9911796707
TMI Blog2024 (12) TMI 1559X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 20.10.2015, and order for its recovery from the Noticee under the section 73 (1) of the Act, along with interest under section 75 of the Act. 2. I also order for recovery of the amount of Rs. 3,25,80,796/- (Rs. Three Crore Twenty Five Lakhs Eight Thousand Seven Hundred and Ninety Six only) calculated @ 5%/ 6% of value of exempted service viz. Trading activity, rendered during the period 2010-2011 to 2014-2015, from the Noticee, as detailed in the SCN dated 20.10.2015, in terms of Rule 6 (3) (1) of CENVAT Credit Rules, 2004 under Rule 14 ibid read with Explanation (1) to Rule 6 (3) and section 73 (1) of the Act, along with interest under Rule 14 of the said rules, read with section 75 of the Act. The amount of Rs. 5,51,543/- paid by the Noticee in the context is ordered to be appropriated against the above demand. 3. I impose a penalty of Rs. 10,000/- (Rs. Ten Thousand only) under section 77 of the Act on the Noticee. 4. I impose penalties of Rs. 96,28,033/- (Rupees Ninety Six Lakhs Twenty Eight Thousand and Thirty Three only) under section 78 of the Act and of Rs. 3,25,80,796/- (Rs. Three Crore Twenty Five Lakhs Eight Thousand Seven Hundred and Ninety Six only) under Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons on behalf of the appellant. 8. Learned counsel made the following submissions on behalf of the appellant: i) The demand of an amount of Rs. 3,25,80,796/- calculated @5%/ 6% of the value of the exempted goods under Rule 6(3)(1) of CCR was confirmed although the appellant reversed proportionate amount of CENVAT credit taken on common input services attributable to the exempted services. This reversal was not accepted by the Commissioner for the reason that no intimation as per Rule 6(3A) of CCR was given by the appellant. ii) An amount under Rule 6(3) of CCR cannot be demanded from the appellant because it had not chosen this option and it is not open to the department to choose an option for the appellant and force it. Reliance is placed on M/s Tiara Advertising versus Union of India 2019 (30) G.S.T.L. 474 (Telangana) in which the High Court of Telangana clearly held that the it is not open for the Revenue to choose an option for the appellant. iii) The amount demanded under Rule 6(3) of CCR is much larger than the total amount of CENVAT credit taken by the appellant on common input services. iv) The "other charges/other income/miscellaneous income" proposed to be char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii) Under Rule 6(2) of CCR, the appellant had the option of reversal of proportionate common credits taken following the procedure prescribed under Rule 6(3A) of CCR. This procedure requires the assessee to intimate the Range officer. Since the appellant had not intimated, it was not covered by Rule 6(3A) of CCR. It had to pay an amount equal to 5%/6% of the value of the exempted services. The demand has been confirmed accordingly. iii) Extended period of limitation was correctly invoked and penalties were correctly imposed. iv) The impugned order is correct and proper and calls for no interference. Findings 10. The two issues to be decided in this appeal are (a) demand for recovery of an amount under Rule 6(3)(1) of CCR; and (b) demand of service tax. Demand of an amount under Rule 6(3)(1) of CCR 11. The CCR, 2004 were framed by the Central Government under Section 37 of the Central Excise Act and Section 94 of the Finance Act superseding the earlier Cenvat Credit Rules, 2002(which dealt with Cenvat credit only for manufacture) and Service Tax Credit Rules, 2002 (which dealt with only credit for service providers). The CCR, 2004 integrated the two sets of rules and provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther taxes, if any, paid on such goods, of the exempted final product charged by the manufacturer for the sale of such goods at the time of their clearance from the factory ; 14. This Rule 6 (3) of CCR was amended w.e.f. 01.03.2008 and a new Rule 6 (3A) of CCR was also introduced. After amendment, Rule 6 (3) & Rule 6 (3A) of CCR read as follows :- (3) Notwithstanding anything contained in sub-rules (1) and (2), the manufacturer of goods or the provider of output service, opting not to maintain separate accounts, shall follow either of the following options, as applicable to him, namely :- (i) the manufacturer of goods shall pay an amount equal to ten per cent of value of the exempted goods and the provider of output service shall pay an amount equal to eight per cent of value of the exempted services ; or (ii) the manufacturer of goods or the provider of output service shall pay an amount equivalent to the CENVAT credit attributable to inputs and input services used in, or in relation to, the manufacture of exempted goods or for provision of exempted services subject to the conditions and procedure specified in sub-rule (3A). Explanation I - If the manufacturer of goods or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded plus the total value of exempted goods manufactured and removed during the preceding financial year, F denotes total value of taxable and exempted services provided, and total value of dutiable and exempted goods manufactured and removed, during the preceding financial year, and G denotes total CENVAT credit taken on input services during the month; (c) The manufacturer of goods or the provider of output service, shall determine finally the amount of CENVAT credit attributable to exempted goods and exempted services for the whole financial year in the following manner, namely :- (i) The amount of CENVAT credit attributable to inputs used in or in relation to manufacture of exempted goods, on the basis of total quantity of inputs used in or in relation to manufacture of said exempted goods, denoted as H; (ii) The amount of CENVAT credit attributable to inputs used for provision of exempted services = (J/K) multiplied by L, where J denotes the total value of exempted services provided during the financial year, K denotes the total value of dutiable goods manufactured and removed plus the total value of taxable services provided plus the total value of exempted services prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... short-paid, determined as per condition (e), and (5) Credit taken on account of excess payment, if any, determined as per condition (f) ; (h) Where the amount equivalent to CENVAT credit attributable to exempted goods or exempted services cannot be determined provisionally, as prescribed in condition (b), due to reasons that no dutiable goods were manufactured and no taxable service was provided in the preceding financial year, then the manufacturer of goods or the provider of output service is not required to determine and pay such amount provisionally for each month, but shall determine the CENVAT credit attributable to exempted goods or exempted services for the whole year as prescribed in condition (c) and pay the amount so calculated on or before 30th June of the succeeding financial year. (i) Where the amount determined under condition (h) is not paid within the said due date, i.e., the 30th June, the manufacturer of goods or the provider of output service shall, in addition to the said amount, be liable to pay interest at the rate of twenty four per cent per annum from the due date till the date of payment. Explanation I - "Value" for the purpose of sub-rules (3) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. In such a situation, it cannot be said that the assessee has taken credit for the duty paid on the inputs utilised in the manufacture of the final exempted product under Rule 57A. In other words, the claim for exemption of duty on the disputed goods cannot be denied on the plea that the assessee has taken credit of the duty paid on the inputs used in manufacture of these goods". 18. Secondly, Rule 6(2) of CCR only requires the appellant to maintain separate accounts for receipt, consumption and inventory of inputs and input services used in manufacture of dutiable final products and manufacture of exempted goods or provision of taxable services and provision of exempted services. It does not specify any manner in which such accounting should be done. In case of common inputs or common input services, the most practical method of maintaining separate accounts is to either take credit of only some portion of the total credit which can be attributed to dutiable goods or taxable services or to take the total credit and reversing that portion of the credit which is attributable to exempted goods or services. It is undisputed that the appellant had done this reversal and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore not be necessary for the petitioner to go through the motions of a statutory appeal to challenge the same. The contention of the respondents as to the maintainability of the writ petition is therefore rejected. 14. Further, we may reiterate that Rule 6(3) of the Cenvat Credit Rules, 2004, merely offers options to an output service provider who does not maintain separate accounts in relation to receipt, consumption and inventory of inputs/input services used for provision of output services which are chargeable to duty/tax as well as exempted services. If such options are not exercised by the service provider, the provision does not contemplate that the Service Tax authorities can choose one of the options on behalf of the service provider. As rightly pointed out by Shri S. Ravi, learned Senior Counsel, if the petitioner did not abide by the provisions of Rule 6(3) of the Cenvat Credit Rules, 2004, it was open to the authorities to reject its claim as regards the disputed Cenvat Credit of Rs. 17,15,489/-. 15. We may also note that in the event the petitioner was found to have availed Cenvat Credit wrongly, Rule 14 of the Cenvat Credit Rules, 2004 empowered the authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01.10.2011 to 31.03.2012 One year from the relevant date - 25.04.2012 Extended Period 01.04.2012 to 27.05.2012 One year from the relevant date - 25.10.2012 Extended Period 28.05.2012 to 30.09.2012 18 months from the relevant date - 25.10.2012 Extended Period 01.10.2012 to 31.03.2013 18 months from the relevant date - 25.04.2013 Extended Period 01.04.2013 to 30.09.2013 18 months from the relevant date - 25.10.2013 Extended Period 01.10.2013 to 31.03.2014 18 months from the relevant date - 25.04.2014 Normal Period 01.04.2014 to 30.09.2014 18 months from the relevant date - 25.10.2014 Normal Period 01.10.2014 to 31.03.2015 18 months from the relevant date - 25.04.2015 Normal Period 28. Thus, the normal period of limitation was from 01.01.2013 to 31.03.2015 and the rest was extended period of limitation. The reasons for invoking extended period of limitation given in the SCN is as below: "4.1.2 The Noticee has not declared the aforesaid "other receipts"/"other charges on new vehicles", as taxable value, in the ST-3 returns filed by it. Thus the material fact for assessment, determination and collection of tax was concealed and not disclosed to the department. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, willful misstatement or suppression of facts by the assessee and therefore there is no reason or occasion for invoking the larger period of limitation. 6.10 It is stated that SCN has been issued for extended period which can be invoked only if the circumstances stipulated in proviso to section 73 (1) of Finance Act, 1994 are satisfied. However, in the absence of such circumstances and without specifying any plausible reason for invoking extended period, period of more than one year has been invoked while issuing this impugned SCN. It is important to note that extended period can be invoked only when there is willful intention for avoiding payment of service tax". 30. The findings in the impugned order regarding invoking extended period of limitation are as below: "23.1 The Noticee also argued against applying the extended period for demand and proposal for penalties stating that there is no suppression on its part, citing various judgments. In this connection, I observe that the Noticee has failed to disclose the fact of collection of "Handling Charges" from its customers as well as the availment of CENVAT credit relatable to provision of exempt/taxable services. Such with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erve to be accepted on this question. ST-3 returns only require aggregate value of the taxable services to be indicated and the service tax to be self-assessed. The assessee is under no obligation to indicate individual transactions. In the process, the appellant may wrongly self-assess service tax. If the assessee either does not file the return at all, or having filed it, does not self-assess the service tax correctly, Section 72 requires the Central Excise officer to do "Best Judgment assessment" and for this purpose, he is empowered to call of any records or accounts from the assessee. Section 72 reads as follows: 72. Best Judgment Assessment. If -(a) any person fails to make the return under section 70, or; (b) any person having made a return fails to comply with all the terms of a notice issued under sub-section (1) of section 71, or (c) the Central Excise Officer is not satisfied with the correctness or the completeness of the accounts of the assessee, the Central Excise Officer, after taking into account all the relevant material which he has gathered, shall, by an order in writing, make the assessment of the value of taxable service to the best of his judgment and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tral Arecanut & Cocoa Marketing & Processing Co-operative Ltd. versus State of Karnataka 2014(46) taxmann.com 243 (Karnataka) in support of this contention. 40. According to the learned authorised representative for the Revenue, these additional amounts recovered by the appellant and recorded in its books of account as other miscellaneous applications were not towards the sale of the vehicle. These were collected for rendering various services and there is nothing on record to show that any of these were in the negative list of services. Therefore, service tax has to be paid on the entire amount. 41. We have considered the submissions. We have also perused the debit notes and invoices and ledgers at pages 422 to 484 of the appeal. The invoices are issued by the appellant as authorised dealer of Maruti Suzuki. The invoices indicate that the sale was on ex-showroom basis and the price is indicated on this basis. In addition, that the appellant collected "other charges" from the customers. The ex-show room price included the price of the vehicle and the applicable VAT. In addition, the appellant collected an amount towards extended warranty and towards "other charges". For example, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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