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TMI Blog2024 (6) TMI 494X X X X Extracts X X X X X X X X Extracts X X X X ..... cedural infirmities should not stand in the way of substantive entitlement and that the law, as it stood then, did not envisage proportional distribution of credit were not dealt with in the impugned order. It would also appear that decisions supporting these propositions now produced before us had also not been placed before the adjudicating authority. It would, therefore, be appropriate for a the legality of the proposals in the notice to be decided afresh and limited to the period validated by section 11A of Central Excise Act, 1944 - the impugned order is set aside - matter remitted back to the original authority to be adjudicated afresh after hearing the assessee on their submissions. Appeal is allowed by way of remand. - HON BLE MR C J MATHEW , MEMBER ( TECHNICAL ) And HON BLE MR AJAY SHARMA , MEMBER ( JUDICIAL ) Shri Arshad Hidayatullah , Senior Counsel with Shri Makrand Joshi , Advocate for the appellant Shri Sunil Kumar Katiyar , Assistant Commissioner ( AR ) for the respondent ORDER PER : C J MATHEW The appellant, M/s Frank Faber India Ltd, was proceeded against in its erstwhile name and style of M/s Faber Heatkraft Industries Ltd and,on the basis of audit carried out i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice has been issued for extended period of five years which includes that from August 2007 to December 2007, the period covered by audit which had been cause for initiating the present proceedings, and later precluding scope for alleging the pre-requisites for demand under section 11A of Central Excise Act, 1944 and for imposition of penalty under section 11AC of Central Excise Act, 1944. Furthermore, he objected strongly to the proposition of Learned Authorized Representative that trading should be excluded from the attributable proportion of credit availed by Unit I as trading was not eligible output service. Both sides were heard at length on these aspects of the impugned order. 4. The tax liability in question has been discharged under section 66A of Finance Act, 1994 and in accordance with agreement between the appellant-company and its overseas principal on the sale value of the specified goods. The three undertakings of the appellant are manufacturing facilities, and registered under Central Excise Rules, 2002 for oversight of liability arising on manufacture under Central Excise Act, 1944 with its own crafting of valuation for assessment; consequently, the taxable event an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge. 6. It is seen that the notice covers the period after December 2007 in addition to a few months prior to extend to all credit taken on tax paid on royalties for five years till issue of notice. It is also seen from 30. In view of aforesaid discussions. 1 have to hold that the noticee i.e manufacturing unit No. I, is not eligible to avail Cenvat credit in respect of service tax paid on royalty charges on account of receipt of 'Technical Know-how from their foreign principal. 'Niro-PIan AG Switzerland on its trading sales effected by their trading unit. Further, in view of non-obtaining of registration as Input Service Distributor by the registered premises of M/s. Faber Heatkraft Industries Ltd 1 have to also hold that the availment of Cenvat credit in respect of service tax paid on royally charges on the strength of Challan showing payment of service tax by the registered office of M/s Faber Heatkraft Industries Ltd., which is not a prescribed and a valid document under the provisions of Rule 4A of the Service Tax Rules. 1994, is also not admissible to the noticee. Further, it is also discussed in above para that the input service in respect of other manufacturing and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ul Cenvat by noticee to avoid payment of excise duly through PLA is correctly established. Therefore, 1 have to hold that the noticee i.e. manufacturing Unit No 1 of M/s Faber Heatkraft Industries Ltd. is liable for penalty for in admissible availment of Cenvat credit of service tax paid on royalty charges relating to trading sale and also on manufactured sales under Rule 15(2) of Cenvat Credit Rules, 2004 read with Section 11AC of Central Excise Act, 1944, which is equal to the wrongful availment and utilization of Cenvat credit in contravention of the provisions of Cenvat credit Rules, 2004 and provisions of Excise Act. Since, equal penalty is proposed to be imposed on the noticee which is sufficient to the circumstances of the case, I am inclined not to impose any penally on co-noticee i.e registered premises of M/s Faber Heatkraft Industries Ltd. that there is no justification offered for inclusion of the period after December 2007 in the notice till the normal period of limitation commences as relevant date in terms of section 11A of Central Excise Act, 1944. Consequently, save for credit assigned to Unit I during the normal period of limitation of one year computed in accorda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons. Further the types of documents under which such distribution of Cenvat can be undertaken are also prescribed. Therefore, the availment of Cenvat by the noticee i.e manufacturing unit No.I, on the strength of Challan showing payment of service tax by the registered office of M/s Faber Heatkraft Industries Ltd., which is not a prescribed and a valid document under the provisions of Rule 4A of the Service Tax Rules, 1994, is not legal and permissible. implying, owing to factory operating at the same premises as the office, that input service distributor registration would never have been granted. The submissions of the noticee that procedural infirmities should not stand in the way of substantive entitlement and that the law, as it stood then, did not envisage proportional distribution of credit were not dealt with in the impugned order. It would also appear that decisions supporting these propositions now produced before us had also not been placed before the adjudicating authority. We are, thus, unable to evaluate the findings in the impugned order on the legal aspects. 8. It would, therefore, be appropriate for a the legality of the proposals in the notice to be decided afresh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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