9911796707
TMI Blog2012 (7) TMI 781X X X X Extracts X X X X X X X X Extracts X X X X ..... During the scrutiny of records of the appellants by the Central Excise Officers, Pune, it was noticed that they were importing and trading in certain types of cosmetic preparations from their Head Office at Mumbai. The same were being imported by their Head Office and subsequently cleared directly to customers or to their branches located at various parts of the country. They were availing Cenvat credit on inputs and input services used in or in relation to manufacture of their final products. Cenvat credit on inputs and capital goods was availed on the basis of duty paid on inputs and capital goods received by them in their factory. Cenvat credit on input services was availed on the basis of input services received by them for their factor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure of non-excisable goods do not qualify as inputs as per Rule 2(k) of the Cenvat Credit Rules, 2004 and the Cenvat credit availed by them on such raw material used for non-excisable goods was not admissible to them. 3. Accordingly, a show-cause notice dated 26.6.2007 was issued to the appellants demanding duty under Rule 14 of the Cenvat Credit Rules, 2004 read with proviso to Section 11A(1) of the Central Excise Act. In the show-cause notice, inadmissible credit of Rs.3,52,38,785/- of Service tax, plus Rs. 7,04,776/- of Education Cess on Service tax availed on services used for traded and non-excisable goods for the period from 10.9.2004 to 31.3.2007 was demanded and inadmissible credit of Rs. 58,83,743/- as BED, plus Rs. 1,10,44 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the credit on the whole of the inputs and were reversing Cenvat credit equal to 10% of the total price excluding sales tax and other taxes of such goods. On receipt of letter dated 18.8.2006, it was pointed out by the department that the goods containing alcohol are non-excisable goods and they are not entitled to avail Cenvat credit on those inputs which are used in the products containing alcohol. On being pointed out by the department, they have paid an amount of Rs. 58,83,743/- as BED plus Rs. 1,10,448/- as Education Cess, plus Rs. 3,73,328/- as AED and interest of Rs.7,80,711 as inadmissible Cenvat Credit on the raw material and services used for such non-excisable goods for the period April, 2004 to August, 2006. They also contended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere under the bona fide belief that they were entitled to avail whole of the credit common to manufacture, service and trading activity. He further added that when the department explained the stand, they have paid back the credit amounting to Rs. 75,37,812/- as service tax, Rs. 1,50,755/- as Education Cess on service tax alongwith interest of Rs. 12,13,974/- and they have done this even before the issue of show-cause notice. He, therefore, submitted that they do not have any intention to avail the ineligible credit, therefore, they are not liable to penalty under Rule 15 of the Cenvat Credit Rules. 6. Ld. Addl.Commissioner (A.R.) appearing for the Revenue reiterated the finding of the Commissioner and stated that the appeal filed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter back to Commissioner for giving a finding on this aspect before taking any view on imposition of penalty. 8. The second issue is regarding whether the Cenvat credit availed on services used for traded goods was admissible to them or not. We find that the trading activity undertaken by the appellants from their Head Office is neither an output services nor it is their final product. As such the appellants are not entitled to avail any Cenvat Credit on the services which are used for trading activity. On being pointed out by the department, they have paid back the credit amounting to Rs. 75,37,812/- as service tax, Rs. 1,50,755/- as Education Cess and Rs. 12,13,947/- as interest even before the issue of show-cause notice. On g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been rejected by the Commissioner and it is open to the Commissioner to call upon the appellants to substantiate their computation of the work-sheet in respect of the credit availed and the appellants should be given an opportunity of being heard to explain their case in respect of the calculation as mentioned in the work-sheet. We, therefore, remand the matter back to the original authority in view of the above observation and he should pass a fresh adjudication order, after giving an opportunity of being heard to the appellants. The appellants should also co-operate with the adjudicating authority by submitting all the documents used for preparation of the work-sheet. 9. The appeal is allowed by way of remand in the above terms. & ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
