Home Case Index All Cases Central Excise Central Excise + AT Central Excise - 2019 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (9) TMI 1532 - AT - Central ExciseRecovery of allegedly ineligible credit from the recipient of credit - CENVAT Credit - utilization of distributed credit - exempt goods/services - area based exemption - retrospective applicability of the Explanation incorporated in 2011 - gap between the availment of ineligible credit and the utilization of pooled, distributed credit for discharge of tax liability - HELD THAT:- CENVAT credit is the bridge that reconciles the charging provision and the valuation provision of the taxing statute. In interpreting the various aspects – real, normal and transaction – of value that were subjected to duties before and after 1975 or after 2000, the Hon’ble Supreme Court has held that valuation, being only a measure of the levy, is not controlled by the charging provision and that legislative competence to prescribe the time and extent may accommodate administrative convenience - The decisions in UNION OF INDIA & ORS. ETC., ETC. VERSUS BOMBAY TYRE INTERNATIONAL LTD. ETC., ETC. [1983 (10) TMI 51 - SUPREME COURT] and COMMISSIONER OF CENTRAL EXCISE, INDORE VERSUS M/S GRASIM INDUSTRIES LTD. THROUGH ITS SECRETARY [2018 (5) TMI 915 - SUPREME COURT] are seminal enough to warrant, for our purpose, mere reference without alluding to the significant portions. Propriety notwithstanding, and tempting though it may even be to the executive branch of government, the cascading effect of such measure on business, and the ultimate consumer, compelled the incorporation of some neutralizing mechanism - The scheme of CENVAT credit restricts the actual collection to the value of contribution to the product emanating or service offering from the assessed entity which is the unambiguous intent of the charging provision. From the one-on-one correspondence of pro forma credit to the general pooling of CENVAT credit, the thread of continuity lies in this bridging intent. Among the various perspectives of CENVAT credit, the two which predominate, and have coloured, the disputes are, in the eyes of the tax advisors, that it is a mirror of, and substitute for, the account current and, from the standpoint of the tax administrator, that it is an exemption scheme. In our opinion, such constricted appreciation is akin to describing the Taj Mahal as a spiffy looking tomb; not only is such perspective flawed in capturing the spirit of neutralization but also fails the test of statutory calibration. Even if the accumulated credit is acknowledged as an instrument for discharge of duty liability, it lacks the flexibility of the account current as a pool of money. The scheme is notified under the general rule making powers conferred by the taxing statute on the Central Government and not by recourse to the specific power of exemption in the respective statutes - The appellant-assessee is a recipient of credit that is assigned by the distributor who, undisputedly, has borne the incidence of tax on procured services. It is the distributor who can be charged with awareness of exempted output/output service, if any, and who is empowered by the statute to take the credit. And it is only such availment by the distributor that can be put to notice for ineligibility as espoused in the decisions that fulfill the criteria of precedent. Even if the ‘input service distributor’ was unable to establish its claim to avail the credit of tax paid on the different services and, thereby, to deprive the utilization of such, the entity to be subject to recovery proceedings remains unidentified in the Rules. It would be a grave travesty to leave such identification to the adjudicating authority. Indeed, the different decisions highlight the inability of the several adjudicating authorities to arrive at a consensus. In this circumstance, there may have been no need to fill the gap - In the circumstances of the Rules having failed to isolate the target of recovery which cannot be read into in the absence of any indication of legislative intent, it cannot be left to be taxed administrator to substitute for such legislative intent, the impugned orders will not sustain. Appeal allowed - decided in favor of assessee.
|