 2004 has not been considered.
The facts of the case are more or less identical bearing few items the grounds taken for confirming demand, grounds and reasons for grant of relief by Tribunal are different. Firstly, in their order Tribunal had not examined applicability of Rule 9(5) of CCR. Also, though it was claimed as “input” in the relevant period, in the present appeal it has been claimed as “capital goods”. Admittedly, the declaration of capital goods was under different rules during the said period and apparently because of that it was claimed as “input” and not as capital goods. The format of Chartered Engineer’s certificate perused by the Tribunal was also different than the one relied upon by the appellant in present appeal - the judgment in M/S. BERRY ALLOYS LIMITED VERSUS COMMISSIONER OF CENTRAL TAX, VISAKHAPATNAM-I [2022 (5) TMI 797 - CESTAT HYDERABAD] cannot be applied in totality for deciding the present appeal where facts and submissions are slightly different as well as the rule position is also different. Therefore, this ground of the appellant is not tenable.
Whether these items can be considered as capital goods or not? - HELD THAT:- It is not the case, nor disputed by Department that various capital goods were fabricated/manufactured at site within the factory and that they were not falling under Chapter 82, 84, 85, 90 etc., or Pollution Control Equipment. In fact, the impugned order has tacitly accepted that these items could be considered as components. What is being disputed is whether these items were actually used as components of the capital goods covered within the definition of capital goods under Rule 2(a) within the factory in view of insufficiency of evidence adduced by the appellant. In so far as the issue whether such components would still be eligible for input credit on account of the fact that the goods were embedded to earth and thus not goods at all, the appellants have relied on plethora of judgments and it is observed that in various judgments it has been held that the goods which are embedded to earth and therefore not excisable, cannot be the ground for denial of Cenvat Credit as capital goods.
The ground taken by the Revenue that since these items were used as components, spares etc., for fabrication of various capital equipments/goods embedded to earth would debar it from being considered as capital goods is not tenable. Thus, such goods would still be considered as components etc., if used in fabrication or construction of capital goods within the factory where such capital goods etc., are further used in the manufacture of excisable goods - apparently, what is being now disputed is whether the usage criteria has been clearly satisfied to consider as component. Thus, impugned items, except when used for making foundation etc., would fall within the definition of capital goods under category 2(a)(A)(iii).
Whether in the given facts of the case, appellant has been able to specify the usage of such components in the capital goods fabricated within the factory of production or otherwise? - HELD THAT:- From the description given by the Chartered Engineer, it is also not clear as to when and how such items were actually issued for fabrication of the intended main equipment. It also does not show what documents were verified and whether they had verified issue register, technical feasibility of utilisation of such items in the intended capital equipment, drawings, designs etc., to satisfy whether such items were required for manufacturing of final goods etc. This becomes more important especially when most of these items have multiple uses and can be used for various purposes and some of these items cannot be used for the intended purposes if they are not having specified technical parameters compatible with such use because of the high temperature etc., where only a specified variety of sheets, plates etc., can be used. Therefore, though theoretically these items can be considered as components, parts etc., for these equipments but were they actually used for such fabrication or uses as detailed in the Chartered Engineer certificate needs further corroboration to the satisfaction of the Competitive Authority.
There are much force in the argument of the Department that in the present appeal, the appellants have failed to satisfy the lower authorities as regards its actual use which is crucial to decide usage and the extent of it’s usage. Thus, in the fact of the case and statutory provisions what is needed is the verification and corroboration of the Chartered Engineer’s certificate with the internal records by the Adjudicating Authority so as to satisfy him about its actual use in those intended capital equipments/goods etc.
Imposition of penalty - HELD THAT:- It is found that Original Authority has imposed penalty under Section 15(1) of CCR read with Section 11AC(1)(a) of Central Excise Act on the grounds that appellant has violated provisions of Rule 9(5) by not disclosing the actual usage, which came to their knowledge only when they informed the Department on being asked. However, this aspect would have to be redetermined in view of discussions in foregoing paras where admissibility of the entire demand would have to be re-determined.
The matter is remanded to the Original Authority to go through the corroborative documents supporting the Chartered Engineer’s certificate supporting actual use of such goods in fabrication/construction of capital goods as claimed by appellant and to allow credit to the extent they are proved to have been actually used in fabrication of those equipments / capital goods etc. Similarly, imposition of penalty would need to be redetermined - Appeal disposed off by way of remand.
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2024 (8) TMI 309
Excisability of residual Zinc Ash - captive consumption - appellant did not avail option under Rule 6(2) and under Rule 6(3) of the Cenvat Credit Rules, 2004 and did not maintain separate register for quantity of Zinc Ash used in the manufacture of their dutiable products and their exempted products - Supression of facts or not - extended period of limitation.
Excisablity - HELD THAT:- The entire proceedings in this case was initiated on the investigation conducted by the DGGI and the same was based on the judgment of Hon’ble Supreme Court in the case of UNION OF INDIA VERSUS DSCL SUGAR LTD. [2015 (10) TMI 566 - SUPREME COURT] and subsequent Board Circular No. 1027/15/2016-CX dated 25.04.2016, wherein it has been clarified that the products including bagasse, dross and skimming are non-excisable goods.
Further, as per the explanations 1 & 2 inserted w.e.f. 01.03.2015, exempted goods shall include non-excisable goods cleared for consideration from the factory. As per the Circular dated 25.04.2016, it was provided that Zinc Ash and Skimming are non-excisable goods and need to be treated as exempted goods for the purpose of reversal of the credit of inputs or input services in terms of the Rule 6 of the CCR, 2004. As per the department, the appellant did not avail the option under Rule 6(2) and under Rule 6(3) and further did not maintain separate register for quantity of Zinc Ash used in the manufacture of their dutiable products and their exempted products.
The department has confirmed the demand solely relied upon the judgment of Hon’ble Supreme Court in the case of Union of India Vs. DSCL Sugar Ltd and subsequent Board Circular No. 1027/15/2016-CX dated 25.04.2016. It is also noted that subsequently the same issue came up before the Hon’ble Supreme Court in the case of UNION OF INDIA & ORS. VERSUS M/S INDIAN SUCROSE LIMITED [2022 (7) TMI 353 - SC ORDER] wherein the Hon'ble Supreme Court has held that Circular dated 25.04.2016 is unsustainable in law as bagasse is non-excisable goods to which cenvat credit has no application.
It is pertinent to note that subsequent to the decision of the Hon’ble Supreme Court in the case of Union of India Vs. Indian Sucrose Limited the Board has issued fresh Circular No. 1084/05/2022-CX dated 07.07.2022 and has rescinded the Circular dated 25.04.2016 on the basis of which, the entire demand was created.
Further, it is found that when the appellant imported the Zinc Ash, they paid CVD and SAD and once they have paid CVD, they are entitled to avail the Cenvat Credit and utilize the same for payment of duty on sale of Zinc Ash; and once CVD is charged treating Zinc Ash as manufacture, there was no illegality on the part of the appellant to pay duty on sale of Zinc Ash - the duty amounting to Rs.1,61,30,759/- paid by the appellant is sought to be appropriated under Section 11D(1A) whereas Section 11D is applicable to excisable goods which are exempt or chargeable to nil rate of duty, but in the present case, Zinc Ash as per the department is non-excisable goods; therefore, Section 11D is not applicable in this case.
Extended period of limitation - Suppression of facts or not - HELD THAT:- The appellant has not suppressed any information from the department. Each and every fact was recorded in books of accounts and on the basis of the same records, demand has been quantified - As the appellant has not suppressed any material fact from the department with intent to evade payment of tax and was subject to internal audit from time to time as cited above; therefore, invoking extended period of limitation is not warranted. Further, in the present case, the period involved is from March 2015 to June 2017 whereas the show cause notice was issued on 20.05.2019, which is entirely time barred.
The impugned order is not sustainable in law - Appeal allowed.
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2024 (8) TMI 261
Method of valuation - respondents and M/s Everest Flavours Ltd. are related to each other in terms of Section 4 (3) (b) of the Central Excise Act, 1944 or not - Inter-connected Undertakings - mutuality of interest - valuation to be done under proviso to Rule 9 read with Rule 8 of the Valuation Rules i.e 110% of cost of production? - Extended period of limitation - penalties.
HELD THAT:- It is found that no effort seems to have been made by the Revenue to ascertain the actual price of the goods, except alleging that the goods cleared by the respondents are over-valued to avail additional refund. While the Show Cause Notice does not give the constitution of both the respondent and M/s Everest Flavours Ltd., the Review Order lists out Directors in each of the companies.
The grounds taken in Review are beyond the scope of the Show Cause Notice and the same cannot be taken in view of the finding of the Hon’ble Apex Court in the case of COMMISSIONER OF CENTRAL EXCISE, SURAT VERSUS BESTA COSMETIC LTD. [2005 (3) TMI 130 - SUPREME COURT] where it was held that 'Additionally, before us, a ground was sought to be raised that BHPL bears the entire advertisement cost of the product of the assessee. This was not a ground which was urged on behalf of the Revenue at any stage of the proceedings and we do not permit them to raise it now. This appeal is accordingly dismissed without any order as to costs.'
Extended period of limitation - penalties - HELD THAT:- The respondents have not indulged in any suppression, mis-declaration etc. with intent to evade payment of duty; they have been not only filing the Returns but also availing refund/ credit of duty paid in terms of Notification No.56/2002 which was scrutinized by the Revenue from time to time; the respondents would be eligible for refund of duty paid by them and as such, the issue is revenue neutral to themselves; therefore, under the circumstances, extended period cannot be invoked and no penalty can be levied.
The appeal filed by the Revenue cannot be sustained both on merits and limitation - there are no reason whatsoever to interfere with the impugned order - appeal of Revenue dismissed.
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2024 (8) TMI 260
Valuation - inclusion of third party inspection charges in the transaction value - Demand on the basis of statement of Director without any corroborative /cogent material brought on records - Penalty on Director.
Valuation - inclusion of third party inspection charges in the transaction value - HELD THAT:- It is settled principle that basic feature of Section 4 has never changed even after the two amendments. Thus, the definition of “transaction value” after amendment, means the price actually paid or payable for the goods, when sold, and include in addition to the amount charged as price, any amount that the buyer is liable to pay to, or on behalf of the assessee, by reason of, or in connection with the sale, whether payable at the time of the sale or at any other time, including, but not limited to, any amount charged for, or to make provision for, advertising or publicity, marketing and selling, organization expenses, storage, outward handling, servicing, warranty, commission or any other matter; but does not include the amount of duty of excise, sales tax and other taxes, if any, actually paid or actually payable on such goods.
The Hon’ble Supreme Court in the case of Purolator India Ltd. [2015 (8) TMI 1014 - SUPREME COURT] has held that 'Section 4(2) pre-2000 made it clear that where the price of excisable goods for delivery at the place of removal is not known, and the value thereof is determined with reference to the price for delivery at a place other than the place of removal, the cost of transportation from the place of removal to the place of delivery is to be excluded from such price.'
Hon’ble Supreme Court in the case of CCE, Pondicherry vs. Acer India Ltd. [2004 (9) TMI 106 - SUPREME COURT] wherein it has been held that only because the expression, “by reason of sale, or in connection with the sale” has been used in the definition of “transaction value”, the same by itself would not take away the rigors of charging section.
Thus, the demand of duty in respect of third party inspection charges cannot be sustained and is accordingly set aside.
Demand on the basis of statement of Director without any corroborative /cogent material brought on records - HELD THAT:- The issue has been examined by the Hon’ble Allahabad High Court in the case of M/S. CONTINENTAL CEMENT COMPANY VERSUS UNION OF INDIA & OTHERS [2014 (9) TMI 243 - ALLAHABAD HIGH COURT] where it was held that 'to prove the allegation of clandestine sale, further corroborative evidence is also required. For this purpose no investigation was conducted by the Department.' - The demand on this count is also not sustainable and is set aside.
Penalty on Director - HELD THAT:- There is no justification in maintaining the penalty imposed upon the Director and accordingly the same is set aside.
The appeals filed by the Appellants are allowed.
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2024 (8) TMI 259
Classification of goods - gear for Rotary Tiller and Parts of Rotary Tiller - to be classified under central excise sub heading 82349090 or under heading no. 848340000? - demand barred by time limitation or not - entitlement to cenvat credit of duty paid on the material used in the manufacture of aforesaid final product.
HELD THAT:- It is observed that Learned Commissioner (Appeals) has cited the fact that other manufacturers of the identical goods were also classifying the gears under CETH 84329090 as per para 23.11 of Order-In-Original. Therefore, this is one of the reason that the appellant had a bona fide belief about the classification which is of no fault in the said finding. It is further found that various courts have taken a consistent view that when there is dispute of classification, the malafide intention cannot be attributed to the assesse and it cannot be said that the assesse has intention to evade payment of duty. In the present case, the respondent has recorded all the transactions in question in their books of account, therefore, it cannot be assumed that the respondent can suppress the fact.
Moreover, the respondent was entitled for the cenvat credit of inputs used for the manufacture of their final product which amounts to substantial reduction of the duty liability on the final product. It is also observed that undisputedly manufactured goods i.e. gears are used in the agricultural equipment, therefore, the bonafide belief of the respondent that it is correctly classifiable as parts of rotary tiller cannot be doubted - there is no suppression of fact or malafide intention on the part of the respondent for mis- classification of the goods i.e. gears and accordingly, the demand was rightly set aside on the ground of time bar.
The classification of goods particularly in the facts of the present case is highly debatable in as much as the manufactured goods meant for agricultural equipment in a common sense can be classified as parts of agricultural equipment under CETH 84329090 but as per the strict interpretation of interpretative rule for classification the goods may be classifiable under 84834000 - since admittedly the issue of classification in the present case involved serious interpretation, this is also a reason that there is no mala fide intention on the part of the respondent to evade excise duty as there was no suppression of fact.
In various judgments it is settled that in case of interpretation of classification of goods, the extended period of limitation shall not apply and demand will not sustain on the ground of time bar - reliance placed in the case of M/S SHAH FOILS LTD., SHRI KARTIK RAMESH SHAH, SUNCITY SHEETS PVT LTD, MUKESH AGARWAL VERSUS C.C. – MUNDRA [2024 (5) TMI 336 - CESTAT AHMEDABAD] where it was held that 'In these facts, since no suppression of fact is there and the show cause notice was issued beyond two years from the import, the entire demand is time barred. In this regard, the judgments cited by the appellant support their case on limitation also.'
The order of the Learned Commissioner (Appeals) setting aside the demand on time bar does not suffer from infirmity. Hence, the finding of the Commissioner (Appeals) agreed on the aspect of time bar. Since we decided the matter on time bar, no conclusive finding given on the merit of the case.
The setting aside of the demand ordered by the Commissioner (Appeals) upheld - the Revenue’s appeal is dismissed.
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2024 (8) TMI 258
100% EOU - abnormal delay of 17 years in adjudication of the impugned SCN - whether the Appellant had resorted to undervaluation of finished goods cleared by them in DTA? - whether the value of the DTA clearances made by a 100% EOU should be the transaction value at which the goods have been sold to domestic buyers or it has to be the value at which department demanded duty? - HELD THAT:- The department has not produced any evidence in support of allegation of undervaluation with any documentary evidence such as DTA invoices issued by other manufactures showing more DTA sale price than the Appellant at the relevant period in the year 2000. It is evident that the Appellant has submitted the data and details in their application for DTA sale to the Development Commissioner. Based on submitted details and scrutiny of the other records the Learned Development Commissioner had granted permission for DTA sale. It is not the case of the department that the Appellant had supplied goods in DTA in excess of the permitted value. The DTA sale was made to several independent buyers on principal to principal basis. There is not a whisper of allegation that the sale price for such DTA sale was depressed or suppressed or manipulated in any manner whatsoever.
In the instant case the department could not show any evidence that the transaction value declared by the appellant was not price actually paid by the buyer. There is also no documentary evidence produced by the revenue that the value adopted for DTA sale is a manipulated one. The sale has been made to the independent buyers and the price is the sole consideration of sale.
In case of EICHER TRACTORS LTD. VERSUS COMMISSIONER OF CUSTOMS, MUMBAI [2000 (11) TMI 139 - SUPREME COURT] the Hon’ble Apex Court held that unless the “special circumstances” exists, the Transactional value cannot be rejected. In these circumstances, the transaction value declared by the appellant cannot be dis-regarded.
In terms of the provisions of proviso to Section 3(1) of Central Excise Act, 1944, while the duty payable in respect of the goods cleared by a 100% EOU into DTA is the aggregate value of duties of customs on import of like goods into India, the assessable value for this purpose is to be determined under Section 14 of the Customs Act, 1962. Therefore, the assessable value of the goods cleared into DTA must be comparable with the contemporaneous import price of identical goods or similar goods into India in comparable quantity. However in the present matter there are no details in this regard produced by the department - the impugned order rejecting the DTA sale price of the appellant unit is not correct.
It is settled law that when there is no duty demand, there could be no penalty. Therefore, the penalties imposed are liable to be set aside.
The impugned order is set aside - appeal allowed.
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2024 (8) TMI 257
Quantum of duty computation/the cum-duty price - Section 4 of the Central Excises Act, 1944 - HELD THAT:- Section 4 of the Central Excises Act, 1944 provides for valuation of excisable goods for purposes of charging of duty of excise. Under Section 4(1), the duty of excise is chargeable on any excisable goods with reference to the value which is deemed to be the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade where the buyer is not a related person and the price is the sole consideration for the sale. Section 4(4)(d)(ii) states that value in relation to any excisable goods does not include the amount of duty of excise, sales tax and other taxes, if any, payable on such goods and, subject to such rules as may be made, the trade discount, etc., is also to be allowed as a deduction.
Following the revenue’s proposal of valuation under section 4, after extending the benefit of cum duty price in this matter the duty liability would come down to Rs. 5,42,846/- - in terms of section 4 of the Central Excise Act, 1944, the correct differential duty demand comes to Rs.5,42,845.96 which stands confirmed.
The remaining demand of duty, corresponding penalty and interest, if any, are set aside - appeal is partly allowed.
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2024 (8) TMI 201
Refund of the excess tax paid - refund was proposed to be recovered by invoking the extended period of limitation - refund sanctioned order till date not challenged by Revenue - HELD THAT:- This issue is no more res integra as the same is covered by the majority decision of the Tribunal in the case of MEDLEY PHARMACEUTICALS LIMITED VERSUS CCE & S.T. -CHANDIGARH-I [2018 (4) TMI 1495 - CESTAT CHANDIGARH] where it was held that 'denying and demanding the wrongly availed self-credit on first instance is not sustainable. Admittedly, the appellant followed the correct procedure on the second time though on the first instance they have wrongly taken direct self-credit.'
Further it is found that since the department has not challenged the refund sanctioned order till date and in the absence of challenge to the refund sanction order, the refund cannot be rejected as held by the Hon'ble Gauhati High Court in the case of COMMISSIONER OF CENTRAL EXCISE, VERSUS M/S. JELLALPORE TEA ESTATE, [2011 (3) TMI 11 - GAUHATI HIGH COURT].
It is further found that the entire demand is also barred by limitation as the department has failed to establish the ingredients for invoking the extended period as provided in Section 11A sub-section (4) of the Central Excise Act, 1944, therefore, on this point also, the impugned order is bad.
The impugned order is not sustainable in law and is thus set aside - appeal allowed.
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