TMI Blog2023 (2) TMI 1091X X X X Extracts X X X X X X X X Extracts X X X X ..... as have been visualised by the proviso by using such strong expression as fraud, collusion etc. and on the other hand it should have been with intention to evade payment of duty. Both must concur to enable the Excise Officer to proceed under this proviso and invoke the exceptional power - However, it is the settled cannon of decision that when the law requires an intention to evade payment of duty then it is not mere failure to pay duty. It must be something more. Except that in few of the statements by ISD invoices in one of the columns, the credit was distributed by specifying turnover as quantity based and in some other it was on allocation weight . It is observed in terms of Circular No. 178/4/2004-S.T. dated 11.07.2014 as relied upon by the department, the distribution as per allocation weight is also based on turnover, hence, apparently such distribution is also in compliance of Rule 7(d) of CCR, 2004. Extended period of limitation - HELD THAT:- There is no willful intent of any of the three appellants to evade their duty/tax liability. Hence, there cannot be suppression on the part of the appellant as alleged and confirmed. The appellant was availing and utilizin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... N dated 07.11.2017) Confirmed Demand Rs.2,27,76,205/- Rs.45,26,888/- Entire demand confirmed 1.1 Facts in brief for the present adjudication are as follows: M/s. India Cements Limited and all its units/the appellants herein are engaged in the manufacture of cement and clinker. They are availing Cenvat credit of excise duty paid on the inputs, service tax paid on input services used in relation to the manufacture of cement and clinker and also of excise duty paid on capital goods. However, during the course of audit of the accounts of appellants conducted in December 2013 for the respective periods as mentioned in the above table, the department observed that the appellants have availed the service tax credit on the basis of ISD challans raised by their Corporate Office situated in Chennai and four Regional Offices situated in Hyderabad, Bangalore, Chennai and Cochin. From the scrutiny of ISD invoices/challans issued by the said five offices, the department observed that they have distributed the service tax credit in three forms: i.e. (1) Plant specific, (2) on turnover basis and (3) on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t its other manufacturing units which are providing output services also. It is evident from the use of word may distribute the Cenvat credit as found in Rule 7 both prior and also post its amendment in 2012. The distribution was made mandatory only w.e.f. 01.04.2016 i.e. after the period in question. Learned counsel has relied upon the decision of Hon ble Bombay High Court in the case of The Commissioner, Central Tax Pune-I Commissionerate Vs. M/s. Oerlikon Balzers Coating India P. Ltd. reported in 2018- TIOL-2688-HC-MUM-CX. 3.2 It is further submitted that Cenvat credit is a substantial benefit which cannot be denied on ground of procedural lapses especially when the entire demand is revenue neutral. Learned counsel has relied upon the decision of this Tribunal in the case of Jet Airways (I) Ltd. Vs. Commissioner of Service Tax, Mumbai reported in 2016 (44) S.T.R. 465 and the decision of Hon ble High Court of Gujarat in the case of Thermax Ltd. Vs. Union of India reported in 2019 (31) G.S.T.L. 60 (Guj.). Finally, it is submitted that compliance of Rule 7 of CCR, 2004 has to be ensured at the ISD s end. Learned counsel has relied upon the decision of this Tribunal in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure to be followed the same has to be followed. Even the substantial benefit has to be denied when their occurs the procedural lapse. Learned DR has relied upon the decision of Hon ble Apex Court in the case of Jagir Singh Vs. Ranbir Singh Ans. Reported in AIR 1979 SC 381, wherein it was held that the provisions of an act of Parliament shall not be evaded by shift or contrivance. It was clarified what may not be done directly cannot be allowed to be done indirectly, that would be an evasion of the statute. 4.2 The plea of revenue neutrality has also been objected by learned DR by submitting that the concept of revenue neutrality is not derived from any statutory provision but it is a concept devised by the judicial forums and hence is applicable only in exceptional circumstances that too for examination of extended period of limitation. Learned DR has relied upon the decision of Five Member Bench of this Tribunal in the case of Jay Yushhin Ltd Vs. CCE, New Delhi reported in 2002-TIOL-126-CESTAT-DEL-LB, wherein it was held that revenue neutrality being a question of fact, the same has to be established in the facts of each case and not merely by showing the availability of an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to the manner of distribution of Cenvat credit in terms of the said rule. The plea of bona fide belief is therefore not acceptable. Hence, the Cenvat credit is rightly held to have been irregularly distributed by the ISD and wrongly utilized by the appellant. The recovery thereof along with the interest and the consequential penalties is very much in compliance of the statute. Impressing upon no infirmity in the order, three of the appeals are prayed to be dismissed. 5. Having heard the rival contentions and perusing the entire records. 6. We observe that the orders of adjudicating authorities below confirming recovery of Cenvat credit availed by the appellants upholding the alleged violation of Rule 7 of CCR, 2004 has not merely been challenged on merits but much emphasis has been laid on the show cause notice itself being barred by limitation. We feel that if challenge to the extended period of limitation, the appellants are bound to succeed, we foremost proceed adjudicating the said plea. We observe that Section 11A of Central Excise Act, 1944 empowers the Central Excise Officer to initiate proceedings where duty has not been levied or short levied within 6 months from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than that. It was clarified that the assessee must be aware that the duty was leviable and it must deliberately avoid paying it. The Hon ble Apex Court further explained that the word evade in the context to mean defeating the provision of law of paying duty. It is made more stringent by use of the word intent . In its another decision in the case of Pushpam Pharmaceuticals Company Vs. Collector of C.Ex., Bombay, reported in 1995 (78) E.L.T. 401 (S.C.), it was also held that a perusal of proviso to Section 11A indicates that the expression Suppression of fact has been used in company of such strong words as fraud, collusion or willful default. In fact it is the mildest expression used in the proviso. Yet the surroundings in which it has been used it has to be construed strictly. It does not mean any omission. The act must be deliberate. In taxation, it can have only one meaning that the correct information was not disclosed deliberately to escape from payment of duty. Where facts are known to both the parties the omission by one to do what he might have done and not that he must have done, does not render it suppression. It was also held that Section 11A empowers the Depart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the eligibility of the service rendered i.e. either on the basis of unit specific or on the basis of turnover. Except that in few of the statements by ISD invoices in one of the columns, the credit was distributed by specifying turnover as quantity based and in some other it was on allocation weight . We observe in terms of Circular No. 178/4/2004-S.T. dated 11.07.2014 as relied upon by the department, the distribution as per allocation weight is also based on turnover, hence, apparently such distribution is also in compliance of Rule 7(d) of CCR, 2004. 10. All these admissions when seen in the light of above discussed law on the ground of limitation, we hold that there is no willful intent of any of the three appellants to evade their duty/tax liability. Hence, there cannot be suppression on the part of the appellant as alleged and confirmed. The appellant was availing and utilizing such amount of Cenvat credit as was distributed by their ISD. The question of suppression or evasion does at all arise in such a case at least against the appellants who were the receivers of the distributed Cenvat credit. They otherwise were regularly mentioning the availment/utilized amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the issue is revenue neutral. Hence, we hold that question of confirmation of that leftover portion of demand gets hit by the principle of revenue neutrality. 14. We further observe that alleged violation of Rule 7 of CCR, 2004, in the given facts and circumstances, is nothing more than the procedural lapse. We rely upon the decision of Hon ble High Court Gujarat in the case of Commissioner of Central Excise Vs. Dashion Ltd. reported in 2016 (41) S.T.R. 884 (Guj.) wherein it is held that when the invoices for input services are not disputed by the Revenue, the availment of Cenvat credit by the unit of an ISD Distributor cannot be denied on the ground that the service was availed by some other unit, it being merely a procedural deficiency. It is emphasized by the court that substantial benefit of the Cenvat credit provision should not be denied on the mere ground of procedural lapse. In the present case also there is no dispute about the invoices raised by the ISD, also there is no dispute that major amount of the credit has been distributed on pro rata distribution basis only, except that in some invoices it was distributed on the quantity basis. Rule 7 of CCR, 2004 is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lants, which was eligible to distribute the credit to their units/factory. We further find that there is no proposal to issue any show cause notice to the said ISD for alleged wrong distribution of the credit. This situation has been dealt with by this Tribunal in the case of M/s. Indsil Energy Electro Chemicals (supra) as relied upon by the appellants. Following findings have been recorded: When we look at the functions of the input service distributor and the documents to be issued by him for passing on the credit, it becomes quite clear that the document issued by him for passing on the credit does not contain the nature of service provided and the details of services. It contains the service provider's details, distributor's details and the amount. Obviously the eligibility or otherwise of the service tax credit has to be examined at the end of input service distributor only. This is further supported by the fact that both Central Excise assessees and Service Tax assessees are under the regime of self-assessment and therefore it is the assessee himself who has to specify that the credit availed by him is admissible. Therefore the input service distributor cannot sa ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
