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TMI Blog2023 (1) TMI 342X X X X Extracts X X X X X X X X Extracts X X X X ..... . In the present matter it is undisputed fact that on imported spares/ components appellant has undertaken the testing process. The Department and Ld. Commissioner both are of the view that the process carried out by the appellant within the factory do not bring about any new product. After undertaking of testing there is no new products with distinctive name, use and character is emerged and the components/spares of the EPBAX systems remains same even after mere electrical and functional testing which can not be considered as manufacture as defined under Section 2(f) of the Central Excise Act, 1994. Therefore, the contention is that the spares/ components cleared to EOUs are nothing but removal of Input as such and in terms of Rule 3 (5) of the Cenvat Credit Rules, 2004 assessee have to reverse the cenvat credit - there is no justification for demand of an amount in terms of Rule 3(5) of the Cenvat Credit Rules. Clearly, the process carried out is in the nature of finishing process which can be considered as ancillary to the manufacture of a finished product. In the facts and circumstances of the case, we find no justification for demand of such amount under Rule 3(5) on the clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsultant for the Appellants- Assessees Shri Vijay G Iyengar, Superintendent (AR) for the Revenue. ORDER These appeals are filed by Revenue as well as Assessee against the same Order-in-Original No. AHM-CEX-003-COM-010-to-016-12 dated 25.04.2012. Since a common order has been passed by the adjudicating authority therefore we are also disposing of these appeals by this common order. 2. The relevant facts that arise for consideration are that based upon an intelligence regarding evasion of Central Excise Duty, the factory premises of the assessee was searched by the officers and records which were found relevant and useful for the investigation were seized under panchanama dated 27.05.2007.After recording the statement of Shri Sasi Nair, Senior Executive of the assessee including other persons, the investigation came to the conclusion that the assessee had indulged in the removal of spares/ components as such to EOUs under CT-3 certificates without paying/reversing the Cenvat Credit. Shri Sasi Nair in statements categorically admitted /stated that all the spares/ components cleared as such to EOUs under CT-3 certificates were imported components/ spares, which were randomly tested ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he identical grounds involving different periods. The adjudicating authority vide impugned order, confirmed the demands of Rs. 2,23,44,289/- out of total demand of Rs. 7,12,73,240/- and rest of demand are dropped. The assessee filed this appeal against that portion of the order which is against them in Appeal No. E/631/2012 while Revenue is in appeal under appeal No. E/647/2012 against that portion of the order which has dropped the demands. 5. Shri P.P. Jadeja, learned Consultant appearing on behalf of assessee-appellant submits that Revenue has not correctly appreciated that clearances to 100% EOU against CT-3 certificates are considered "Deemed Exports" and in such clearances, Cenvat Credit is not required to be reversed and Refunds of Cenvat Credit in terms of Rule 5 of the Cenvat Credits are also allowed. This is a settled position in law by now. In the present matter Goods in question were cleared vide Notification No.22/2003-CE dt. 31-3-2003 to 100 % EOU against CT-3 certificate procedure without payment of duty which was on the condition that "the user industry brings the excisable goods directly from the factory of manufacture or warehouse". There is no dispute on the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded to be allowed by Notification. It is a well-settled principle of law that wherever literal meaning leads to an anomaly and absurdity, it should be avoided. Such settled principles of law are required to be considered to set aside the demands of Central Excise on clearances of inputs to 100 % EOU. He placed reliance on the following decisions:- (i) Com. of Cus. (Imp.) vs. Tullow India Operations Ltd. - 2005 (189) E.L.T. 401 (S.C.) (ii) Malwa Industries Ltd. - 2009(235) ELT- 214 (S.C.). (iii) Commr. Cus (IMPORT), Mumbai vs. Dilip Kumar & Co. - 2018 (361) E.L.T. 577 (S.C.) 7. He further submits that the facts are not in dispute that after clearance of inputs as such from Appellant‟s factory against CT-3, such goods (inputs) have reached in 100 % EOU. Even otherwise for receiving "Inputs" in the 100 % EOU, without payment of duty against CT-3 Certificates, the receiver 100 % EOU submits Bond for discharging duty liability, in case of violations or contraventions of Rules. The supplier of "inputs" does not have liabilities in such case. 8. As regard the demand of Rs. 1,25,65,890/- he submits that assessee has utilized services of Foreigners i.e. the persons not having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for undue reasons shown in the Appeal. This view of the Revenue in Appeal cannot be sustained, as the same is contrary to law and accepted by CBEC Circular F. No. 276/8/2009-CX. 8A dated 26-9-2011. Settled law is that the Field officers under CBEC can not take any plea against the Circulars issued by the CBEC. He placed reliance on the following decisions. (i) Ranadey Micronurients vs. CCE- 1996 (87) ELT 19(SC) (ii) CCE vs. Usha Martin Industries - 1997 (94) ELT 460 (SC) (iii) CCE vs. Dhiren Chemical Industries - 2002 (139) ELT 3 (SC) (iv) CCE, Meerut vs. Maruti Foam Pvt. Ltd. 2004 (164) E.L.T. 394 (S.C.) (v) CCE vs. Ratan Melting & Wire Industries- 2008 (231) ELT 22(SC). 9. He also submits that Revenue has contended in its Appeal that it is not permissible to pay Service Tax from Cenvat Credit Account in such payment under RCM. However for using Services of Foreigners, Service Tax is payable only from 18-04-2006 i.e. from enactment of Section 66A of Finance Act, 1994. There was no restriction for Payment of Service Tax under reverse charge mechanism under Rule 3(4) of Cenvat Credit Rules 2004. Explanation is introduced under Rule 3(4) of Cenvat Credit Rules, 2004 vide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arch 2007 by show cause notice No. V.85/15-150/OFF/OA/08-09 dated 07.07.2008, invoking extended period of limitation, which is not sustainable in facts of this case. There must be a deliberate attempt by assessee to suppress facts from Department with intention to evade payment of Excise duty or Service Tax which is absent in present case. He placed reliance on the following decisions:- (i) Cosmic Dye Chemical v. CCE- 1995 (75) ELT-721 (SC) (ii) Tamil Nadu Housing Board -1994 (74) ELT-9 (SC) On the basis of above, he submits that there is no justification for demand of any amount out of demand of Rs. 1,25,65,890/- and the Revenue‟s Appeal No. E/647/2012-DB deserves to be dismissed on this point. 12. As regard the demand of Cenvat Credit of Rs. 90,45,338/- on the ground that such credit pertained to other premises of Appellant not registered, he submits that impugned order has denied credit of Rs. 6,32,118/-, out of demand of Rs. 90,45,338/- for the period from November 2003 to March 2004. The Ld. Commissioner has taken the view that the assessee vide its letter dated 29-03-2004 has informed that they have adopted Centralised Billing and Accounting system at Gandhinaga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 58 (iii) Stadmed Pvt Limited vs. C.CE Allahabad- 1998 (102) ELT 466. (iv) M N Dastur Company Pvt. Ltd. Kolkata - 2010 (20) STR 230 (Tri. Kolkata), (v) Mportal India Wireless Solutions P. Ltd vs CST, Bangalore 2012 (27) STR-134 (Kar). 14. He further submits that in the present case, services received at those premises and Services provided by said premises were only on payment of due Service Tax. Therefore, credit availed in respect of input services used in the said premises is clearly admissible. Further, credit is demanded from November, 2003 to July 2006 by SCN No. V.85/15-150/OFF/OA/08-09 dated 07.07.2008 invoking the extended period of limitation, which is not sustainable in the facts of this case. The ingredients required to invoke extended period are not existing in this case. The case is of interpretation of whether Cenvat Credit can be taken or otherwise. In such cases of interpretation of provisions and without any intention to evade duty/tax, extended period of time limitation can not be invoked. Therefore, entire demand is not sustainable on merits or on time limitation in the facts of this case. Therefore, the entire demand is time barred and consequently, confo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 25-04-2012. However, Review Order No. R-08/2012 in the case is passed on 08-08-2012, which is beyond three months in any case. Hence, the Appeal No. E/647/2012 on this Review Order is not maintainable. He placed reliance on the following decisions. (i) CCE vs. M.M. Rubber Co. - 1991 (55) E.L.T. 289 (S.C.) (ii) GTC Industries Ltd. vs. CCE, New Delhi- 1997(94)ELT 9(SC) (iii) Amtrex Hitachi Appliances Ltd vs. CCE2009 (234) ELT-126 (Tri. - Ahmd.) (iv) CCE vs. Bhilai Wires Limited - 2009(236)ELT 40 (HP) 15.1 Shri Vijay G Iyengar, learned Superintendent Authorised Representative for the Revenue reiterates the findings of impugned orders in respect of party appeals and grounds of appeal in the Revenue appeal. 16. We have heard both sides and perused the records of the case. On going through the rival submissions and the records of the case, we find that assessee was registered with the Central Excise authorities as a "manufacturer of goods" and was also holding Service Tax Registration as service providers. Assessee was availing the facility of Cenvat Credit. Assessee had imported and also indigenously procured various parts and components, brought into their factory at Ga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ule (6) of Rule 6 of Cenvat Credit Rules, 2004. Therefore, the ruling by the Larger Bench is not applicable in the present case. I, therefore, hold that if the Cenvat credit is availed on inputs and if the same are cleared to 100% EOU as provided under sub-rule (6) of Rule 6 of Cenvat Credit Rules, 2004, Cenvat credit of duty paid on such inputs cannot be denied. I, therefore, allow the appeal filed by the appellant by setting aside impugned Order-in-Appeal." The ratio of above judgment squarely applicable in the present matter and we following the same are of the view that demand confirmed on this count in impugned order is not sustainable. 18. Further we have also gone through the provisions of Rule 3(5) of Cenvat Credit Rules 2004 applied by the revenue for denial of Cenvat Credit to the Appellant. Before proceeding further, we feel it appropriate to analyze said provision. The text of Rule 3(5) is reproduced here below :- "Rule3. (5) When inputs or capital goods, on which Cenvat credit has been taken, are removed as such from the factory, or premises of the provider of output service, the manufacturer of the final products or provider of output service, as the case may be, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tances of the case, we find no justification for demand of such amount under Rule 3(5) on the clearances made to 100% EOU. 20. We find that the words "as such" are being the subject matter of interpretation by the various Courts. Punjab and Haryana High Court in the case of Commissioner of Central Excise, Ludhiana vs. Khalsa Cotspin (P) Ltd., reported in 2011 (270) E.L.T. 349 (P & H) has held as under : "The assessee having validly availed Cenvat credit, same is required to be reversed only if goods were cleared in the same position without payment of Excise duty. In the present case, it has been held by the Tribunal that goods were not cleared in the same position but after having been used and in such situation Rule3(5) of the Rules will not apply." The Hon‟ble Bombay High Court in the case of Cummins India Ltd. v. Commissioner of Central Excise, Pune-III reported in 2007 (219) E.L.T. 911 (Tri.-Mumbai) confirmed the order of the Appellate Tribunal which has held as under : "The plain and simple meaning of expression "as such" would be that capital goods are removed without putting them to use. Admittedly, in the present case capital goods have been used for a period o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 66A of the Finance Act., Central Board of Excise and Customs has also accepted this position. We agree with the argument of learned Consultant that the amount debited from Cenvat Credit was not required to have been debited and if re-credit is taken of the said amount it is revenue neutral situation. Further from 18.04.2006, Appellant has paid service tax and they are eligible for the cenvat credit thereon. Hence entire action of the revenue in this matter is illegal and unsustainable, both on facts and in law. Further in this matter Cenvat demand is on the basis that the service tax liability cannot be discharged from the cenvat account. We, however, propose to accord to the dispute a more empirical analysis. 22. Section 66A of the Finance Act, 1994 makes the recipient of any service, specified in Section 65(105) of the Finance Act, 1994 - which would cover all "taxable services" - received by a person located in India, from a service provider located outside India, liable to pay Service Tax thereon as if he had himself provided the service in India. This, in taxing parlance, is known as payment on "reverse charge basis". In the Service Tax universe, Service Tax is payabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "Output Service" is defined, in Rule 2(p) of the Cenvat Credit Rules as service provided, by a provider of Taxable Service. It has already been pointed out, hereinabove, that the Appellant was, by dint of the definition of the expression, as contained in Rule 2(r) of the Cenvat Credit Rules, the "provider of Taxable Service". Section 66A of the Finance Act, 1994, provides that, in cases where service, provided by a provider located outside India, is received by a recipient in India, the service would be deemed to have been provided by the Indian recipient. (ix) Resultantly, the services received in India, by the appellant, from the service providers located outside India, were deemed to be output services, provided in India, for which the appellant was the deemed service provider. (x) In this scenario, Service Tax, on such services, was payable by utilisation of Cenvat credit, by virtue of Rule 3(4) of the Cenvat Credit Rules. 24. We may also observe, in this context, that this issue has engaged the attention of various High Courts from time to time, including, inter alia, the High Court of Rajasthan in U.O.I. v. Kansara Modlers Ltd. - 2018 (15) G.S.T.L. 255 (Raj.), the High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is prior to 01.07.2012, the case of the appellant will be governed under the provisions of unamended Rule 3(4) ibid and in absence of specific restrictions contained therein for non-utilisation of Cenvat credit by the service recipient, the benefit of the existence rule is available to the assessee for utilization of Cenvat credit for payment of service tax under reverse charge mechanism. 27. In view of the above, keeping in view the statutory provisions and judicial pronouncements as referred to hereinabove, it is clear that the argument of revenue for confirming the demand cannot sustain in law. 28. As regard the 3rd issue regarding denial of Cenvat Credit pertaining to other premises/ branch offices of the Appellant we find that in the present matter Ld. Commissioner allowed the Cenvat credit of input services received by the Regional /branch offices only with effect from 29.03.2004 and accordingly has denied the Cenvat Credit of Rs. 6,32,118/- out of demand of Rs. 90,45,338/-. The Ld. Commissioner held as under:- "28.7 From the above it is clear the as per sub-rule (2) of Rule 4 of the Service tax Rule, 1994, the assessee has an option to register the premises or offices fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r.)] Covers the issue. Therefore credit could not have been denied on the ground that the appellant did not have centralized registration during the period. As regards availment of credit by Appellant without a centralized registration, the fact that appellant had applied for centralized registration. The non obtaining the centralized registration at the best is a technical issue, since there is a substantive adherence of law in view of the fact that service tax has been apparently paid on the basis of centralized registration therefore credit could have been taken in the centrally registered office. Therefore it cannot be said that credit has been availed wrongly. It is not a case of the department that on the input services/ invoices, no service tax was paid and there is no dispute about receipt and use of the services, which are the main criteria for allowing Cenvat credit on input service. Therefore, in our view, credit, only on the technical infraction should not be denied. Further, Assessee was also registered with Central Excise Department from 1998 as manufacturer. The manufacturer can also avail the Cenvat Credit. A Division Bench of the Tribunal in Adbur Private Limited ..... X X X X Extracts X X X X X X X X Extracts X X X X
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