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TMI Blog2024 (8) TMI 1328X X X X Extracts X X X X X X X X Extracts X X X X ..... rom whom such inputs are procured is recorded and the burden of proof regarding the admissibility of Cenvat credit shall lie upon the manufacturer which is the Appellant (A1) in this case. It is a settled law that adjustment of Cenvat credit of inputs is permissible whenever demand is made by the Department on the final manufactured goods. The Appellant (A1) is eligible to avail Cenvat Credit on the inputs used in the manufacture of job worked goods provided the suppliers of these raw materials endorse the documents in favour of the Appellant (A1) and subject to verification of the duty paid nature of input invoices / documents / Bills of Entry, which were already submitted to the Adjudicating Authority. In paragraph 46.15 of the Order of Adjudicating Authority, it was mentioned that all the documents in five spiral bound booklets for examining the Appellant s eligibility for input Cenvat credit were sent to the Assistant Commissioner of Central Excise, Coimbatore-II division for conducting verification - As there is a considerable delay, verification of the documents submitted to be got completed within a period of 6 months from the date of communication of this order. Whether Ext ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcise Rules, 2002 - however, the penalties imposed are on the higher side and to meet the ends of justice, the same are reduced. The appeals are partly remanded and partly allowed. - MS. SULEKHA BEEVI C.S., MEMBER (JUDICIAL) AND MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL) For the Appellants : Mr. Raghavan Ramabadran, Advocate Ms. Nimrah Ali, Advocate For the Respondent : Mr. M. Selvakumar, Authorised Representative ORDER Excise Appeal Nos. 41457-41561/2014 have been filed by the Appellants assailing the Order-in-Original No. 03/2014 dated 28.02.2014 passed by the Commissioner of Central Excise, Coimbatore confirming the demand of Excise Duty of Rs.4,53,45,054/- under Section 11A(10) of the Central Excise Act, 1944 ( ACT ) for the period from 10.06.2010 to 14.04.2012 along with interest under Section 11AA of the act ibid and imposing penalty equal to the duty confirmed in terms of Section 11AC of the ACT and personal penalties imposed under Section 26(1) of Central Excise Rules, 2002 (Rules). The details of the Appeals are as follows provided below:- Appeal No E/41457/2014 E/41458/2014 E/41459/2014 E/41460/2014 E/41461/2014 Appellant Premier Roofing and Building Systems Pvt. Ltd. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion with their investigation. 2.3 Investigations conducted revealed that A1 was engaged in the manufacture of Profiled Roofing Sheets of (i) Iron Steel falling under CTH 73089090 and (ii) Aluminium falling under CTH 76109090 of CETA . The raw materials Viz. GCC Coils and Aluminium Coils were decoiled and converted into sheets in decoiling machines to make profiled sheets and then crimped with curves to cater to customers demands. The Appellant was found to be discharging excise duty only on goods manufactured by them and not on the job worked goods reportedly under the wrong notion that excise duty was not attracted on those goods manufactured on job work basis out of the raw materials supplied by the principals without excise invoices. 2.4 After detailed investigation, the Department has concluded that A1 was liable to pay duty on job worked goods also along with applicable interest and as the Appellant resorted to suppression of facts with an intent to evade payment of appropriate duty, penalty was imposable under Section 11AC of the ACT. 2.5 Consequently, a Show Cause notice dated 17.10.2012 was issued to A1-A5 proposing interalia to demand excise duty of Rs.4,53,45,054/- under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (109) ELT 305] (c) National Steel Industries Vs CCE, Chandigarh [1999 (111) ELT 80 (Tri.)] (d) CCE, BBSRII Vs. re-rolling Mills [2003 (159) ELT 192 (Tri.-Kol.)] (e) DSM Anti-infective India Pvt. Ltd. Vs CCE, Chandigarh [2004 (165) ELT 69 (Tri.-Del.)] (f) Supreme Industries Ltd. [2004 (64) RLT 135] (g) Muliflex Lami Prints [2004 (64) ELT 532] (h) CCE Vs. Servomed Pvt. Ltd. [2004 (172) ELT 318] (i) Sujana Steel Vs. CCE, Hyderabad [2009 (243) ELT 711], etc. It was submitted that the impugned order had in para 46.3 ignored the above case laws stating that the case laws pertained to Modvat Credit Scheme and not applicable to the demand under the Cenvat Scheme which was erroneous as the object and purpose of the Modvat and Cenvat schemes was one and the same as held in (a) Vikram Cement Vs. CCE, Indore [2006 (194) ELT 3 (SC)] and (b) CCE, Belgaum Vs. Vasavadatta Cement [2008 (230) ELT 335 (Tri.-Bang.)]. Further, the Appellant cited the CBEC Circular No. 962/05/2012-CX8 dated 28.03.2012 which permitted utilisation of cenvat credit towards payment of duty demand. ii. The Appellant contested the ground as held in the impugned order that the Appellant had failed to discharge duty liability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e extent, extended period was not invokable as the Appellant had no intention to evade payment of excise duty in as much as the Appellant had duly discharged service tax treating the job work as service. vii. It was contested that interest was only an accessory to tax and without recovery of tax, interest has no independent existence and reliance was placed on the decision in the case of Pratibha Processors Vs. UOI [1996 (88) ELT 12 (SC)] wherein it was held that once the demand is not sustainable, then the demand for interest cannot survive independently which was also reiterated in Commissioner of Customs Vs. Jayathi Krishna Co. [2000 (119) ELT 4 (SC)]. 6.1 Shri Raghavan Ramabhadran and Ms. Nimrah Ali, Ld. Advocates for the Appellants reiterated their contentions as submitted in the Grounds of Appeals. They have mainly emphasised that the Appellants were eligible to avail CENVAT Credit on the inputs received for the discharge of output duty liability placing reliance on the following cases: - Jai Balaji Industries vs. Commissioner of Central Excise, Bolpur, [2023 (6) TMI 1102-CESTAT Kolkata] Commissioner of Central Excise, Pune vs. Coca-cola India Private Limited, [2007 (213) E.L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts, excise duty cannot be demanded on the same. 7. The Ld. Authorised Representative Shri M. Selvakumar has affirmed the findings of the Original Adjudicating Authority. He has drawn our attention to the fact that the raw materials utilised for the manufacture on its own account and on job work basis were one and the same and there was no difference between the manufacturing process on their own account and on job work basis and stressed that duty was payable on the job worked goods. He further submitted that there is no provision in the law for availment of Cenvat Credit from a retrospective date and as the Appellant had suppressed the fact of job work with an intent to evade payment of appropriate duty, Penalty was imposable. Hence it was prayed to dismiss the Appeals filed by the Appellants and affirm the impugned order. 8. Heard both sides and carefully considered the submissions and evidences on record. 9. The issues which arise for decision in these appeals are: - (i) Whether the Appellant is eligible to the input Cenvat credit and its utilisation for payment of duty demanded on job worked goods? (ii) Whether Extended Period is invokable or not considering the evidence and fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ked goods were sold as such in the market without any further process subsequently and without payment of Central Excise duty. In these circumstances, the job worker is the manufacturer. However, when the procedure under Notification No. 214/1986 dated 01.03.1986 as amended is followed the liability is shifted to the supplier of materials. In view of the above, the Appellant (A1) in whose hands a different, distinct marketable product viz., roofing sheets, emerge is the manufacturer of Excisable goods and so liable to pay appropriate Central Excise duty on the goods manufactured on job work basis in respect of the raw materials supplied by the traders. 12. The Appellant has mainly submitted that he was under mistaken impression that on the job worked goods, he was not required to pay excise duty as the iron steel and aluminium coils were not received under excise duty paying documents and not availed Cenvat credit on these inputs received. A reference was also made to the Audit Report of the Central Excise Department conducted during January 2012 wherein, the Appellant was advised to pay Service Tax as job work undertaken amounted to provision of service under Business Auxiliary Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t credit benefit as reportedly there was undue delay in completing the verification of the duty paid documents by jurisdictional officers. We are of the view that it is a settled law that the Cenvat credit should be allowed on inputs used in the manufacture of the final products to discharge the output duty liability. The delay on the part of the jurisdictional officers in completing the verification of documents, could not be used against the Appellants to deny the Cenvat credit. The Appellant (A1) has brought to the notice of the Adjudicating Authority that they were eligible for Cenvat credit of Rs.4,50,26,647/- as against the duty demand of Rs.4,53,45,054/-. As the Cenvat credit being a substantive right, the same ought to have been extended at the time of quantifying the demand subject to availability of duty paying documents and after their verification. In respect of job worked goods, it appears that the duty paid invoices and Bills of Entry for transfer of raw materials to the Appellant (A1) were in the name of the suppliers and these need to be transferred in favour of the Appellant (A1) by the suppliers. These iron steel and aluminium coils were sent by the Coimbatore Bra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to the period to which the arrears pertained. Such clarification has been sought in view of first proviso to rule 3(4) of the Cenvat Credit Rules, 2004. As per this proviso, while paying duty of excise or service tax, as the case may be, the cenvat credit shall be utilized only to the extent such credit is available on the last day of the month or quarter, as the case may be, for payment of duty or tax relating to that month or the quarter, as the case may be. 2. Doubts have been raised whether these restrictions will be applicable to duty payable in terms of Section 11A or duty paid after due date in terms of rule 8 of the Central Excise Rules, 2002. 3. The matter has been examined in the Board. Practice ascertained from field formations points out that in majority of cases the payment of demands confirmed under Section 11A are being permitted to be paid by utilizing cenvat credit without linking the same to the period to which these demand pertain. 4. A harmonious reading of rule 8 of Central Excise Rules, 2002 and first proviso to rule 3(4) of the Cenvat Credit Rules, 2004 indicates that the restriction with regard to the utilization of cenvat credit is relating to the normal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e raw materials endorse the documents in favour of the Appellant (A1) and subject to verification of the duty paid nature of input invoices / documents / Bills of Entry, which were already submitted to the Adjudicating Authority. In paragraph 46.15 of the Order of Adjudicating Authority, it was mentioned that all the documents in five spiral bound booklets for examining the Appellant s eligibility for input Cenvat credit were sent to the Assistant Commissioner of Central Excise, Coimbatore-II division for conducting verification. As there is a considerable delay, verification of the documents submitted to be got completed within a period of 6 months from the date of communication of this order. Invocation of Extended Period: 17. It is to be noted that the Appellant has commenced its manufacturing activity in 2009 and started job work for the Appellant traders since June 2010. They have neither paid service tax nor central excise duty uptill the date of receipt of audit objection which was intimated on 16.03.2012. The relevant para in Audit report reads as under: - From the above, it is clear that the Appellants (A2-A4) who are the traders in profiled roofing sheets have supplied ga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aterials get their job work done from the Appellant (A1) as below: - i. That they normally place the purchase order for aluminium roofing materials from their head office for both the company and the firm and the suppliers supply the goods directly to their two branch offices situated at Coimbatore. ii. that their Coimbatore branches deliver these raw materials under Delivery challans to the Appellant (A1) for manufacture of the final product viz., Roofing Sheets strong profile and wide profile under the cover of Delivery Challan. iii. that the final products after manufacture were delivered to their Coimbatore office under the cover of delivery challan and from there, the final products were transported to their Head Office at Cochin. iv. that they delivered the goods received from Appellant (A1) as such to their various branches under the cover of stock transfer for sale and that they were selling the goods directly from the Head Office as well as through the above mentioned branches. v. that they had purchased and supplied two profiling machines (Capital goods) to Appellant (A1) on loan basis and the price of the same is being adjusted against the payment of labour charges throu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... non-payment of central excise duty thereon was not disclosed by the Appellant (A1) either in the ER-1 Returns filed or by service tax payment or in any other manner. 23. Even, the conduct of appellant defies logic when they have not discharged the excise duty on job worked goods but were paying on its own production of identical goods. In view of the above detailed reasoning, we have to hold that larger period has been rightly invoked. Consequently, demand of duty and imposition of mandatory penalty is legal and proper. As the issue of limitation is decided in favour of Revenue, the orders of confiscation and imposition of fines are upheld. As to the Appellant s submission that they are eligible for refund of service tax paid as the job work manufacturer which cannot be subjected to both duties of excise and service tax, we find merit in these contentions and hold that the Appellant (A1) is entitled to claim refund and we order so accordingly. The mandatory penalty imposable will be equivalent to the net duty payable after adjusting the eligible Cenvat credit on inputs used in job work manufactured goods. 24. We do not find any merit in submission of Shri Vikas Sanghrajka (A5), Exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of offence of non payment of duty on the job worked goods and so are liable to penalty under the Rule 26 (1) of the Central Excise Rules, 2002. The Original Adjudicating Authority has imposed the penalties on Appellants (A2-A5) as follows:- Appellants Penalty Imposed Mr. Vikas Sanghrajka (A5) Rs.1,00,00,000/- M/s. Oriental Metals Steels Pvt. Ltd. (A2) Rs.42,00,000/- M/s. Oriental Metals (A3) Rs.33,00,000/- M/s. Rainbow Metals (A4) Rs.16,00,000/- 26. Considering the overall facts in these appeals, we are of the view that penalties imposed are on the higher side and to meet the ends of justice, it will suffice, if the same are reduced as follows:- Appellants Penalty Reduced Mr. Vikas Sanghrajka (A5) Rs.10,00,000/- M/s. Oriental Metals Steels Pvt. Ltd. (A2) Rs.5,00,000/- M/s. Oriental Metals (A3) Rs.5,00,000/- M/s. Rainbow Metals (A4) Rs.5,00,000/- 27. In summary, i. The duty demand and invocation of extended period are decided against the Appellant (A1) and in favor of the Department. ii. The issue of eligibility of Cenvat credit on the raw materials received is decided in favor of the Appellant (A1) who would be eligible for adjustment of such credit towards the duty demanded on t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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