9911796707
TMI Blog2024 (9) TMI 238X X X X Extracts X X X X X X X X Extracts X X X X ..... ace of evidence - the Department has not submitted any evidence to the contrary. Accordingly, there is no substance in the allegation of the Department that all those inputs are consumed in a single day. This is evident from the stock register maintained in RG-23A Part-I which forms part of RUD-3 to the Show Cause Notice dated 27.02.2014. Accordingly, we hold that the CENVAT Credit of Rs.6,25,651/-availed by the Appellant-Assessee cannot be denied on this ground. Thus, we set aside the demand confirmed in the impugned order on this count. Difference of opinion in the report dated 06.08.2024 is with respect to returned goods involving CENVAT Credit of Rs.5,14,168/- - HELD THAT:- The Appellant-Assessee entered such returned goods in their finished goods stock records. However, for the purpose of control, they have also recorded the factum of receipt back of cleared goods in a separate register. Merely relying on such recording of these goods in separate register, the Department assumed that the inventory of these products was separately maintained without physically verifying the same or even checking the accounting of finished goods stock. A bare look at the goods return register wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed the credit of Rs.26,70.004/- For the same reason, the confirmation of demand of Rs.14,962/- in the impugned order is not sustainable. Hence, the Revenue s appeal on this issue is dismissed. Time Limitation - HELD THAT:- The fact of availment of CENVAT credit was duly reflected in the periodical returns (ER-1) filed by the Appellant-Assessee. Thus, there is no evidence of suppression of fact with intention to evade the payment of tax established in this case. In absence of any such evidence of suppression of fact, thus raising of demand by invoking of extended period of limitation is not sustainable - This view has been held in the case ofPr. Commissioner vs. Himadri Speciality Chemical Ltd. [ 2022 (9) TMI 1213 - CALCUTTA HIGH COURT] wherein it has been held that if availment of credit shown in ER-1 return filed with Department, then five years extended period of demand cannot be invoked - the entire demand confirmed vide impugned order dated 20.08.2015 is legally unsustainable on the grounds of limitation. Demand of interest on the payment/reversal of CENVAT Credit - HELD THAT:- Rule 14 of the CCR has been invoked to levy interest on the amount to be recovered under Rule 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant-Assessee was having considerable quantity of finished goods and inputs in stock, they were under the process of making inventory of such goods to calculate their liability to reverse the amount equivalent to the CENVAT credit availed on inputs lying in stock as well as inputs used in manufacture of finished goods/semi-finished goods. 2.1. A team of officers from the anti-evasion unit of the Department visited the factory of the Assessee on 07.03.2013 for the purpose of ascertaining the details of finished goods and inputs lying in stock with regard to implementation of Rule 11(3)(ii) of the CENVAT Credit Rules, 2004 (hereinafter referred to as CCR ). 2.2. Consequent to verification by the officers, a Show Cause Notice bearing No. V (12)74/HQAE/Misc. Inv/Kol-I/2013/Lux/943 dated 27.02.2014was issued to the Assessee demanding the following: - Sl. No. Issue/Allegation Demand (Rs) 1. CENVAT credit availed for brand promotion services in relation to exempted final product in contravention of Rule 6(1) of the CCR as well on the ground that invoice was addressed to head office instead of the manufacturing unit 89,61,000/- 2. CENVAT credit availed on invoices addressed to head offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacturing unit, it was held that when there is no dispute regarding rendering of services and payment being made, substantial benefit cannot be denied for mere procedural lapse. 2. Rs.26,84,966/- (Demand of 26,70,004/- dropped and 14,962/- confirmed) CENVAT credit availed on invoices addressed to head office/corp. office of the Assessee and also on some invoices mentioning incorrect address. F INDING Demand of Rs.26,70,004/- was dropped on the same finding as mentioned above. Demand of Rs.14,962/- was confirmed on the ground that address contained in the invoice is not associated with the Assessee. 3. Rs.6,25,651/- (Entire demand confirmed) Demand under Rule 11(3)(ii) of the CCR in respect of inputs (paper board, snow white bleaching powder, yarn) contained in semi-finished goods (work-in-progress) when final product became exempted. F INDING Inputs/Packing materials on which CENVAT credit was availed was sent to job worker on 28.02.2013, it was not possible to consume such input/packing material before 01.03.2013, therefore, such duty suffered input/packing material would be available in Work-in-Progress 4. Rs.31,24,345/- (Entire demand confirmed) Demand under Rule 11(3)(ii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10/- less Rs. 12,21,873/- already reversed) under 11(5) of the Central Excise Act, 1944 (CEA) r/w Rule 14 of the CENVAT Credit Rules, 2004 (CCR); Interest Not quantified on Rs. 1,85,75,437/- and Rs. 1,24,190/- on amount of Rs. 12,21,873/- already reversed under Section 11AA of the CEA r/w Rule 14 of the CCR; Penalty Rs.92,87,721/- under Section 11AC(1)(b) of the CEA read with Rule 15 of the CCR. 3.1. Aggrieved against the confirmation of the above said demands, the Appellant-Assessee has filed this appeal. 4. Regarding the demands in respect of Excise Appeal Nos. 75048 and 75091 of 2015, confirmed and dropped in the Order-in-Original No. 03/Commr./Kol-I/C.Ex./2014-15 dated 29.09.2014, the Appellant-Assessee made the following submissions: 4.1. Demand to the extent of Rs. 1,16,31,004/-has been correctly dropped against the Assessee and Demand to the extent of Rs. 14,962/- has been wrongly confirmed. It is submitted that the demand of CENVAT credit of Rs.89,61,000/- availed on brand promotion services of the brand Lux received through 2 IPL franchises namely M/s. Sahara Adventure Sports Ltd. and M/s. KPH Dream Cricket Pvt. Ltd. for the period - FY 2013-2015 was raised on 2 counts: th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the context of inputs prior to insertion of Rule 11(3), it will equally apply to input services as well inasmuch as there was no provision equivalent to Rule 11(3) for input services during the relevant period. It is submitted that SLP against the above ruling was dismissed by the Hon ble Supreme Court reported as 2015 (320) ELT A185 (S.C.). 4.6. Further, it is submitted by the Appellant-Assessee that similar observations have been made by this Tribunal and various High Courts in the below mentioned rulings: Commissioner of C. Ex., Rajkot vs. Ashok Iron and Steel Fabricators [2002 (140) ELT 277 (Tri-LB)], SLP dismissed by Supreme Court reported as 2003 (156) ELT A212 (SC), Tractor and Farm Equipment Ltd vs. Commr. of C. Ex., Madurai [2015 (320) ELT 357 (Mad.)], Commissioner of Cus. C. Ex., Meerut I vs. Apco Pharma Ltd [2015 (319) ELT 641 (Uttarakhand)], 4.7. CENVAT credit of Rs. 26,84,966/- availed by the Appellant-Assessee was proposed to be denied on the ground that some of the invoices were addressed to head office/corp. office of the Appellant-Assessee and also some invoices mentioned incorrect address. On adjudication, the ld. adjudicating authority has allowed the CENVAT Cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee itself. Thus, it is their contention that the impugned order is liable to be set aside on this ground alone. It is further contended by the Appellant-Assessee that the impugned order has proceeded merely on an apprehension or a suspicion that the Appellant could not have consumed so much inputs in a single day; this is without any corroborative evidence on the part of the Department; that it is a settled law that suspicion however strong, cannot take place of evidence and thus, the demand is liable to be set aside on this ground also. 5.2. Further, it is submitted that the Appellant-Assessee did not consume such inputs in a single day, but such inputs were consumed in making final goods by the Appellant-Assessee over the month; the Appellant-Assessee merely recorded the fact of such usage of inputs at the end of the month, as per its accounting practice, which is evident from the stock register maintained in RG-23A Part I which forms part of RUD-3 to the Show Cause Notice dated 27.02.2014. 5.3. Further, it is the submission of the Appellant-Assessee that the issue, when looked along with the issue of reversal of credit under Rule 11(3) on inputs contained in finished goods, is r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts willingness to pay the balance amount of Rs.12,84,118/-. 6.1. It is submitted that the reason for difference is that: a. Earlier incorrect CENVAT credit amount availed on spun yarn and packing material was taken, b. Further, the Assessee had calculated the reversal only on the closing stock figure as on 28.02.2013 for FY 2012-13 instead of the closing stock arrived at after taking into account opening stock, manufacture and clearance of final products. c. Further, there were a few final products on which spun yarn was used whereas it was not used in respect of others. The previous working did not consider the said aspect. 6.2. It is submitted that initially all these aspects were not taken into consideration and the reversal amount was calculated. The Assessee submits that in any case, as against the Department s demand of Rs. 31,24,345/-, the Appellant-Assessee has arrived at a higher reversal of Rs.32,04,919/- and hence there is no plausible reason for not accepting the reversal amount determined by the Appellant-Assessee; such working cannot be discarded merely by saying it to be an afterthought. 6.3. Accordingly, the Appellant-Assessee prayed for accepting the revised calcul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hamdard (Wakf) Laboratories vs. Commr. of Customs, CE ST, Ghaziabad [2021 (11) TMI 299-CESTAT Allahabad]- as affirmed by the Hon ble Allahabad High Court in 2022 (3) TMI 1523 - Allahabad High Court - as affirmed by the Hon ble Supreme Court in 2023 (5) TMI 603 SC, wherein it has been held that an amount required to be reversed under Rule 6(3) cannot be demanded under Rule 14 of the CCR. 8.1. The Appellant-Assessee submitted that penalty under Rule 15 can be imposed only when CENVAT credit taken is wrongly utilized in contravention of any provision of the Central Excise Act or rules made thereunder. It is submitted that while recovering an amount under Rule 11(3)(ii), no penalty can be imposed. In this regard reliance is placed on Commissioner of Cus., C. Ex. ST., Hapur vs. Shree Baba Exports [2018 (364) ELT 665 (Tri-All.)]. 8.2. Accordingly, the Appellant-Assessee submitted that no interest can be levied or penalty imposed in this case and prayed for setting aside the same. 9. Regarding the demands confirmed in Excise Appeal No. 76076 of 2015, vide Order-in-Original No.10/Commr/Kol-I/C.Ex./2015-16 dated 20.08.2015, the Appellant-Assessee submitted that the demand of Rs. 1,20,66,18 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AT credit on PY Yarn/Spun Yarn has been duly considered by the Appellant while working out reversal of Rs. 32,04,919/- under Rule 11(3)(ii) of the CCR which is the subject matter of Excise Appeal No. 75048 of 2015. It is submitted by the Assessee that if this demand amount is allowed to be sustained, it would amount to duplication of demand. 9.1. It is further submitted that the Department is taking contrary stands in different cases pertaining to the same issue. In Excise Appeal No. 75048 of 2015, the Department is of the view that CENVAT credit on PV Yarn/Spun Yarn is only Rs. 23,64,695/- and the revised calculation with the figure of Rs. 1,44,31,147/- was an afterthought whereas in the instant case, the Department has taken the same very figure as credit of PV Yarn/ Spun Yarn availed during the year and adopted it to work out the credit pertaining to such yarn in stock, by reducing the incorrect figure of Rs. 23,64,695/- therefrom. In light of the aforesaid, the Appellant-Assessee submitted that the instant demand confirmed by invoking the extended period of limitation again cannot be sustained and is liable to be set aside. 9.2. The Appellant-Assessee submitted that entire dema ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ginal dated 29.09.2014, the Revenue has made the following submissions: - (a) The Commissioner has overlooked the fact that in the Show Cause Notice dt. 27.02.2014, the credit of CENVAT on Input Service to the tune of Rs. 89,61,000/- was never disputed. The point of dispute was utilisation of the same credit during the period 2013-15 when their product for which such Input Service was utilised, was exempted. (b) The Commissioner also overlooked the fact that the agreement between the Assessee and M/s. Sahara Adventure Sports Ltd. was signed during April/ May 2013, but it is seen that the Invoices were all dated 25.02.2013 i.e., prior to the date of agreement. The Commissioner failed to examine/scrutinize the invoices all dt. 25.02.2013 as how those were executed/transacted before agreement. (c) The Commissioner has erred in discussing about the applicability/application of Point of Taxation Rules 2011 when the question of taking credit of the Input Service was never disputed in the Show Cause Notice dt. 27.02.2014 and in the same Show Cause Notice, no reference of the Point of Taxation Rules 2011 was made. (d) The Commissioner failed to appreciate that during the period when their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ri and Shri Shovit Betal, both Advocates, appeared for personal hearing on behalf of M/s Lux Industries and submitted that Cenvat Reversal is on account of finished goods lying in stock as on 28/02/2013 and same can be ascertained from calculation as shown in SCN. There are two Cenvatable input, packing material which are used in all finished goods and spun yarn which are used in cots wool. Thus, ITC reversal related to packing material shall be in proportion to percentage of Closing Balance of finished goods of all manufactured goods and ITC reversal related to Spun Yarn shall be in proportion to percentage of Closing Balance of Cots wool. Their calculation is more than the demand raised. However, two issues remain unanswered (1) whether returned goods have been accounted in their finished goods and (2) whether demand raised for ineligible credit of Rs.1,20,66,182/-is correct or not. 11.2 We observe that the ld. adjudicating authority has reconciled the figures in respect of Cevat reversal and found that the CENVAT reversal calculated by the Appellant-Assessee was more than the demand raised in the Notice. While reconciling the CENVAT Credit related to inputs contained in the fini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een made on a single day as per accounting practice. We observe that the Department has not submitted any evidence to the contrary. Accordingly, we hold that there is no substance in the allegation of the Department that all those inputs are consumed in a single day. This is evident from the stock register maintained in RG-23A Part-I which forms part of RUD-3 to the Show Cause Notice dated 27.02.2014. Accordingly, we hold that the CENVAT Credit of Rs.6,25,651/-availed by the Appellant-Assessee cannot be denied on this ground. Thus, we set aside the demand confirmed in the impugned order on this count. 13. The next issue in which there is a difference of opinion in the report dated 06.08.2024 is with respect to returned goods involving CENVAT Credit of Rs.5,14,168/-. This demand has been made under Rule 16(2) of the Central Excise Rules, 2002 as per Annexure D of the said Show Cause Notice. It was alleged that 329270 pieces were despatched by the Appellant-Assessee during 2011-12 and 2012-13, Out of which 285310 pcs were returned. It has been mentioned in the Goods return Register Statement that duty paid goods were sent to depot but some manufacturing defect was noticed and receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ule 6 of the CCR cannot be invoked in this case to deny CENVAT Credit on input service which was rightly taken when the final product was chargeable to duty. It is to be noted that Rule 6 is applicable only in cases where the assessee is manufacturing both dutiable as well as exempted products. It is not applicable where the input/ input service is used in the manufacture of final product, which is exempted subsequently. 14.2. Further, we observe that Rule 11(3) which was inserted on 01.03.2007 under the CENVAT Credit Rules, mandated the manufacturer to pay an amount equivalent to the CENVAT credit taken in respect of inputs received for use in the manufacture of the final product, which is lying in stock or contained in the final products, if the final products become exempted subsequently. We observe that Rule 11(3) is only restricted to inputs and there is no provision which requires paying of an amount in respect of input services. Hence, we hold that CENVAT credit availed on input services before the final product became exempt cannot be denied to the Appellant. 14.3. In this regard, we rely on the decision in the case of Commissioner of C. Ex., Bangalore-II vs. Tafe Ltd.[2011 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvices by the Appellant-Assessee in the factory. The objections raised by the Department in the Notice are procedural in nature. It is the settled position of law that substantive benefit of CENVAT Credit cannot be denied for mere procedural lapse of mentioning incorrect/not proper address in the invoice issued by the service provider. We also observe that as per proviso to Rule 9(2) of the CCR, address of service recipient is not a mandatory requirement; hence CENVAT credit cannot be denied on this ground. Accordingly, we hold that the ld. adjudicating authority has rightly allowed the credit of Rs.26,70.004/- For the same reason, we hold that the confirmation of demand of Rs.14,962/- in the impugned order is not sustainable. Hence, the Revenue s appeal on this issue is dismissed. 16. Regarding the demands confirmed in Excise Appeal No.76076 of 2015, vide Order-in-Original No.10/Commr/Kol-I/C.Ex./2015-16 dated 20.08.2015, we observe that in addition to some other demands, the demand of Rs. 1,20,66,182/- has been confirmed on the ground that the Appellant-Assessee did not reverse an amount equivalent to the CENVAT credit availed on input (PV Yarn) and lying on stock as on 28.02.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 09.2014. It is thus contended by the Assessee that the instant demand in the Show Cause Notice has been raised on a total misconception/assumption that Rs. 1,20,66,182/- arrived at by deducting Rs. 23,64,695/- from Rs.1,44,31,147/- represents the CENVAT credit on PV Yarn/Spun Yarn which are lying on stock as on 28.02.2013; it was an admitted position in the proceedings under the SCN dated 27.09.2014 that no stock of PV Yarn/ Spun Yarn was there as on 28.02.2013 and even during the visit of the departmental officers no evidence to the contrary was led. The Assessee submitted that this is even corroborated by the stock account of PV Yarn which shows invoice wise receipt and issuance/use of PV Yarn in manufacture of final product for the period April 2012 to February 2013; as evident from the same, the stock of PV Yarn as on 28.03.2013 was zero. It is submitted that Rs. 1,20,66,182/- representing the CENVAT credit on PY Yarn/Spun Yarn has been duly considered by the Appellant-Assessee while working out reversal of Rs. 32,04,919/- under Rule 11(3)(ii) of the CCR which is subject matter of Excise Appeal No. 75048 of 2015. It is submitted by the Assessee that if this demand amount is all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n this case. In absence of any such evidence of suppression of fact, we hold that raising of demand by invoking of extended period of limitation is not sustainable. This view has been held in the case ofPr. Commissioner vs. Himadri Speciality Chemical Ltd. [2022 (66) G.S.T.L. 264 (Cal.)] wherein it has been held that if availment of credit shown in ER-1 return filed with Department, then five years extended period of demand cannot be invoked. Similar view has been taken in the following cases also: Bordubi Engineering Works vs. Union of India [2016 (42) STR 803 (Gau.)] Commissioner of C. Ex., Noida vs. Accurate Chemicals Industries [2014 (310) ELT 441], and Johnson Matthey Chemicals India P. Ltd vs. Comm. of C. Ex., Kanpur [2014 (34) STR 458 (Tri-Del.)] 16.4. Thus, by relying on the decisions cited above, we hold that the entire demand confirmed vide impugned order dated 20.08.2015 is legally unsustainable on the grounds of limitation. 17. Regarding demand of interest on the payment/reversal of CENVAT Credit made in this case, we observe that Rule 14 of the CCR has been invoked to levy interest on the amount to be recovered under Rule 11(3)(ii) of the CCR. As per Rule 14(2), if CEN ..... X X X X Extracts X X X X X X X X Extracts X X X X
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