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Central Excise - Case Laws
Showing 1 to 20 of 83 Records
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2022 (11) TMI 1460
CENVAT Credit - inputs written off or in respect of which provision has been made to write off, whether fully or partially - Extended period of Limitation - interest - penalties - HELD THAT:- The intention for insertion of Rule 3(5B), was to plug those situations, wherein the assessee is availing benefit of Cenvat Credit on the inputs which are not intended to be used and are written off or provisioned for written off in the books of accounts, but still lying in the factory. Rule 3 (5B) is part of the CENVAT Credit scheme, and should be interpreted in a manner to fulfill the basic objective of scheme. On a plain reading of the aforesaid provision, it is clear that the assessee shall be liable to pay the amount of Cenvat credit availed on the inputs, which are either written off fully or partially or any provision for write off fully or partially has been made in the books of accounts. This provision shall only apply in respect, of those goods which are written off the input in the books of accounts of the appellants for the reason that they have been lost, destroyed or become obsolete. It cannot be applied to case where the value of goods for any reason is written down in the books of account.
From the plain reading of the definitions of the term "write off", it can be construed that write off is term used wherein the asset is permanently lost on account of pilferage, obsolescence or otherwise and is required to be removed from the books of accounts. Thus it is quite evident that the impact of “write off”, or “making the provision to write off” an asset (including the inputs) would be reflected as loss or an expense in the book of accounts of the appellant and shall be admissible as deduction while computing the income of the appellant.
Whether the valuation of inventories as per the accounting standards and the accounting policies followed by the appellant would amount to “write off” or “making the provisions to write off”? - HELD THAT:- Admittedly the goods in respect of which demand for reversal of CENVAT credit has been made have been used in the production of the finished goods which are cleared on payment of duty. Further revenue has gone on the basis of monthly inventory valuation without even co-relating the same with the Annual Financial Statements i.e. Balance Sheet and Profit and Loss Account of the Appellant. As per the appellant the entries made in the respect of the slow moving items in inventory are reversed subsequently in the next month will neutralize each other, without having any impact on the total inventory at the closure of financial year. Even the auditors who value the stock at the closure of financial years will point out if any discrepancies exist in the actual physical stock of inventory and inventory records. Without making any reference to such financial statements can anybody conclude in respect of write off of the inputs or finished goods. Not a single case of such reference over the period from 2008 to 2017 has been put forth.
Revenue has relied upon the Board Circular of 2009 to support their case. On perusal of the said circular, it is found that the circular is in respect of inputs contained in work in process. Hence there is no applicability of the said circular to fact of present case.
Extended period of limitation - HELD THAT:- During the period from April 2008 to June 2017 (period of demand), the appellant claim that they had already reversed Cenvat Credit of Rs. 7,05,86,921/- on obsolete inventory. Revenue do not dispute that in case where the appellants have written off the inputs in the books of accounts they have reversed the CENVAT Credit in respect of those inputs which were written off - since the demand made not upheld on merits, the issue in respect of quantification and invocation of the extended period not taken up.
Interest - penalties - HELD THAT:- Since the demand do not survive the demand for interest too fails and no penal consequences will follow.
The impugned order set aside - appeal allowed.
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2022 (11) TMI 1444
Clandestine removal - undervaluation or not/short payment of duty - value shown on the Central Excise Invoices at the time of removal of excisable goods is 'transaction value' or not - price escalation clause - clandestine removal of excisable goods manufactured at their Satara factory in the disguise of goods shown to have been manufactured by KC Goa - Demand on the basis of presumptions - liability to pay CENVAT duty on escalation bills issued.
HELD THAT:- The appellant are not in business of supply of the off the shelf goods or consuming the goods captively or supplying the goods through the any of their related person. Admittedly in all the case the appellant have supplied the goods to their customer against contractual agreement and the goods have been tailor made as per the requirements/ specifications of the Customer. In the present case after analyzing the Contracts impugned order adopts the value as determined by the cost auditor, for the demanding the duty. It is settled preposition in law that in case of the supplies made under the contractual agreement the contract price is the basis for determination of the assessable value as per section 4 of the Central Excise Act, 1944.
During the course of arguments revenue has relied upon the decision of the Hon’ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE, MUMBAI VERSUS M/S FIAT INDIA PVT LTD & ANR [2012 (8) TMI 791 - SUPREME COURT]. It is not the case that the appellant was selling the goods at price lower than the cost of production and incurring loss. Even the cost auditor has not concluded that the appellant was selling the goods and earning loss. Hence the ratio of this decision cannot be directly applied to the present case.
Demand on the basis of presumptions - HELD THAT:- Commissioner has in the impugned order nowhere concluded that appellants had in case of any contract received any amount over and above the agreed contractual value. That being so there cannot be any reason for the rejection of the transaction value/ contractual value. Commissioner has in the impugned order referred to 41 contracts against which the supplies were made by the appellant to their customers, but have no where concluded to this effect in a single case. Interestingly it is seen that such a conclusion has not been arrived in the impugned order even in the cases where the supplies were made to the group companies. The demand seem to be made on the basis of the presumptions only contrary to values determined as per the contract/ agreement entered into by the purchaser and seller. The said approach is totally contrary to the concept of transaction value introduced from 2000 - Impugned order seeks to reject the contract value/ transaction value without even showing what was additional commercial consideration flowing from the buyer to seller for the sale of the goods. The impugned order nowhere concludes that appellant has received any amounts over and above the declared transaction value for the payment of duty. The demand thus made contrary to the settled position in law cannot be sustained.
Charge of undervaluation has been made against the appellant on the basis of the cost auditor report who has concluded that appellant was supplying the bought out items bought from various entities - HELD THAT:- The entire analysis done is not as per any prescribed standard of The Institute of Cost and Work Accountant of India and is also not based on the CAS-4, standard prescribed for determining the cost of production - The cost auditor report relied upon being bereft of the analysis of the cost records and the cost statement cannot have much sanctity in law. The costing studies could have been done either contract wise or the project wise, in case of company undertaking turnkey projects, whereas the cost auditor has in general determined the quantum of undervaluation only by referring to the total cost of sales and sales revenue - The cost auditor report do not point to any accounting standard and the accounting policies of the appellant which are the part of Financial Statements of the company. Accordingly the reliance placed on the Cost Audit report in the impugned order, is contrary to the specific direction given by the tribunal while remanding the matter back to original authority.
The show cause notice not only makes the demand by alleging the undervaluation of the manufactured goods by overvaluing the brought out items, it also alleges that appellant has removed the clandestinely removed the bought out items as per the cost auditor report from their premises clandestinely - HELD THAT:- The difference between the selling price and purchase price is claimed to be trading profit by the appellant. The total value of the bought out items as per the show cause notice which have been purchased by the appellant from their sister concern as percentage of the total purchase value of bought out items is in range of 17% to 28% for the three years where the data is free from defect. In the year 2003-04 and 2004-05 the purchases from sister concern exceed the total purchase value of bought out item hence left out from the analysis. Further from the figures as above it is observed that constantly from the year 2000-01 to 2003-04 the purchase value of bought out items have declined - Further as per the terms of contract, appellant were required to produce the invoices/ gate passes of the sub vendor to the purchaser to claim the duty paid against the said supplies and the goods/ the sub vendor facilities were open for inspection by the purchaser before dispatch. The findings recorded in the impugned order go contrary to this extent as provided in the contract. No instance has been pointed out where the purchaser has raised any query for non fulfillment of said conditions.
Alleged clandestine clearance of the goods, by showing them as manufacture of Kay Chandra Goa - It is also the case of the revenue while alleging undervaluation, that the Appellant 1, was overvaluing the value of bought items from M/s Kay Chandra Goa, while issuing the invoices in respect of these goods to the purchaser - HELD THAT:- While alleging the goods to be clandestinely cleared by the Appellant the duty is being demanded on the purchase value of the goods from Goa Unit and not on the sale value indicated in the invoices issued by the appellant. If these goods were the manufactured at Satara unit, then the transaction value between the appellant and its customer at the time and place of clearance as per section 4 of the Central excise Act, 1944 would be the sale price of the impugned goods and CENVAT duty paid on the purchase price would be available as CENVAT Credit to the appellant.
Even if the charge of clandestine clearance of the goods in garb of the goods manufactured at Goa is to be upheld, tribunal has categorically held that the amounts paid at Goa need to be offset against the duty payable by the appellant at Satara. There is no challenge to the above by the revenue and accordingly in our view the amount paid at Goa needs to be offset against the amount payable by the appellant in respect of the goods alleged to be cleared clandestinely. Undisputedly against the impugned order records that an amount of Rs 95,01,741/- has been paid by K C Goa against the clearance of the said goods. A demand of Rs 1,02,69,756/-, has been made and confirmed against the appellant. Thus after offsetting the amount paid in the name of K C Goa registered with Goa Commissionerate during the relevant period an amount of Rs 7,68,015/- is demandable from the appellant 1.
Demand made on the escalation bills - HELD THAT:- The escalation bills are not even finalized till today. On the contrary applicant has produced the letter dated 03.03.2008 from the Commissioner for Cane Development and Director of Sugar Bangalore. Against the escalation bills raised by the appellant as reflecting in Show Cause Notice to M/s Shree Dhanalaxmi SSK for an amount of Rs 1,77,83,308/- having duty component of Rs. 28,45,330/- as per the letter dated 03.03.2008, the escalation amount allowed is Rs. 29,88,940/- having the component of duty and taxes of Rs 7,08,565/-. This clearly establishes that the escalation amount as claimed by the appellant in the escalation bills is not the amount received by them but is the amount which is subsequently determined and agreed to by the purchaser - Undisputedly the appellant is required to pay the duty on the escalation amount received by them along with the interest from the date when the goods against which these escalation bills are raised were cleared by them from the place of clearance as have been held by the Hon’ble Supreme Court in M/S. STEEL AUTHORITY OF INDIA LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIPUR [2019 (5) TMI 657 - SUPREME COURT]- the demand made in respect of undetermined escalation amount is pre-matured and needs to be set aside.
Demand on the issue of limitation and penalties on the two appellant - HELD THAT:- The demand made cannot be upheld on the merits of the case except for adjustment which is indicated with regard to escalation price, the issue of limitation and penal action becomes irrelevant and is not discussed further.
Appeal disposed off.
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2022 (11) TMI 1393
Contravention of time limitation - personal hearing notice dated 20.10.2020 scheduling adjudication in respect of the impugned SCNs - Section 11A (11) of CEA - HELD THAT:- The consistent position since 1985 (vide Circular No. 223/8/85-CX.6 dated 21.03.1985) is that the determination of duty, under sub-Section 10, shall be completed within six months from date of notice, where it was possible to do so. The present case falls under sub-section 1 of Section 11A, and thus, the applicable time limit would be, as far as possible, six months from date of notice. Even if one were to accede to the position that the statutory period of six months was elastic and admitted of some flexibility, the excess of time, over and above six months must be justifiable and reasonable.
As to whether the phrase under sub-section (11) being 'where it is possible to do so' would stand justified by the sequence of events that have been noted in the matter, the categoric conclusion is that it does not. There are admittedly, absolutely no circumstances warranting or justifying the pendency of the SCNs on the call book for 21 long years.
The Gujarat High Court in the case of SIDDHI VINAYAK SYNTEX PVT LTD. VERSUS VERSUS UNION OF INDIA & 2 [2017 (3) TMI 1534 - GUJARAT HIGH COURT], considered the case of delay ranging up to 15 years in that case and had set aside all SCNs as being unreasonably and unduly belated. The Bench has also expressed the view that the concept of the call book, created by the Central Board of Excise and Customs, and transfer of pending cases to the call book, is contrary to the statutory mandate. Such transfer provides for an extrastatutory period of limitation, impermissible and contrary to law.
The SCNs in the present case have been issued in 2001 and there has been areference to the call book immediately thereafter. Para 9.4 of the 2017 Circular requires a formal communication to be issued to the noticee informing them that the case has been transferred to the call book. This requirement does not flow from the earlier Circulars - the petitioner has been in touch with the Assessing Officer requesting timely adjudication of the SCNs and on 13.06.2003 there was a communication issued by the respondents to the effect that the demands under the SCNs are based on audit objections that are pending closure. The officer states that 'show cause notices will be decided on merits at the appropriate time'.
In the present cases, the hearing notices have been issued for the first time only in 2020. The notices also provide no clarity as to whether the contest on the audit objections continues, has been resolved or whether the matters have merely been revived by the assessing authority.
There has been considerable and unacceptable delay on the part of the respondents to have revived the SCNs issued originally in 1999, in 2020 - the impugned proceedings are barred by limitation. The challenge to the same is upheld - Petition allowed.
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2022 (11) TMI 1350
Levy of penalty on appellant u/r 26 of CER - Failure to do provisional assessment or to pay the interest accruing on the differential duty paid after price revision - liability of appellant as a General Manager - dispute under Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019 already settled - HELD THAT:- On perusal of the Order-in-Original it is noticed that negligence in general is attributed to the conduct of the present Appellant for holding a responsible position of General Manager in M/s. Crompton Greaves Ltd. and it was stated that he had not taken corrective actions to opt for provisional assessment or to pay the interest accruing on the differential duty paid after price revision and such frequent instances clearly reflect failure of duty on the part of the General Manager namely the Appellant.
This being the allegations and having regard to the fact that had the present Appellant preferred to have filed a declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019, he would have paid nil penalty in view of the relief available to him under Section 124(i)(b) of the Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules 2019, we are of the considered view that even after failure on the part of the Appellant to avail the benefits of the scheme, no specific allegation against the Appellant has been substantiated so as to confirm penalty of Rupees Ten lakhs imposed on him.
The order passed by the Commissioner of Central Excise, Mumbai-III to the extent of imposing penalty of Rs.10 lakhs on the Appellant Vishwanath Narayan under Rule, 26 of the Central Excise Rules, 2002 is hereby set aside - Appeal allowed.
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2022 (11) TMI 1319
Maintainability of appeal - monetary limit of amount involved in the appeal - HELD THAT:- The Board, in its communication dated 19.10.2022, has indicated that an SLP should not be filed, keeping in view, the monetary limit. However, the question of law could be kept open in terms of Section 35R of the Central Excise Act, 1944.
Appeal closed.
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2022 (11) TMI 1276
Process amounting to manufacture - conversion of waste oil/ sludge into reclaimed fuel oil/re-refining used oil - HELD THAT:- In the present case, the demand is for the subsequent period whereas on the same issue for the earlier period the case has been decided in favour of the appellant by this Tribunal in ALICID ORGANIC INDUSTRIES LIMITED AND SHRI MANISH C PATEL VERSUS C.C.E. & S.T. -AHMEDABAD-III [2022 (8) TMI 163 - CESTAT AHMEDABAD] wherein it was held that the process of cleaning of waste oil to yield reclaimed fuel oil does not amount to manufacture as defined under Section 2(f) of the Central Excise Act, 1944.
It is clear that except for the different period, the issue is identical which has been settled in the above order - Appeal allowed - decided in favor of appellant.
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2022 (11) TMI 1275
Refund claim - time limitation - availability of credit for the period prior to 01.04.2011 - HELD THAT:- The operating portion of the order passed by this Tribunal on the earlier occasion clearly reveals that the entire Order-in-Appeal passed by the Commissioner (Appeals) was set aside and the matter was remanded back to the original adjudicating authority to adjudicate on the point of limitation as well as availability of credit for the period prior to 01.04.2011 apart from examination of documents like filing of return, verification of entries in the CENVAT Credit accounts etc.
This being facts on record observation of the Commissioner (Appeals), while confirming the rejection of refund order passed by the adjudicating authority, to the extent that Appellant had sought for refund by filing refund application dated 04.07.2018 on the basis of Order-in-Appeal dated 29.05.2017 that was set aside by this Tribunal on 05.12.2017 is not maintainable, appears to be rational and proper.
Appeal dismissed.
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2022 (11) TMI 1225
Valuation of goods - Recovery of short paid duty - packaged drinking water - goods sold to institutional buyers - requirement to pay duty as per Section 4A or in terms of Section 4? - Circular No. 625/16/2002-CX dated 28.02.2002 - HELD THAT:- It is quite evident that the goods in question were not meant for retail sale but were for the consumption of MCD for their various schemes. MCD was an institutional buyer and thereafter no retail sale was ever envisaged.
Commissioner (Appeals) has recorded that the goods were meant for retail sale through the customer only at snack bars owned by ABCTC. There being so, the goods were not being consumed by ABCTC themselves but further sold in retail and as such in terms of Standards of Weights and Measures (Packaged Commodities) Rules, 1977 the goods were required to be sold on the declared and printed MRP only - where the goods were actually sold in retail, Section 4A of the Central Excise Act will become applicable as has been held by Hon’ble Supreme Court in the case of JAYANTI FOOD PROCESSING (P) LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, RAJASTHAN [2007 (8) TMI 3 - SUPREME COURT].
Reliance placed by the Revenue on the case of FEDERATION OF HOTEL AND RESTAURANT ASSOCIATIONS OF INDIA VERSUS UNION OF INDIA AND ORS. [2018 (1) TMI 1221 - SUPREME COURT] also does not help the case as the issue involved in the said case was not with reference to the provisions of Section 4A of the Central Excise Act. In the said decision Hon’ble Supreme Court has held that the sale of packaged mineral water by hotel to their clients is inclusive of the cost of bottle plus the services provided. Accordingly they have held that the sale at price higher than the affixed MRP is not in contravention of the provisions of Legal Metrology Act.
There is no merit in the impugned order - appeal allowed.
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2022 (11) TMI 1145
CENVAT Credit - capital goods installed by the Respondent for manufacturing of exempted goods - dutiability of the final produce on the date of receipt of capital goods irrespective of whether the exempted goods have been manufactured or not - Business Support Service - time limitation - HELD THAT:- The facts in the present case are not in dispute. Admittedly, the respondent/assessee had initially filed a declaration on 04.08.2006 to avail benefit of Notification No.49-50/2003-CE, dated 10.06.2003, area based exemption for manufacture of goods. However, the respondent/ assessee then filed another declaration on 29.06.2007 to the effect that it had let out the premises on lease to Hindustan Liver Limited for manufacture of intended goods.
Time limitation - HELD THAT:- The Show Cause Notice dated 13.07.2010, was issued with regard to the years 2006-2007, 2007-2008 & 2008-2009. Show cause notice could have been issued within one year from the last date of filing of ST-3 Returns, whereas, the show cause notice had been issued beyond the period of limitation on 13.07.2010. Learned counsel for the appellant/revenue has failed to point out any provision which required the respondent to intimate to the Department that he had availed the “CENVAT Credit” on the capital goods inputs or the input services, on which, it intended to take credit. It is not a case where the respondent had not maintained the records correctly or had filed incorrect returns. Respondent/assessee was required to disclose only those facts to the appellant/revenue as required under law. Hence, the Adjudicating Authority rightly came to the conclusion that the Show Cause Notice dated 13.07.2010 was barred by limitation.
As per Rule 6(4) of the Cenvat Credit Rules, 2004, a manufacturer, who manufactures exempted goods, cannot take the benefit of “CENVAT Credit”. However, so far as the respondent/assessee is concerned, admittedly, it has not indulged in any manufacturing process - Since in the present case, the capital goods in question had never been used for any manufacturing activity, the learned Tribunal rightly held that the respondent/ assessee was entitled to avail “CENVAT Credit” on the goods in question.
Since in the present case, the capital goods purchased by the respondent/assessee had never been used for manufacturing exempted goods by it, the learned Tribunal rightly came to the conclusion that the respondent/assessee was entitled to avail “CENVAT Credit” on the goods in question - the manufacturing aspect in relation to the plant and machinery had been taken over by Hindustan Liver Limited and the respondent/assessee had become a service provider and its activity relating to manufacture had ceased.
No substantial question of law arises in this case, warranting interference - the appeal is dismissed.
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2022 (11) TMI 1144
Wrongful availment of service tax credit - credit availed against the invoices issued by Input Service Distributor - period May, 2016 to March, 2017 - HELD THAT:- The main reason for initiating the current proceedings against the appellant is the Order-in-Original dated 23.12.2016 in appellants own case for the earlier period i.e. March, 2013 to April, 2015 on the same issue - the said case was challenged by appellant itself in M/S G.P. PETROLEUM LTD. VERSUS CCE & ST, RAIGAD [2019 (3) TMI 33 - CESTAT MUMBAI] where it was held that The legality or admissibility of credit can only be question to the ISD by its jurisdictional authority.
In view of the aforesaid decision of the Tribunal, since the basis of the initiation of the current proceedings by the department for the period in issue itself has gone, the current proceedings can’t survive - appeal allowed.
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2022 (11) TMI 1143
Irregular utilization of CENVAT Credit - inputs used in manufacture of capital goods - Joist - MS Channel - MS Joist - TMT Bars - Plate - RS Joist - MS Angles - nexus/pertinence in or in relation to manufacture of the excisable goods - applicability of N/N. 61/2009-CE (NT) dated 07.07.2009 - period March 2008, July 2008 and January 2009 - HELD THAT:- Clause (i) of Rule 2(a)(A) is parimateria with clause (3) of the table annexed to Rule 57Q. Similarly, clause (iii) of Rule 2(a)(A) is parimateria with clause (5) of the table annexed to Rule 57Q. In the case of Rajasthan Spinning & Weaving Mills Ltd. [2010 (7) TMI 12 - SUPREME COURT], the Hon’ble Supreme Court considered the question whether the steel plates and channels used in the fabrication of chimney for DG set would fall within the purview of Sl. No. 5 of the table annexed to Rule 57Q. The Hon’ble Supreme Court observed that the DG set fell under Heading No. 85.02, Chapter 85, of First Schedule to the Central Excise Tariff Act and ipso facto got covered under Sl. No. 3 of the table ibid. The Hon’ble Supreme Court further noted that the chimney attached to the DG set was undisputedly covered by Sl. No. 5 of the table ibid. On this basis, it was held that the chimney was an integral part of the DG set and, therefore, MS channels, plates, etc., used in its fabrication were to be treated as accessories in terms of Sl. No. 5 of the table ibid. This judgement was rendered by applying the “user test”.
The facts of the present case are perfectly analogous to those of Rajasthan Spinning & Weaving Mills Ltd. It is not in dispute that MS angles, plates, etc., were used to fabricate structural support for machinery which was used for manufacturing excisable goods. It is, again, not in dispute that the machinery is squarely covered by clause (i) of Rule 2(a)(A) of the CENVAT Credit Rules, 2004. The immediate question is whether the structural support for the machinery could be treated as ‘capital goods’. Indeed, it should be construed to be an integral part of the machinery and hence to be covered by clause (i) ibid. If that be so, as held by the Hon’ble Supreme Court in the aforesaid case, the plates, angles, etc., used for fabricating structural support will fall within the purview of clause (iii) of Rule 2(a)(A). Therefore, it has to be held that the MS angles, plates and rounds used by the Respondent for fabricating structural support for machinery would qualify to be ‘capital goods’ for the purpose of availing CENVAT credit.
The view of the Tribunal’s Larger Bench in the case of Vandana Global Ltd. [2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)], taken much before the Hon’ble Supreme Court rendered the judgement in the case of Rajasthan Spinning & Weaving Mills Ltd. [2010 (7) TMI 12 - SUPREME COURT], was to the effect that the supporting structure for a machinery could not be considered to be part or accessories of the machinery and, therefore, the steel items used for constructing such supporting structure would not be ‘capital goods’ for the purpose of CENVAT credit. This view of the Larger Bench is no longer valid as it runs contrary to the subsequent ruling of the Apex Court.
The Appeal filed by the Appellant is allowed.
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2022 (11) TMI 1124
Interest on delayed refund - time limitation - whether there exists any liability of the revenue to pay interest under Section 11BB of the Act and whether it commences from the date of expiry of three months from the date of receipt of application for refund or on the expiry of the said period from the date on which the order of refund is made? - Section 11BB of the Central Excise Act 1944 - HELD THAT:- The present controversy is squarely covered by the judgment of the Supreme Court in Ranbaxy Laboratories Ltd [2011 (10) TMI 16 - SUPREME COURT]. The language of Section 11BB is plain and unambiguous. It casts a duty on the respondents to pay the interest on delayed refunds, if refund is not made within three months from the date of receipt of application under Sub Section 1 of the relevant Section. Indisputably, the said application was filed by the petitioner on 3.9.2014 (Annexure P-2).
There are no merit in the singular objection raised by learned counsel for the respondents that upon passing the order of refund, the competent authority became functus officio - the Statute makes it obligatory for the respondents to pay the interest on delayed payment and, therefore, if respondents have chosen to undertake an exercise partially by only refunding the amount without interest, they cannot wriggle out from their statutory responsibility to pay the interest.
The respondents shall now determine the amount of interest payable to the petitioner under Section 11BB of the Act in the light of Section 11BB of the Act as interpreted by the Supreme Court in Ranbaxy Laboratories Ltd and after calculating the amount of interest shall pay the same to the petitioner within eight weeks from the date of communication of this order - petition allowed.
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2022 (11) TMI 1091
CENVAT Credit - capital goods used in the factory (Power Plant of KMCL) meant for another company/assessee (NINL) for manufacture of final products which are different and distinct - Department contended that the CC Rules specifically mentioned that capital goods and inputs for the purposes of the said Rules should be used in or in relation to the manufacture of final products within the factory of production - HELD THAT:- The definition of Factory does not preclude the possibility of there being two or more premises which can be “segregated by public road, canal or railway line.” How the two premises are to be considered to be part of the same factory by the Commissioner of the Central Excise has been set out in the above instructions of the CBEC. It only shows that as long as the two portions are integrally connected and inter-linked with the manufacturing process of excisable goods, it can be considered to be part of the same factory premises. In other words, merely because the Coke Oven Plant and the CPP may have been in two separate locations would not result in there being considered to be not part of the same factory premises.
An important factor which has to be taken note of in this context is that an agreement was executed between the Government of Odisha and KMCL on 28th June, 2000 where under a land to an extent of 249.45 acres on which both the Coke Oven Plant as well as the CPP Plant were located had subsequently been transferred to KMCL.
Selling of 75% of the power to NINL - HELD THAT:- There is indeed no restriction under the CENVAT Scheme that after captive use of power, the surplus power cannot be sold to any other party. The only restriction is that the capital goods are not to be exclusively used for manufacture of ‘exempted products’. It is nobody’s case that the final manufactured products of KMCL or that of NINL are ‘exempted products’. In this context, it should be noticed that ‘power/ electricity’ is not a final product. It is generated in the CPP of KMCL and is used in the manufacture of excisable goods in the Coke Oven Plant.
In COMMISSIONER OF CENTRAL GOODS AND SERVICE TAX, JAIPUR VERSUS SHREE CEMENT LIMITED [2018 (9) TMI 822 - RAJASTHAN HIGH COURT], a similar question arose. There, one factory manufactured duplex board and the other paper. They were separately registered with the Central Excise Department. The question that arose was whether the excess electricity cleared by the Assessee in favour of its sister concern units would make it ineligible for CENVAT Credit. The Court answered the question in the negative. It was held that electricity generated by the CPP was being used for the sister concern which was part of the company itself and, therefore, would still constitute captive consumption of electricity. In other words, the Assessee was held to be eligible for the CENVAT Credit.
Thus, the power generated in the CPP of KMCL is used in the manufacture of the excisable goods by KMCL - the mere fact that the surplus power may have been sold to NINL would not disentitle KMCL to the benefit of CENVAT Credit on capital goods.
Appeal dismissed.
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2022 (11) TMI 1090
Refund of accumulated Credit - transition to GST regime - whether under Transitory Provisions Section 142(3) of CGST Act, refund is not available of the amount of credit, which has been transited to GST Regime under the provisions of the erstwhile Central Excise Act? - principles of natural justice - HELD THAT:- Admittedly, Save and Except taking forward of the credit balance as on 30.06.2017, the appellant have not commenced production or manufacturing activities nor cleared any taxable goods on or after 1.7.2017. Further, debit by the appellant in the electronic ledger (DRC-3) amounts to reversal of credit transferred to GST regime - the appellant is entitled to refund under the provisions of Section 142(3) of CGST Act, which provides that assessee can file refund claim on or after the appointed day, for refund of any amount of credit of duty, etc. paid under the existing law (Central Excise/Service Tax), subject to clearing the bar of unjust enrichment. Further, the bar of limitation has been waived under Section 142 (3).
In the facts of the present case, the appellant is entitled to refund in terms of Section 142(3) read with Section 54 read with Section 49(6) of the CGST Act - in the facts of the present case as the credit has been accumulated due to clearance of excisable goods, during the Excise Law Regime for export, the bar of unjust enrichment is not attracted.
Appeal allowed - decided in favor of appellant.
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2022 (11) TMI 1089
CENVAT Credit - capital goods or structural items of general use? - S.S. Welding Tube - Steel - Tubes - Alloy Steel Pipe - Prime HR Steel Coil - M.S.Wire - M.S.Slate - S.S. Welded tube - H.R. Steel pipe - Link Outer etc. - appellant is manufacturer of sugar & molasses or not - HELD THAT:- Although while rejecting the claim, a finding has been recorded by the authorities below that these parts were used for structural purposes but no evidence for arriving at such a finding has been discussed or produced anywhere by the department. The only case made out by the department is that the items in issue are not covered by the definition of capital goods in terms of Rule 2(a) ibid and are generally used for structures providing support to the capital goods which are excluded from the definition of capital goods. Apart from this bald allegation, no cogent evidence has been put forth by the department to show that these parts have been used for structural purpose and therefore in the absence of any evidence to the contrary, the claim made by the appellant cannot be denied.
Hon’ble High Court of Judicature at Madras in the matter 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] has held that M.S. Rod, sheet, M.S. Channel/Plate/flat etc used for erection/fabrication of structural support for various machines like crusher, kiln, hooper etc. without which such structural machinery could not be erected and would not function, are eligible for Cenvat Credit. Undoubtedly, as demonstrated by learned counsel, the parts in issue herein have been used for smooth and efficient functioning of the machinery which has been used for manufacturing Sugar and Molasses and therefore there is no reason not to allow the credit in issue to the Appellants.
The appellants are entitled for Cenvat credit of the items in issue - Appeal allowed - decided in favor of appellant.
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2022 (11) TMI 1088
CENVAT Credit - inputs used in the manufacture of prefabricated structure - input services used in Construction of Building, Erection Commissioning & Installation (Erection of Electric Tower From GEB to their factory premises) Architect Services, Real Estate Agent - denial of credit on the ground of no nexus with manufacture of finished goods - period February 2008 to June 2009 - HELD THAT:- This appeal pertains to the period February 2008 to June 2009, the adjudicating authority decided the matter on the basis of old theory of law that services are related to the immovable properties hence Cenvat credit is not admissible. We find that subsequently, the various high courts and tribunals have given decisions in various judgments cited by the learned counsel for the appellant on this issue. The entire finding of the adjudicating authority is based on old theory of law and subsequently, much water was flown on the issue. We are of the view that the adjudicating authority needs to give a fresh look in the entire case in the light of the various judgements given subsequent to the passing of the impugned order.
The adjudication authority in respect of most of the services denied the credit on the ground that there is no nexus between the services with the manufacturing activity of appellant and clearance of the goods or for their business activity. We find that all the services per se are prima facie input services held in various judgments, however, the admissibility of Cenvat credit on these services can be decided on the basis that whether the services were used for the purpose specified in the definition of input service.
Appeal allowed by way of remand.
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2022 (11) TMI 1087
Refund claim of excess Central Excise duty paid - rejection of refund claim on the ground that the effective date as per the sub-section 5 of Section 5A of the Central Excise Act, 1994 would be the day of issue of Notification, irrespective of the facts that whether it was published and offered for sale by the Director of Publicity and Public Relations of the CBEC, or not - principles of unjust enrichment - HELD THAT:- The background of the refund claim is that the appellant though paid excess duty but the rate of duty was revised downward by notification. Only due to the reason that system was not updated, the duty was paid on the higher rate, the appellant though shown the higher duty in the invoices, subsequently, the excess paid duty was adjusted and the same was given reduction in the subsequent updated payment recovered from buyers of the goods. To this effect, the appellant filed refund claim on the ground that the differential duty on account of enhancement rate was not payable by them due to late receipts of the Notification which should come into force from the date of its publication and offer for sale.
Relevant provisions is made under sub-section (5) of Section 5A of Central Excise Act, 1994. From the said provision it is absolutely clear that any Notification issued under sub-section (1) or sub-section (2A) come into force on the date when it is published and offered for sale on the date of issue - it is undisputed fact in the present matter that the Notification were not offered for sale by the Directorate of Publicity and were put on the CBEC website on the next date around 11:45 hours on 13.11.2014 in respect of Notification No. 22/2014 –CE dated 12.12.2014 and on the late evening of 02.12.2014 in respect of Notification No. 24/2012-CE dated 02.12.2014. Therefore, both the Notification will be effective from its publication and refund on this ground is admissible to the Appellant.
Principles of unjust enrichment - HELD THAT:- The ld. Commissioner (Appeals) in impugned order as regard the issue of unjust enrichment held that once the issue on merits is decided against the appellant there is no requirement of going into the aspect of unjust enrichment - Thus this issue has not been considered.
Since in the present matter issue of unjust enrichment not properly considered by the Ld. Commissioner (Appeals), the matter needs to be remanded to the adjudicating authority for passing a fresh order only in respect of unjust enrichment - appeal allowed by way of remand.
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2022 (11) TMI 1071
Wrongful availment of CENVAT Credit - admission of fictitious transportation by using registration number of vehicle of defunct transport firm - retraction of statements relied upon - May, 2012 to September, 2014 - contravention of provisions of Rule 3, 4 and 9 of Cenvat Credit Rules, 2004 - HELD THAT:- The plain reading of sub section (1) of section 9D of Central Excise Act makes it clear that clause (a) and (b) of the said section sets out circumstances in which a statement made and sanctioned by a person before Central Excise Officer of a gazetted rank during the course of inquiry or proceedings under the Act, shall be relevant for the purpose of proving the truth of the facts contained therein.
Any findings solely based upon the statements cannot be confirmed against M/s. Mittal Pigments Pvt Ltd. unless those statements have stood the test of Section 9(D) of Central Excise Act. Apparently and admittedly Shri Amit Gupta was not examined by the Adjudicating Authority. More so, for the reason that Shri Amit Gupta was not even allowed to be cross-examined by the appellant and that Shri Sanjeev Maggu had retracted the statements which had been relied upon by the Original Adjudicating Authority - there are no infirmity in the order of Commissioner (Appeals) while denying the admissibility of these statements.
The departmental investigating agencies as well as the Adjudicating Authorities have not yet started observing compliance of mandatory statutory provisions i.e. section 9D of Central Excise Act, 1944 and section 138 B of Customs Act, 1962 without which the statement recorded at the stage of inquiry / investigation will not be relevant for the purpose of proving the truth of requisite facts during prosecution. It is therefore desired that department may come with certain guidelines so that the efforts of investigating team may not be discarded for the reason of non-compliance of aforesaid provisions.
Appeal of Revenue dismissed.
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2022 (11) TMI 1070
Recovery of CENVAT Credit u/r 6 of the Cenvat Credit Rules 2004 along with interest and penalty - common input services used for rendering Erection, Commissioning and Installation Services provided in Jammu and Kashmir - exempt services or not - non-maintenance of separate records - HELD THAT:- Undisputedly the appellants have used common input services for providing services in State of Jammu & Kashmir and other parts of India. The proviso to sub-clause (2) of Rule 1 of Cenvat Credit Rules states that ‘nothing contained in these rules relating to availment and utilization of credit of service tax shall apply to the State of Jammu and Kashmir’. Again, as per Section 64 of the Finance Act, 1994, the Act extends to the whole of India except the State of Jammu & Kashmir. Thus, there is no levy of service tax on the services provided in Jammu & Kashmir. The Department has construed or rather confused the services rendered in Jammu & Kashmir to be exempted services.
Sub-clause (2) of Rule 6 of Cenvat Credit Rules, 2004 speaks about the situation when the service provider is rendering output services which are chargeable to tax as well as exempted services. The services rendered in Jammu & Kashmir are not chargeable to service tax and therefore, are not taxable services. But this does not make them exempted services also. A service becomes an exempted service when by notification or law, the service tax payable on such service is exempted. Rule 6(2) does not apply to a situation where the service provider renders both taxable services and services which are not subject to service tax. The law is silent in this regard. The Department cannot construe the services provided to Jammu & Kashmir as exempted services and press into application, in such situations, Rule 6 of Cenvat Credit Rules, 2004.
In the present matter appellant already reversed the proportionate Cenvat Credit attributable to the said disputed service. Therefore, the appellant have complied with the condition prescribed under Rule 6(3)(ii) read with sub-rule (3A) of Rule 6 of Cenvat Credit Rules, therefore demand @ 5% / 6%/ 7% cannot be demanded. The main objective of the Rule 6 is to ensure that the assessee should not avail the Cenvat Credit in respect of input or input services which are used in or in relation to the manufacture of the exempted goods or for exempted services.
The Learned Commissioner had rightly dropped the demand and granted the relief to the respondent. Hence, the Revenue has not made out any grounds before us to interfere with the impugned order.
Appeal of Revenue dismissed.
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2022 (11) TMI 1069
CENVAT Credit - inputs used for repair - appellant had received back forklift trucks in terms of Rule 16 of Central Excise Rules, 2002 - processes undertaken amounted to manufacture or not - HELD THAT:- As a result of the processes undertaken, the goods as received were converted to different capacity and to different model number. They were even cleared to different customers. The adjudicating authority himself observed that the processes undertaken was “incidental and ancillary to the completion of the manufactured products - Any process which is incidental or ancillary to completion of the manufactured products is to be held as the process of manufacture in terms of Section 2(f) - Same view has been held by the Tribunal in various cases - reliance can be placed in the case of M/S. NEW BHARAT FIRE PROTECTION SYSTEM PVT. LTD VERSUS COMMISSIONER OF CENTRAL EXICSE, THANE-I [2016 (11) TMI 1204 - CESTAT MUMBAI] and JINDAL STAINLESS STEELWAY LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIGAD [2016 (6) TMI 760 - CESTAT MUMBAI].
Appeal allowed.
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