9911796707
TMI Blog2025 (1) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be basis for confirmation of demand. Appellant has taken a categorical stand before the Adjudicating Authority that these scraps have arisen out of non-cenvated capital goods, some of them even prior to the insertion of Modvat/Cenvat credit scheme in respect of capital goods, this stand of the appellant was to be rebutted by the Adjudicating Authority in the impugned order by relying upon the suitable and concrete evidences. Presumption made against the appellant cannot be the ground for confirming the demand. These scrap would have arisen not on account of any manufacture but on account of uses of capital goods. Over period of time such waste and scrap arising on account of reasons other than the activity of manufacture could not have been subjected to demand of central excise duty but should have been subjected to reversal of credit in the manner specified as per Rule 3 (5) of Cenvat Credit Rules, if the said capital goods were cenvated. In absence of any conclusion in respect of the facts that these capital goods were cenvated, it is found that impugned order proceeds only on the basis of presumption and assumption to confirm this demand. Interest and penalties - HELD THA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le. On being asked, appellant vide letter dated 20.02.2013 and 02.04.2013 submitted the details of such waste and scrap valued at Rs.12,71,35,002.31, which were cleared by them without paying the Central Excise duty (including Cess). Appellant failed to furnish any evidence that the subject goods were purchased before the inception of Modvat/Cenvat Scheme or that no Modvat/Cenvat Credit was utilized on it. Further, the appellants have not followed the prescribed manners of assessing duty and payment thereof, maintaining daily stock account and clearance of the said waste and scraps under cover of invoices as per Rule 6, 8, 10 11 of Central Excise Rules, 2002. 2.3 Show cause notice dated 12.04.2013 was issued to the appellant asking them to show cause as to why : - (i) Central Excise duty amounting to Rs.1,43,47,121.75 (Rs One Crore Forty Three Lakhs Forty Seven Thousand One Hundred Twenty One Seventy Five Paisa) including Education Cess and Secondary and Higher Education Cess on the clearance and sale of the said waste and scraps, should not be demanded and recovered from them alongwith appropriate interest under the erstwhile Section 11A(1) [now Section 11A(4)] read with erstwhile ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be determined based on presumption and assumption. The Adjudicating Authority has gone beyond the show cause notice. The demand is barred by limitation. The extended period of limitation is not invokable in the present case. All facts were in the knowledge of the Department, hence extended period could not have been invoked. Reliance is placed by the following decisions:- PVR Ltd. 2021 (55) GSTL 435 (Tri.-Del.); Anand Nishikawa Co. Ltd. 2005 (188) ELT 149 (SC); Narender Kumar Co. 2011 (267) ELT 577 (SC); There was no intention to evade payment of duty invocation of extended period would not be invoked. Reliance is placed on the decisions of Hon ble Supreme Court in the case of Nizam Sugar Factory 2006 (197) ELT 465 (SC) Continental Foundattion JT. Venture 2007 (216) ELT 177 (SC). Section 11A (4) of the Excise Act, being an exception, has to be construed strictly. Reliance is placed by the various decisions, which are as follows:- Pushpam Pharmaceuticals Co 1995 (78) ELT 401 (SC); Tamil Nadu Housing Board 1994 (74) ELT 9 (SC); Punjab Laminates Pvt. Ltd. 2006 (202) ELT 578 (SC). Appellant was of the bonafide belief that no amount equal to duty was payable as stated above, thus. If ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he party, whereas the sole contention of the party is that they have not availed any Cenvat Credit on the items out of which this scrap was generated, since these items were purchased well before the introduction of CENVAT Credit scheme / MODVAT Credit scheme, hence no duty is payable. I have gone through the details of waste scrap cleared during the period under reference, as submitted by the party itself, and which is a part of the instant show cause notice I observe that sample items which figure in the said details contain the descriptions such as old rejected scrap of MS Angle, Channel, Plate, Sheet Metal, MS Pipe, Copper, Wires, Rubber, as well as scrap of various old machineries plant. 14c. Now, I turn my attention to the brief submitted by the party at the time of personal hearing held on 24.01.2014, wherein the party submitted that they have not availed Cenvat Credit of capital goods against items of Iron Steel, Copper and Aluminum falling under Chapters 72, 74, 76, 78 79, and as evidence, they enclosed Lists of such items purchased by them during the period from April, 2002 to March, 2008. I have carefully gone through the said two Lists submitted by the party, and I obse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 Kgs with CSH 72165000 Cenvat Credit Entry in RG23 Pt-l Register No 1970 dt 03.09.2005 [Central Excise Tariff Act, 1985 description of the said CSH is 'Angles, Shapes Sections of Iron or Non-Alloy Steel'] e) Purchase Invoice No. 126 dt 20.02.2007 of M/s Vishal Tubes, Kanpur for the item 'Pipe MS' 139.45 MT with CSH 73063090 Cenvat Credit Entry in RG23 Pt-I Register No 4620 dt 17.03.2007 [Central Excise Tariff Act, 1985 description of the said CSH is 'Other Tubes, Pipes Hollow Profiles of Iron Steel'] On the basis of the above illustrations, the R.O. concluded in his report that the party had in fact taken/availed Cenvat Credit on various items of iron Steel, during the period April, 2002 to March, 2008. He also stated that there were numerous such Invoices. Thus, the report of the R.O. goes against the claim of the party, made in their submissions dt. 24.01.2014, that they had not taken capital goods Cenvat credit against items of Iron Steel, Copper and Aluminum falling under Chapters 72, 74, 76, 78 79 of the Central Excise Tariff Act, 1985. 14f. In compliance of the principles of natural justice, the said verification report dt. 06.02.2014 of the jurisdic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out availing Cenvat Credit. This indicates deliberate suppression of the facts by the party and an attempt to misguide the adjudicating authority, in order to get away from the payment of duty/amount which is otherwise payable by them. I therefore conclude that the result of the verification exercise goes entirely in favour of the Revenue, and accordingly, I hold that the Capital Goods Cenvat Credit had actually been availed on the items, which after being brought into use, turned into waste and scrap, duty / amount on which is being demanded in the present SCN. 15a. It is possible that the scrap cleared by the party may have logically arisen out of cenvated as well as non-cenvated items of Iron Steel. However, the party had cleared such waste scrap by considering all of them to have arisen out of totally non-cenvated capital goods. When enquired about it, the party has contended that the burden lies upon the department to prove that the waste has arisen out of the capital goods in respect of which Cenvat Credit has been availed. They have claimed that in the instant case, the department has not discharged its onus of proving that the noticees have availed Cenvat Credit on the capi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity of the CENVAT credit shall lie upon the manufacturer or provider of output service taking such credit. I hold that the provisions of Rule 9(5) clearly require any assessee (including the party) to maintain records about capital goods/inputs on which Cenvat Credit is taken. The records have to be in detail and should contain the facts about consumption disposal of such cenvated inputs/capital goods. Clearly, the party has failed to discharge the responsibility cast upon them under the provisions of Rule 9(5) of the Rules. Had they maintained records properly, it would have been possible to pinpoint as to whether the impugned scrap arose out of cenvated/non cenvated capital goods. However, the party did not maintain the necessary records and made a sweeping claim that the impugned scrap was generated out of non cenvated capital goods. However, the subsequent verification exercise has resulted in the claim of the party being proved hollow. Thus, in conclusion, I hold that the onus was upon the party to maintain necessary records. Had they maintained them, the task would have been easy. However, since they have failed in discharging the onus cast upon them, they can't escape th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen the burden to prove the contrary will shift on the appellant. Appellant has vide letter dated 11.01.2010 taken the stand that the waste and scrap sold by them has arisen out of the Capital Goods on which no Cenvat Credit was taken. Revenue authorities should have investigated the matter to establish to the contrary. Instead of doing so the show cause notice has been issued stating that it is immaterial whether the CENVAT Credit on the capital goods has been taken or not. Once Commissioner (Appeal) concluded that Rule 3 (5A) is applicable only to the Cenvated Capital goods, he should have dropped the proceedings initiated by this show cause notice. 4.6 Delhi bench has in the case of Karnal Co-Operative Sugar Mills Ltd. [2011 (265) E.L.T. 236 (Tri. - Del.)] held as follows: 6. I have carefully considered the submissions made from both sides and perused the records. The demand has been sustained on two grounds which are overlapping. The show cause notice alleges that the goods cleared by them are excisable. It also alleges that the goods cleared as waste and scrap has arisen out of capital goods on which credit has been taken. No attempt has been made to segregate the goods under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of which resulted in waste and scrap and therefore, held that the demand in this regard was unsustainable. The goods have been cleared during the period August 1995 to July, 1999 and the same relates to capital goods received during earlier period. The Commissioner‟s factual finding that there was no evidence about Cenvat credit having been taken on the capital goods has not been contested with any evidence. The claim that they would qualify for waste and scrap as manufactured was not correct. The ground was taken that dismantling of capital goods would be the process amounting to manufacture and that a distinct commodity namely waste and scrap came into existence. This is not acceptable. Therefore, the Commissioner‟s finding that the goods were not held as manufactured and no duty was leviable cannot be faulted. The reduction of penalty in view of the reduction in demand of duty on the above grounds is also justified. 4.8 In case of Sandoz India Ltd. [1980 (6) E.L.T. 696 (Bom.)], Hon‟ble Bombay High Court has held as follows: 11. It is settled law that in a case of taxation the burden of proving that the necessary ingredients prescribed by the taxing provision ar ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
