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Central Excise - Case Laws
Showing 161 to 180 of 1430 Records
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2023 (11) TMI 1028
Recovery of CENVAT Credit alongwith interest and penalty - procurement of items of iron and steel which were used for ‘fabrication’ and ‘erection and installation’ of plant - HELD THAT:- The issue of eligibility of products of iron and steel used for, or in relation to, manufacture of ‘capital goods’ or for fixing of capital goods came to be excluded from availment of credit only with effect from 7th July 2009 and the present dispute pertains to the period prior to 19th August 2008.
The original decision of the Tribunal in re Vandana Global Ltd [2018 (5) TMI 305 - CHHATTISGARH, HIGH COURT], confirming the retrospective application of the amendment, has since been discarded by the Hon'ble High Court of Chhattisgarh. Accordingly, the first appellate authority was correct in determining the eligibility for CENVAT credit on products of iron and steel. The decision of the Hon'ble Supreme Court in re Saraswati Sugar Mills [2011 (8) TMI 4 - SUPREME COURT], cited by Learned Authorised Representative, would not apply to the facts relating to availment of CENVAT credit.
Cenvat Credit on Dumpers used to provide services as ‘annual maintenance contract’ for ‘windmills’ - HELD THAT:- The original authority was not correct in determining the ineligibility for CENVAT credit on ‘dumpers’ and supplies relating to. The sole ground for denial of credit on ‘annual maintenance contract’ service is that these are not used directly in manufacture of excisable goods and that ‘windmills’ themselves are not finished products liable to duties of central excise.
There are no merit in the appeal of Revenue which is dismissed.
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2023 (11) TMI 1027
Classification of manufactured goods - Badam Milk Drink Ready to Drink - to be classified under 0401 11 as flavoured milk or under CETH 2202 9030? - HELD THAT:- It is found that with the introduction of 8-digit Classification Code, there is a specific entry for beverages containing milk, which was not there in the earlier Central Excise Tariff. Further Tarriff item 0401.11 “flavoured milk whether sweetened or not put up in unit containers ordinarily is not anymore present under Chapter 04 after the introduction of 8 digit classification code. With the introduction of the 8 digit, since there is a specific classification for the impugned item under Chapter sub-heading 2202 9030 the same has to be classified under this specific heading in view of Rule 3(a) of the General Rules for the Interpretation of Central Excise Tariff, which says that a specific heading should be preferred for a generic heading. In this case, we find that the impugned item i.e. Badam Milk Drink – Ready to Drink is containing flavourings namely badam powder, cardamom, saffron, Maltodextrin and garnished with badam flakes.
Further it is found that this item has also undergone the process of homogenization and pasteurization and UHT treatment to increase the shelf life of the product. Such items, which are having a longer shelf life because of the above processes are not akin to normal pasteurized, homogenized and toned milk.
It is found that the Board, while issuing Section 11C Notification No. 17/2008-CE (NT) has classified flavoured milk of animal origin under chapter sub-heading 2202 9030. We find that the Notification is issued after the introduction of 8-digit classification code and after the full alignment of Central Excise Tariff with HSN. This buttresses the contention of the Department that the impugned item is classifiable under the chapter sub-heading 2202 9030.
The Department contended that the product/item is classifiable under 2202 9030 and in support they cited the case-law of ERCMPU (MILMA) VERSUS COMMISSIONER OF CENTRAL EXCISE, COCHIN [2013 (5) TMI 1066 - CESTAT BANGALORE].
The case-law of NESTLE INDIA LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE (LTU) , DELHI [2017 (3) TMI 1636 - CESTAT NEW DELHI] cited by the appellant is distinguishable on facts as the issue involved is classification between Chapter heading 0404 and 1904 of mix and not beverage and the case is based on the Central Excise Tariff that existed before 2005 i.e. before alignment of the Central Excise Tariff with the HSN.
Thus, following the ratio of the decision in Ernakulam Regional Co-operative Milk Producers Union Ltd. of this Tribunal, there are no reason to interfere with the impugned order - the appeal filed by the appellant is unsustainable and is rejected.
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2023 (11) TMI 1026
Area Based Exemption - Recovery of excess refund sanctioned to the assessee in the initial month where the Cenvat credit was not fully utilized - Utilization of CENVAT Credit in the subsequent period - HELD THAT:- During the hearing, it is informed by the Ld.D.R. that this bench has decided similar issue in the case of M/S OZONE PHARMACEUTICALS AND M/S OZONE AYURVEDICS LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX, GUWAHATI [2023 (9) TMI 1371 - CESTAT KOLKATA], wherein the appeal filed by the Appellant was allowed - It was held in the said case that the refund claim of the appellants for the subsequent period, could not be rejected on the ground that the appellant has taken excess refund for the period prior to 22.12.2002, therefore, no demand is sustainable against the appellant as demanded in view of the letter dated 03.06.2003 by the Deputy Commissioner and the refund for the period August, 2006 to October, 2006 were not required to be appropriated.
The demand confirmed in the impugned order is not sustainable and is set aside - appeal allowed.
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2023 (11) TMI 1025
Project Import - Mega Power Project - international competitive bidding - exemption under notification 6/2006 dated 01.03.2006 - HELD THAT:- The Respondent supplied components/parts/accessories to the Coal Handling plant for Barh Super Thermal Power Project. The Respondent vide their letter dated 27.11.2010 submitted a certificate issued by the Joint Secretary, Ministry of Power, to the effect that the project was a mega power project. The Project Authority Certificate dated 05.02.2007 categorically states that supply of goods under the contract to be made to the power project in India were under the procedure of international competitive bidding. The name of the Respondent was included as sub-contractor in the contract document of M/s DVC, who were responsible for completion of the mega power project.
The Respondent has satisfied all the conditions required to avail the exemption as provided under Notification 6/2006 dated 01.03.2006 - the allegation of the department that the Respondent would be eligible for the exemption under Notification 6/2006 dated 01.03.2006, only if they are registered under Project Import Regulations 1986. Registration under Project Import is required only when they import the goods. In this case the Respondent has supplied goods manufactured by them domestically, for which exemption is specifically provided under notification 6/2006 dated 01.03.2006. Since, the Respondent has satisfied all the conditions required to avail the exemption under notification 6/2006 dated 01.03.2006, it is found that no infirmity in the order-in-original passed by the adjudicating authority, dropping the proceedings.
Appeal filed by Revenue dismissed.
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2023 (11) TMI 964
Recovery of refund - Exemption to new industrial units which commenced its commercial production on or after 24.12.1997 - goods cleared from units located in Export Promotion Industrial Parks (EPIP) in the State of Assam - benefit of N/N. 32/99-CE dated 08.07.1999 - HELD THAT:- Similar issue in the case of M/s Ozone Pharmaceuticals Limited Vs Commissioner of Central Excise and service Tax, Guwahati [2023 (9) TMI 1371 - CESTAT KOLKATA], wherein the appeal filed by the Appellant was allowed - it was held in the said case that the refund claim of the appellants for the subsequent period, could not be rejected on the ground that the appellant has taken excess refund for the period prior to 22.12.2002, therefore, no demand is sustainable against the appellant as demanded in view of the letter dated 03.06.2003 by the Deputy Commissioner and the refund for the period August, 2006 to October, 2006 were not required to be appropriated.
The ratio of the above cited decision is squarely applicable in this case as the facts and circumstances of the present case on hand is same as the case cited above. Thus, by following the ratio of the above cited decision, it is held that the demand confirmed in the impugned order is not sustainable.
Appeal allowed.
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2023 (11) TMI 963
Valuation of goods - captive consumption - determination of transfer price, which is much lower than value that should have been determined as per Rule 8 & 9 of Central Excise (Determination of Price of Excisable Goods) Valuation Rules, 2000 and CAS-4 - Extended period of limitation as per proviso to Section 11A(1) of the Central Excise Act - demand on duty imposing equivalent penalty - HELD THAT:- Appellant have already paid an amount of Rs.85,25,918/- towards central excise duty and Rs.37,843/- towards education cess. From this chart it is quite evident that appellant has admitted and paid the entire differential duty liability for the year 2003-04 and 2005-06. There is a short payment only in the year 2004-05. It is also noted that the appellant sister concern was taking the CENVAT Credit of the differential duty paid by them on the basis of the supplementary invoice.
Computation of period of limitation - HELD THAT:- As per the procedure followed by the appellant they were paying the differential duty on the basis of the Cost Accountant Certificate issued on the basis of finalized/ audited financial/ cost records, the relevant date for computation of period of limitation under section 11A of the Central excise Act, 1944 should be as per clause (iv) of Explanation 1 (b) of the said section which reads “in case where duty of excise is provisionally assessed under this Act or the rules made thereunder, the date of adjustment of duty after the final assessment thereof.” Accordingly the show cause notice has to be treated as one being issued within the normal period of limitation for making the demand.
Levy of penalty - HELD THAT:- It is observed that the appellant was following the procedure as laid down by making the payment of duty on the basis of the cost of production determined on the basis of the finalized accounting records of the previous year and subsequently paying the differential duty on the basis Cost Accountant certificate issued on the basis of the finalized accounting records of current year. When this is prescribed and also is an accepted procedure for payment of duty on the goods consumed captively, there are no merits in the findings recorded by the Commissioner for imposing penalty under Section 11AC read with Rule 25.
The penalties under section 11AC of the Central Excise Act, 1944 read with Rule 25 of the Central Excise Rules, 2002 set aside
Appropriation of duty paid Rs 56,55,637/- + Rs 72,186/- by the Appellant for the period 2003-04, 2005-06 respectively, towards the demand made in the show cause notice and confirmed by the impugned order - demand of differential duty for the year 2004-05 is modified to Rs 66,13,705/- (Rs 65,48,222/- (C Ex Duty) + Rs 65,482/- (Edu Cess). Amount of Rs 27,98,055/- paid by the appellant for this period is appropriate against this amount upheld - differential duty for the year 2004-05 to the extent of this amount not paid by the Appellant is upheld - demand for interest under Section 11AB is upheld.
Appeal allowed in part.
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2023 (11) TMI 889
CENVAT re-Credit on inputs, provisionally written off in the books of accounts - Rule 3(5B) of CENVAT Credit Rules, 2004 - invocation of extended period of limitation - interest - penalty.
It appeared to the department that the CENVAT credit on Obsolescent material which was earlier debited, was taken back on 30.06.2017, without utilising the same in the manufacture of final products.
HELD THAT:- The Appellant have availed CENVAT re-credit of Rs.34,84,905/- on 30.06.2017 on the inputs which were provisionally written off earlier and carried forward the same in ER 1 return filed prior to introduction of GST in terms of Section 140(1) of the Act as transitional credit. It is pertinent to note that the material on which CENVAT credit was availed was not fully written off.
In terms of provisions of Rule 3(5B) of erstwhile CENVAT Credit Rules, 2004, any assessee is entitled to take re-credit if the said inputs/ capital goods are subsequently put to use in the manufacture of final products and which have not been fully written off - In the instant case, the Appellant has provided documents pertaining to the utilisation of inputs in the manufacture of final products.
The provisions of Rule 3(5B) of erstwhile CENVAT Credit Rules, 2004 are very clear which states that when said inputs or capital goods are subsequently used in the manufacture of their products, the manufacturer is entitled to take the credit of the amount equivalent to the CENVAT Credit paid earlier.
Extended period of Limitation - HELD THAT:- In the instant case, the appellant has provided sufficient documentary evidence pertaining to the utilisation of inputs in the manufacture of their final products. As such, the demand of alleged ineligible CENVAT Credit cannot sustain. As the issue is of interpretational in nature, invocation of extended period is not justified as the ingredients required for extending the limitation are not satisfied in this case.
Interest and penalty - HELD THAT:- As the demand cannot sustain, imposition of penalty and demand of interest also cannot survive. However, it is to be observed that the Departmental authorities are free to verify the utilisation of the impugned inputs whether used or not in the manufacture of their finished products by the appellant.
The impugned order set aside - appeal allowed.
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2023 (11) TMI 888
Clearance of some goods on payment of duty while availing the benefit of exemption - Benefit of exemption specified with a cap of maximum quantity - exemption under N/N.4/2006-CE dated 1.3.2006 as amended by N/N. 4/2008-CE dated 1.3.2008 with effect from 1.4.2008 - HELD THAT:- A plain reading of the said Notification reveals that paper and paper board articles thereof were eligible for clearance at ‘Nil’ rate of duty, with effect from 1.4.2008, subject to fulfilment of Condition No.10 prescribed under the said Notification - For the present purpose, clause (i) of the Condition No.10 is relevant. It is stipulated under the said clause (i) of Condition No.10 that the exemption shall apply only for clearances made for home consumption from a factory in any financial year up to first clearances of aggregate quantity not exceeding 3500 MTs.
There are no other stipulation under the said subclause. The learned Commissioner reading the said Notification along with Section 5A(1A) came to the conclusion that since, it is an absolute exemption, therefore, payment of duty before completion of the stipulated quantity of 3500 MTs, is incorrect and thereby the condition of the Notification is violated, hence, the appellant would not be eligible to the benefit of the Notification - the said interpretation of the learned Commissioner would not stand the scrutiny of law.
Firstly, neither Section 5A(1A) is applicable to the present scenario, since Notification No.4/2006-CE dated 1.3.2006 is a conditional, quantity-based exemption; and admissibility to ‘Nil’ rate of duty is only to the first clearances of 3500 MTs; there is no other condition stipulated in the said Notification. On a plane reading of the condition as it is, it is opined that the appellants are entitled to avail ‘Nil’ rate of duty for the first clearances of 3500 MTs in a financial year, irrespective of whether they discharged duty for 500 MTs in between the said clearance - Since, the benefit of Notification has been denied by demanding duty and no demand has been raised for availing credit irregularly, there are no reason to analyse applicability of Rule 11(2) of the CENVAT Credit Rules, 2004 to the facts of the present case which would be an academic exercise.
The impugned order is set aside - Appeal allowed.
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2023 (11) TMI 887
Refund of duty - doctrine of unjust enrichment - duty was paid under compounded levy scheme - Refund was sanctioned but credited to the Consumer Welfare Fund under erstwhile Section 12B of the Central Excise Act, 1944 - HELD THAT:- It is astonishing to note that the department is missing a simple thing to notice that the company was paying excise duty liability on compounding basis i.e. its liability was fixed on the basis of no. of machines. Accordingly, the company was responsible to pay excise duty even if it had not produced a single pouch of scented tobacco jarda or branded chewing jarda as the case may be and if this was so it is beyond comprehension that how the company could take excise duty as component of cost for fixing price as mentioned in the order at several places.
Since the company was paying excise duty on compounding basis and none of its part was treated as manufacturing expense therefore, it was deducted directly from Revenue from Operations as per guidelines given under Companies Act 2013. It may be noted that no Chartered Account can change the format of Balance Sheet or Profit and Loss Account as given under Schedule III of Companies Act 2013, and since the format specifically mandates that excise duty paid should be specifically deducted from Revenue from operations, then every Chartered Accountants is bound to follow the same format - the company had to pay excise duty irrespective of sale/production under compounding scheme, therefore, it has correctly debited entire amount to profit and loss account. The refund amount constitutes the entitlement of the company on account of excess excised duty paid and mere change in nomenclature i.e. called pre-deposit or deposited under protest etc. does not change the essence of transaction. Under no circumstance compoundable excise duty can be shown anywhere else but as a reduction from Revenue from Operation. recovery of excise duty is not possible.
It is found that there is no set mechanism or opportunity available to the manufacturers working under compounded levy scheme in terms of Section 3A and the Assessee necessarily have to pay the prescribed duty in advance, irrespective of the number of days the machines are operative and irrespective of the quantity of the goods manufactured - the principle of the unjust enrichment, which is ordinarily applicable only on the goods manufactured and removed under the scheme of levy and more appropriately under Section 3 of the Act, the said principle cannot by any logically and economical be justifiable as legally tenable principle be extended to the manufactures working under compounded levy scheme under Section 3A.
The impugned order cannot be sustained and is accordingly set aside. The doctrine of unjust enrichment is not applicable to the facts and circumstances of the present case and accordingly it is directed that the refund of Rs.6,95,52,000/- appropriated in favour of the ‘Consumer Welfare Fund’ be credited to the account of the Appellant.
Accordingly the appeal filed by the Appellant is allowed.
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2023 (11) TMI 886
Validity of confirmation of demand towards reversal of Cenvat Credit - - Benefit of exemption - confirmation of demand against services provided to National Financial Corporation which was not listed in schedule to Section (3) of United Nations (Privileges and Immunities) Act, 1947 - HELD THAT:- Tribunal while deciding the appeal for earlier period has stated In para 7 of M/S ICRA MANAGEMENT CONSULTING SERVICE LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE & S.T., GHAZIABAD [2019 (3) TMI 1230 - CESTAT ALLAHABAD] demand upholding the reversal of credit of Rs 2,12,309 the penalty imposed equal to this amount has been set aside. Appellant vide his letter dated 07/11/2023 informs that they has reversed the Cenvat credit amounting to Rs.2,65,723/- in terms of provisions of Rule 6 of the Cenvat Credit Rules, 2004. Further, it is informed that the said reversal of credit had already been intimated to the Service Tax Department vide letter(s) dated 29.06.2015 and 23.06.2016. However it is also noted that taking note of the above revenue has not given any demand in respect of this amount in the present statement of demand, nor any penalty has been imposed corresponding to this amount.
There are no reason to differ from the above order, as the show cause notice also do not give any ground except that it was an statement of demand on the basis of earlier show cause notice.
Impugned order is set aside - appeal allowed.
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2023 (11) TMI 885
Wrongful availment of exemption as per the notification 6/2002 dt.1.3.2002 by accounting bogus/excess fly ash receipts - invocation of extended period of limitation - period 2003 to 2005.
It is the case of the department that the Appellant has not satisfied the condition in the Notification No. 06/2002 to clear the asbestos sheets at ‘Nil’ rate of duty since the asbestos sheets (finished products) did not contain not less than 25% fly ash.
HELD THAT:- The adjudicating authority has not recorded any finding as to whether this contention of the appellant is acceptable or not. The adjudicating authority is seen to be silent or has conveniently avoided recording a finding as to the quantity said to have been procured from Chettinad Cements Corporation. In page 504 of the appeal paper book, the letter dt. 25.3.2004 issued by Chettinad Cements Corporation to the appellant is enclosed. This letter shows the lifting of 748 MTs of dry fly ash from MTPS by appellant which is the allotted quota of Chettinad Cements Corporation - Out of the 2162 MTs on two bills raised by M/s.Karthikeyan Transport on M/s.NEC, a quantity of 1322.235 MTs has been sold by M/s.NEC to appellant. This evidence has not been accepted by the adjudicating authority by observing that appellant has not produced copies of allotment order to these brick companies. The adjudicating authority has not been satisfied by the document showing the source but has rejected this by saying the document of source’s source is not produced.
The appellant has been able to establish that they have procured fly ash from sources other than MTPS. The Ld. Counsel for appellant submitted that the appellant is able to establish the source of the source also. In response to a RTI application for furnishing the list of Cement and ASC sheet companies which use MTPS dry fly ash, the name of appellant is seen mentioned. In the said list the name of Sakthiguhan Construction, Erode is also mentioned. This would prove that Sakthiguhan is also getting MTPS dry fly ash. In this document, the list of small scale industries which uses MTPS fly ash is also given. This list mentions the name of the six brick making units (Sun Hollow Bricks, Cheran Bricks, Sindhu FA Products, Sankar, Emerald FLAG Bricks, ERK Concrete, RM concrete) from whom Shri Karthikeyan Transports has sourced the fly ash, and supplied to appellant. Similarly, SIAR Traders, Salem is listed at Sl.No.18 in this document. These documents which are reply to RTI supports the contentions of the appellant.
After appreciation of the facts, evidence established by documents, the appellant has been able to successfully establish that the alleged bogus quantity of fly ash was actually received in their factory and used in the manufacture of final product. In such circumstances, the allegation that appellant has contravened the condition of the notification 6/2002 dt. 1.3.2002 in as much as their final products did not contain 25% of fly ash is without any factual basis. The demand therefore cannot sustain and requires to be set aside - the allegation of bogus quantity is factually wrong, the penalty imposed on the appellant in E/40390/2021, NEC alleging that NEC abetted / connived in creating bogus receipts also cannot sustain and requires to be set aside. The issue on merits is found in favour of appellants and against the department.
Time Limitation - HELD THAT:- The entire case is set up on the basis of facts. It is alleged that appellant accounted bogus quantity with intention to wrongly avail the exemption benefit of the notification. As it is already held that the issue on merits that the quantity accounted is not bogus and that the appellant is eligible for benefit of exemption of notification 6/2002 dt.1.3.2002, there are no ground to hold that the appellant has suppressed facts with intent to evade payment of duty. The issue on limitation is also answered in favour of appellant and against the department.
The impugned order is set aside - Appeal allowed.
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2023 (11) TMI 884
Classification of goods - Salmonella Antigens - classifiable under Central Excise Tariff 3822 or 3002? - HELD THAT:- The issue involved in the present case has been settled in the favour of the appellant’s own case RECKON DIAGNOSTICS P LTD VERSUS C.C.E. & S.T. -VADODARA-I [2023 (11) TMI 718 - CESTAT AHMEDABAD], wherein the Tribunal has held that As the issue of the classification of appellant’s product has already been decided under CETH 3002 therefore, the present appeal filed by the appellant is allowed.
The impugned order is set aside - Appeals are allowed.
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2023 (11) TMI 826
CENVAT Credit - freight charges incurred for outward transportation of their finished products from the factory to the place of dealers and buyers - place of removal - period January 2007 to February 2008 - HELD THAT:- The issues stands covered in the appellant’s own case [2022 (5) TMI 904 - CESTAT CHENNAI]. The Tribunal has analysed the definition of input service prior to 1/4/2008 and after held that We make it clear that we have set aside the orders of the Tribunal as well as the Adjudicating Authority with regard to disallowance of Cenvat credit in respect of GTA services.
The demand cannot sustain and requires to be set aside - the impugned order is set aside - Appeal allowed.
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2023 (11) TMI 825
Non-payment of service tax - rent received as per the agreement for renting of the Fit Outs - HELD THAT:- It has to be noted that the demand for the consideration received on Fit Outs is made under the category of “renting of immovable property service”. Fit Outs cannot be considered as an immovable property. Further, it is also stated by the appellant that they have discharged applicable Sales Tax / VAT on the consideration received for renting out the said Fit Outs, holding the same as ‘transfer of right to use the goods’ (deemed sale).
The very same issue was considered by the Tribunal in the case of M/s. Ascendas IT Park (Chennai) Ltd. [2018 (1) TMI 827 - CESTAT CHENNAI], where it was held that From the facts explained, it is seen that these are movable items (chairs, tables and other items) which are handed over to the tenants for use by them. The appellant has paid VAT on the consideration received in the said transaction for transfer of right to use the goods. Payment of VAT is not disputed by the department. VAT and Service Tax being exclusive, further demand of service tax on the very same consideration received for transfer or right to use of goods cannot sustain.
The demand cannot sustain and requires to be set aside. In the result, the impugned orders are set aside - Appeal allowed.
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2023 (11) TMI 824
Classification of goods - edible oil (palmolein) - classifiable under subheading 15119090 or not - inordinate delay in drawal of samples - HELD THAT:- The learned Commissioner (A) following the principle of law laid in the RUCHI SOYA INDUSTRIES LTD. VERSUS COMMISSIONER OF CUSTOMS, MANGALORE [2005 (8) TMI 228 - CESTAT, BANGALORE] has observed that since there was inordinate delay in drawal of samples and receiving the test reports, the carotene level of vegetable oils reduces with passage of time, hence, the test reports of the Customs Revenue Laboratory cannot be relied and accordingly, he has confirmed acceptance of the test report of the goods at the load port by the adjudicating authority. Accordingly, he has upheld the order of the adjudicating authority.
There are no discrepancy in the said reasoning of the learned Commissioner (A) - Revenue’s appeals are being devoid of merit, accordingly dismissed.
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2023 (11) TMI 818
Time limitation - non-inclusion of entire input stock for the purpose of expunging the credit during transition from duty paying unit to the SSI unit - HELD THAT:- The appellant had disclosed the purchase of raw materials after 15.3.2007 in their excise records and also in the cenvat registers. It is submitted by the learned counsel that they had not included this in the closing stock on the understanding that the only the credit availed by them upto the last clearance is to be expunged. On being pointed out by department they have immediately accepted the demand and paid the amount at the time of filing the appeal. Taking note of the fact that the appellant is not contesting this amount admitted by them and as these invoices have been reflected in their ER.1 returns, it is found that it is a bonafide mistake on the part of the appellant that these invoices were not included in the closing stock.
The demand raised beyond the normal period cannot sustain. Assessee succeeds on the ground of limitation. However, as the liability to the tune of Rs.1,38,141/- is admitted and not contested in this appeal, the same is upheld along with interest.
The impugned order is modified to the extent of upholding the demand of Rs.1,38,441/- along with interest and setting aside the remaining demand interest and penalties. The penalty in regard to Rs.1,38,441/- is also set aside - Appeal allowed in part.
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2023 (11) TMI 748
Clandestine removal - undeclared production - unexplained income of Rs.1.00 crore - onus/burden to prove - HELD THAT:- On perusal of the show cause notice as well as Order-in-original that the impugned order is based only on the ground that there was unexplained income of Rs.1.00 crore which was detected by the income tax authorities and the Department has presumed that aforesaid income must have been the result of undeclared production and clandestine removal of excisable goods. Further, it is noted that if the Department has raised duty demand, then the onus of proving excess production and clandestine removal of excisable goods is on the Department.
It is also noted that the impugned order is prima facie based on assumption and presumption and there is no evidence which may suggest excess production or clandestine removal of excisable goods by the appellant.
It is found that in the case of M/S. OSCAR REMEDIES PVT. LIMITED, SHRI NAVDEEP DHINGRA, DIRECTOR VERSUS COMMISSIONER OF CENTRAL EXCISE & ST, PANCHKULA [2017 (7) TMI 404 - CESTAT CHANDIGARH], this Tribunal on identical facts relying upon the decision of VARDHMAN CHEMTECH LIMITED VERSUS CCE, CHANDIGARH [2016 (7) TMI 1320 - CESTAT, CHANDIGARH] has allowed the appeal of the appellant and set-aside the demand.
The impugned order is not sustainable in law and the same are set-aside - Appeal allowed.
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2023 (11) TMI 721
CENVAT Credit - Capital goods and inputs used for Capital goods - Refractory material - invocation of extended period of limitation - suppression of facts or not - HELD THAT:- From the Order passed by the Adjudicating Authority, it is observed that he has been guided by the Larger Bench decision in the case of Vandana Global [2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)]. The Appellant has provided proper Chartered Engineer’s Certificate clearly specifying the usage of Steel items in various capital goods. The Tribunals/Courts have been consistently holding that when the capital goods that are embedded are required for manufacture of the finished goods, Cenvat Credit cannot be denied.
Reliance can be placed in CCE, Trichy Vs India Cements Ltd. 2004 (175) ELT-476 [2004 (5) TMI 441 - CESTAT, CHENNAI] where it was held that the credit would be admissible on Rebar coils, CTD bars, TOR Steel, joists and cement.
Refractory items - HELD THAT:- They are required for maintenance of boiler and furnaces without which finished goods cannot be manufactured, hence the Cenvat Credit on the same cannot be denied.
Extended period of limitation - suppression of facts or not - HELD THAT:- In the present case, no evidence has been brought in by the Revenue to fortify their allegation of suppression on the part of the Appellant. The Appellant has filed their Monthly Returns properly declaring the Cenvat taken by them on various counts. The Tribunals have been consistently holding that when the issue is that of interpretation, suppression clause cannot be invoked against the assesse. Therefore, the assesse could be having bonafide belief that they are eligible for Cenvat Credit. Accordingly, the demand in respect of the extended period is required to be set aside on account of time bar also.
Appeal allowed both on merits as well as on account of limitation also.
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2023 (11) TMI 720
Lack of Jurisdiction - principle of comity and doctrine of impossibility - Wrongful availment of CENVAT Credit of service tax paid at Puducherry - credit is attributable to trading activity done at Bangalore unit of the company - nexus of input services to manufacturing activity.
The first point argued by the Ld. Counsel for appellant is that Show cause notices issued to the appellant- manufacturing unit at Puducherry is without jurisdiction - HELD THAT:- The Head office situated at Bangalore is registered as ISD and thus distributed the credit to the appellant in terms of Rule 7 of CCR, 2004 - Rule 9 speaks about the documents on which credit can be availed. The main contention of the appellant is that as the Head Office at Bangalore has availed credit and distributed the same to the appellant- manufacturing unit at Puducherry, the excise formation at Puducherry lacks jurisdiction to allege wrong availment of credit, issue notice of demand to disallow the credit or recover the same. In other words, it is argued that the Puducherry unit being the unit which has received the credit which was distributed by Bangalore unit, the eligibility of credit cannot be questioned at the end of recipient unit.
From Rule 14, it is clear that the wrongly availed credit is to be recovered from the manufacturer/ service provider. Rule 14 uses the words ‘taken and utilised wrongly’. Later, in 2008, the word ‘and’ was substituted with ‘or’. It has to be stated that, whether be it ‘AND’ or ‘OR’ the demand can be made against the appellant-manufacturer who has utilised the credit for payment of duty - In the present case, the Bangalore unit is not able to utilise the huge credit. It is only the manufacturing unit that can utilise the credit for payment of duty. For this reason, we have to say that the Show Cause Notice issued to the appellant- Puducherry unit is well within the jurisdiction.
The method of ISD registration and distribution between several units of a corporate body is a facilitation by which the availment of credit is made convenient when there are more than one unit. The tax paid on input services is availed as credit by the Bangalore unit (ISD). Usually, the invoices are raised in favour of Head office by the service provider even though the services may be consumed in other units. The ISD unit therefore avails the credit on behalf of the other units and then distributes it as per provisions of law - the appellant manufacturing unit who has received the credit distributed by the ISD unit cannot be said to be a recipient unit in literal sense so as to oust the jurisdiction of the formations at Puducherry - the issue on jurisdiction is answered in favour of Revenue and against assesse.
The credit availed on various input services prior to 01.04.2011 have been denied alleging that there is no nexus for input services with the manufacturing activity. Prior to 01.04.2011 all these services the definition of input services had a wide ambit as it contained the words ‘activities relating to business’. So for the period prior to 01.04.2011 are availed for activities relating to the credit availed is eligible as these services are business of the manufacturer. For the period after 01.04.2011 it can be seen that in the appellant’s own case the credit availed on all services, except Housekeeping services and AMC/warranty services have been allowed. The department having allowed the credit for certain period cannot deny credit for other subsequent/different periods.
Credit is availed on exempted services (trading) - HELD THAT:- In the present case, the trading activity takes place mainly at Head office at Bangalore. The credit availed in respect of trading at Bangalore unit is only Rs.9,49,60,261/- on the total turnover. There is a huge balance of unavailed credit or undistributed credit lying in stock with the Bangalore unit. This being so, it cannot be alleged that the credit in respect of trading has been distributed. The Departmnet has not been able to explain as to how Rs.1,73,60558/- pertains to trading when the credit has been distributed to the appellant unit. It is settled law that it is not required that there should be one to one correlation for availment of credit or utilisation. The same would apply for distribution of credit by ISD also. This being so, the explanation put forward by appellant with their consistent plea is tenable and acceptable.
The denial of Cenvat Credit for different periods and the demand raised thereon cannot sustain. The issue on merits is answered in favour of assessee and against the Revenue - Appeal allowed.
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2023 (11) TMI 719
CENVAT Credit - input service - services availed by the appellant with respect to renovation, repairs and modernizations of its plant and machinery - case of the department is that the said services relate to industrial and commercial construction services/work contract services pertaining to civil works and would not be ‘input services’ as defined under rule 2(1) of the CENVAT Credit Rules, 2004 - HELD THAT:- It would be seen from the definition of ‘input service’ in rule 2(l) of the Rules that while the ‘means’ part of the definition has continued to remain the same pre amendment or post amendment, but the ‘includes’ part and the ‘excludes’ part of the definition of ‘input service’ have underdone changes. Though ‘services used in relation to setting up’ of a factory was included in the inclusive part of the definition of ‘input services’ prior to 01.04.2011 but it was deleted w.e.f. 01.04.2011. The ‘excludes’ part in the definition of ‘input service’ was added w.e.f. 01.04.2011 and it provided that services specified in certain sub-clauses of clause (105) of section 65 of the Finance Act in so far as they were used for construction of a building or a civil structure or a part thereof would be excluded w.e.f. 01.04.2011. It is also seen that the ‘excludes’ part of the definition of ‘input service’ was further amended w.e.f. 01.07.2012.
When input service under rule 2(l) includes any service used in relation to modernization, renovation or repairs of factory either prior to 01.04.2011 or from 01.04.2011 upto 30.06.2012 or w.e.f 01.07.2012, the appellant would be entitled to avail CENVAT credit of the input service received in relation to renovation or repairs of factory and merely because w.e.f. 01.04.2011 the construction of a building or a civil structure or a part thereof has been excluded from the definition of input service would not mean that any service used in relation to renovation or repairs of factory would stand excluded from the definition of input service. The exclusion part would cover constructions at the time of setting up of the plant and would not include the repairs or renovation works.
This issue stands decided in favour of the appellant by the Tribunal in M/s. Jai Balaji Industries Ltd. vs. Commissioner of Central Excise, Customs & Service Tax, Durgapur [2022 (8) TMI 468 - CESTAT KOLKATA] where it was held that the Appellants have correctly taken credit of service tax paid/borne in respect of all services which were used for the Coke Oven Project as part of the modernization/renovation plan of the existing plant/factory.
In view of the decision of the Tribunal rendered in Jai Balaji Industries, the order passed by the Commissioner (Appeals) denying the CENVAT credit to the appellant merely for the reason that though the services that had been rendered were renovation or repair services which the appellant had received would be covered by the ‘includes’ part of the definition but the appellant cannot avail CENVAT credit because of the exclusion clause cannot be sustained.
The order dated 26.08.2020 passed by the Commissioner (Appeals) is, accordingly, set aside - appeal allowed.
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