|
Advanced Search Options
Central Excise - Case Laws
Showing 141 to 160 of 685 Records
-
2020 (9) TMI 787 - CESTAT MUMBAI
Reversal of proportionate Cenvat credit - common input/input services used for manufacture of dutiable as well as exempt goods - Rule 6(3A) of the Cenvat Credit Rules, 2004 - HELD THAT:- The issue arising out of the present dispute regarding determination and payment of amount as per the formula prescribed under sub-rule (3A) of Rule 6 ibid is no more open for any debate in view of the Co-ordinate Bench decision of the Tribunal in the case of the appellant itself COMMISSIONER OF CENTRAL EXCISE & ST, RAJKOT VERSUS M/S. RELIANCE INDUSTRIES LIMITED [2019 (3) TMI 784 - CESTAT AHMEDABAD].
There are no merits in the impugned order passed by the learned Commissioner (Appeals) - appeal allowed - decided in favor of appellant.
-
2020 (9) TMI 786 - CESTAT NEW DELHI
Reversal of Cenvat Credit - clearance of iron ore fines - separate excisable goods but exempted commodity or not - whether iron ore fines in question are needed to be considered as exempted goods, being sold for consideration during the relevant period as provided under the amended provisions of Rule 6 (1) of CCR, 2004? - HELD THAT:- It is foremost important to understand the procedure or the activity of the appellant. Not only from the show cause notice, but from the appellant’s submission, the admitted procedure adopted by the appellant in manufacturing the final product i.e. ‘sponge iron’ is that, the appellant procures iron ore etc., as the input for manufacturing sponge iron. The iron ore lumps of different sizes are first crushed and are then segregated by screening. It is thereafter that requisite sized iron ore /ore lump is fed in the sponge iron klin. In the aforesaid process of segregation, the iron ore fines are inevitably generated. Thus these fines, cannot be considered as the result of the manufacturing activity of the appellant, since no manufacturing activity is involved for emergence of the same out of iron ore by the appellant.
It is not the case of the respondent that sieving out of the finer input from coarser one, will be a manufacturing activity. In the present case, the fine iron ore (input) is inevitably generated in the process of segregation, is admittedly not usable in the klin for the purpose of manufacture of the final product i.e. the sponge iron. However, it is still the part of the input. The iron ore fines are therefore, held not to be the excisable commodity. The findings of original adjudicating authority are found to be correct. The findings of impugned order under challenge being contradictory to this effect, are held perverse and liable to be set aside - Further, the Department has brought nothing on record to show that the iron ore fines can be considered as exempted goods. Admittedly, there is no Notification of the Revenue granting exemption to this product. Thus, the embargo created in Rule 6 (3) (b) of CCR will not apply for removal of iron ore fines from the appellant’s factory.
Appeal allowed - decided in favor of appellant.
-
2020 (9) TMI 695 - CESTAT KOLKATA
Irregular availment of CENVAT Credit - contravention to Rule 15(2) of the Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944 - demand based on various statements - reliability on Chartered Engineer’s Certificate - discrepancies pointed out by the department with regard to the “Transportation of Goods” from the factory of M/s.Industrial Associates to the factory of the appellant - Failure to Produce Documents - non-appearance against summons - HELD THAT:- The inputs received by the appellants were duly entered in their RG-23A Part-I for the period from August, 2008 to January, 2009 and such records were subject to scrutiny by their jurisdictional Central Excise Officers and the credits were being availed with the knowledge of the Revenue and by reflecting the inputs in the records. In such a scenario, it is a difficult proposition to come to a finding that all the inputs received by the appellants, which have been utilized in the manufacture of their final product, were not actually received by the appellants.
The appellants received the goods in their factory under cover of the Central Excise invoices issued by M/s.Industrial Associates. The concerned staff at the factory gate puts the receipt seal under his initial and affected a consolidated entry in Form-IV Register for the receipt of said inputs along with other inputs of analogous character. The credit availed by them were duly reflected in their monthly ER-I returns. They also received tax-invoice-cum-challan along with original for buyer copy of the excise invoices for inputs received from the said manufacturer. The amounts were paid by them by account payee cheques/RTGS. VAT were also reflected in the invoices raised by the said company. The transportation costs were paid by them to the vehicle drivers/owners under the cash vouchers.
The appellants have admittedly manufactured their final product by using the said inputs and the final products stands cleared by them on payment of duty. The final product cannot be manufactured out of nothing and obviously requires inputs. There is no iota of evidence produced by the Revenue to reflect upon the fact as to from where the appellants have procured such a huge quantity of inputs used by them in the manufacture of their final product. As such, there is a lacuna in the Revenue’s investigations to that extent also.
The Tribunal had come to a finding that the assessee in fact had received the goods covered under the disputed invoices inasmuch as the Revenue has not brought any tangible evidence to prove nonreceipt of the goods by the respondent - it is undisputed fact that all the purchases were duly recorded in the statutory books of the appellant and the goods were also found to be entered in statutory records of the appellant. None of the consignors of the goods have denied the clearance of the goods to the appellant. There is no evidence which can show that the records maintained by the appellant are not correct.
The order for disallowance of credit to the appellant is not sustainable - in the absence of any cogent evidence, the demands are not sustainable, as a consequence, the penalties imposed on both the appellants are also not sustainable and are accordingly set aside - appeal allowed - decided in favor of appellant.
-
2020 (9) TMI 646 - MADRAS HIGH COURT
Extended period of Limitation - suppression of relevant facts or not - Section 11A of Central Excise Act - valuation under Rule 8 of the Central Excise (Valuation) Rules 2000 - HELD THAT:- The extended period of limitation in the present case was not available to the Revenue Authorities and therefore, the Show Cause Notice issued to the Assessee on 19.8.2010 could not cover the period in question viz., 2007-2008 to 2009-2010 except to the extent of one year from the date of issuance of Show Cause Notice on 19.8.2010 and therefore, the learned Tribunal was justified in holding in favour of the Assessee to that extent.
We fail to understand that when the Assessee had changed its method of valuation on the advice of the Department's Authority himself based on some Audit objection as indicated in the communication dated 17.1.2008, how by turning the tables on the Assessee, the Adjudicating Authority, without referring to the said communication dated 17.1.2008, could invoke the extended period of limitation and hold that the Assessee is guilty of suppression of relevant facts viz., the Steel Bars were supplied to their Sister Concerns for the construction work and not for further manufacture of excisable goods, and thereby impose the duty following the Rule 4 Valuation and not Rule 8 Valuation as advised by the Department's Authority itself, while the Assessee had followed the said advice/suggestion of the Department and changed its valuation method from Rule 4 to Rule 8 (110%) of the cost of transfer of goods - The Revenue Authority cannot be allowed to take a different stand at different point of time to suit their convenience and impose Additional Duty on the Assessee without establishing any suppression of facts on the part of the Assessee.
Appeal dismissed - decided against appellant.
-
2020 (9) TMI 645 - CESTAT AHMEDABAD
Clandestine Removal - shortage of finished goods - Kraft Paper - main evidence for making allegation of clandestine removal and raising demand is computer printouts - Corroborative evidences or not - reliability of statements - period from April, 2009 to July, 2012 - HELD THAT:- As per section 36B of Central Excise Act, 1944, printed material produced by the computer shall be admissible as evidence only when the condition mentioned in Sub-section (2) and other provision contained in the said section 36B are satisfied. As per the condition laid down in subsection (2) the statement of computer printout must be produced by the computer during the period for which the computer was used regularly to store or process information for the purposes of any activities regularly carried on over that period by the person having lawful control over the use of the computer. In the present case it is admitted by the revenue itself that the statement was not produced in the computer which was seized, it is only having the backup data the data originally produced in different computer. As per the department the hard disc of the said computer was destroyed. Therefore it is clear that the computer which was seized, the data was not produced on the seized computer. No evidence was brought on record that the data retrieved from the computer was originally produced on different computer and the hard disc of the same was destroyed. It is only as per the statement of the director which was claimed by the appellant having been taken under duress and threat.
As per clause (b) of Sub-section (2) of Section 36B the information must be regularly supplied to the computer during that period - In the present case the period involved is April, 2009 to June, 2012 during that period the computer which was seized was not in use therefore, clause (b) is not satisfied. Similarly, since the seized computer was not in use for the material period clause(c) is also not satisfied. Even the seized computer is not the computer to which the data was supplied in the ordinary course of the said activities, therefore, clause (d) is also not satisfied.
In the present case also the undisputed fact is that the computer seized by the department, the data was not supplied in the said computer. Therefore, in terms of the Section 36B(2) the computer printout in the present case cannot be accepted as admissible evidence.
Reliability on statements - HELD THAT:- The Adjudicating Authority has heavily relied upon the statements of directors and various alleged raw material supplier and buyers of goods. We find that the appellant have requested for cross-examination of all the witnesses but none of the witness was allowed to be cross-examined by the adjudicating authority. We find that since the entire basis of demand is computer printout and the statements of third parties, it is incumbent on the adjudicating authority to allow the cross-examination as required not only under Section 9D of the Central Excise Act but also to follow the Principle of Natural justice.
As per statutory provision under Section 9D and also settled law, all the statements which were retracted in the form of reply to Show Cause Notice and without allowing the cross-examination of the witnesses cannot be used as admissible evidence, therefore all the statements are discarded. The major demand is based on the computer printout and various statements. Since both are not admissible evidence as discussed above the charge of clandestine removal is not established against the appellant.
The appellant also made a submission that they were involved in the trading of kraft paper, since we have discarded the computer printout being not admissible evidence, we need not to discuss about the content of the data available in the printouts therefore, we need not to give finding on the aspect of trading of kraft paper, whether the same was factually carried out by the appellant or otherwise.
The charge of clandestine removal in respect of major quantity could not be established by the revenue. Accordingly, consequential demand of duty worked out from computer printout is not sustainable - In respect of the co-appellants a penalty under Rule 26 was imposed. This penalty is consequential to the demand confirmed by the Adjudicating Authority. Since the major demand of duty confirmed itself is not sustainable penalties of co-appellants are also not sustained.
Appeal allowed in part.
-
2020 (9) TMI 644 - CESTAT NEW DELHI
CENVAT Credit - inputs not received - forged and fake invoices - chain of company/firm(s) created by Shri Gaurav Mungad - such cenvat credit was utilised towards payment of duty on the goods exported, and thereafter obtained undue rebate claim - proper opportunity of hearing not given - principles of natural justice - HELD THAT:- The case of Revenue is mainly based on the statements of the aforementioned persons. In spite of the categorical request for cross examination of the aforementioned persons, in the adjudication proceedings and also of some other persons connected with the investigations, who had verified the cenvat credit records and the documents of the appellants as well as the officers involved in scrutiny and sanctioning of the rebate claims. But this request of the appellants have been arbitrarily refused by the ld. Commissioner observing that the allegations of the Revenue are also corroborated by other independent evidences and hence cross examination is not required.
This stand of the Adjudicating Authority is a clear violation of the mandate of Section 9 D of the Central Excise Act read with Ruling of the Hon’ble Punjab & Haryana High Court in the case of Jindal Drugs [2016 (6) TMI 956 - PUNJAB & HARYANA HIGH COURT] and the requirement of cross examination reiterated by the Hon’ble Supreme Court in its ruling in Andaman Timber Industries [2015 (10) TMI 442 - SUPREME COURT]. Thus, there is mis-carriage of justice causing prejudice to the appellants. The contention of the appellants that they have received their raw materials under dispute, is also established by the fact that they have manufactured the finished goods, which have been mainly cleared for export.
The Revenue has failed to discharge the onus as regards the source of receipt of raw materials from any other alternative source rather have made a bald allegation on the manufacturers that they have received bazaar scrap on payment in cash - there is no basis for such allegations except assumptions and presumptions.
The cross examination in the facts and circumstances of the present case, was required also for the following reasons:-
(i) The appellant-manufacturers had cleared the goods for export under bond (ARE-I) and thereafter, they have filed the export promotion copy containing the evidences of the Port Officer, certifying the factum of export.
(ii) The goods exported from ICD, Pithampur or Mandideep have been examined either in the factory at the time of stuffing by the officers or at the port by the customs officers. Further, samples were also drawn. In the course of investigation, no inquiry has been made from such officers, who were involved in the supervision and sealing of the containers for export.
(iii) The manufacturers – appellants have made payments for the raw materials /inputs through regular banking channels and no irregularity has been found on this aspect.
In the facts of the present case, the examination of the raw materials suppliers, transporters and the proprietors of the Prerna Enterprises and Ocean Impex was essentially required as their statements are the main evidence relied upon by the Revenue. As the examination and cross examination have not been done in the course of the adjudication proceedings, in spite of this being the second round of litigation, it is held that none of the aforementioned statements can be relied upon for proving the allegations against the appellants. After discarding the statements, as aforementioned, we find that other than the bald allegations, there is no other cogent and corroborative evidences on record in support of the allegation of the Revenue.
The appellants have satisfied the requirement of receipt of inputs along with cenvatable invoices and accordingly, the cenvat credit taken by them is in accordance with the scheme of the Act read with Cenvat Credit Rules - before sanction of the rebate claims by the jurisdictional Asstt. Commissioner, the payment of duty on the goods exported was verified by the Range Superintendent and it was found that the appellants have taken proper cenvat credit and the same was utilized. Thus, the rebate claim was sanctioned only after verification of the cenvat credit as per the procedure.
The Revenue has placed strong reliance on the facts that the proprietor /directors of the appellants companies are related or relatives, but such observations in itself do not prove the case of the Revenue in view of the fact of the manufacture and clearance of the finished goods is on payment of duty. Further, there is no allegation of any flow back of money after the payment has been made through banking channels. Further, the appellant manufacturers have exported their goods and have received the export proceeds, although at some delay and have produced deficit BRCs, which have been annexed in the appeal paper books.
Dispute of quantitative details of the manufacture and sales - HELD THAT:- Such allegations are vague and not based on any cogent evidence or standard input out norms. The allegation of the Revenue as regards the inflation of sale price of the finished goods is also vague. The Revenue has only disputed the sale price with respect to the metal price of Aluminum on LME, which is only a bald allegation. Sale price are the result of market force including demand and supply, among others. No buyer will pay any abnormal high price to please the seller. There is no allegation of hawala transactions in the export made by the exporter, being fake or made to their related party.
The allegations of the Revenue against the appellant are not substantiated - Appeal allowed - decided in favor of appellant.
-
2020 (9) TMI 643 - CESTAT KOLKATA
Recovery of Short paid duty - fabrication of steel tanks for Oil Companies - allegation that the appellants did not obtain Central Excise Registration even after exceeding the SSI exemption limit of turnover ₹ 1.00 Crore - Extended period of limitation - whether the tanks fabricated by the assessee are goods and whether they are liable to Central Excise duty? - Difference of Opinion - Majority decision.
HELD THAT:- The appellant manufacture tank in their factory, although some parts of the tanks are finally attached at the buyers’ premises only. I agree with the submission of the learned counsel for the appellant that the impugned goods when left the factory is incomplete and unfinished tanks. But they are still classified as tanks and is liable to excise duty under CETH 73090090 of CETA.
The learned Member(Technical) has considered the definition of ‘goods’ and the definition of ‘attached to earth’ and has rightly relied upon the decision of the Apex Court in the case of COMMISSIONER OF CENTRAL EXCISE, AHMEDABAD VERSUS SOLID & CORRECT ENGINEERING WORKS & ORS. [2010 (4) TMI 15 - SUPREME COURT] where it was held that the plants in question were not immovable property so as to be immune from the levy of excise duty.
Further the issue involved in the present case is squarely covered by the Division Bench decision of the Delhi Tribunal in the case of M/S V.D. ENGINEERING VERSUS CCE, JABALPUR [2018 (6) TMI 863 - CESTAT NEW DELHI] relied upon by the learned AR wherein identical goods were involved. Though the decision was rendered prior to the decision of this case, the same was not brought to the notice of the Bench at the time of hearing the matter - It was held in the case that Inasmuch as the storage tanks have arisen in the factory of the appellant, the liability for payment of excise duty gets fastened on the appellant.
The impugned goods are liable to excise duty and the opinion expressed by the learned Member(Technical) is in accordance with law - In view of the majority decision, Central Excise demand is legally sustainable on merits for the normal period of limitation and the appeals are disposed of as follows:
(i) Demands for normal period, is confirmed in both the impugned orders.
(ii) Demands for extended period is set aside.
(iii) Cenvat credit is available to the assessees.
(iv) The prices received by them may be taken as cum-duty prices and duty calculated accordingly.
(v) All penalties are set aside.
(vi) Appeals are remanded to the original authority for the limited purpose of computation.
-
2020 (9) TMI 642 - CESTAT MUMBAI
Hearing of appeal - supply of necessary documents - HELD THAT:- The appeal is taken up for hearing after handing over the necessary statements relied upon by the adjudicating authority in passing the impugned order to the Appellant.
Valuation - short payment of duty - allegation that even though their Miraz unit sold Motor Spirit blended with Ethanol and collected duty on the whole quantity of Motor spirit including duty on Ethanol, but failed to discharge the excess duty collected on ethanol under Section 11D of Central Excise Act, 1944 - whether the appellants are required to deposit the amount of ₹ 75,94,886/- on the quantity of ethanol of 712.290 KL blended with 13533.580 KL of Motor Spirit(Petrol),when the resultant quantity of 14245.850 KL of EBP was sold as Motor Spirit ,under Section 11D, and interest under Section 11DD of Central Excise Act, 1944? - HELD THAT:- The Miraj unit receives duty paid motor spirit from their manufacturing Unit at Vasco, Goa and also duty paid ethanol from independent distillers. The Motor spirit and ethanol was blended in the ratio of 95:5 at the time of clearance from the Miraj unit to the customers in tankers. The price per KL of EBP (which was mentioned in the invoice as motor spirit) was similar to the price charged by the appellant for unblended motor spirit to the customers. The Commissioner while adjudicating the demand notice for recovery of excess duty alleged to have been collected on the quantity of ethanol blended with Motor spirit, took cognizance of the fact about the activity/process of blending, whether amounts to manufacture or otherwise. Following the order of the Commissioner of Central Excise and Customs, Goa, he was also of the view that the activity of blending of motor spirit with ethanol amounts to manufacture under Section 2(f) of Central Excise Act, 1944. However, he has proceeded to observe that the appellant had failed to deposit the excess amount of duty collected from the customs on the quantity of EBP blended with motor spirit.
There are no merit in the reasoning of the learned Commissioner in confirming the amount under Section 11D of the Central Excise Act, 1944. Once it is held that the activity of blending 5% of the ethanol with 95% of motor spirit results into manufacture of motor spirit (EBP), the identity of ethanol islost in the process of manufacture of the EBP. Therefore, the price charged on the invoices which includes duty at the rate applicable to motor spirit, if not paid is recoverable under Sec. 11A of CEA,1944 as duty short paid. The approach of theoretically calculating duty on non-excisable portion of the Motor spirit( i.e.ethanol), the raw material used in the manufacture of EBP, and demanding the same under Section 11D of Central Excise Act, 1944, in our considered opinion, cannot be sustained being contrary to the scheme of the Act.
Also, alternatively even if it is assumed that the process of blending of ethanol with motor spirit does not amount to manufacture under Section 2(f) of Central Excise Act, 1944, even than the duty paid on motor spirit (EBP) cannot be construed as duty paid separately on Motor spirit and proportionate duty applicable to ethanol in the total duty be recoverable under Section 11D of Central Excise Act, 1944, when the price charged was inclusive of duty, and the duty attributable to Ethanol is not shown and recovered separately in the invoice - In the present case, the Revenue could not show that the appellant after blending ethanol with duty paid motor spirit collected separately, mentioning the duty on ethanol in the invoices, but not paid to the Government. Therefore, Section 11D of CEA,1944 cannot be said to have been attracted.
Statements of Shri Subbara - HELD THAT:- In all his statements, it is stated that the duty in the invoices prior to the disputed period were shown separately, whereas during the disputed period, it was shown as inclusive of duty. On further being asked by the department, he has stated that the resultant EBP which contains 5% of ethanol since not suffered duty but after blending with motor spirit duty was collected on the total quantity of EBP, therefore, the duty attributable to ethanol theoretically in the total duty paid on the price of motor spirit is payable but not paid - there are no merit in the said understanding of the Shri Subbaraj in stating that excess duty collected is payable but not paid under Sec. 11D of CEA,1944 because of change in the pattern of reflecting duty on the invoice. Therefore, his understanding of the applicability of Sec.11D cannot be the basis for confirming the demand.
Appeal allowed on merits.
-
2020 (9) TMI 503 - CESTAT MUMBAI
CENVAT Credit - inability to maintain separate accounts for consumption of common inputs and inputs services - scope of rule 6(3) of CENVAT Credit Rules, 2004 - two options under the Rules, mutually exclusive or not? - HELD THAT:- It is clear from a reading of CENVAT Credit Rules 2004 that rule 6(1) and rule 6(2) complement each other and are in contradistinction with rule 6(3) which, qualified by the non obstante clause, operates on its own. The latter is unambiguously clear in conferring the privilege of exercising of option to the assessee. It was, therefore, not appropriate for the adjudicating authority to resort to computation that yielded higher revenue.
It would be appropriate for the adjudicating authority to consider the matters afresh after giving an opportunity to the appellant to furnish the computation preferred by them but strictly in accordance with the provisions of rule 6(3) of CENVAT Credit Rules, 2004. The claim of Learned Senior Counsel that the plants should be deemed as separate registrations is not acceptable in law. The appellant is at liberty to raise the submissions pertaining to retrospective application of the revised computation methodology, as well as the claim of certain clearances being excluded from the definition of ‘exempted goods’, before the adjudicating authority.
Matters remanded back to the adjudicating authority - appeal allowed by way of remand.
-
2020 (9) TMI 502 - CESTAT HYDERABAD
Classification of goods - RBD Palm Stearin which they manufacture from refined palm oil - classified under Central Excise Tariff heading 1511 9090 or not? - benefit of N/N. 03/2006- CE dt.01.03.2006 (S.No.9) (as amended) - CBEC Circular No.81/2002-CUS dt.03.12.2002 - period September, 2008 to September, 2010 - extended period of limitation - HELD THAT:- The issue has been settled by the Hon’ble Apex Court in October, 2010 in the case of CCE, C AND SERVICE TAX VERSUS JOCIL LTD. [2010 (12) TMI 24 - SUPREME COURT] and it has been held that Palm Stearin is classifiable under Central Excise Tariff Heading 3823 and not under CTH 1511. Thus, it has been decided against assessee and in favour of the revenue - Respectfully following the judgment of the Hon’ble Apex Court in the case of JOCIL Ltd, it is held that the appellant’s product is classifiable under CTH 3823 and not under CTH 1511 as claimed by the appellant.
Consequently, the exemption notification claimed by the appellant is also not applicable as the relevant entry pertains to only goods falling under Chapter Heading 1507 to 1515. Clearly the appellant’s product falling under CTH 3823 is not covered.
Extended period of Limitation - HELD THAT:- The appellant has been filing ER-1 returns claiming the product’s classification under CTH 1511 and there has been correspondence between the department and the appellant in this regard. On 03.12.2008 the department advised the appellant that the classification of Palm Stearin in ER-1 returns is not correct to which the appellant responded on 06.01.2009 justifying their classification. Thus, the department was fully aware of the appellant’s classification. There is no delay in the appellant responding to the revenue’s letter. It was open for the revenue to issue a show cause notice if they did not find the appellant’s reply acceptable. However, this was not done. No action was taken until the expiry of normal period of limitation and thereafter, demand has been raised invoking extended period of limitation - The entire demand is based on the information provided by the assessee in their ER-1 returns. Making a wrong claim of classification, per se, is neither fraud nor collusion nor wilful misstatement nor suppression of any facts. It is just a wrong claim. If the claim is wrong in the ER-1 returns, it was open for the revenue to have raised demand by issuing a show cause notice immediately. Therefore, we find that there is no ground for invoking extended period of limitation in this appeal.
The appeal is allowed on the ground of demands being time barred - Appeal allowed - decided in favor of appellant.
-
2020 (9) TMI 431 - CESTAT NEW DELHI
CENVAT Credit - inputs - M.S. Plates used in fabrication of final products as well as for platforms used as accessory to capital goods - applicability of restriction introduced in Explanation to Rule 2(k) for the relevant period of June, 2007 - HELD THAT:- The appellants have used the MS Plates both as inputs for fabrication of machinery, which is their final product liable to duty and have also used the MS Plates as Steel Platform for fabrication of their finished product being machinery. Thus, the MS Plates used in steel platform are also admittedly used in the factory of production.
Rule 2(k) of CCR defines, “inputs as all goods used in the factory by the manufacturer of the final product”. Accordingly, the appellant is entitled to cenvat credit on MS Plates - appeal allowed - decided in favor of appellant.
-
2020 (9) TMI 383 - CESTAT MUMBAI
Valuation - undervaluation - “Polo” and “Vento” models of their car - related party transaction - interconnected undertakings - Mutuality of Interest - Section 4(3)(b) of the Central Excise Act, 1944 - four SCN for same transactions and same period - Impact of the CAG report of 2014 on determination of value - benefit of cum-duty price - extended period of limitation - change of opinion - demand of interest - various penalties.
Whether the Commissioner could have considered and adjudicated four different Show Cause Notices in respect of the same transactions for the same period proposing to demand duty by invoking different routes to the valuation of Goods Cleared? - HELD THAT:- We cannot agree with the method adopted by the Commissioner while dealing with the three Show Cause Notice dated 06.02.2015. Commissioner could not have determined three different methods for valuation of the same goods simultaneously. Commissioner while adjudicating has to be judicious enough to determine what is the correct approach to determine the value of the goods cleared. Accordingly he/ she have to determine the value and duty payable - in such a case only one of the three show cause notices which as per the understanding of adjudicator are logical and legally sustainable should have been adjudicated and the other two summarily dismissed.
Appellants have contended that the value determined by them for payment of duty is the transaction value determined purely on commercial considerations at arm’s length. However we find that the documents and evidences suggests that both M/s VWIPL (Appellant) and M/s VWGSIPL do not independently determine the value at which the M/s VWIPL would transfer the cars to M/s VWGSIPL . The transfer value claimed to be the true transaction value is determined by the Planning Round, every year which is headed by M/s VWAG, Germany.
Mutuality of Interest and Related Person - HELD THAT:- Undisputedly, Appellant and VWGSIPL are subsidiaries of M/s VWAG, Germany. Appellant is engaged in the manufacture and production of the cars of models Polo and Vento, as per the designs and specifications of M/s VWAG, Germany, and sell them in the territory of India to only and only M/s VWGSIPL, a marketing subsidiary of M/s VWAG. Any operating loss suffered by the appellant i.e. VWIPL is made good by the M/s VWAG, Germany. As per the submissions made by the appellant counsel at the time of hearing and in written submissions we note that appellant was suffering losses that were made good by M/s VWAG Germany.
All the facts as recorded in impugned order on the basis of the various agreements clearly point to one fact that the issue for consideration is not one of relationship between the buyer and seller simplicitor, because the two Indian subsidiaries are mere puppets in the hand of M/s VWAG, Germany who is authority to determine and take decisions in relation to production and sale of the vehicles of Volkswagen Brand namely Polo and Vento in Indian territory. In fact German unit by rendering financial assistance to both the Indian subsidiaries make them financially viable for their operation. In none of the cases relied upon by the Appellants during the course of arguments on appeal have such an arrangement been considered. In our opinion, in the present case if corporate veil is pierced then we find that the entire operations of manufacture and sale of these vehicle was throughout on account of M/s VWAG, Germany.
Impact of the CAG report of 2014, on determination of Value of Polo and Vento Models of Cars cleared by the Appellant - HELD THAT:- Appellants have submitted that it is also the view of the Ministry that in this case the transactions between VWIPL and VWGSIPL, are not covered by rule 10 as they are not the holding and subsidiary company. Hence the valuation could not be done in terms of Rule 9 by taking the sale price of the VWGSIPL, as the basis for determination of assessable value. We are not in position to accept the submissions made by the appellants, for the reason that in its reply the Ministry has not outrightly rejected the contentions of the audit but have clearly referred to the investigations in the case of under-valuation under process. The points made by the audit have been made the part of that investigation. The opinion of the Ministry referred in the Audit Reports is not conclusive and also is not the statement of law. It is also not a binding judicial precedent.
The value that qualifies to be a value under Section 4(1)(a) can be value which is on account of sale at arm’s length, and not any value that is determined for transfer/ clearance of goods. In absence of any value under Section 4(1)(a), the only route available for determination of the value will be under Sec.4(1)(b) through Rule 11 of valuation rules and the value shall be determined using reasonable means consistent with the principles and general provisions of these rules and sub-section (1) of section 4 of the Act. By application of Rule 11, in case of related person transactions the value needs to be determined by application of Rule 9 of the Central Excise Valuation (determination of Price of Excisable Goods) Rules, 2000. Thus in absence of Section 4(1)(a) value satisfying the criteria laid down by the Apex Court in case of M/s FIAT Industries the value is finally determined in terms of Rule 9 only, on the basis of sale price of M/s VWGSIPL to the dealers.
Benefit of Cum Duty Price - HELD THAT:- The Commissioner has in the impugned order not even examined the issue at all. We are in full agreement with this submission of the Appellant that the benefit of cum duty price will be admissible to them if it can be shown that the price which is taken for computation of assessable value and duty demand is inclusive of excise duty and cesses. Since the Commissioner has not even examined this aspect, the matters need to be remanded back to the Commissioner for re-determining the value of clearances after allowing the benefit of cum duty price - Thus the demand for duty needs to be recomputed after allowing the benefit of cum duty price from the sale price to dealers.
Extended period of Limitation - Change of opinion - HELD THAT:- The impugned order has completely mis-directed while determining the issue of limitation. There can be no dispute about the fact that the issue of valuation of Polo and Vento Variants of the Cars manufactured and cleared by the Appellant was always in the knowledge of the department and was subject matter of correspondence and discussions. It was also taken up in the audit conducted by Central Excise Revenue Audit and is part of the CAG Report of 2014, tabled in Parliament. When the entire issue was under discussion and inquiry, and revenue entertained the view about the correctness of the methodology of valuation adopted as is evident from the CAG Report of 2014. Change in opinion or insufficiency of enquiries earlier made by the department cannot be said to be amongst the grounds enumerated in section 11A (4) for invoking the extended period of limitation - extended period of limitation as provided by Section 11A (4) will not be available for making the demand of duty in the circumstances of this case.
Demand of Interest - HELD THAT:- Since the demand of tax has been upheld the demand for interest will follow. It is now settled law that interest under Section 11AA, is for delay in the payment of tax from the date when it was due. Since appellants have failed to determine the correct assessable value and pay the correct amount of duty by the due date interest demanded cannot be faulted.
Penalty under Section 11AC of the Central Excise Act, 1944 - HELD THAT:- We do not agree with the findings of the Commissioner that there was suppression with intention to evade payment of Central Excise duty, hence we did not find any merits in the invocation of extended period of limitation - the penalty imposed under Section 11AC is liable to be set aside the moment it is held that extended period of limitation cannot be invoked for making the demand.
Penalty under Rule 26 of Central Excise Rules, 2002 - HELD THAT:- Since we find that the issue involved in the matter is of interpretation of legal provisions and number of contractual agreements and documents. On the merits till the time investigations were undertaken by Director General of Central Excise Intelligence, revenue authorities also held the view akin to held by the Appellants. When revenue authorities also held the same view as the appellant then how can appellants alone be held guilty of contumacious conduct for imposition of penalty - in such case involving complex issues in relation to interpretation of statutory provisions, where revenue also entertained the same view as appellants the penalties imposed under Rule 26 of Central Excise Rules, 2002 cannot be justified and are set aside.
The appeals filed by Appellant namely M/s VWIPL, are partially allowed and the matter remanded back to the Commissioner for redetermination of the quantum of duty payable.
-
2020 (9) TMI 303 - KERALA HIGH COURT
Rectification of Mistake/Review of Order - non-compliance with the rules of natural justice - HELD THAT:- While it may be a fact that Ext.P5 communication was issued to the petitioner without hearing him on his Rectification of Mistake Application, that by itself may not justify an interference with Ext.P5 communication in these proceedings under Art.226 of the Constitution of India. A reading of Ext.P4 document clearly reveals that, although styled as a Rectification of Mistake Application, it is in effect an application seeking a review of Ext.P3 order of the Assistant Commissioner. Under the Statute in question, there is no express power of review conferred on the Assistant Commissioner. As a statutory authority, he cannot be seen as possessing any inherent power of review either.
Ext.P5 communication of the Assistant Commissioner, that refuses to consider the application of the petitioner for a review of Ext.P3 order, albeit styled as a Rectification of Mistake Application, does not require any interference.
Petition dismissed.
-
2020 (9) TMI 302 - CESTAT NEW DELHI
CENVAT Credit - fake purchases - It was alleged that M/s.Abhay Chemicals, Jammu had not purchased raw materials from their stated suppliers and therefore they could not have manufactured any finished goods in the absence of procurement of raw materials, with the sole intent to facilitate undue cenvat credit to their buyers - HELD THAT:- The allegations in the show cause notice of taking irregular cenvat credit is based on a communication dated 30.02.2012 received from the Additional Commissioner, Customs & Central Excise, J & K, Jammu, stating that the several units in their jurisdiction located in Jammu & Kashmir appear to be not actually engaged in the manufacturing activities - Further, it is found that the appellants have led evidence that they have received the inputs along with duty paying documents. Further, the appellants have made payments for receipt of inputs by cheque. Further, the appellants have manufactured finished products from the inputs and cleared the same on payment of duty, which is an admitted fact. Further, Revenue has not identified any alternate source of receipt of raw materials clandestinely.
The allegation of Revenue are vague and are proved wrong - Adjudicating Authority is directed to grant the refund of disputed cenvat credit in cash along with interest as per Transitory Provisions under CGST Act - Appeal allowed - decided in favor of appellant.
-
2020 (9) TMI 301 - CESTAT NEW DELHI
Transfer of CENVAT Credit - closure of Delhi unit & merger with its Baddi unit - Rule 10 of CCR - HELD THAT:- Admittedly appellant have maintained proper record of their transactions including taking of cenvat credit on the eligible inputs. Appellant have claimed transfer/ shifting of their Delhi unit to their Baddi unit. But from the finding of the Court below, it is found that no finding have been recorded with respect to the claim of shifting of Delhi unit to Baddi unit and its consequent merger with the Baddi unit. Shifting of a factory to another site is the primary condition under Rule 10(1) alongwith liabilities of the Delhi unit, if any, and Rule 10(3) provides for additional condition that such transfer/ unit or factory should include transfer of stock of input as such or in process, or the capital goods to the new site and such transferred goods are duly accounted for to the satisfaction of the Central Excise Authority.
Thus, prima-facie with respect to claim of the appellant or request for transfer of cenvat credit from Delhi unit to Baddi unit requires that a finding to be recorded by the Central Excise Authority having jurisdiction over the Baddi unit to record the finding of transfer / shifting of Delhi unit to Baddi and to record a further finding in regard to transfer of inputs or capital goods etc. and proper accountal of the same. For such purpose, the Adjudicating Authority of the Baddi unit can call for proper report from the jurisdictional Central Excise Authority of the Delhi unit - If the conditions are satisfied, the appellant is entitled to the transfer of cenvat credit to their Baddi unit.
Matter remanded to the adjudicating authority to pass a denovo order recording finding on the two aspects and thereafter pass consequential order - appeal allowed by way of remand.
-
2020 (9) TMI 300 - CESTAT NEW DELHI
CENVAT Credit - Iron Steel, G.I. Flat, MS Beam, MS channel, Flats, Joist, old and used plates, New MS Plates, PPGI profiles sheets etc. used in erection of EOT crane (during the gestation period) for the new factory - steel structures, nut and bolt, electrical items, 122 KV, Gantry column, 132 KV Isolator, earthing wire, etc. utilised in fabrication of the power house station - rejection of cenvat credit on the ground that these items are falling under chapter heading 72 and 73, and thus not specified under Rule 2A(a) of Cenvat Credit rules.
HELD THAT:- It is admitted fact that the items have been utilised in the factory of production for erection of new machinery, of EOT crane, utilised in fabrication of the power house station, which are capital goods and are essential for setting up of the factory which manufactures dutiable goods - Although, the appellant has taken credit on these items as capital goods, but actually these are inputs which have been utilised in fabrication of capital goods, including the support structures for erection of machinery.
This issue has been settled in favour of the appellant-assessee by the decision of Madras High Court in the case of M/S. INDIA CEMENTS LTD. VERSUS THE CUSTOM, EXCISE AND SERVICE TAX & THE COMMISSIONER OF CENTRAL EXCISE, [2015 (3) TMI 661 - MADRAS HIGH COURT] and also by the Hon’ble Gujarat High Court in the case of MUNDRA PORTS AND SPECIAL ECONOMIC ZONE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE & CUSTOMS [2015 (5) TMI 663 - GUJARAT HIGH COURT] wherein it has been held that inputs and input service used in the fabrication of capital goods are eligible inputs for the purpose of cenvat credit - The appellant is held entitled for the cenvat credit.
Refund claim - case of appellant is that they have debited the cenvat credit under dispute under protest, at the time of investigation and the said fact is also witnessed in the order-in-original, that credit was reversed amounting to ₹ 71,94,972/- - HELD THAT:- The respondent –Department is directed to refund the amount of cenvat credit under dispute in cash, in terms of Section 142(5) of CGST Act, 2007.
Appeal allowed - decided in favor of appellant.
-
2020 (9) TMI 257 - GUJARAT HIGH COURT
Applicability of Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 to the cases involving confiscation and redemption fine - Rejection of the declaration made by the petitioners by the Designated Committee formed under SVLDRS
HELD THAT:- The Coordinate Bench of this Court has done analysis in detail of the provisions of the Scheme in para 6 to 9 of the order dated 24.12.2019 and has also discussed the frequently asked questions (FAQs) and flyers issued by the Central Board of Indirect Taxes as well as the letter dated 20.12.2019 in para-10 to 12 to form a prima-facie opinion that when the Board has issued FAQs, press notes and flyers stating that the scheme grants waiver of interest, fine and penalty, then the scheme would be relatable to redemption fine also, because there is no other fine which is contemplated under the Act coupled with the fact that Section 125 of the Finance Act, 2019 does not exclude the categories of cases involving confiscation / fine in lieu of confiscation.
In view of the Scheme as was introduced by Chapter-V of the Finance Act, 2019 comprising of Sections 120 to 135, flyers issued by the Central Board of Indirect Taxes and Customs and press note dated 22.08.2019 issued by the Ministry of Finance, Government of India, the intent and purpose of the Scheme appears to reduce litigation by giving a window to the taxpayers to pay the tax and end the litigation. The object of the Scheme was to provide one time measure for putting an end to past disputes of central excise and service tax and to provide the opportunity of voluntary disclosure to non complying taxpayers. Section 121(c) of the Scheme defines the ‘amount in arrears’ which means the amount of duty which is recoverable as arrears of duty under the indirect tax enactment, on account of adjudication by the competent authority or on account of admitted tax liability but not paid. Section 121 (h) of the Scheme provides that ‘declarant’ means a person who is eligible to make a declaration and files such declaration under Section 125.
Though, there is no express provision in the Scheme with regard to providing immunity from payment of fine, the respondent authorities have specifically stated in FAQs, press notes and flyers that the Scheme provides for full waiver of interest, fine and penalty. In the facts of the case, there in no other fine which is envisaged under the indirect tax enactment. At this juncture, the contention raised on behalf of the respondents that the fine would mean the fine to be levied by the competent Court under Section 9 of the Central Excise Act and not fine as referred to be the redemption fine under Section 34 of the Act cannot be accepted considering overall intent and object of the Scheme, and we therefore, concur with the prima-facie opinion of the Coordinate Bench - Coordinate Bench expressed in para-10 of the order that in terms of the FAQs, press notes and flyers issued by the Board, the Scheme provides substantial relief in the tax dues for all categories of cases as well as full waiver of interest, fine and penalty. Thus, having regard to the fact that: (i) section 125 of the Finance Act says that all persons shall be eligible to make declaration under the Scheme except for the categories specifically enumerated therein; and (ii) under section 125 of the Finance Act, cases involving confiscation and fine in lieu of confiscation (redemption fine) are not excluded from the benefit of the Scheme, and (iii) according to the Board, the Scheme provides relief in tax dues for all categories of cases; prima facie it appears that the legislature did not have the intention of excluding cases involving confiscation and fine in lieu of confiscation from the purview of the Scheme.
When the respondents had issued show cause notice demanding excise duty together with confiscation of the goods in terms of Rule 25 (a) and (d) of the Central Excise Rules, 2002 and redemption fine in lieu of confiscation under Rule-25 as goods were not available for confiscation, it is clear that by issuing the show cause notice , the respondent has invoked Rule-25 of the Central Excise Rules, 2002 for levy of redemption fine in lieu of confiscation as goods which were sought to be confiscated were not available for confiscation. Therefore, the levy of the redemption fine equivalent to demand of central excise duty under Rule-25 of the Central Excise Rules, 2002 would be an amount in arrears as defined in Section 121 (c) of the Scheme along with the amount of duty which is recoverable as arrears of duty under indirect tax enactment - the interpretation made by the Board in the communication dated 20.12.2019 in order to consider the declaration made by the declarant, the payment of redemption fine is prerequisite, is not tenable in law, because as per Section 125 of the Scheme a declarant cannot be made ineligible to file a declaration for non-payment of redemption fine. Moreover, the declarant is required to include redemption fine as part of the duty demanded, so as to calculate the amount in arrears as per Section 121 (c) of the Scheme.
The Supreme Court in the case of KP VARGHESE VERSUS INCOME-TAX OFFICER, ERNAKULAM, AND ANOTHER [1981 (9) TMI 1 - SUPREME COURT] has laid down that the Rule of construction by reference to the principle of ‘contemporanea exposition est optima et fortissima in lege’ which is a well established rule for interpreting a statute by reference to the exposition it has received from contemporary authority, though it must give way where the language of the statute is plain and unambiguous. Therefore, when the Central Board of Indirect Taxes has issued FAQs, press notes and flyers by way of explaining the scheme providing waiver of interest, penalty and fine and immunity from prosecution, then case involving confiscation / redemption fine cannot be excluded under the Scheme, as such explanation by the Board provides legitimate aid in the constructions and interpretations of the provision of the Scheme.
The declaration filed by the petitioners and other similarly situated persons are required to be considered by the designated committee without payment of redemption fine by the declarant. The impugned orders passed by the designated committee are therefore quashed and set aside - Petition allowed.
-
2020 (9) TMI 222 - CESTAT MUMBAI
Benefit of exemption under N/N. 28/2002-CE - Ethanol Blended Petrol (EBP) (Gasohol) - Allegation that the appellant had not complied with the condition of said notifications inasmuch as the EBP did not satisfy the Bureau of Indian Standard’s (BIS) specification 2796:2000 - requirement of deposit of duty under Section 11D of the Central Excise Act, 1944.
Revenue’s main contention is that to be eligible for exemption under aforesaid Notifications, inter alia, it is required to show that EBP conforms the BIS 2796:2000 standards. It is their allegation that the Appellant failed to establish that the EBP cleared by them from their Vashi Terminal conforms the BIS specification - appellants, on the other hand, claimed that the tests carried out on the samples of EBP at their Vashi Terminal even though limited to nine out of fifteen tests, but indicate that the EBP confirms to the BIS 2796:2000 specification. They submitted the sample Test Reports conducted at Vashi Terminal to the department.
HELD THAT:- There are no merit in the reasoning advanced by the learned Commissioner in rejecting the test reports. The appellant while clearing the EBP from their Vashi Terminal invariably conducted tests on the EBP samples to ascertain its quality and the specification of the product before clearance. Needless to mention the said product is subjected to strict control and orders issued by Central and State Government from time to time viz. Motor Spirit and High Speed Diesel(Regulation of Supply & Distribution and Prevention of Malpractices) Order,1998, where under the quality and specification of the MS to be strictly complied.
It is found that at the Vashi Terminal where the duty paid MS and Ethanol were received, and after blending the same, EBP emerges, the Appellant carry out tests, albeit nine out of fifteen tests, which indicated that it conforms the BIS 2796:2000 specification and the control Order, 1998; and accordingly cleared/sold to their customers like other Refineries /terminals did. Later on being disputed by the department about the correctness of the test reports of EBP at Vashi Terminal as all the tests were not carried out on the samples, they subjected the samples tested at their Refinery and produced test certificates dated 1.6.2004 and 5.6.2004, which conform BIS specification 2796:2000 - the test reports on EBP at Vashi Terminal cannot be brushed aside unless contrary test result is produced by the Revenue. The said test results further confirmed when got tested at their equipped to test all parameters.
Applicability of Section 11D to the facts of the present case - HELD THAT:- The Vashi terminal receives duty paid Motor spirit from their Refinery and also duty paid ethanol, which was blended in the ratio of 95:5 at the time of clearance from the Vashi unit to the customers in tankers. The price per KL of EBP was similar to the price charged by the appellant for unblended motor spirit to the customers - In the present case, the Revenue could not show that the appellant after blending ethanol with duty paid motor spirit collected separately, mentioning the duty on ethanol in the invoices, but not paid to the Government. Therefore, Section 11D of CEA, 1944 cannot be said to have been attracted.
The Revenue has vehemently argued that the issue is covered by the judgment of this Tribunal in the appellant’s own case reported as IOCL Vs. Commissioner of Customs, Vadodara [2010 (10) TMI 399 - CESTAT, AHMEDABAD] - Analyzing the facts and the question of law involved in the said case, we find that there is no similarity between the said case and the appeal before us.
Appeal allowed - decided in favor of appellant.
-
2020 (9) TMI 79 - MADRAS HIGH COURT
Jurisdiction - appropriate forum - Striking down of Rule 96 ZQ of the Central Excise Rules - applicability if same in the facts of present case - HELD THAT:- We are not inclined to entertain these submissions unless such submissions have been first raised before the learned Tribunal and the same have been dealt with by the Tribunal in appropriate manner by reasoned order thereon.
Though the learned counsel for the respondent Assessee also raised a plea before us that the Revenue stakes involved in the present case are below the prescribed monetary limit as per the latest litigation policy of Revenue Department, we are not inclined to consider the same at this stage.
Appeal dismissed - decided against Revenue.
-
2020 (9) TMI 78 - CESTAT AHMEDABAD
Valuation - ball or roller bearing - related party transaction - rejection of declared value - value is sought to be determined on the basis of price at which M/s. SKF India Ltd. has sold the product - benefit of N/N. 6/2006-CE. - HELD THAT:- So far as loan granted by M/S SKFIL to M/s SKFTIL is concerned interest at the rate of 9% has been fixed. It has also been specified that the rate of interest would be revised regularly at half yearly basis and shall not be less than the prevailing bank rate under section 49 of RBI Act, 1934. In view of above, it is apparent that this a purely business transaction and not a transaction creating interest in the business of each other.
It is seen that M/s SKFIL and M/s SKFTIL are sharing some staff cost. It is seen that M/s SKFIL has factories located in Bangalore, Haridwar, Pune, Manesar and Jamshedpur, also for 5 branches located all over the country. There are also two associate companies namely M/s SKF Technologies Ltd. and M/s Lincoln Helios India Ltd. Among these organisations, M/s SKFIL has identified the departments where they share the cost incurred on staff. It is found that these are purely business transaction and cost sharing cannot be treated as transaction creating interest in business of each other. Had it been the case that M/s SKFIL were providing such services free of cost or at subsidised rates to the other, then one could have asserted that there was an interest in business of each other. In this case, the costs of staff are charged to each other. Therefore, it can only be treated as business transaction.
The mere fact that the entire production of M/S SKFTIL is sold through M/s SKFIL is not sufficient to make them related parties. There has to be positive evidence of them having interest in the business of each other - Since the two cannot be treated as related parties, the transaction value between SKFIL and SKFTIL has to be accepted for the purpose of assessment. The appeal on this count is allowed.
Admissibility of notifications of 06/2006 to the bearings manufactured by the M/s SKFTL and ultimately sold for use in the wind operated electricity generators as parts - HELD THAT:- The term wind operated electricity generator appeared in notification 06/2006-CE dated 01.03.2006 includes the entire setup i.e. the tower, the generator, the blades which are used to generate electricity from wind. The term “wind operated electricity generator” in the notification does not refer to solely to the generator which is just one of the parts of the wind operated electricity generator.
Appeal allowed - decided in favor of appellant.
............
|
