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Central Excise - Case Laws
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2025 (5) TMI 1529
Clandestine manufacturing and removal of goods without payment of Central Excise duty - Demand based on private record/note books without corroboration of other evidences - Fulfilment of conditions laid down under Section 36(B) of the Central Excise Act, 1944 - Suppression of production and removing goods without payment of excise duty - Validity and admissibility of electronic evidence obtained during a search - pen drives found from the worker’s quarters located behind the Account Section of the factory - onus of proof - HELD THAT:- We find that the demand was confirmed by the Commissioner (Appeals) solely on the basis of the confessional statement of the director of the company. We further observe that it has not been clarified from which computer of the company, data was stored in the impugned pen drives. It is a settled principal of law that evidences available in electronic modes are accepted only when conditions laid down under Section 36(B) of the Central Excise Act, 1944 are fulfilled.
As per sub clause (4) of Section 36(B) of the Central Excise Act, 1944, electronic evidences would be admissible when a certificate is given identifying the documents contained in the statement and describing the manner in which it was produced. Given such particulars of any device involved in the production of those documents as may be appropriate for the purpose of showing that the documents were obtained from a computer and dealing with any of the matters to which the conditions mentioned in sub clause (2) relates. In the SCN, there is no such mention regarding regular use of the computers to store or processing information and the computer was operating properly.
In the present case, pen drives were not resumed from office of the Appellant but from the worker’s quarters and also there is no certificate taken by the Department as provided in sub clause (2) of Section 36(B) of the Central Excise Act, 1944. In the above scenario, the data retrieved from the pen drives cannot be accepted as tangible evidence. We may like to examine as to whether search was made as per provisions of Section 100 of the Cr. P.C. read with Section 18 of the Act or not. It is seen that the pen drives were not seized under proper seizure memo. Also, it is not clear as if seal was put on pen drives at the time of search and was intact and is duly signed by panchas. Second panchanama proceedings for retrieval of data contained in pen drives was carried out in the office of DGCEI and the print outs were obtained without mentioning the computer which was used for such data retrieval.
We are of the view that search and seizure proceedings were made in violation of Section 100 of Cr. P.C. read with Section 18 of the Act, for the reason that Department has failed to follow the provisions of Section 36B of the Act.
We also agree with the contention of the Learned Counsel of the Appellant that at the time of sealing and desealing of the external data storage device as well as the time of obtaining printouts therefrom, a certificate should have been obtained as per the provisions of Section 36B of the Act. No such certificate has been brought on record without which the evidentiary value of these printouts gets vitiated. As no certificate from the responsible person of the Appellant was obtained by the Department, the credibility of the computer printout gets vitiated.
It is evident from the panchnama that the Department failed to gather any of documents from the factory of the Appellant.
Thus, we hold that the charges of clandestine removal of the goods cannot be upheld merely on assumptions and presumptions, but has to be proved with positive evidence such as purchase of excess raw materials, consumption of excess electricity, employment of extra labour, seizure of cash, transportation of clandestinely removed goods etc. It has also been held that onus of proof of bringing clinching evidence is on the Revenue. It has been held that the clandestine manufacturing and removal of excisable goods is to be proved by tangible, direct, affirmative and incontrovertible evidence relating to receipts of raw materials inside the factory premises, and non-accountal thereof in the statutory records, utilization of such raw materials for clandestine manufacture of finished goods, manufactured of finished goods with reference to installed capacity, consumption of electricity, labour employed and payment made to them, amount received by the consignees, statement of the consignees, receipts of sale proceeds by the consignor and its disposal. All these material evidence are missing in the present case and the evidences brought into the record by the Department are incomplete, inconsistent and are not a reliable piece of evidence to prove charges of clandestine removal.
Hence, the impugned order cannot be sustained and is accordingly, set aside. Both the appeals filed by the Appellants are allowed with consequential relief, as per law.
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2025 (5) TMI 1528
Liability to pay CENVAT on the edible lactose - Demand of duty along with interest and penalty - availing credit of CENVAT on the inputs and input services - HELD THAT:- Duties can be charged if excisable goods are manufactured or produced in India. According to the appellant, as recorded in the impugned order, it had no manufacturing facility to manufacture edible lactose at all. It had imported edible lactose, took it into its factory and availed CENVAT credit of the Additional Duty of Customs paid in the Bills of Entry. The assessee got part of the edible lactose processed into pharma grade lactose through a job worker and cleared the rest of the edible lactose as such after reversing the CENVAT credit which it had taken. In the first round of litigation, this Tribunal wanted this fact checked- whether it had imported edible grade lactose. The reason is that the charge against the appellant is that it cleared edible grade lactose. If it had imported edible grade lactose, took it into its factory and later cleared edible grade lactose, it can only be clearance of the input which it had imported.
As can be seen from Section 3 of the Act, the charge of duty of excise (CENVAT) is on manufacture or production of excisable goods and not merely on clearing them (i.e., taking goods out of the factory which it had not manufactured). The Commissioner lost sight of the charging section of the Act and confirmed the demand without establishing through any evidence that the appellant had manufactured edible grade lactose.
Thus, the impugned order cannot be sustained and needs to be set aside. The appeal is allowed and the impugned order is set aside with consequential relief to the appellant.
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2025 (5) TMI 1527
Entitlement to cash refund of unutilized Cenvat credit under the erstwhile Central Excise regime and its transitional treatment under the GST regime - discontinuation of certain production activities - period of limitation prescribed provided under Section 118 of the Central Excise Act, 1944 - mischief on the account of phrase “accumulated credit” - principle of statutory interpretation - Rule 5 prior to its amendment in 2012 and amendments made in the Rule 5 of the CENVAT Credit Rules, 2004 - HELD THAT:- Central excise registration of the appellant would have been migrated into the GST regime and the appellant as per the returns filed was a continuing entity, it could have been claim the benefit of taking this credit into their GST account. There is no law which provides that if appellant fail to exercise the exercise its right to carry forward this credit to the GST, they could have claim the refund in cash. This is exactly as has been advised by the concern authorities to the appellant.
Rule 5 of the CENVAT Credit Rules,2004 was amended in the year 2012 and as per the amended rule there is no provision for the refund of the accumulated credit. The said rule after amendment provided for the refund of the Cenvat Credit taken during a particular quarter which is attributable to the export of the good or services during that quarter. Refund under Rule 5 has been made subject to the limitation as provided by the Section 11B of the Central Excise Act, 1944. In the present case appellant could not show how there refund claim can be considered in terms of amended rule 5 and was filed within the period of limitation prescribed.
I further note Rule 5 was amended with the objective, taking note of the mischief on the account of phrase “accumulated credit” used in the said rule earlier. The rule was made more specific to provide refund only in specified circumstances of the CENVAT Credit attributable to the export of goods and services during specified period. It is settled position in law that while interpreting any such provision the courts or tribunal should take note of mischief sought to be corrected by the amendments made in law. The Mischief Rule, also known as Heydon's Rule, is a principle of statutory interpretation that guides courts to interpret legislation by identifying the "mischief" or "evil" the law aimed to address. It essentially prioritizes the purpose of the law over its literal wording. The rule also aims to prevent clever evasions or circumventions of the law that would allow the mischief to continue.
Further I find that the issue is also covered against the appellant by the decision of larger bench of Bombay High Court in case of Gauri Plasticulture (P) Ltd. [2019 (6) TMI 820 - BOMBAY HIGH COURT] and other decisions relied in the impugned order.
Thus, not find any merits in this appeal.
Appeal is dismissed.
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2025 (5) TMI 1526
CENVAT Credit - place of removal of goods - whether in this case the sale is on exworks basis or at buyer’s premises? - HELD THAT:- It is found from the factual matrix that the appellant has included both freight and insurance in the exworks price for the purpose of discharging their VAT liability. On going through various clauses, it is obvious that though there is a separate exworks price, which has been termed as fixed price and freight separately, a holistic perusal of all this terms and conditions would clearly indicate that the goods are accepted only when they reach the destination in good condition and liability for their transport including pre-payment of transport is on the appellants themselves. Therefore, in the factual matrix it is obvious that sale has got concluded only at the destination of the buyer and not at the factory gate.
As far as various judgments are concerned, all these judgments have been considered by different Tribunals to arrive at a particular conclusion in a given factual matrix about the place of sale. In the case of Schneider Electric India Pvt Ltd Vs CCT, Medchal-GST [2025 (3) TMI 1484 - CESTAT HYDERABAD], this Bench has examined this issue in a given factual matrix and it was held that the appellant is liable to pay excise duty inclusive of freight charges as the place of removal is the buyer's premises under the facts of this case, but the extended period of limitation and penalty under section 11AC(1)(b) are not justified and are set aside.
Conclusion - The sale took place at the buyer's premises on FOR basis and that freight and insurance costs are includable in the assessable value for excise/GST purposes.
There are no infirmity in the impugned orders and therefore, they are upheld - appeal dismissed.
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2025 (5) TMI 1525
Short payment of Central Excise duty - method of valuation - goods supplied to institutional consumers without direct sale by the manufacturer - to be valued under Section 4 or Section 4A of the Central Excise Act, 1944? - HELD THAT:- The provisions of the Legal Metrology Act & Rules provide that only those supplies which are made directly by the manufacturer/ packers or where it is endorsed that these are “ not for retail sale”, will be eligible for exemption from printing of MRP. Fact of the case show that there is neither a direct sale of PP medicines by the appellant to the institutional consumers, nor he has endorsed “not for retail sale” on the said goods cleared to their distributors which he claims were meant for such supply. Also, the appellant has printed MRP on the goods but did not assess the same under Section 4A of the Central Excise Act for excise duty payment.
What has come out of the documents that MRP was printed on the PP medicines supplied by the appellant to their distributors. There was no endorsement to show that the goods are not meant for retail sale. Only mention of “Government invoice” on the covering Central Excise invoices, does not fulfil the requirement of Legal Metrology Act and the Rules made thereunder.
Reliance placed on the decision of CESTAT, Delhi in M/s. Hanon Climate Systems India Ltd Vs. Commissioner (Appeals) CE & CGST, Jaipur [2024 (4) TMI 1267 - CESTAT NEW DELHI] wherein it is held, that if the goods are marked “not for retail sale” and sold to the manufacturers, they qualify as sale to the industrial consumers and not otherwise.
Extended period of limitation - HELD THAT:- There is no dispute that the appellant have filed Central Excise Returns but the same nowhere show clearances made to their distributors separately. The assessable value has been determined in respect of all the clearances without showing as to which of the goods were assessed under Section 4 and under Section 4A of the Act. Non-disclosure of such vital information, leads to conclude that the appellant has not disclosed full facts in the Central Excise returns and therefor, extended period of limitation has rightly been invoked.
Conclusion - i) If the goods are marked “not for retail sale” and sold to the manufacturers, they qualify as sale to the industrial consumers and not otherwise. ii) Non-disclosure of vital information, leads to conclude that the appellant has not disclosed full facts in the Central Excise returns and therefor, extended period of limitation has rightly been invoked.
The order of the lower authority confirming differential Central Excise Rs. 14,65,213/- alongwith interest and imposition of equal penalty on the appellant under Section 11AC of the Central Excise Act, 1944 upheld - penalty on manager is not justified - appeal disposed off.
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2025 (5) TMI 1452
Nonfulfillment of mandatory requirement of pre-deposit - affidavit for poor financial condition - waive the pre-deposit or to reduce the pre-deposit - Seeking direction to entertain the appeal filed under Section 35B of the Central Excise Act, 1944 - exercise of power under Article 226 of the Constitution of India - HELD THAT:- In Rahul Rajvaidhya v/s Customs Central Excise and Service Tax the Division Bench [2019 (10) TMI 227 - MADHYA PRADESH HIGH COURT], has dismissed the appeal affirming the order of the Tribunal due to nonfulfillment of mandatory requirement of pre-deposit as provided under Section 129(e) of the Central Excise Act.
In case of M/s Shree Marwal Sewashram v/s Customs, Excise & Service Tax, Appellate Tribunal [2018 (3) TMI 1427 - MADHYA PRADESH HIGH COURT], the writ petition has been dismissed be declining the relaxation of pre-deposit which is mandatory under Section 35(f) of the Act, 1944 and the order of dismissal of appeal by the Central Excise & Service Tax, Appellate Tribunal has been affirmed.
In view of the above, the Tribunal has not committed any error while dismissing the appeal due to non-deposit of the statutory amount as per provisions of Section 35(f) of the Act, 1944.
Accordingly, this Writ Petition is dismissed.
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2025 (5) TMI 1367
Condonation of delay in filing the application for restoration - duty paid on fixed facility charges - Demand for CENVAT credit including Education cess and Secondary and Higher Education cess in terms of Rule 2014 of the CENVAT Credit Rules, 2004, read with Section 11A (2) of the Central Excise Act, 1944 - levy of Penalty and interest - definition of "input" - HELD THAT:- We have perused the reasons given by the applicant for not being present on the day when the matter was called. The reasons are acceptable and are not being disputed by the assessee. Therefore, the delay in filing the application is condoned and the appeal stands restored to its original file and number of this Court to be heard and disposed of. The application, IA No: GA/3/2025, is allowed.
The learned Tribunal took note of the fact that identical issue was considered in the assessee’s own case and by final order dated March 23, 2018, the claim of the assessee with regard to CENVAT credit on the duty paid on fixed facility charges was allowed. While doing so, the order passed by the co-ordinate Bench of the Tribunal in the case of Commissioner of Excise, Hyderabad vs. Aurobindo Pharma Ltd., [2009 (3) TMI 908 - CESTAT BANGALORE] was relied on.
The revenue challenged the said order before this Court in CEXA 52/2019 and the said appeal was dismissed by the Hon’ble Division Bench by judgment dated February 24, 2020. Thus, the issue in the assessee’ s own case having been decided, the revenue cannot take a different view in the matter though the only distinction in the instant case is that the fixed facility charges is in respect of the facility which was provided for supply of liquid oxygen whereas in the other case it was liquid nitrogen.
That apart, the clarification issued by the Central Board of Excise and Customs dated November 10, 2014 also comes to the aid and assistance of the assessee wherein it was clarified that in the months back there is supply of gas, all elements of consideration, such as price of gas at designated rate per unit of gas and FFC would be added to determine the assessable value for payment of Central Excise Duty.
Further, it was clarified that where the gases so supplied are used by another assessee as ‘inputs’, admissibility of the duty paid on gases as reflected in the invoice for all situations would be decided in accordance with the provisions of the CENVAT Credit Rules, 2004. That apart, on facts it is not in dispute that the supplier had paid the duty and the value of the gas which was supplied was also included in the assessable value.
Therefore, we find that the learned Tribunal was fully right in allowing the assessee’s appeal. Accordingly, the appeal filed by the revenue is dismissed and the substantial questions of law are answered against the revenue.
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2025 (5) TMI 1366
Entitlement to the CENVAT Credit - Free on Road (FOR) sale destination basis - inclusion of freight in the transaction value - refund claimed on the duty paid on the returned goods - Availing the benefit of Notification No. 56/2002-CE - claim of excess self-credit - Demand of tax along with interest and penalty - HELD THAT:- From the perusal of documents on record, it is clear that the appellant sold the goods on FOR basis and have included the value of freight in the assessable value which has been disputed by the department. Further, we find that this issue is no more res integra as the same has been settled by the Larger Bench of the Tribunal in the case of M/s Ramco Cements Limited [2023 (12) TMI 1332 - CESTAT CHENNAI-LB] as well as by the Hon’ble High Court of Himachal Pradesh in the case of M/s Inox Air Products Pvt Ltd. [2024 (4) TMI 32 - HIMACHAL PRADESH HIGH COURT], wherein the Hon’ble High Court, after considering various judgments of Hon’ble Supreme Court as well as the decision of Larger Bench of the Tribunal in M/s Ramco Cements Limited (supra)’s case, has held that when there is FOR sale and the assessable value includes freight charge also, in that situation, the assessee is entitled to the CENVAT Credit of service tax.
Thus, by following the ratios of the decisions cited supra, we are of the considered opinion that the impugned order is not sustainable in law; accordingly, we set aside the same and allow the appeals of the appellant.
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2025 (5) TMI 1365
CENVAT credit on capital goods used for job-work - non-submission of undertaking - benefit of Notification No.214/86-CE - allegation of diversion of raw materials/inputs namely “Housings” imported duty free - demand of interest and imposition of penalties on UKB and personal penalties on its Director - quantum of penalty under Section 114A of the Customs Act, 1962 - HELD THAT:- So far as the first issue regarding demand of CENVAT credit of Rs.36,13,490/- on capital goods is concerned, we find from the records that the demand has been confirmed on the ground that the capital goods were not used for manufacture of dutiable final product by UKB but were used by UKN for job-work for the principal manufacturer in terms of Notification No.214/86-CE dated 25.03.1986 and the principal manufacturer has failed to submit undertaking as required under the said notification.
In view of the dicta of law laid down by Hon’ble High Courts in Commissioner of Central Excise, Chennai-IV vs. Kyungshin Industrial Motherson Ltd.[2015 (11) TMI 899 - MADRAS HIGH COURT], we conclude that the goods manufactured on job- work basis and cleared by availing benefit of Notification No.214/86, as amended, are not exempted goods and therefore Rule 6(4) of the CENVAT Credit Rules, 2004 restricting CENVAT credit on capital goods is not applicable.
Non-submission of undertaking in terms of Notification No.214/86 by the principal manufacturer is concerned, We find that ER-1 return of the principal manufacturer was submitted before the adjudicating authority showing payment of duty on final product and the same has not been disputed in the impugned order. The finding in the impugned order that UKB has not put forth the evidences to show taxability of goods manufactured under job-work is therefore perverse and incorrect.
Even if we assume for a moment that benefit of Notification No.214/86, as amended, can be denied to UKB, on account of non-submission of undertaking by the principal manufacturer, then also in such a case, the revenue can demand duty on job-worked goods and cannot deny the CENVAT credit on capital goods. Having not demanded duty on job-worked goods, the revenue cannot deny CENVAT credit on capital goods and therefore we find that the demand of CENVAT credit of Rs.36,13,490/- along with appropriation of the amount of credit reversed by UKB cannot be sustained.
Demand of customs duty of Rs.49,60,092/- is concerned, In this regard, we have perused the letter dated 07.09.2011 issued by the Deputy Commissioner, Pune Commissionerate intimating the facts found during enquiry and statements of Shri Pankaj Bhardwaj. However, we fail to gather as to how the said letter or its enclosures point out diversion of “Housings” from UKB to its Pune unit.
We also find that a certificate dated 27.03.2018 issued by M/s East West Automation Technologies Pvt. Ltd. clarifying that the purchase order placed by UKB was for housings and terminals only and the same goods were supplied to UKB. Despite, this certificate on record before the adjudicating authority, neither any enquiry has been made from M/s East West Automation Technologies Pvt. Ltd. nor the contents of the certificate has been disputed by the adjudicating authority. In these facts, we cannot draw any adverse inference on the two invoices in question.
We also find that apart from the two invoices issued by UKB, there is absolutely no material on record to sustain the case of diversion of imported goods. Merely because UKB failed to give details of utilisation of imported “Housings” in beginning, the same could entail imposition of penalty under appropriate provision but the same cannot form the basis for alleging diversion of goods and demand of duty. Therefore, we conclude that the demand of customs duty of Rs.49,60,092/- cannot be upheld.
Accordingly, the duty liability is worked out to Rs.3,98,149/- only, by reducing the duty involved on these machines from the total duty liability of Rs.9,04,380/-. The appropriation of amount, over and above the said amount of Rs.3,98,149/- is also therefore set-aside.
So far as demand of duty of Rs.32,761/- is concerned, we fail to understand that when UKB paid certain amounts in excess, than why the said excess amount can be adjusted towards the short-paid amount of duty. The reasoning given in the impugned order is therefore not tenable.
So far as imposition of penalties on UKB and demand of interest is concerned, since removal of machineries may be prior to 08.04.2011 but determination of duty postulated under Section 114A was made only on 10.09.2020, that too under Section 28(2)/Section 28(10) and not under Section 28(8) and therefore, we find that UKB is not the person liable for penalty under Section 114A in respect of demand of duty of Rs.3,88,149/-. In so far as demand of personal penalties on director is concerned, since we have set-aside the majority of demand of duty, hence personal penalties on the director are also set-aside.
This takes us to the appeals filed by the revenue. The revenue has challenged the impugned order to the extent it imposes penalty equivalent to the amount of duty and not the amount equivalent to duty and interest, on the basis of Circular No.61/2002-Cus dated 20.09.2022.
The ground raised in the appeals filed by the revenue is squarely covered by the decision of the Tribunal in Commissioner of Customs, Noida v. Unnati Fortune Industries Pvt. Ltd.[2024 (1) TMI 532 - CESTAT ALLAHABAD] and therefore the appeals filed by revenue cannot succeed.
Thus, we partly allow the appeal filed by UKB by setting aside the entire demand of duty, interest and penalties except demand of Customs duty, CVD & Addl. Duty (Imports) of Rs.3,98,149/-. Since we are confirming demand of duty of Rs.3,98,149/- only, hence appropriation of amounts made in the impugned order, over and above of Rs.3,98,149/- is set-aside.
The appeal filed by Director of UKB is allowed in toto and the appeals filed by revenue are rejected.
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2025 (5) TMI 1364
Invocation of extended period of limitation - suppression of facts, knowingly and willfully - evasion on payment of duty - non-submission of price list - claiming wrong valuation and wrongly availing benefit of SSI exemption under the Notification No.8/2003-CE - classification of goods - failure to take registration and file monthly Returns - demand and recovery of duty along with interest, penalties - HELD THAT:- Now once the revenue was aware of the material facts regarding classification under tariff item 2106 9011 and also the claim under the exemption notification, we find that there was no suppression on the part of the Appellant as the Appellant disclosed the correct information. Merely because the goods classifiable under tariff item 2106 9011 were assessable under Section 4A and not under Section 4 will not make out a case of suppression, as the relevant facts were already in the knowledge of the revenue. Therefore no case of suppression with intent to evade duty is made out against the Appellant, which is in consonance with the law laid down in Pushpam Pharmaceuticals Co. vs. CCE [1995 (3) TMI 100 - SUPREME COURT].
So far as non-submission of price list is concerned, we find that price list is relevant for the purposes of valuation under Section 4A of the Act and once the Appellant was paying duty under Section 4A without there being any objection of the revenue, the question of submission of price list does not arise and consequently it cannot be a ground for invoking extended period. We also cannot approve the finding in paragraph 5.4 that it is already proved that the assessee had suppressed the facts as the adjudication order, prior to paragraph 5.4, nowhere deals with the issue of suppression.
The fact that during 2016-17, the Appellant cleared goods of more than Rs.4 crores also does not lead to suppression, when the Appellant had admittedly paid duty on turnover in excess of Rs.4 crores. The fact that the Appellant did not paid duty in 2017-18 by claiming SSI exemption also cannot be a ground for alleging suppression, when the said fact was already in the knowledge of the revenue and non-payment of duty was under the bona-fide belief that the Appellant is still entitled for SSI exemption. It is important to note here that mere non-payment of duty is not sufficient to sustain the charge of suppression, since for suppression, there must be intent to evade payment of duty, which is not there in the present case.
We further find that in the impugned order, the charge of suppression has been sustained on grounds, which were not there in the adjudication order. This is clearly impermissible in law, as the case of the revenue cannot be sustained on a ground which was not there in the adjudication order and therefore the impugned order, to this extent, is not sustainable in law.
Thus, the impugned order, to the extent challenged, is set-aside and the appeal is allowed with consequential relief, as per law.
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2025 (5) TMI 1282
Clandestine removal - Seizure of Pen Drive from the premises of another party, contains the “Production & Dispatch of Sponge Iron” - Demands along with interest and penalty - difference between the Excel Sheet production figure and the RG1 figure - excess / unaccounted production of sponge iron - modus operendi - HELD THAT:- We find that apart from heavily relying on the pendrive and recorded statements, the Revenue has made no effort to bring in corroborative evidence to fortify its claim of clandestine removal. There is no discussion about procurement of materials / inputs, the input – output ratio analysis, electricity consumption, statement of purported sellers of inputs, purported buyers of the finished goods, movement of vehicles and statement of such vehicle drivers / owners. While the Revenue is not required to bring in pinpoint and precise evidence but still efforts have to be made to ensure that sufficient evidence is produced in support of their case.
From the present proceedings, we find that even within the pen-drive the Revenue claims that part of the same is accounted for in the RG 1 records and clearance has been made on payment of Excise Duty. The quantification has been done by comparing the RG 1 sales figures vis-à-vis the figures shown in the Pendrive data and admittedly the author of the Pendrive is not known and no statement has been recorded to this effect from that person. The procedure prescribed under the statutory provisions have not been followed while relying on the data contained in the pendrive.
As we have observed that entire case in respect of the all demands on different heads as observed in the table referred above, has been built up with miniscule evidence, with no corroborative evidence brought in whatsoever. Therefore, we have no hesitation to apply the ratio of the cited case laws in respect of Pendrive, non-allowing of cross-examination of the persons recording the statements, non-production of corroborative evidence, and set aside the impugned order on these counts in respect of the confirmed demands of Rs.1,47,93,916/-.
Since the demands are being set aside, the corollary interest and penalties also get aside.
The impugned Order is set aside towards the confirmed demand of Rs.1,47,93,516/- along with interest and penalty thereon. The penalty on the second appellant is set aside and appeal is allowed.
The appeals are disposed off thus.
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2025 (5) TMI 1281
Demand of duty - Clandestine manufacture - demand with interest and various penalties - solely on the basis of private records found during the course of investigation - satisfying the tests laid down in the case of Arya Fibres Pvt. Ltd. [2013 (11) TMI 626 - CESTAT AHMEDABAD] - HELD THAT:- As none of those tests has been satisfied as from where the excess raw material has been procured by the appellant from where the excess labour has been employed to manufacture such a huge quantity of the goods, how much electricity has been consumed by the appellant, what is the production capacity of the plant installed in the factory premises, where the clandestine removal of the goods were sold and how the transaction were made by the appellant. None of these tests has been satisfied. Therefore, on that ground the demands are not sustainable.
Further in the case of Commissioner of C.Ex, Chandigarh versus Laxmi Engineering Works, (2010 (3) TMI 276 - PUNJAB & HARYANA HIGH COURT), the Hon’ble High Court observed that even if some record recovered during raid and corroborated by some supportable evidence holding that there was an attempt of clandestine production and removal of goods then it is necessary to have some positive evidence of clandestine production and removal of the goods. Admittedly, no such evidence is produced by the Revenue therefore, demand against the appellant is not sustainable.
Thus, it is alleged that appellants were involved in clandestine removal of goods on the basis of private records during the course of investigation and statements recorded during the course of investigation which were not corrugated by the tests laid down in the case of Arya Fibres Pvt. Ltd. (Supra) the demand of Central Excise duty is not sustainable against the appellant. As demand of duty is not sustainable, consequently, no penalty can be imposed on the appellant. In these terms we drop the demand alongwith penalties imposed on the appellant.
In result, we set aside the impugned orders and allow the appeal filed by the appellants.
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2025 (5) TMI 1224
100% EOU - Appellant has achieved negative NFE and had not fulfilled the obligations and conditions as provided in Para 4(b) of Notification No. 22/2003-CE and Para 3(d) of Notification No. 52/2003-Cus dated 31.03.2003 - contravention of provisions of Section 5A of Central Excise Act, 1944, and violating Rule 20 of the Central Excise Rules, 2002 as well as contravened Section 25(1) of the Customs Act, 1962 - Extended period of limitation - HELD THAT:- There is no controversy regarding the fact that appellants failed to achieve positive NFE and could not export the goods to achieve positive NFE earning for the period 2010-15 having procured goods without payment of duty.
The main argument of the appellant is that they have duly complied with the condition stipulated in para 4(b) and 3(d) of exemption Notifications No. 22/2003-CE and 52/3003-Cus dated 31.03.2003 respectively by furnishing bond and hence the impugned order to recover the duty in the absence of any breach of conditions, cannot be sustained. The argument of the learned Counsel for the appellant not agreed upon. From the plain reading of the provisions as contained in 4(b) and 3(d) of the exemption notifications as mentioned above, it is clear that conditions stipulate the payment of duty alongwith interest in case of failure of achieving positive NFE earning and the adjudicating authority can demand duty alongwith interest in case of failure to achieve positive NFE.
Learned Counsel for the appellant has also argued that encashment of bond as stipulated in para No. 4(b) and para No. 3(d) of the exemption notifications 22/2003-CE and 52/2003-Cus dated 31.03.2003 respectively is permissible only when there is permanent failure to achieve net foreign exchange earning and LOP is cancelled leading to the debonding of the EOU. In the present facts, the LOP has been extended upto 12.05.2020 whereas the impugned order dated 31.03.2016 demands the excise duty and Customs duty for the period 2010-15. He contends that when the LOP is in force and not cancelled, appellant are entitled to all the privileges and benefits attached to the LOP including the benefit of the exemption notification and the Revenue has no authority to recover the duty. The arguments of the learned Counsel for the appellant not agreed uponand the contention of the appellant cannot be accepted.
Extended period of limitation - HELD THAT:- The arguments of the learned counsel for the appellant cannot be accepted that they have regularly submitted the returns etc. disclosing the net foreign exchange earning achieved and extended period of limitation cannot be invoked. The department has rightly invoked extended period of limitation and the ingredients mentioned in provision of Section 11A of Central Excise Act, 1944 and Section 28 of the Customs Act, 1962 are present in the instant case.
The appellant also argued that subsequent to the impugned order-in-original, appellant have achieved the stipulated positive NFE earnings as required by DC KASEZ while granting an extension of the LOP period. Annual progress reports for FY 2016-17, 17-18 and 18-19 submitted to SC-KASEZ establish the fact of positive NFE achieved which is enclosed by the appellant. The argument of the learned Counsel cannot be accepted because the show cause notice was issued to the appellant for violation of exemption notifications for the Financial Year 2010 to 2015 and not for the Financial Year 2016 to 2019.
Conclusion - The appellant has violated the conditions of Notification No. 22/2003-CE dated 31.03.2003 and 52/3003-Cus dated 31.03.2003, having failed to achieve positive Net Foreign Exchange earnings during the period 2010-11 to 2014-15 and the appellant have contravened Section 5A of the Central Excise Act, 1944 and violated Rule 20 of Central Excise Rules, 2002. They have also contravened the provisions of Section 25 of the Customs Act, 1962. Therefore, demand of Central Excise duty of Rs. 6,93,932/- as per provisions of Section 4(b) of the Notification No. 22/2003-CE dated 31.03.2003 with interest and penalty and Customs duty of Rs. 42,576/- demanded as per para 3(d) of the Notification No. 52/2003-Cus with applicable interest and penalty is liable to be upheld. Therefore, the impugned order passed by Commissioner (Appeals) is liable to be confirmed whereas the appeal filed by appellant is liable to be dismissed.
Appeal dismissed.
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2025 (5) TMI 1223
Activities amounting to manufacture - activities of packing, repacking, labelling, relabelling, etc., on spare parts traded - HELD THAT:- The adjudicating authority has held that 'The fact that the noticee had claimed in the NIT that they are manufacturer and the fact that the noticee are responsible for the warranty of the spares in case these gets rejected by the buyers cannot be a reason to conclude that the notice would be covered by the definition of manufacturer under the Central Excise Act, 1944 in view of the fact that the original manufacturer of these spares clears these goods on payment of the Central Excise duty In this regard reference may be drawn to the observation of Hon'ble CESTAT in the case of ASKA EQUIPMENT PVT. LTD. vs. CCE [2006 (6) TMI 27 - CESTAT, MUMBAI] where it was held that - Fact that appellant/trader had claimed before Government companies, who are buyers of lower that they manufacture the same or that they give warranty, cannot be a reason to hold them manufacturer under section 2(f) of the Central Excise Act, 1944-Placing a sticker on tower showing brand name of appellants will not render appellants as a manufacturer of tower.'
The respondent is not affixing any price or undertaking packing/repacking of the said goods. These goods are coming in their original packing and labelling. The respondent is putting all these parts in a big box, for proper transportation of the same and no testing has been done by the respondent. Thus, it is clear that these goods have been sold in their original packing.
With regard to MRP, the respondent, in view of tenders raised by buyers, put their quotations and on those quoted values, the respondent is clearing the goods, without changing the MRP affixed by the manufacturers - The fact is also noted that most of the items are duty-paid items and no CENVAT Credit has been availed by the respondent.
Conclusion - It cannot be held that the activity carried out by the respondent with regard to the bought-out items amounts to manufacture in terms of Section 2(f)(iii) of the Central Excise Act, 1944.
There are no infirmity in the impugned order - the appeal filed by the Revenue is dismissed.
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2025 (5) TMI 1219
Recovery of CENVAT Credit with penalty - payment of duty under Sugar Cess Act, 1982 can be claimed as Cenvat Credit when the Cenvat Credit Rules does not provide payment of cess under the Sugar Cess Act, 1982 as not being eligible under Rule 3 of the said Rules or not - Sugar Cess imposed under the provisions of the Cess Act can assume the characteristic of the Central Excise Duty or not - non-consideration of provisions of sub-section (4) of Section 3 of the Cess Act, which is for the purpose of levy and collection of cess relating to Sugar - cess paid under a different statutory provisions which is not related or connected with the duties payable under the Central Excise Act can qualify as a credit component under the Cenvat Excise Act and as such, since the Sugar Cess does not qualify the eligibility criteria fixed in the said Rules or not.
HELD THAT:- The Hon’ble Court after taking note of the above submissions proceeded to first take up for consideration the question as to whether the cess paid under the Act is a fee or tax. After elaborate discussions and after referring to several decisions of the Hon’ble Supreme Court in Shree Renuka Sugars Ltd. [2019 (2) TMI 1242 - SC ORDER] including the Constitutional Bench of the Hon’ble Supreme Court it was held that the traditional view that there must be actual quid pro quo for fee has undergone a sea change in the recent years. The tax recovered by a public authority invariably goes into the Consolidated Fund, which ultimately is utilized for public purposes; whereas a cess levied by way of fee is not intended to be and does not become a part of the Consolidated Fund. Thereafter, the Court took into consideration Article 266 ad 270 of the Constitution of India and with the following reasoning it was held that the sugar cess paid under the Act is tax and to be precise it is duty of excise and not fee.
The other contention which was raised by the revenue in Shree Renuka Sugars Ltd. which is also argued before us is that to be eligible for Cenvat credit, it is necessary that the Act should have been mentioned in Rule 3 of the Cenvat Credit Rules. This issue was answered by the Court after taking into consideration Section 3 of the Central Excise Act, 1944 which is the charging section and the other provisions of the Act and the Cenvat Credit Rules and it was held that excise duty is leviable under the Central Excise Act and also the Sugar Cess Act, 1982 - Ultimately, the Court held that Section 3 of the Act provides for levy and collection as a cess for the purpose of Sugar Development Fund Act, 1982, a duty of excise on all sugar produced by any sugar factory in India and, therefore, the cess leviable and collected is at the stage of production of sugar in the sugar factory. Because it is a tax on production, it is described as a duty of excise.
Conclusion - i) The sugar cess levied under the Sugar Cess Act, 1982, is a duty of excise and not a fee, as its proceeds are credited to the Consolidated Fund of India and utilized for public purposes, negating the traditional quid pro quo characteristic of fees. ii) The cess paid under the Sugar Cess Act is eligible for CENVAT credit under the CENVAT Credit Rules, 2004, and the assessee is entitled to refund claims arising therefrom.
The appeal filed by the revenue is dismissed and the substantial questions of law are answered against the revenue.
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2025 (5) TMI 1218
Short payment of tax by following realization basis as against the accrual basis prescribed under the POT Rules by comparing the “gross amount billed and “gross amount received” as reflected in the ST 3 returns of the Appellant - short-payment of tax based on an improper comparison of select GL Codes appearing in the Trial Balance of the Appellant vis-à-vis the income reflected in the ST 3 returns for the relevant period.
Short payment of tax by following realization basis as against the accrual basis prescribed under the POT Rules by comparing the “gross amount billed and “gross amount received” as reflected in the ST 3 returns of the Appellant - HELD THAT:- On going through the finding recorded by the learned Tribunal, it is found that the learned Tribunal has examined the factual position and observed that the adjudicating authority has not given any finding contrary to the reconciliation report submitted by the assessee. Furthermore, the Department has not produced any other evidence to substantiate short payment of further demand on this count and only a sum of Rs. 18,128/- needs to be confirmed on this score which is the demand of service tax payable under the category ‘Business Auxiliary Service’ and the remaining demand was set aside.
On perusal of the adjudication order, it is found that the assessee was issued a show cause notice for which the assessee submitted their reply and the adjudicating authority disagreed in arriving at a taxable value of the issue and to remove the same the adjudicating authority decided to appoint a registered chartered accountant under Section 72A of the Finance Act, 1994 to justify the veracity of the allegation. Accordingly, a chartered accountant was appointed and the terms of reference were specified in the order passed by the adjudicating authority.
Short payment of tax based on improper comparison of select G.L. Codes appearing in the Trial Balance of the assessee vis-à-vis the income reflected in the ST 3 returns for the relevant period - HELD THAT:- The learned Tribunal on this issue observed that the assessee has submitted a detailed reconciliation report duly certified by the chartered accountant along with the reply to the show cause notice and upon perusal of the report the Tribunal was satisfied that there was no difference in the income reflected in the Trial Balance and the income reflected in the ST 3 returns and also pointed out that the adjudicating authority has not given any finding on the return in the order of adjudication. This aspect also is entirely factual and no substantial question of law arises for consideration. Therefore, the contention of the revenue that the order passed by the learned Tribunal suffers from perversity and does not fit for acceptance.
In the facts and circumstances of the case on hand, there was no material brought on record by the adjudicating authority to establish that the assessee had made willful mis-statement and suppressed the material facts with an intent to evade payment of tax.
Conclusion - i) The adjudicating authority failed to discharge its burden of proof regarding short payment of service tax on both issues (no.3 and no.4). The Tribunal's reliance on the reconciliation report certified by the assessee's Chartered Accountant was justified due to the absence of contrary evidence or reasoned findings by the adjudicating authority, including disregard of the Special Audit Report without explanation. ii) The adjudicating authority's failure to examine and give reasons on the Special Audit Report amounted to a breach of procedural fairness and natural justice.
Thus, no question of law much less substantial question of law arises for consideration in this appeal - appeal dismissed.
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2025 (5) TMI 1217
Clandestine removal - Central Excise duty evasion of Polyester Texturised Yarn (PTY), which was manufactured and cleared by M/s Bhagyashali Textile Mills (P) Limited through the warehouse of the appellant, by misdeclaration and undervaluation - imposition of penalty under Rule 209A of the Central Excise Rules, 2004 - period of dispute relates to financial years 1997-98, 1998-99 - HELD THAT:- From plain reading of the legal provisions under the Central Excise Act, 1944 and the Central Excise Rules, 1944, it is clear that a penalty may be imposed on any person under Rule 209A ibid, if it is established that in relation to ‘excisable goods’ which are liable to confiscation under Rule 173Q ibid or Rule 209A ibid, such a person had knowledge or had reason to believe, that any act or omission to do an act by him, would enable violation of Central Excise statute, and would lead to confiscation of such excisable goods. In fact, the appellant is the warehouse operator, and had actually stored the excisable goods manufactured by BTMPL before its delivery to the customers of BTMPL, on the basis of Delivery Orders and Central Excise Invoices issued by BTMPL.
Thus, it is not the case of the Revenue, that in the factual matrix of the present case, that the impugned excisable goods were clandestinely removed by the appellant, or that the appellant is in any way concerned with preparation of documents for undervaluation or misdeclaration of the excisable goods alleged to have been removed clandestinely without payment of appropriate central excise duty.
The appellant held no responsibility for the warehoused goods, and in the event of theft or fire, it is the responsibility of the manufacturer BTMPL, and accordingly the goods were insured by themselves. Upon receipt of the PTY/goods from BTMPL for warehousing/storage in their godowns, they use to enter the receipt of materials in general ledger book and prepare Goods Receipt Notes (GRNs), copies of which were given to the manufacturer/BTMPL.
The appellant was unaware of the exact quality/description of the goods and followed the numbers printed/written on the bags/carton by BTMPL for re-cognising the identity of the goods and for its delivery, in providing warehousing and storage facility to BTMPL. Further, it is found that there is no specific finding given in the impugned order, for proving that the appellant having been done an act or omitted to have done certain act, or having a reasonable belief or understanding that such action done or omitted to have been done by him would lead to confiscation of impugned goods. From the above factual position, the penalty under Section 209A ibid cannot be imposed on the appellant.
The SCN did not propose for confiscation of the seized goods under panchanama dated 07.07.1999, which was subsequently released provisionally upon execution of bond and bank guarantee by BTMPL, and the learned Commissioner also did not confiscate the impugned goods. In the absence of confiscation of goods in the impugned order under Rule 173Q ibid or Rule 209 ibid, which are alleged to have been undervalued and clandestinely removed, it is not feasible to fasten the liability on the appellant on the ground that they had knowledge of such goods being liable to confiscation, when those were stored in their warehouse on behalf of BTMPL - imposition of penalty under Rule 209A ibid without providing such an important ingredient of the existence of knowledge on the part of the appellant or reasonable ground to believe that their act of storage/warehousing would lead to confiscation of impugned goods does not have the sanction of law and thus, to this extent the impugned order imposing penalty under Rule 209A of the Central Excise Rules, 1944 on the appellant, is not legally sustainable.
Further, in the case R.C.Jain [2014 (12) TMI 1223 - CESTAT AHMEDABAD] the Co-ordinate Bench of this Tribunal have held that the penalty under Section 112(b) of the Customs Act, 1962 and Rule 209A of the Central Excise Rules, 1944 is not sustainable in the absence of establishing that the appellant was aware for forgery or fake nature.
It is found that in the case Nirmal Transports [2011 (1) TMI 758 - CESTAT, MUMBAI] the Coordinate Bench of this Tribunal have held that the penalty under Rule 209A of the Central Excise Rules, 1944 is not imposable on mere allegation and the act of aiding and abetting of the appellant is to be proved by the department.
The impugned order imposing penalty on the appellant under Rule 209A of the Central Excise Rules, 1944, is not legally sustainable.
Conclusion - i) Penalty under Rule 209A of the Central Excise Rules, 1944 cannot be imposed unless it is established that the person had knowledge or had reason to believe that the goods were liable to confiscation under the Act or Rules. ii) In the absence of confiscation of goods or evidence of knowledge or intent, imposition of penalty under Rule 209A is not legally sustainable. iii) Mere allegation or suspicion of aiding and abetting evasion without concrete evidence is insufficient for penalty.
The impugned order dated 31.12.2012 to the extent it had imposed penalty on the appellant is set aside and the appeal is allowed in favour of the appellant.
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2025 (5) TMI 1216
Benefit of concessional rate of excise duty under Notification No. 01/2011-C.E. dated 01.03.2011 and Notification No. 16/2012-C.E. dated 17.03.2012 - Bamboo Mat Corrugated Sheets - Bamboo Mat Ridge Caps - invocation of extended period of limitation - HELD THAT:- It is observed that concessional rate of duty @1% and 2% has been provided for the goods “Resin Bonded Bamboo Mat Board, with or without veneer in between” vide N/N. 01/2011-C.E. dated 01.03.2011 (Sl. No. 52) and N/N. 16/2012-C.E. dated 17.03.2012.
“Bamboo Mat Board”, “Bamboo Mat Corrugated Sheets” and “Bamboo Mat Ridge Caps” are all identical products and classifiable under the same heading of 4412 1000 of the Tariff. In this regard, it is observed that N/N. 01/2011-C.E. dated 01.03.2011 and Notification No. 16/2012-C.E. dated 17.03.2012 fixes the rate of duty for “Resin Bonded Bamboo Mat Board, with or without veneer in between” initially to 1% and later, to 2% and there is no separate Notification for Bamboo Mat Corrugated Sheets and Bamboo Mat Ridge Caps as the nature of these products are almost identical. The raw materials and the process of manufacture is also same for all the three products.
The “Bamboo Mat Corrugated Sheets” and “Bamboo Mat Ridge Caps” manufactured by the appellant are also required to be clubbed along with “Resin Bonded Bamboo Mat Board, with or without veneer in between”. Accordingly, all the three products manufactured by the appellant would be eligible for the benefit of concessional rate of duty as provided under N/N. 01/2011-C.E. dated 01.03.2011 and N/N. 16/2012-C.E. dated 17.03.2012. Thus, the demands confirmed in the impugned orders by denying the concessional rates of duty in respect of the two products namely “Bamboo Mat Corrugated Sheets” and “Bamboo Mat Ridge Caps" is legally not sustainable and hence we set aside the same.
Since the demand of Central excise duty is not sustainable, the question of demanding interest and imposing penalties does not arise.
Time limitation - Suppression of facts or not - HELD THAT:- It is observed that the various letters have been sent by the appellant to the Revenue and no information has been suppressed by them from the Department with the intent to evade payment of duty. Therefore, since the appellant was always in correspondence with the Department and have time and again sought clarification, we are of the view that there has been no suppression of facts on the part of the appellant in this case. Hence, the demand confirmed in the first Show Cause Notice dated 09.07.2015 by invocation for the extended period of limitation is not sustainable - the demands confirmed by invoking the extended period of limitation are not sustainable.
Conclusion - i) The benefit of concessional rate of duty provided under N/N. 01/2011-C.E. dated 01.03.2011 and N/N. 16/2012-C.E. dated 17.03.2012at the rates of 1% and 2% respectively are available to all the three products viz. “Bamboo Mat Board”, “Bamboo Mat Corrugated Sheets” and “Bamboo Mat Ridge Caps” during the periods under dispute. Hence, the demands confirmed in the impugned orders are not sustainable and accordingly, the same is set aside. ii) Since the demands against the appellant are not sustainable, the demand of interest and imposition of penalties thereon are also not sustainable and consequently, the same are set aside.
The impugned order set aside - appeal allowed.
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2025 (5) TMI 1128
Reversal of Cenvat credit availed on inputs and input services - appellants were admittedly clearing certain exempted goods along with certain dutiable goods from their factory or otherwise - applicability of Rule 6 of the Cenvat Credit Rules, 2004 - HELD THAT:- On going through the SCN dt.05.03.2010, we find that the appellants are primarily engaged in manufacture of sugar but are also manufacturing certain specialized products which are cleared to ISRO in terms of Notification No.64/95-CE, being an exemption notification. The department’s view is that since they have taken certain credit in respect of certain input services including services used by appellant for transportation of gas by pipeline used for generation of electricity and not maintained separate account, Rule 6(3) is invokable.
As per the provision of Rule 6(2), the appellants who are admittedly manufacturing both dutiable and exempted excisable goods were required to maintain separate record for receipt and use of input services. Apparently, the appellants have not been able to adduce any evidence that they have maintained any record for receipt and use of input services separately though they have claimed that they have not at all used the input services for manufacture of exempted goods. As per Rule 6(2), in the event of nonmaintenance, the appellants will have the right to choose any one of the options governed by Rule 6(3)(i), (ii) and (iii). In this case, though claimed but they are not able to establish that they have maintained separate account for receipt and use of input services even though admittedly they are engaged in manufacture of both dutiable and exempted goods.
As per the provisions of Rule 6(3) of CCR post 01.04.2008, there is a provision for payment of an amount equivalent to Cenvat credit attributable to inputs and input services used in or in relation to manufacture of exempted goods subject to condition and procedure specified in Rule 6(3A). Whereas, prior to 01.04.2008, there was no such provision except for in terms of retrospective amendment in 2010, which provided for specialized procedure under Rule 6(7) for payment of amount equivalent to the credit attributable to exempted goods along with 24% interest before a specified date - In this case, they have clearly not availed of the said provision and thus, in terms of the extant rules, when there was no provision for reversal of Cenvat credit attributable for period prior to 01.04.2008, as such, then the only option left was to pay an amount at the specified rate indicated in the respective SCNs. However, for the period post 01.04.2008, the option is to be chosen by the manufacturer and it cannot be imposed on him by Department. Further, even if the procedure under Rule 6(3A) has not been followed in full, they can work out the credit attributable to said exempted goods, if any.
The appellant’s reliance on the judgment of Hon’ble High Court in the case of Principal Commissioner, CGST, Ludhiana Vs Suraj Solvents & Vanaspati Industries [2023 (3) TMI 7 - PUNJAB AND HARYANA HIGH COURT], is distinguished as in that case the assessee could not apply because of pendency of proceedings in other forum, which is not the case here. Hence it is distinguished.
For the period prior to 01.04.2008, the appellant would be required to pay an amount as indicated in the respective SCNs. However, for the period post 01.04.2008, they will be at liberty to pay an amount equivalent to the Cenvat credit attributable to the exempted goods. In case no credit is found attributable to the exempted goods, then no amount shall be liable to be payable. As far as the issue of limitation is concerned, it is found that the Adjudicating Authority has considered their submission and has held that in the facts of the case, it is rightly invokable. It is found that in this issue of reversal of credit, options under Rule 6, etc., were subject matter of differing interpretations during material time and even retrospective amendment was made to allow certain relief for period prior to 2008.
The issue is interpretative in nature and there is no other strong and cogent ground for invoking extended period, hence, extended period cannot be invoked.
Conclusion - i) The manufacturers engaged in production of both dutiable and exempted goods must maintain separate accounts for inputs and input services as per Rule 6(2). ii) Failure to maintain such records invokes Rule 6(3) requiring reversal or payment of proportionate credit. iii) For periods prior to 01.04.2008, statutory provisions did not allow reversal of credit, limiting recovery to specified amounts. iv) Post 01.04.2008, manufacturers have the option to pay proportionate credit attributable to exempted goods, which cannot be unilaterally imposed by the Department. v) Extended period for demand recovery was not justified given the interpretative nature of the issue and vi) Penalty cannot be imposed without evidence of fraudulent or willful conduct.
Appeal is partly allowed by way of remand.
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2025 (5) TMI 1127
Refund of CENVAT credit of Countervailing Duty [CVD] and Special Additional Duty [SAD] paid by the appellant - non-fulfilment of export obligation in respect of Advance Authorisation - HELD THAT:- It is clear from the decision of the Tribunal in Shakti Pumps [2024 (7) TMI 541 - CESTAT NEW DELHI] that Shakti Pumps was held entitled to claim refund of CENVAT credit in cash under the provision of section 142(3) of the CGST Act even though Shakti Pumps had paid CVD and SAD post implementation of the CGST Act and in terms of the 2004 Credit Rules, as applicable prior to 01.07.2017, Shakti Pumps was entitled to claim CENVAT credit of CVD and SAD paid on imports. The appellant would, therefore, be entitled to refund in cash CENVAT credit of the amount of CVD and SAD paid after 01.07.2017.
It would be seen that the Jharkhand High Court after acknowledging that under section 142(3) of the CGST Act a refund application can be filed with respect to any amount relating to CENVAT credit paid under the existing law and it has to be disposed of in accordance with the provisions of the existing law, the refund was not granted for the reason that the writ petitioner had not claimed transactional credit, but had claimed the amount of service tax on ‘port service’ as credit in the ST-3 returns to which it was admittedly not entitled to as it was an assessee under service tax only on reverse charge mechanism and admittedly the “port services” availed by the writ petitioner was not covered under reverse charge mechanism. Thus, it was found as a fact that the writ petitioner had not only illegally taken credit of service tax on “port services” as credit in the ST-3 returns, but had filed an application for refund of the same under section 142(3) of the CGST Act, which was not permissible in law. This decision of the Jharkhand High Court in Rungta Mines [2022 (2) TMI 934 - JHARKHAND HIGH COURT] would, therefore, not come to the aid of the department.
The decision of the Larger Bench of the Tribunal in Collector of Central Excise, Chandigarh vs. Kashmir Conductors [1997 (7) TMI 186 - CEGAT, COURT NO. II, NEW DELHI - LB] relied upon by the learned authorized representative appearing for the department is also not applicable to the facts of the present case since it deals with time limit for filing refund claim. In the instant case, the refund claim has not been rejected as being barred by time under section 11B of the Central Excise Act, 1944.
Conclusion - The appellant would be entitled to refund of CENVAT credit in cash under the provisions of section 142(3) of the CGST Act of the amount of CVD and SAD paid after the coming into force of the CGST Act on 01.07.2017.
Appeal allowed.
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