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TMI Blog2019 (10) TMI 167X X X X Extracts X X X X X X X X Extracts X X X X ..... truction dated 10.11.2014 but the said Circular also clarified that when the gases are used as inputs by another assessee, the admissibility of the credit of the duty paid will be decided in accordance with CCR, 2004. Extended period of limitation - HELD THAT:- Taking of CENVAT credit on declared services is a matter of interpretation of law and therefore there is no justification invoking larger period alleging suppression of fact with malafide intention to evade tax. The demand for the normal period is confirmed - the demand invoking extended period of limitation set aside - case remanded back to the Original Authority for quantification of the demand for the normal period along with interest - Penalties under Rule 15 (1) and (2) of CCR, 2004 read with Section 11AC of the Central Excise Act, 1984 are also set aside. Appeal allowed in part by way of remand. - E/20814, 20811, 21179/2018 - Final Order No. 20860-20862/2019 - Dated:- 4-10-2019 - SHRI S.S GARG, JUDICIAL MEMBER For the Appellant : MR. M.S. NAGARAJA, ADVOCATE For the Respondent : MR. K.MURALI, SUPERINTENDENT (AR) ORDER The appellants have filed these three appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e impugned order is not sustainable in law as the same has been passed without properly appreciating the facts and the law. He further submitted that service provided by Praxair India Pvt. Ltd. is an input service for the appellant and they are eligible to take CENVAT credit on MTOP charges and electricity charges paid by them as liquidated damages. Further, the Learned Counsel referred to Article 8.2 of the Product Supply Agreement entered between the appellant and the seller which stipulates that the buyer shall pay and take for and even if not taken pay for (MTOP) ₹ 31,50,000 Nm3 per month (150 TPD) of gaseous oxygen throughout the terms of the Agreement as and by way of compensatory payment. He further submitted that the appellants have paid the seller the prevailing price of oxygen as per Article 8 plus cost of power which shall be weighted average of the cost of power from all sources in a given month using the power consumption norms. On failure of the appellants to ensure minimum take, the appellants were liable to pay on such minimum quantity of oxygen the MTOP charges along with cost of power from all sources proportionate to the minimum quantity of oxygen as prescr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad, 2008 (12) STR 150 (Tri. Mumbai). 4.1. He also referred to a copy of CBEC Circular Letter F No. 6/03/2013/CX 1 dated 10.11.2014 vide General Instructions No. 30/2014-15 dated 19.12.2014 whereby CBEC has clarified that the MTOP charges are directly linked with manufacture and supply of gases irrespective of whether they are paid at the time of sale or at any other subsequent time. When the gases are used as inputs by another assessee, the admissibility of credit of the duty paid will be decided in accordance with the CCR, 2004. He further submitted that both M/s Mukund Ltd. and Kalyani Steels Ltd. have entered into common Product Supply Agreement as brought out above and both the assessees have taken CENVAT credit on the MTOP charges and the electricity charges proportionate to the MTOP charges and only the appellant has been denied the CENVAT credit whereas Kalyani Steels Ltd. have not been proceeded against by the Department. He further submitted that Section 66E has declared certain activities as service even though may not appear to be so and it is a settled position of law that when the conditions precedent are satisfied the legal fiction created for the purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the penalties imposed under Rule 15 (1) (2) of CCR, 2004 read with Section 11AC of CEA, 1944 alleging suppression of facts is also not tenable in law since the Department has not been able to establish the suppression with any material fact. 5. On the other hand, Learned AR defended the impugned order and submitted that as per the Product Supply Agreement dated 06.06.2005 between M/s Praxair India Pvt. Ltd. (Supplier) and M/s Mukund Ltd. (Buyer). Supplier supplies oxygen, Nitrogen and Argon. Further, in terms of Article 8 of the said agreement, MTOP charges are payable by Mukund Ltd. in the event of any failure on the part of Mukund Ltd. to take products up to quantities mentioned in Article 8.1 of the said Agreement by way of liquidated damages. He further submitted that as per the agreement if the appellant, who is the buyer, does not lift prescribed quantity, buyer should pay MTOP charges, as prescribed, to the seller and in the present case, the amount has been paid towards non-lifting of gases on which Service Tax was paid by the seller. Therefore, even without receiving goods, the MTOP charges are paid by buyer to the seller. He also submitted that in the instant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... substance of law Equitable considerations, presumptions and assumptions are entirely out of place No tax can be imposed by inference or by analogy or by trying to probe intentions of legislature and by considering what was substance of the matter Court cannot import provisions in statutes so as to supply any assumed deficiency. [paras 14, 15,16 , 17] 5.3. He also submitted that the Excise Duty on power also does not qualify as input service under rule 2(l) of CCR, 2004. In fact, at the time adjudication and appeal, the appellant only discussed about MTOP charges but not on Excise Duty on power or electricity charges on which credit was availed by them wrongly. Learned AR further submitted that the use of device known as legal fiction is for certain purposes by which the law deliberately departs from the truth of things. He then referred to principles of statutory interpretation by G.P. Singh wherein scope of Legal Fiction‟ has been explained as under: In interpreting a provision creating a legal fiction, the Court is to ascertain for what purpose the fiction is created; [refer Ex Parte Walton, In re Levy, (1881) 17 Ch D 746, p 756, State of Trav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s non-lifting of gases on which the Service Tax has been paid by the seller. Further, I find that in the present case, MTOP charges are for the purpose of non-lifting of the goods and it is a fact that the goods have not been lifted by the appellant and they have not been received and used in the manufacturing activity or output services. Further, I find that the said services were not used directly or indirectly by the appellant in the manufacturing activity and therefore there is no nexus between the said services and the final product produced by the appellant. Further, I find that though the CBEC has issued Instruction dated 10.11.2014 but the said Circular also clarified that when the gases are used as inputs by another assessee, the admissibility of the credit of the duty paid will be decided in accordance with CCR, 2004. Further, I find that as per Section 66E, the impugned service has been declared as service by way of a Legal Fiction but the CENVAT credit has to be availed as per CCR, 2004. Further, I find that this payment of MTOP charges as per the Agreement is by way of liquidated damages and does not fall in the definition of Input Service by any stretch of imaginati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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