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Central Excise - Case Laws
Showing 41 to 60 of 88 Records
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2022 (8) TMI 829 - CESTAT AHMEDABAD
CENVAT Credit - duty paying documents - credit availed on the basis of invoices of dealers which are claimed to have been received along with inputs - denial in the ground of investigations by third party - HELD THAT:- The officers visited the appellant’s factory on the basis of information that the appellant availed the Cenvat credit on invoices, without actual receipt of the goods. However revenue did not find any shortage/excess of inputs or finished goods in factory of Appellant. Officers also seized records/ documents related to the receipt of the goods and availment of cenvat credit. The Revenue could not bring any evidence from the Appellant’s factory by which it can be shown that the goods covered under the invoices were not received by them. It is found that in the entire investigation the evidences which were relied upon are related to transporters/ RTO check post. On the basis of such third party evidences revenue alleged that goods were not received by the appellant in their factory.
When the statutory records maintained by them do not disclose absence of receipt of inputs in the factory and there is no cogent evidence of disposal of the same goods elsewhere the credit cannot be denied. It is also not the case of the department that the appellant have procured some unaccounted inputs to cover up the quantity of input shown in the invoices. There is no allegation by the department regarding the financial flow back that against the invoices for which the payments were made through cheque, any cash payment was received by the appellant. With all these undisputed facts, merely on the basis of the transporter records and RTO check-post reports, it cannot be concluded that the inputs were not received by the appellant - the denial of Cenvat credit on the basis of the investigations conducted at the third party end cannot be adopted as the sole basis for denial of credit.
The Appellant correctly availed the cenvat credit. Further, the department nowhere raised any dispute on the said records. Thus the contention of the department that appellant have availed cenvat credit without receipt of goods (raw material) is not tenable. Further, as the Appellant have discharged the Central Excise duty on the final product manufactured out of the alleged raw material, if the department is of the opinion that the alleged goods was not received by the appellant then it is the onus on the department to prove that any other alternative raw material was used in the final products, department has failed to do so.
The allegation of the Revenue that the appellant have not received the inputs made against the appellant are not sustainable and thus, the impugned orders are liable to be set aside - appeal allowed - decided in favor of appellant.
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2022 (8) TMI 828 - CESTAT KOLKATA
CENVAT Credit - inputs - structural items such as MS Angle, Plates, HR Sheets, CR Sheet, CR coil, Beam, MS Rod, Joist, MS Channel, and other Steel products used for manufacture of capital goods - period from 2007-08 to 2009-10 - HELD THAT:- The Ld.Adjudicating authority had confirmed the demand of recovery of Cenvat credit on items such as Cement, TMT Bar, Beam, Angle, Channels & Joist by relying on the judgement of the Larger Bench of the Tribunal in the case of VANDANA GLOBAL LTD. VERSUS CCE [2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)].
However, the said judgement, as rightly pointed by the Ld.Advocate has been quashed by the Hon’ble High Court of Chhattisgarh. Also, the Hon’ble Calcutta High Court in the case of SURYA ALLOY INDUSTRIES LTD. VERSUS UNION OF INDIA [2014 (9) TMI 406 - CALCUTTA HIGH COURT] had disapproved the judgement of the Larger Bench. Thus, the Cenvat credit of the items mentioned is an eligible Cenvat credit upto 06/07/2009 and hence the appeal to this extent ought to be allowed.
Further, it has been stated by the Ld.Advocate appearing for the Appellant, that they are not pressing for the same and only have requested for waiver of penalty as the issue involved interpretation of law. There are force in such argument as the issue is related to interpretation of law. Hence the imposition of penalty cannot be sustained in the instant case.
Appeal disposed off.
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2022 (8) TMI 827 - CESTAT AHMEDABAD
CENVAT Credit - Daman Unit had sent certain cenvatted inputs (CRGO sheets) to their Vadodara unit, to undertake processing thereon - demand on the ground that processed goods have not been returned back to Daman unit, and such goods were not used in Daman unit but at Vadodara unit/ Amod Steel Processors - Rule 4(5)(a) of the Cenvat Credit Rues, 2004 - HELD THAT:- Admittedly the various customers have received the processed goods and also certified to this effect and at the same time, no cogent evidence is adduced by revenue to show that such goods in fact physically travelled from Vadodara to customers premises, instead of from Daman to customer premises, as claimed by the Appellant. In any case, it is found that the entire controversy can be decided on legal basis, without entering into the chequered controversy regarding return movement of goods to Daman and from Daman to eventual customers, in light of certain admitted facts.
There are merits in the legal contention raised by the Ld. Counsel for the Appellants that since the inputs were originally sent under Rule 4(5)(a) procedure to job workers, and since finally duty stands discharged by the Principal at Daman on finished goods, evenif it is cleared directly from job workers to eventual customers, neither Cenvat Credit requires to be denied to the Appellant at Daman nor duty demand can be raised on the job worker at Vadodara, even though they are the actual manufacturers, since the duty admittedly stands paid at Daman, and even collected by revenue authorities as such.
The present case is not one where the Appellant claimed the benefit of Notification No.214/86-CE, but instead, one where job work procedure under the Cenvat Credit Rules, 2004 was adopted. Rule 4(6) thereof has a specific provision to permit the finished goods to be cleared directly from job worker’s premises where the Principal pays duty thereon, which is done in the present case. As regards not seeking permission under Rule 4(6), the impugned order itself at Para 10.6 suggests that had such permission been sought, there would not have been any demand as such. Thus, not seeking such permission is merely a procedural lapse and there is no loss to the revenue department in the matter as such anyway.
That since admittedly, in the case on hand, the Principal manufacturer, i.e. the Daman unit, paid duty on finished goods, evenif it is produced at job worker’s end, there is no question of recovery of duty once again from job worker at Vadodara unit at all. As regards the Cenvat Credit demand on Daman unit, having paid duty as principal manufacturer, which is admitted by revenue authorities as well, the input stage credit too cannot be denied to them in the facts and circumstances of the present case.
The appeals therefore deserve to be allowed, since the demand cannot be sustained on merits - Appeal allowed.
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2022 (8) TMI 826 - CESTAT CHANDIGARH
Classification of the goods manufactured by the appellants - chewing tobacco - classifiable under heading 24039910 as claimed by the appellants or its jarda scented tobacco classifiable under heading 24039930 as claimed by the revenue? - HELD THAT:- There is no indication in the test report as to what is the definition of jarda scented tobacco and chewing tobacco and under which parameter test of sample conducted viz. Moisture content, Nicotine, Ash etc. as provided in the BIS specification - the conclusion arrived at by the Chemical Examiner, CRCL that ‘sample has the characteristics of Jarda Scented Tobacco’ in the test reports (supra) is without any basis and since the CRCL report which has been relied upon by the revenue for changing the classification is not as per the BIS specification, the reliance placed on it by revenue as well as by the adjudicating authority for changing the classification is totally misplaced.
The chemical examiner has failed to provide the parameters set out for jarda scented tobacco during her cross-examination. Apart from the test report, the revenue has not adduced any evidence to support its proposal to classify the impugned product as jarda scented tobacco and not chewing tobacco.
In the present case neither in the show cause notice nor before the adjudicating authority, it is the case that the appellant have used ‘jarda scent’ in their product. Even the statements relied upon by the department nowhere mention that ‘jarda scent’ has been used by the appellant in their product. The learned commissioner mistook the pleasant odour as mentioned in CRCL test report as scent which is totally different from ‘jarda scent’, an essential ingredient for manufacturing jarda scented tobacco - the learned commissioner has erred in not resorting to the Trade Parlance Test in the facts of the present case by erroneously observing that as the product can be classified as per the contents, there is no need to resort to the parlance test. In Trade parlance i.e. from packaging and presentation, sales and distribution and till its consumption by the ultimate consumer the product in issue is known as chewing tobacco only. The learned commissioner has also overlooked that the contents of the product in dispute have been prescribed under the Tariff and therefore the classification cannot be based on contents.
Admittedly the pouches of the products in including presentation, sales, distribution and usage issue described the product as ‘chewing tobacco’ and in Trade Parlance it is known as ‘Chewing Tobacco’ only. The manufacturer, distributor and the consumer, everyone understands and consume the product as chewing tobacco only. The Tribunal in the matter of M/S. FLAKES-N-FLAVOURZ VERSUS COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH [2014 (9) TMI 664 - CESTAT NEW DELHI (LB)] has held that in the absence of anything to the contrary, the product in question has to be treated as per the description given by the manufacturer on outer cover of pouch, common parlance and established practice as the chewing tobacco or zarda scented tobacco have not been defined in the tariff.
In view of the facts of this case the classification given by the appellant is proper and hence the impugned order is set aside - Appeal allowed - decided in favor of appellant.
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2022 (8) TMI 825 - CESTAT NEW DELHI
Distribution of ITC - sales agents have charged service tax on commission so received by them - Department formed an opinion that since the (Consignment Sales Agents) CSAs were appointed for the sale promotion of chewing tobacco, the Cenvat has wrongly been distributed by the ISD to the appellants who were engaged in manufacturing Kiwam - Rule 7 C of Cenvat Credit rules - extended period of limitation - suppression of facts or not - HELD THAT:- Since Rule 7C has been amended w.e.f. 01.04.2016 and the period of impugned demand is till 30.06.2016 that the amended Rule 7C is not applicable to the present case. Hence the effect of word “shall” of the amended provision cannot be implemented upon the demand and period of demand in the present case.
Since the appellant is observed to be dealing with the same product, though an ingredient thereof, as that being manufactured by ISD finally and for which the service in question was availed, hence even though the service precisely was not used in the appellant premises but in the different premises of the ISD Cenvat Credit cannot be denied by invoking rule 7 C of Cenvat Credit Rules - keeping in view the peculiar fact of the present case that the appellant herein was manufacturing an inseparable essential ingredient for the final product of the ISD that the input service of sales agent availed by the ISD for promotion of tobacco is held to have rightly been distributed to the appellant. The sole reliance of the adjudicating authority below, on Rule 7 C, the amendment thereof, is held to be absolutely wrong also for the reason that amendment came into effect after the period of demand in the present case was over.
Extended period of limitation - Suppression of facts or not - HELD THAT:- The only ground taken by the adjudicating authority is that the documents in relation to availment of credit were not the part of those ERs is held not acceptable in the light of the fact that appellant had never committed any default or delay while filing the ER Returns. The returns contained all the requisite details as that of the invoice numbers, the amount of invoice, the amount of service tax etc. Nothing has stopped Department to look into those invoices - the allegation of suppression of facts against the appellant are without any basis. Accordingly the foremost reason for invoking the extended period of limitation remains not available with the Department. Otherwise also the onus is always upon the Department to prove the alleged misrepresentation or suppression of fact that too with an intent to evading duty. Admittedly, present is not the case of duty evasion. There is no evidence for any positive act on part of the appellant to prove the alleged misrepresentation or suppression of facts.
For want of any evidence by the Department to prove the alleged suppression, fraud or collusion on part of the appellant to not to pay or to short pay the duty. It is held that Show Cause Notice should have been issued in the normal period of limitation. Since the SCN is issued after an expiry of period of more than 2 years same is held to be barred by time - Appeal allowed - decided in favor of appellant.
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2022 (8) TMI 824 - CESTAT MUMBAI
Maintainability of appeal - non-prosecution of the case - Rule 20 of the CESTAT (Procedure) Rules, 1982 - HELD THAT:- This appeal is liable for dismissal on the ground of default in appearance in terms of Rule 20 of the CESTAT (Procedure) Rules, 1982.
The appeal is dismissed under Rule 20 of the CESTAT (Procedure) Rules, 1982 for non-prosecution.
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2022 (8) TMI 773 - CESTAT BANGALORE
CENVAT Credit - input services - services of Commission Agent received from Larsen & Toubro Ltd. - sales commission paid to M/s L&T Ltd, who were marketing their products in India, as per Sole selling Agreement entered - extended period of limitation - suppression of facts or not - penalty - HELD THAT:- It is found that general tenor and purport of the Agreement is sales and not sales promotion. It can inferred from the Agreement that the terms of payment are only as a percentage of sales and the payment terms have no relation with any activity of sale promotion like advertisement etc. for which the appellants have not paid any money to M/s L&T Ltd. Even though there is a mention of filed campaign in the Agreement, it is on a case to case basis and on a specific offer letter to be issued by the appellants; no payments for such activity have been agreed upon in an Agreement. Therefore, it is a clear-cut understanding between the parties that M/s L&T Ltd would work as Commission Agents for sales and get a fixed percentage of the sales turnover.
The learned Commissioner has correctly held that the impugned service does not qualify as Input Service as the same was not used in or in relation to manufacture of goods by the appellants and therefore, the credit availed is illegal.
Gujarat High Court has gone into this issue in an elaborate manner and had made a final distinction between Sales Promotion and Sales Commission Services in the case of COMMISSIONER OF CENTRAL EXCISE, AHMEDABAD – II VERSUS M/S CADILA HEALTH CARE LTD. [2013 (1) TMI 304 - GUJARAT HIGH COURT] has held that though the business activities mentioned in the definition are not exhaustive, the service rendered by the commission agents not being analogous to the activities mentioned in the definition, would not fall within the ambit of the expression "activities relating to business".
The appellants are not eligible to avail CENVAT credit on the Sales Commission paid to M/s L&T Ltd. We find that the appellants have also submitted that in case the bench takes a contrary view to the judgments of tribunal in M/S ESSAR STEEL INDIA LTD. VERSUS COMMISSIONER OF C. EX. & SERVICE TAX, SURAT-I [2016 (4) TMI 232 - CESTAT AHMEDABAD] and Federal Mogul [2019 (2) TMI 1485 - CESTAT BANGALORE], they may refer the issue to a larger Bench - in view of the elaborate discussion and categorical finding of the Gujarat High Court in the case of COMMISSIONER OF CENTRAL EXCISE, AHMEDABAD – II VERSUS M/S CADILA HEALTH CARE LTD. [2013 (1) TMI 304 - GUJARAT HIGH COURT], no such reference to larger bench is warranted.
Time Limitation - suppression of facts or not - penalty under Section 11AC of the Central Excise Act, 1944 and Rule 25 of Cenvat Credit Rules, 2004 - HELD THAT:- The extended period is not invokable in respect of the first show cause notice that is the part of the proceedings in Appeal No. E/639/2010 and for that reason, suppression, fraud, collusion etc. with intent to evade payment of duty cannot be alleged and therefore, penalty under Section 11AC cannot be imposed - as the issue involved does not pertain to clandestine removal etc. and therefore, the question of confiscation and penalty under the provisions of Rule 25 of the Central Excise Rules do not arise - penalty imposed under Section 11AC of Central Excise Act and Rule 25 of Central Excise Rules are not sustainable.
The appellants are not eligible to avail the impugned credit and therefore, availment of credit, before the amendment carried out with effect from 03.02.2016, does constitute a contravention of Central Excise Rules and therefore, penalty under Rule 15 of CENVAT Credit Rules, 2004 is rightly imposed.
Duty demand confirmed within normal period; extended period not invokable; However, penalty under Section 11AC is set aside - Duty demand of Rs.10, 96, 33,738 is confirmed; however, penalty under Rule 25 of Central Excise Rules is set aside - duty demand of Rs.20, 85, 94,049 is confirmed; however, penalty under Section 11AC is set aside - duty demand of Rs.8, 12, 82,621 is confirmed; however, penalty under Rule 25 of Central Excise is set aside - Appeal allowed in part.
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2022 (8) TMI 702 - PUNJAB & HARYANA HIGH COURT
Time Limitation - Wrongful availment of CENVAT Credit - motor vehicles cleared without payment of excise duty claiming exemption under N/N. 06/2006-CE dated 01.03.2006 - Case of Department is that petitioner has wrongly availed of the exemption inasmuch as Cenvat Credit on the input consumed in the manufacture of bodies manufactured on duty paid chassis received from independent owners of the chassis had been taken and the vehicles so manufactured had been cleared for payment of applicable central excise duty - inordinate delay in adjudication of the show cause notices as per Section 11(A) of the Central Excise Act, 1944.
HELD THAT:- The issue as regards inordinate delay in adjudication of the show cause notices as per Section 11(A) of the Central Excise Act, 1944 came to be dealt with exhaustively by a Division Bench of this Court in M/s Shree Baba Exports through proprietor Ms. Jyotsna Agarwal vs. Commissioner, GST & Central Excise, Commissionerate, Chandigarh and another (CWP No. 11860 of 2021) decided on 15.03.2022 [2022 (3) TMI 749 - PUNJAB & HARYANA HIGH COURT], where it was held that it is clear that in Section 11-A(11), the legislature has prescribed a time limit. The Authority(s) are duty bound to abide the same. The expression “where it is possible to do so” does not mean that the time prescribed can be extended perpetually. The time limit cannot be taken to be directory except in a case where the Authority has a reason to offer as an explanation for extending the said time limit. In the present case, no explanation has been offered in the written statement which can be held to be a plausible explanation for not adjudicating upon the Show Cause Notice within the time prescribed.
In the facts of the present case the impugned show cause notices were issued in the year 2008. The same have not been adjudicated upon and the only explanation coming forth in the written statement is that the matter had been transferred to the Call Book as per CVIC guidelines issued from time to time. There are no cogent basis or legal impediment has been offered which may be construed to be a plausible explanation for not adjudicating upon the show cause notices within the time prescribed.
In view of the above and by following the dictum laid down in COMMISSIONER GST AND CENTRAL EXCISE & ANR. VERSUS M/S SHREE BABA EXPORTS [2022 (8) TMI 634 - SC ORDER] the impugned show cause notices cannot sustain as there has been an inordinate delay in adjudication of the same.
Petition allowed.
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2022 (8) TMI 701 - CESTAT KOLKATA
CENVAT Credit - inputs - castings and cast articles of iron, pipe fittings etc. falling under Central Excise Tariff 7325 and 7307 - activity amounting to manufacture or not - denial of CENVAT Credit availed by the appellant on the strength of invoices issued by the supplier - HELD THAT:- The Ld. Commissioner in the impugned Order has observed that the goods removed by the consigner is not a manufactured product and therefore, the assessee appellant is not entitled to credit. He has also observed that the assessee availing the credit was under obligation to examine the fact as to whether the goods received by him are a manufacture product and whether duty was rightly charged by the supplier i.e., M/s. Indo Thai Flexible Tubes Ltd.
In the present case, it is found that the jurisdictional Commissioner of the said vendor has dropped the entire proceedings which has been duly upheld by the Tribunal as well as the Hon’ble High Court. There are no reason to deny the claim of CENVAT Credit in the hands of the Appellant who is the recipient of the impugned goods from the said manufacturer - also, the legal position already stands decided in favor of the Appellant that CENVAT Credit cannot be denied on input on the ground that the activity undertaken by the assessee does not amount to manufacture when the assessee has admittedly deposited output duty on final product.
Appeal allowed - decided in favor of appellant.
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2022 (8) TMI 700 - CESTAT NEW DELHI
Levy of penalty - delay in filing ER-1 returns - violation of Rule12 (1) of Central Excise Rules, 2022 and of Rule 12 (6) of Central Excise Rules, 2022 of Central Excise Act - intent to evade present or not - HELD THAT:- No doubt Rule 12 is silent about the element of intent. But the above facts clarifies that present is not the case of evasion of duty nor even the case of non-filing the requisite returns for the period in question. The only issue is that despite that the appellant was filing GST Returns but has failed to file the ER Returns for the same period - There is a substantial compliance on part of appellant to all the legal provisions which were in effect during the impugned period. Interest of justice requires that Rule 12 (6) of Central Excise Rules 2002 would not have been invoked. The imposition of late fee is nothing less than imposition of penalty.
Penalty is a grave word which should be imposed only in case of apparent mala fide fraud, suppression of facts, misrepresentation etc. There is nothing apparent in this case on the part of the appellant.
Appeal allowed.
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2022 (8) TMI 699 - CESTAT KOLKATA
Disallowance of MODVAT Credit - ingots/billets and rounds - Rail Anchor and Suspension Shackle - Fish Plate Bar and Loose Jaw Bar - credit denied on the ground that the inputs (ingots, billets and rounds) used in manufacturing Elastic Rail Clip (ERC), Modified Loose Jaw (MLJ), were not of the type specified by the buyer - HELD THAT:- There can be no dispute that according to Chapter Note 1(f), Chapter 72 of the Excise Tariff, steel containing by weight 0.6% or more of silicon was alloy steel. Even otherwise, there has been no attempt on part of the revenue to controvert Mak Engineering’s averments and submissions regarding the chemical composition of EN-45 grade steel or the views given in the publication ‘Tool and Alloy Steel’ of M/s Dhiraj Steel Company produced in support thereof - no substantive evidence has been brought on record to support the Commissioner’s observations that during the period in question, Mak Engineering had mostly purchased “non-alloy ingots” for manufacture of ERC and MLJ.
Mak Engineering’s final products manufactured from EN-45 alloy steel had been accepted by the railways after due quality inspection. This, by itself, leaves little room to allege that the input materials were something other than alloy steel. The ingots/billets procured by Mak Engineering and directly sent to its job workers, who had undertaken re-rolling on job work basis, were of grade EN-45. Such grade had also been specifically mentioned in the job work challans issued by the job workers. The job workers’ challans, manufacturers’ challans and other relevant challans should have been given due recognition by the Commissioner. On a query from this Bench, Sri Khaitan satisfied us that all such challans had formed part of the Department’s seized records - the Commissioner wrongly observed that the invoices and relevant documents relating to job work showed that the disputed inputs were non-alloy. The said observations are contrary to the records of the case.
The case of alleged price differential between alloy and non-alloy steel products sought to be made against the appellant on the basis of two invoices, one dated 08.08.1996 and the other dated 22.09.1996, lacks merit - it is evident from the accompanying challan that the goods were actually of grade EN-45 i.e. alloy steel. The said accompanying challan has been wrongly ignored and it accordingly follows that the entire case of alleged price differential must fail. Even otherwise, the said two invoices under consideration were more than one and half months apart and ought not to have been compared in the manner as done while framing the allegations in the show cause notice. Nothing turns against Mak Engineering on the basis of such alleged price differential.
Thus, there is no proper justification to deny the credit on inputs in relation to manufacture of ERC and MLJ.
Rail Anchor - It is the revenue’s case that according to Chapter Note 1(f), Chapter 72 of Excise Tariff, steel having silicon and manganese less than 0.60% and 1.65% respectively fell in the category of non-alloy steel - HELD THAT:- It seems wholly unreasonable on part of the Commissioner to have given a go-bye to the ingot manufacturers’ invoices for ingots used in the manufacture of Rail Anchor which described the products as alloy ingots. When admittedly the ingot manufacturers had supplied alloy ingots under proper central excise invoices, subsequently confirmed vide the statements given by the said ingot manufacturers, Mak Engineering had availed Modvat on alloy steel, the job worker namely, ASRM had also categorically stated to have rolled alloy steel anchor bars and the use of alloy steel having chromium in the range of 0.32% to 0.38% for manufacturing Rail Anchor was not prohibited as per the Railways’ Specification, there remains no scope to sustain the findings that Mak Engineering had irregularly availed credit on the inputs. Nothing turns on the fact that the railways’ inspection agency, M/s Rites had never checked the Rail Anchor for chromium content.
The Commissioner has not been able to appreciate the statement dated 19.07.2000 of Sri Dilip Sen of Mak Engineering in its proper perspective. It must be noted that the said representative was never asked questions as to the chromium content of the material used for manufacturing Rail Anchor. Accordingly, the said statement cannot be of much relevance in the facts and circumstances of the case - the Commissioner had wrongly held that no documentary evidence had been produced to show that without changing the percentage of carbon, silicon, manganese and sulphur, only presence of chromium at 0.3% will change the character of non- alloy steel to alloy steel products. This observation is completely arbitrary and perverse inasmuch as it is based on a total ignorance of the provisions of Chapter Note 1(f) of Chapter 72 of the Excise Tariff.
Thus, the denial of Modvat Credit in relation to Rail Anchor was not in accordance with law and we set aside the impugned findings in this regard.
CENVAT Credit on Fish Plate Bar and Loose Jaw Bar - denial on the ground that duty had been paid by the manufacturer, M/s Bengal Hammer Industries (Unit II) whereas the commercial invoice for the same had been raised by Unit III or Unit IV of the said manufacturer - HELD THAT:- Having gone through the excise documents issued by the said M/s Bengal Hammer Industries Pvt. Ltd., it is clear that the bills contained reference to the said manufacturer’s Works, Rolling Mills, Registered Office as well as City Office. The commercial invoices of the said manufacturer containing reference of its Units III and Unit IV could not have, by itself, negatively impacted the availment of credit at the end of the supply recipient. Mak Engineering had rightly submitted that there was nothing illegal or wrong about the aforesaid internal arrangement of issuance of commercial bills, central excise invoices etc. at the end of the input supplier, M/s Bengal Hammer Industries Pvt. Ltd. - It is also not that the revenue has controverted Mak Engineering’s assertion that M/s Bengal Hammer Industries Pvt. Ltd. maintained the same bank account for all its units and Mak Engineering had duly made payment for the inputs to the said M/s Bengal Hammer Industries Pvt. Ltd., pursuant to raising of central excise invoices and commercial invoices.
The revenue has not been able to establish that the inputs in question had not been received by Mak Engineering directly from the factory of M/s Bengal Hammer Industries Pvt. Ltd. aforesaid or that the covering central excise invoices had not declared the payment of appropriate central excise duty under Section 3A of the Excise Act - the revenue has not been able to establish that Mak Engineering had violated the conditions of the above Notification dated 30.08.1997. Consequently, the impugned findings denying credit of Rs. 2,89,742/- in respect of Fish Plate and Loose Jaw are set aside being incorrect and illegal.
Suspension Shackle - Credit denied on the basis that the assessee- appellant had used ‘rounds’ of a diameter other than 25 mm - HELD THAT:- The Commissioner had erred by relying on the statement of the third supplier viz. Shiva Steel Rolling Mills. When the assessee-appellant had specifically requested that the records of the said supplier should be called for and after affording opportunity to inspect the same, it should be allowed to cross-examine Sri Bimal Sureka, partner of Shiva Steel Rolling Mills aforesaid, then the assessee-appellant’s request for cross-examination should have been granted. The Commissioner was unjustified in failing to grant such inspection and cross-examination but disallowing credit on the basis of the said alleged statement - apart from the statements, no evidence has been brought on record to prove that the appellant had used non-25 mm diameter rounds for manufacturing Suspension Shackle. Thus. Mak Engineering had lawfully and correctly availed the credit of Rs.2,47,580/-.
Invocation of extended period of limitation - suppression of facts or not - HELD THAT:- From a careful perusal of the show cause notice it is apparent that the said show cause notice has merely set out the language of Section 11A of the Excise Act without specifying as to which particular fact was suppressed by Mak Engineering - the present case does not involve any suppression of facts on part of the assessee. The Commissioner too, had mechanically upheld the invocation of extended period of limitation - there is no hesitation in holding that Mak Engineering is entitled to succeed on the point of limitation.
Appeal allowed.
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2022 (8) TMI 642 - SUPREME COURT
Validity and jurisdiction to adjudicate the subsequent SCN - Order-in-Original passed in proceedings pursuant to the show cause notice are ordered to be revived and to be transferred to the Additional Director General, Directorate General of Central Excise Intelligence, Delhi Zonal Unit, New Delhi for decision with the proceedings initiated pursuant to the first show cause notice - HELD THAT:- Considering the fact that both the show cause notices - one dated 1-3-2016 issued by the Directorate General of Central Excise Intelligence, Delhi Zonal Unit and the subsequent show cause notice dated 23-10-2017 issued by the Commissioner, Central Goods and Services Tax Commissionerate, Alwar were on the same subject - matter, the High Court is justified in passing the impugned judgment and order and directing that both the notices to be adjudicated and heard together by one authority.
There are no reason to interfere with the impugned judgment and order passed by the High Court - it is directed that, now both the show cause notices one dated 1-3-2016 and the subsequent show cause notice dated 23-10-2017 be adjudicated by only one authority, namely, the Additional Director General, Directorate General of Central Excise Intelligence, Delhi Zonal Unit, New Delhi and/or the equivalent authority, to be decided and disposed of within a period of six months from today.
SLP disposed off.
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2022 (8) TMI 641 - CALCUTTA HIGH COURT
Classification of goods - Mis-rolls - Whether the Learned Tribunal without going into the merits of the case and without even seeing the documents was right in simply passing the order on the basis of the ratio laid down in the decision of the Tribunal in Jai Raj Ispat Limited –Vs- Commissioner of Central Excise, Hyderabad-IV [2006 (7) TMI 210 - SUPREME COURT]? - misrolls arising during the process of manufacture of CTD bars would fall under tariff entry 72.04 or 72.07 or not? - recovery of CENVAT Credit - interest - penalty - HELD THAT:- The Tribunal in the impugned orders has left open the classification issue. If such be the circumstances, the learned Tribunal ought to have made an endeavour to consider the facts of the case, specially when the allegation in the show cause notice issued by the adjudicating authority was that the assessee does not process furnace for melting such waste and scrap and it is practically impossible for the assessee to manufacture MS Flat/Bar, MS Angle, MS Channel, MS Round etc. from the said items which are various types of scraps.
Assessee contended that, the demand notice has been issued without any enquiry and investigation in the factory of the assessee and the burden of proof is on the department to show that the goods purchased from SAIL and others have been disposed off without use in their factory. Further, it was contended that the department does not dispute payment of duty on goods purchased from SAIL and others, payment of duty on the final products manufactured by them, there was no revenue loss and therefore, proceedings could not have been initiated against the assessee.
The substantial questions of law does arise for consideration in these appeals, more particularly, the question whether the Tribunal without going into the merits of the case and without noting the documents was right in simply passing the order on the basis of the decision in the case of Jai Raj Ispat Ltd. [2006 (7) TMI 210 - SUPREME COURT] and whether the learned Tribunal failed to note that the judgment in the case of Jai Raj Ispat Ltd. was pertaining to a classification issue.
The appeals are allowed and the substantial questions of law are answered in favour of the revenue - matters are remanded to the Tribunal to consider the cases afresh and after taking note of the factual position, as well as the legal and various decisions that may be relied upon. The learned Tribunal shall pass a speaking order on merits and in accordance with law.
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2022 (8) TMI 639 - CESTAT MUMBAI
Reversal of CENVAT Credit - manufacture of dutiable as well as exempt goods - appellants have a 100% EOU unit as well as a DTA unit located adjacent to each other - manufacture dutiable goods viz. PVC vinyl floorings, PVC film/sheets, PVC leather cloth etc. classified under Chapter 39 and coated cotton fabrics classified under Chapter 59 of the First Scheduled to the Central Excise Tariff Act, 1985 as well as manufacture and clearance of coated cotton fabrics (deluxe) falling under Chapter 5903 without payment of Central Excise duty by availing benefit of Notification No. 30/2004 dated 9.7.2004 - non-maintenance of separate records - applicability of Rule 6(3) (i) of the Cenvat Credit Rules, 2004 - CENVAT credit on services like Transport Charges, Testing Charges, Import Charges, Freight Charges availed - procedure laid down under clause 3A of Rule 6 for determination and payment of amount equivalent to Cenvat credit attributable to inputs and input services used in or in relation to the manufacture of exempted goods, not followed.
HELD THAT:- In the light of judicial pronouncements it is clear that
(i). Rule 6 lays down the obligations of the manufacturer of dutiable and exempted goods and provider of taxable, and exempted services; Rule 6 (1) and (2) Provide for different situations;
(ii). Rule (3) starts with a non estante clause; it begins with the words ‘notwithstanding’ and refers to Sub-Rules (1) and (2) of Rule 6 of CCR, 2004; once the conditions stipulated in Sub-Rule (3) are complied with, the provisions of Sub-Rule (1) and (2) will not be applicable; sub-Rule (3) clearly provides that if the provider of output service does not opt to maintain separate accounts, he should comply with the provision of Rule 6(3)(c) of the said Rules;
(iii). Reversal amounts to non availment of credit;
(iv). It is not open for the revenue to thrust upon the assessee the choices available under Sub-Rule (3);
(v). It is not the intention of the legislature to demand huge amounts of credit disproportionate to the credit availed on exempted goods.
Validity of reliability on judgment of Mumbai High Court in the case of COMMISSIONER OF C. EX., THANE-I VERSUS NICHOLAS PIRAMAL (INDIA) LTD. [2009 (8) TMI 224 - BOMBAY HIGH COURT] by Revenue - HELD THAT:- It was held in the case of Nicholas Piramal that if separate inventory is not maintained, then, the manufacturer would have no option, but to pay amounts specified in Rule 6(3)(i) of the Cenvat Credit Rules, 2004; mere reversal of the availed Cenvat credit would not be sufficient; procedure needs to be followed.
The decision of Principal Bench in the case of M/S AGRAWAL METAL WORKS PVT. LTD. VERSUS COMMISSIONER OF CENTRAL GOODS AND SERVICE TAX, ALWAR [2022 (7) TMI 924 - CESTAT NEW DELHI], relied upon, being the latest one, where it was held that The demand has been made under Rule 6 (3) of CCR, 2004. It has been held by the Hon’ble High Court of Andhra Pradesh and Telangana in the case of M/S TIARA ADVERTISING VERSUS UNION OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE [2019 (10) TMI 27 - TELANGANA AND ANDHRA PRADESH HIGH COURT] that the various options under Rule 6 are options given to the assessee and the Revenue cannot choose one of the options and force it upon the assessee. Even if the assessee is rendering exempted services or manufacturing exempted goods and using common input services no demand can be sustained under Rule 6 (3) as this is only one of its options available to assessee to fulfill its objection.
The appellants have submitted to the Audit party as well as the adjudicating authority that process involved in the manufacture of goods respectively i.e. coated cotton fabrics (deluxe) by M/s Responsive Industries and Hawser Fishing Net by M/s Axiom Cordages Ltd did not involve the raw material which is disputed to have been a common input by the Department - It is found that the appellants have given a detailed submission on the process of manufacture of the impugned goods. The learned adjudicating authority has not gone into the submissions and has simply brushed aside the arguments of the appellant saying that understandably, the raw material used is common - Department has not taken any steps to negate the claims of the respective appellants. No Panchnama indicating the process of manufacture has been drawn, in the least, leave alone obtaining any technical opinion to support or to contradict the submissions of the appellants. The only averment of the learned adjudicating authority appears to be that the input services are understandably, used in the manufacture of dutiable as well as exempted goods - it is not open to the Department to brush aside the submissions of the appellants without a proper enquiry and reason. In the absence of a systematic study and negation of the appellant’s submissions, the findings of the learned adjudicating authority are not legally tenable.
Validity of acceptance of Chartered Accountant’s certificates without giving any reasons thereof - HELD THAT:- It is not a case of the Department that the said Chartered Accountant has been examined. Learned Commissioner was within his rights to call the said Chartered Accountants and examine him to find out and establish the veracity or otherwise of the certificates issued by them. Interestingly, one more argument taken by the learned adjudicating authority is that the certificates given by the Manpower Recruitment Agency in respect of Axiom Cordages Ltd are verbatim to the end and do not disclose any details - in the absence of any enquiry, verification or examination of the persons concerned, the conclusion drawn by the learned adjudicating authority do not sustain the scrutiny of law. The impugned orders are not sustainable.
The learned adjudicating authority mainly relies on the averments that the appellants did not disprove the allegation made in the show-cause notice. It is a matter of record that the appellants have given elaborate submissions in response to Audit reports and also during the adjudication proceedings, it is apparent that the learned adjudicating authority has not gone into the submissions in detail and has not negated the assertions made by the appellant in a reasoned manner. It is to be noted that it is the Department who are alleging certain non-observance, of procedures by the appellants and availment of CENVAT Credit in a proper manner, on the part of the appellants. Therefore, it was incumbent upon the Department to prove the same with cogent evidence, reasoned argument and on a legal basis. Having not discharged their onus, the Department cannot simply brush aside the submissions of the appellants. The appellants have reversed the credit attributable to the inputs or inputs services alleged to have been used in the manufacture of exempted goods - the reversal of CENVAT Credit amounts to non-availment of CENVAT Credit and therefore, demands would not sustain.
The appeal is partly allowed by way of remand to the adjudicating authority for a limited purpose of verifying the conclusion of reversal. In case the amount reversed by the appellant falls short of the requisite amount, the appellants shall pay the difference along with interest.
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2022 (8) TMI 638 - CESTAT HYDERABAD
Rejection of refund claim - refund rejected on the ground that proper documents were not submitted - HELD THAT:- It has categorically been recorded by the Original Authority as well as the Commissioner (Appeals) that the only reason for rejection of refund is that proper documents were not submitted.
It is deemed proper to remand the matter to the Original Authority to give the Appellant an opportunity to produce all relevant documents and also explain the apparent mismatches in the invoice details, etc. - appeal allowed by way of remand.
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2022 (8) TMI 634 - SC ORDER
Validity of Show Cause notice - Non adjudication / delayed adjustication of SCN for 11 years - CENVAT Credit - inputs - Menthol/Menthol flakes - Mentholised Oil (DMO) - Deterpinated Menthol & like inputs - invoices issued by the J&K and North East based units by showing supply of raw materials without supply of goods - It was held by the High Court that In the present case, no explanation has been offered in the written statement which can be held to be a plausible explanation for not adjudicating upon the Show Cause Notice within the time prescribed.
HELD THAT:- In the peculiar facts and circumstances of the present case, there are no reason to interfere.
The Special Leave Petition is dismissed.
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2022 (8) TMI 609 - CESTAT AHMEDABAD
Proceedings amounting to manufacture or not - activity of unloading of chemicals of Chapter 29 from the tankers and re-packing and labeled in small drums by the job workers - liability of duty on principal supplier or job-worker.
If at all the activity carried out at the job worker’s end is amount to manufacture whether the appellant is liable to pay the duty on such activity? - HELD THAT:- If at all the activity amounts to manufacture the job worker is a manufacturer in the eyes of Central Excise Act, 1944 to hold a person as manufacturer. The ownership of goods is not relevant, therefore, in the present case even though the goods belongs to the appellant but the entire activities were carried out by the job worker.
From the detailed finding of the Larger Bench in THERMAX BABCOCK AND WILCOX LTD., THERMAX LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE-I [2017 (12) TMI 266 - CESTAT MUMBAI], it is settled that irrespective of the ownership of goods whoever undertakes the manufacturing activity he has to pay the duty. Applying the ratio of the Larger Bench in the present case since, the job worker has carried out all the activities which as per the department amounts to manufacture, the job worker is alone to pay the excise duty, therefore, the duty demand raised against the appellant is not sustainable, hence, the same is liable to be set aside.
Since, the issue that who is liable to pay the duty has been decided, the issue whether the activity per se is amount to manufacture or otherwise is not decided.
The appellant in any case is not liable to pay the excise duty in the facts and circumstances of the present case - Appeal allowed - decided in favor of appellant.
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2022 (8) TMI 538 - CESTAT ALLAHABAD
Clandestine Removal - Iron Flats, spring Leaves and Agriculture implements - entire case of department is based on the entries in a Shristi Brand Notebook recovered during the search - shortage or excess in the raw material/final products to prove clandestine removal - admissible statements or not - HELD THAT:- The case of the Department is that the appellants have indulged in clandestine removal. The department came to this conclusion on the basis of entries made in a certain note book recovered from the appellant’s premises. Learned Counsel for the appellants submits that the author of the notebook is not identified to verify the truthfulness of the entries made therein; his statement was also not recorded and that all the entries in the said notebook appeared to be made with the same ink at same time - it has been held in a catena of judgments that a serious charge like clandestine removal cannot be established without tangible evidence or procurement of raw material, deployment of labour, consumption of electricity, manufacture of excisable goods, sale of excisable goods, transportation of excisable goods and receipt of consideration etc.
It is found that other than the entries in the notebook and the statement of the appellants no other evidence has been put forth by the Department. Under these circumstances, the statement of the appellant has no validity as evidence. It is also found that there are some entries related to transportation allegedly by Tractor. Learned authorized representative argues that only a tractor has registration and not the trolley and therefore, reference to tractor should be read as reference to tractor with trolley - clandestine removal is a serious charge and requires to be substantiated by evidence encompassing various activities in the chain of events.
The department has not adduced any additional evidence, even on a sample basis to substantiate the allegation of clandestine removal as per above. In the absence of evidence, the allegations raised by the department are not substantiated - Appeal allowed - decided in favor of appellant.
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2022 (8) TMI 537 - CESTAT AHMEDABAD
Process amounting to manufacture or not - conversion of jumbo paper rolls into smaller sheet by the activity of slitting, cutting - adjudicating authority has contended that the use of the paper sheet converted from jumbo rolls is different from the paper in the paper jumbo rolls - time limitation - HELD THAT:- From Chapter Notes 13 of Chapter 48, it is clear that the process of slitting and cutting of thermal paper is amount to manufacture. However, the similar chapter note is not provided in respect of paper, which is the product in question. Therefore, in absence of the similar chapter note the slitting, cutting and conversion from bulk jumbo roll to sheet form of paper cannot be termed as manufacturing activity in terms of section 2(f) of Central Excise Act, 1944. Slitting, cutting of a already manufactured goods does not amount to manufacture as held in catena of judgments.
It is settled that slitting, cutting of jumbo paper rolls to smaller sheet of already manufactured goods does not amount to manufacture - reliance can be placed in the case of COMMISSIONER OF CENTRAL EXCISE, VAPI VERSUS KNOWELL CONVERTERS [2008 (8) TMI 725 - CESTAT, AHMEDABAD] - thus, the activity of slitting, cutting in conversion of jumbo paper roll into paper sheet does not amount to manufacture.
Time Limitation - HELD THAT:- The appellant have been categorically declaring their activity in each and every invoices as “Jumbo Rolls converted into small rolls and small Rolls to Sheet, does not amount to Manufacture as per Section 2(f) of Central Excise Act, 1944 hence, no duty is leviable”. The appellant had a bonafide belief that the activity of conversion from jumbo paper rolls to paper sheet is not amount to manufacture, therefore, the appellant have not suppressed the fact or misdeclared with intend to evade payment of duty. Therefore, the entire demand which is raised beyond the normal period is also hit by limitation.
The demand raised by the adjudicating authority is not sustainable on merit as well as on limitation - Appeal allowed.
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2022 (8) TMI 536 - CESTAT NEW DELHI
Pre-deposit for the purpose of refund - amount deposited during investigation - Refund claim - tiime limitation - HELD THAT:- The Board has issued Circular No. 984/8/2014-CX dated 16.09.2014 wherein it has been clarified in para 3, that payment made during investigation or audit, prior to the date on which appeal is filed, shall be considered as pre-deposit for the purpose of appeal to the extent of the percentage specified under Section 35F (required for the purpose of pre-deposit). It is further stipulated in para 3.2 that from the date of filing appeal, the amount deposited shall be deemed to be the date of pre-deposit under Section 35F - para 5 of the Circular mentions that when the appeal is decided in favour of the assessee, he shall be entitled to refund of the amount deposited alongwith the interest at the prescribed rate, as per Section 35FF of the Act.
It is found from the plain reading of Section 35FF of the Act, that there is no application of Section 11B in respect of refund arising, on being successful in appeal. This has also been clarified in para 5 of the aforementioned Circular of the Board. Accordingly, the impugned order is erroneous and against the provisions of law - The Adjudicating Authority is directed to grant the refund of the said amount of Rs.6,51,300/- with interest from the date of reversal (dated 02.02.2011), till the date of grant of refund.
Appeal allowed - decided in favor of appellant.
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