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2024 (12) TMI 76 - AT - Central ExciseReversal of CENVAT Credit on input services - amount of 10.3% reversed by the appellant in terms of Rule 6(3) of Cenvat Credit Rules, 2004 - application of Section 11D of Central Excise Act, 1944 - HELD THAT - From the plain reading of Section 11D, it is found that firstly the recovery under Section 11D can be made only when an asseesee recovers any amount in the name of excise duty and does not deposit to the government exchequer. In the present case the amount so recovered, firstly not a duty of excise and secondly, the same amount has been reversed by the appellant. Therefore, on both the counts Section 11D cannot be invoked. This very issue has been clarified by the CBEC Circular No.870/08/2008-CX dated 16.05.2008 - From the circular it is has been clarified that any amount reversed under erstwhile Rule 57CC of Central Excise Rules, 1944 or Rule 6 (3) (1) of Cenvat Credit Rules, 2004and even though the same is recovered from the customers, the provision of Section 11D shall not apply. Therefore, the present issue stands clarified by the board under the aforesaid circular. Thus, the amount reversed by the appellant under Rule 6(3) and even though recovered from the customer, provision of Section 11D shall not apply. Hence, the demand under Section 11D is not sustainable. The impugned order is set aside - Appeal is allowed.
Issues Involved:
1. Applicability of Section 11D of the Central Excise Act, 1944. 2. Denial of Cenvat Credit on input services. 3. Inclusion of freight charges in the assessable value for central excise duty on FOR basis sales. Issue-wise Detailed Analysis: 1. Applicability of Section 11D of the Central Excise Act, 1944: The primary issue was whether the amount reversed by the appellant under Rule 6(3) of the Cenvat Credit Rules, 2004, and recovered from the customer, falls under the purview of Section 11D of the Central Excise Act, 1944. Section 11D mandates that any amount collected as excise duty must be deposited with the Central Government. However, it was clarified through CBEC Circular No. 870/08/2008-CX dated 16.05.2008, and supported by the Tribunal's decision in the case of Jindal Tubular (India) Ltd, that amounts paid under Rule 6 of the Cenvat Credit Rules are not considered as excise duty. Therefore, Section 11D is not applicable even if such amounts are recovered from customers. The Tribunal held that since the amount was not collected as excise duty, and was already reversed, Section 11D cannot be invoked. Consequently, the demand under Section 11D was found unsustainable and was set aside. 2. Denial of Cenvat Credit on Input Services: The appellant claimed Cenvat credit on rent-a-cab services used for business travel. The impugned order denied this credit. However, the Tribunal referred to the judgment of the High Court of Gujarat in the case of Transpek Industry Ltd., which held that rent-a-cab services used by employees for business purposes qualify as "input services," and thus, Cenvat credit is allowable. Respecting this judgment, the Tribunal concluded that the appellant is entitled to Cenvat credit for the service tax paid on rent-a-cab services. Therefore, the denial of Cenvat credit on this ground was overturned. 3. Inclusion of Freight Charges in the Assessable Value for Central Excise Duty on FOR Basis Sales: The appellant supplied goods on a FOR (Free on Rail) basis, and the question arose whether the freight charges should be included in the assessable value for excise duty. The Tribunal referred to the Supreme Court's decision in the case of Ispat Industries Ltd., which established that the "place of removal" must be related to the seller's premises, such as the factory gate or depot, rather than the buyer's premises. Consequently, freight charges from the place of removal to the buyer's premises should not be included in the assessable value. The Tribunal found that the demand for excise duty on freight charges was not sustainable and set it aside. Conclusion: The Tribunal set aside the impugned order, allowing the appeal with consequential relief to the appellant. The demands under Section 11D, denial of Cenvat credit on input services, and inclusion of freight charges in the assessable value were all found unsustainable based on the legal precedents and circulars referenced.
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