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TMI Blog2023 (5) TMI 332X X X X Extracts X X X X X X X X Extracts X X X X ..... stries Versus Principal Commissioner of Central Excise Pune - I Suresh Press Works Versus Principal Commissioner of Central Excise Pune - I S M Rolling Works Versus Principal Commissioner of Central Excise Pune - I Sumit Plastic Industries Versus Principal Commissioner of Central Excise Pune - I Spray All Versus Principal Commissioner of Central Excise Pune - I Shreekant Auto Engineering Works Versus Principal Commissioner of Central Excise Pune - I Lotus Flexible Packing Co Pvt Ltd Versus Principal Commissioner of Central Excise Pune - I HON'BLE MR C J MATHEW, MEMBER (TECHNICAL) HON'BLE MR AJAY SHARMA, MEMBER (JUDICIAL) Shri S Narayanan, Advocate for the Appellant Shri Amrendra Kumar Jha, Deputy Commissioner (AR) for the Respondent ORDER PER : C J MATHEW The ordinary, like tax assessment, does not make news headlines and is very rarely remarkable. Nevertheless, the renowned poetess, Ntozake Shange did find that 'In our ordinariness we are most bizarre!' but whether that is to be said about the foray of tax administration concerned with this dispute or about the appellant remains to be seen. At stake is Rs. 2,96,95,510 and Rs. 49,59,792 availed by M/s Anasuya Aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Suresh Press Works, a manufacturer registered under Central Excise Act, 1944, in their CENVAT credit account from April 2010 to September 2014 and from October 2014 to March 2015 respectively on discharge of tax liability under Finance Act, 1944 by providers of service procured by them, along with another Rs. 51,583 taken and utilized by them on capital goods received by them during the former period, was directed to be recovered under rule 14 of CENVAT Credit Rules, 2004, besides applicable interest thereon, by Principal Commissioner of Central Excise, Pune - I while imposing penalty under rule 15 of CENVAT Credit Rules, 2004. Attendant thereto, is the redesignation of Rs. 42,07,677, Rs. 7,13,994 and Rs. 40,85,619, paid as tax under Finance Act, 1994 by M/s Anubhav Auto Industries, M/s Mahesh Industries and M/s Snehal Industries during the span of the dispute, as credit of theirs under deposit with the exchequer. 4. The three manufacturers are in appeal before us against the deprivation of credit and the other ten, being 'job-workers' and though not burdened with demand, are, nonetheless, aggrieved that, despite retention of tax paid by them, their entire business model stands be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he liability is to be fastened on the 'principal manufacturer' supplying raw material or semiprocessed goods. The three manufacturer-assessees undertook the responsibility to discharge duties of central excise on the value at which they cleared the finished products to their customers and, thus, availed credit of tax discharged, under Finance Act, 1994, by the service tax-assessees. This was the third facet of the controversy. 7. The three 'principal manufacturers', suppliers of 'sheet metal components of automobiles' to M/s Tata Motors Ltd and others, procure 'mild steel sheets' which are sent for further working to the ten 'job-workers' against documentation prescribed in rule 4(5)(a) of CENVAT Credit Rules, 2004 governing the treatment accorded to credit taken under the CENVAT credit scheme straddling both 'manufacturer-assessees' under Central Excise Act, 1944 and 'service providing assessees' under Finance Act, 1994. It would appear from the records that the some capital goods, procured by the three manufacture-assessees and on which credit was availed, had been shifted to the premises of 'job-workers' that was permissible under CENVAT Credit Rules, 2004 subject to return wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of this dispute, to any breach of CENVAT Credit Rules, 2004 or of any evasion of duties spurned by mala fides in structuring of the transactional flow. 10. On perusal of the impugned orders, we take note that the worm in the wood, so to speak, is the access of 'job-workers', contrived by payment of tax under Finance Act, 1994 that they are not obliged to, both before, and in, the 'negative list' regime, to CENVAT Credit Rules, 2004. There is no doubt that section 65(19), and section 66D, of Finance Act, 1994 did, and appropriately so, render 'manufacture' and 'providing of service' to be mutually exclusive. That, however, is not the issue here for duty liability under Central Excise Act, 1944 is not being sought to be fastened, in lieu of taxability under Finance Act, 1994, on the 'job-workers' in the impugned proceedings. On the other hand, the adjudicating authority placed reliance on the lack of option in availing exemptions under section 5A of Central Excise Act, 1944 to be no less applicable to the parallel legislation intended for levy of service tax and the enablement of exemption under section 93 of Finance Act, 1994 which was held to be germane to the 'job workers' who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of credit. The decision of the Tribunal in re Federal Mughal Goetze India Ltd v. Commissioner of Central Excise, Bangalore [2015 (318) ELT 340 (Tri-Bang)] would not, he argued further, apply as it pertained to availment of notification no. 214/86- CE (NT) dated 25th March 1986 in which the 'job worker' could not be expected to know the final disposition by the principal manufacturer but that lack of certainty could not be claimed in the present instance by entities belonging to the same group. 14. The sequence of detriment leading to recovery of credit availed by the three principal manufacturers under rule 14 of CENVAT Credit Rules, 2004 is founded upon the imposition of mandatory acceptance of exemption from tax as provider of 'business auxiliary service' and 'taxable service' over the time span of dispute for which the adjudicating authority has drawn upon the manner in which exemptions under section 5A of Central Excise Act, 1944 are administered. From such determination, it was held that tax, having been collected without authority of law, is transformed as 'deposit' contemplated in section 73A of Finance Act, 1994 and that, with the consequent erasure of documentation evinc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 5A of Central Excise Act, 1944 and section 93 of Finance Act, 1994 has also been taken note of in the said judgement thus '11. Section 5A (1) of the Central Excise Act provides for power to grant exemption from duty of excise. Section 5A (1A) of the Central Excise Act specifically provides that "for the removal of doubts, it is hereby declared that where an exemption under sub-section (1) in respect of any excisable goods from the whole of duty of excise leviable thereon has been granted absolutely, the manufacturer of such excisable goods shall not take the duty of excise on such goods." 12. The words "shall not pay" enumerated in the said provision specifically denotes that it is the mandatory requirement on the manufacture of such excisable goods not pay the duty of excise on such goods in respect of which an exemption under Section 5A (1A) has been granted absolutely. Such a mandatory requirement of "not to pay" the duty of excise on goods exempted under sub-section (1) of Section 5 (A) is not found in Section 93 of the Service Tax Act. Section 83 of the Service Tax Act provides for application of certain provisions of Central Excise Act, 1944 in relation to service ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not administered the mandate of law appropriately even if section 73A of Finance Act, 1994 could have been drawn upon. The consequence of such determination in the adjudication order has been the recovery of identical amount from the three principal manufacturers; the entitlement to refund of the amount, under section 73A of Finance Act, 1994, renders the entire exercise of adjudication, insofar as availment of credit of tax collected by the 'job worker' is concerned, to be futile and in a circular loop. That is bizarre, if nothing else! 16. Turning to the issue of capital goods that were not found in the premises of the principal manufacturers who had availed credit thereon under CENVAT Credit Rules, 2004, the decision of the Tribunal in re Zenith Machine Tools Pvt Ltd has held that '5. ...... The first issue involved in this case is whether the lower authorities were justified in seeking reversal of Cenvat credit and capital goods (sic) which are found in the job workers premises. It is undisputed in this case, that the said job worker M/s. Aditya Engineering is doing job work for the appellant. It is also undisputed that the entire job work material from M/s. Aditya Engin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redit, it would have been inappropriate for the adjudicating authority to determine the deployment prevailing at the time of adjudication. Learned Chartered Accountant drew our attention to the reversal of credit affected by the principal manufacturers and of it having been taken note in the show cause notice. In the circumstances, it is surprising that the adjudicating authority went ahead with the detriment in the impugned orders in relation to the same capital goods. The reversal of credit, claimed well before the issue of show cause notice, has not been controverted by tax authorities at any stage till now. Consequently, the demand of the same under rule 14 of CENVAT Credit Rules, 2004 is not tenable. 18. The denial of credit to the ten 'job workers' and consequent deeming of tax paid under Finance Act, 1994 as deposit in terms of section 73A of Finance Act, 1994 is, in view of our findings, not maintainable. With the tax having been properly discharged, there is no scope for denial of such amount as credit available under CENVAT Credit Rules, 2004 to the three principal manufacturers. The recovery of Rs. 5,65,95,738 from the three principal manufacturers for the period from A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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