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Central Excise - Case Laws
Showing 141 to 160 of 82128 Records
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2025 (5) TMI 1223
Activities amounting to manufacture - activities of packing, repacking, labelling, relabelling, etc., on spare parts traded - HELD THAT:- The adjudicating authority has held that 'The fact that the noticee had claimed in the NIT that they are manufacturer and the fact that the noticee are responsible for the warranty of the spares in case these gets rejected by the buyers cannot be a reason to conclude that the notice would be covered by the definition of manufacturer under the Central Excise Act, 1944 in view of the fact that the original manufacturer of these spares clears these goods on payment of the Central Excise duty In this regard reference may be drawn to the observation of Hon'ble CESTAT in the case of ASKA EQUIPMENT PVT. LTD. vs. CCE [2006 (6) TMI 27 - CESTAT, MUMBAI] where it was held that - Fact that appellant/trader had claimed before Government companies, who are buyers of lower that they manufacture the same or that they give warranty, cannot be a reason to hold them manufacturer under section 2(f) of the Central Excise Act, 1944-Placing a sticker on tower showing brand name of appellants will not render appellants as a manufacturer of tower.'
The respondent is not affixing any price or undertaking packing/repacking of the said goods. These goods are coming in their original packing and labelling. The respondent is putting all these parts in a big box, for proper transportation of the same and no testing has been done by the respondent. Thus, it is clear that these goods have been sold in their original packing.
With regard to MRP, the respondent, in view of tenders raised by buyers, put their quotations and on those quoted values, the respondent is clearing the goods, without changing the MRP affixed by the manufacturers - The fact is also noted that most of the items are duty-paid items and no CENVAT Credit has been availed by the respondent.
Conclusion - It cannot be held that the activity carried out by the respondent with regard to the bought-out items amounts to manufacture in terms of Section 2(f)(iii) of the Central Excise Act, 1944.
There are no infirmity in the impugned order - the appeal filed by the Revenue is dismissed.
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2025 (5) TMI 1219
Recovery of CENVAT Credit with penalty - payment of duty under Sugar Cess Act, 1982 can be claimed as Cenvat Credit when the Cenvat Credit Rules does not provide payment of cess under the Sugar Cess Act, 1982 as not being eligible under Rule 3 of the said Rules or not - Sugar Cess imposed under the provisions of the Cess Act can assume the characteristic of the Central Excise Duty or not - non-consideration of provisions of sub-section (4) of Section 3 of the Cess Act, which is for the purpose of levy and collection of cess relating to Sugar - cess paid under a different statutory provisions which is not related or connected with the duties payable under the Central Excise Act can qualify as a credit component under the Cenvat Excise Act and as such, since the Sugar Cess does not qualify the eligibility criteria fixed in the said Rules or not.
HELD THAT:- The Hon’ble Court after taking note of the above submissions proceeded to first take up for consideration the question as to whether the cess paid under the Act is a fee or tax. After elaborate discussions and after referring to several decisions of the Hon’ble Supreme Court in Shree Renuka Sugars Ltd. [2019 (2) TMI 1242 - SC ORDER] including the Constitutional Bench of the Hon’ble Supreme Court it was held that the traditional view that there must be actual quid pro quo for fee has undergone a sea change in the recent years. The tax recovered by a public authority invariably goes into the Consolidated Fund, which ultimately is utilized for public purposes; whereas a cess levied by way of fee is not intended to be and does not become a part of the Consolidated Fund. Thereafter, the Court took into consideration Article 266 ad 270 of the Constitution of India and with the following reasoning it was held that the sugar cess paid under the Act is tax and to be precise it is duty of excise and not fee.
The other contention which was raised by the revenue in Shree Renuka Sugars Ltd. which is also argued before us is that to be eligible for Cenvat credit, it is necessary that the Act should have been mentioned in Rule 3 of the Cenvat Credit Rules. This issue was answered by the Court after taking into consideration Section 3 of the Central Excise Act, 1944 which is the charging section and the other provisions of the Act and the Cenvat Credit Rules and it was held that excise duty is leviable under the Central Excise Act and also the Sugar Cess Act, 1982 - Ultimately, the Court held that Section 3 of the Act provides for levy and collection as a cess for the purpose of Sugar Development Fund Act, 1982, a duty of excise on all sugar produced by any sugar factory in India and, therefore, the cess leviable and collected is at the stage of production of sugar in the sugar factory. Because it is a tax on production, it is described as a duty of excise.
Conclusion - i) The sugar cess levied under the Sugar Cess Act, 1982, is a duty of excise and not a fee, as its proceeds are credited to the Consolidated Fund of India and utilized for public purposes, negating the traditional quid pro quo characteristic of fees. ii) The cess paid under the Sugar Cess Act is eligible for CENVAT credit under the CENVAT Credit Rules, 2004, and the assessee is entitled to refund claims arising therefrom.
The appeal filed by the revenue is dismissed and the substantial questions of law are answered against the revenue.
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2025 (5) TMI 1218
Short payment of tax by following realization basis as against the accrual basis prescribed under the POT Rules by comparing the “gross amount billed and “gross amount received” as reflected in the ST 3 returns of the Appellant - short-payment of tax based on an improper comparison of select GL Codes appearing in the Trial Balance of the Appellant vis-à-vis the income reflected in the ST 3 returns for the relevant period.
Short payment of tax by following realization basis as against the accrual basis prescribed under the POT Rules by comparing the “gross amount billed and “gross amount received” as reflected in the ST 3 returns of the Appellant - HELD THAT:- On going through the finding recorded by the learned Tribunal, it is found that the learned Tribunal has examined the factual position and observed that the adjudicating authority has not given any finding contrary to the reconciliation report submitted by the assessee. Furthermore, the Department has not produced any other evidence to substantiate short payment of further demand on this count and only a sum of Rs. 18,128/- needs to be confirmed on this score which is the demand of service tax payable under the category ‘Business Auxiliary Service’ and the remaining demand was set aside.
On perusal of the adjudication order, it is found that the assessee was issued a show cause notice for which the assessee submitted their reply and the adjudicating authority disagreed in arriving at a taxable value of the issue and to remove the same the adjudicating authority decided to appoint a registered chartered accountant under Section 72A of the Finance Act, 1994 to justify the veracity of the allegation. Accordingly, a chartered accountant was appointed and the terms of reference were specified in the order passed by the adjudicating authority.
Short payment of tax based on improper comparison of select G.L. Codes appearing in the Trial Balance of the assessee vis-à-vis the income reflected in the ST 3 returns for the relevant period - HELD THAT:- The learned Tribunal on this issue observed that the assessee has submitted a detailed reconciliation report duly certified by the chartered accountant along with the reply to the show cause notice and upon perusal of the report the Tribunal was satisfied that there was no difference in the income reflected in the Trial Balance and the income reflected in the ST 3 returns and also pointed out that the adjudicating authority has not given any finding on the return in the order of adjudication. This aspect also is entirely factual and no substantial question of law arises for consideration. Therefore, the contention of the revenue that the order passed by the learned Tribunal suffers from perversity and does not fit for acceptance.
In the facts and circumstances of the case on hand, there was no material brought on record by the adjudicating authority to establish that the assessee had made willful mis-statement and suppressed the material facts with an intent to evade payment of tax.
Conclusion - i) The adjudicating authority failed to discharge its burden of proof regarding short payment of service tax on both issues (no.3 and no.4). The Tribunal's reliance on the reconciliation report certified by the assessee's Chartered Accountant was justified due to the absence of contrary evidence or reasoned findings by the adjudicating authority, including disregard of the Special Audit Report without explanation. ii) The adjudicating authority's failure to examine and give reasons on the Special Audit Report amounted to a breach of procedural fairness and natural justice.
Thus, no question of law much less substantial question of law arises for consideration in this appeal - appeal dismissed.
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2025 (5) TMI 1217
Clandestine removal - Central Excise duty evasion of Polyester Texturised Yarn (PTY), which was manufactured and cleared by M/s Bhagyashali Textile Mills (P) Limited through the warehouse of the appellant, by misdeclaration and undervaluation - imposition of penalty under Rule 209A of the Central Excise Rules, 2004 - period of dispute relates to financial years 1997-98, 1998-99 - HELD THAT:- From plain reading of the legal provisions under the Central Excise Act, 1944 and the Central Excise Rules, 1944, it is clear that a penalty may be imposed on any person under Rule 209A ibid, if it is established that in relation to ‘excisable goods’ which are liable to confiscation under Rule 173Q ibid or Rule 209A ibid, such a person had knowledge or had reason to believe, that any act or omission to do an act by him, would enable violation of Central Excise statute, and would lead to confiscation of such excisable goods. In fact, the appellant is the warehouse operator, and had actually stored the excisable goods manufactured by BTMPL before its delivery to the customers of BTMPL, on the basis of Delivery Orders and Central Excise Invoices issued by BTMPL.
Thus, it is not the case of the Revenue, that in the factual matrix of the present case, that the impugned excisable goods were clandestinely removed by the appellant, or that the appellant is in any way concerned with preparation of documents for undervaluation or misdeclaration of the excisable goods alleged to have been removed clandestinely without payment of appropriate central excise duty.
The appellant held no responsibility for the warehoused goods, and in the event of theft or fire, it is the responsibility of the manufacturer BTMPL, and accordingly the goods were insured by themselves. Upon receipt of the PTY/goods from BTMPL for warehousing/storage in their godowns, they use to enter the receipt of materials in general ledger book and prepare Goods Receipt Notes (GRNs), copies of which were given to the manufacturer/BTMPL.
The appellant was unaware of the exact quality/description of the goods and followed the numbers printed/written on the bags/carton by BTMPL for re-cognising the identity of the goods and for its delivery, in providing warehousing and storage facility to BTMPL. Further, it is found that there is no specific finding given in the impugned order, for proving that the appellant having been done an act or omitted to have done certain act, or having a reasonable belief or understanding that such action done or omitted to have been done by him would lead to confiscation of impugned goods. From the above factual position, the penalty under Section 209A ibid cannot be imposed on the appellant.
The SCN did not propose for confiscation of the seized goods under panchanama dated 07.07.1999, which was subsequently released provisionally upon execution of bond and bank guarantee by BTMPL, and the learned Commissioner also did not confiscate the impugned goods. In the absence of confiscation of goods in the impugned order under Rule 173Q ibid or Rule 209 ibid, which are alleged to have been undervalued and clandestinely removed, it is not feasible to fasten the liability on the appellant on the ground that they had knowledge of such goods being liable to confiscation, when those were stored in their warehouse on behalf of BTMPL - imposition of penalty under Rule 209A ibid without providing such an important ingredient of the existence of knowledge on the part of the appellant or reasonable ground to believe that their act of storage/warehousing would lead to confiscation of impugned goods does not have the sanction of law and thus, to this extent the impugned order imposing penalty under Rule 209A of the Central Excise Rules, 1944 on the appellant, is not legally sustainable.
Further, in the case R.C.Jain [2014 (12) TMI 1223 - CESTAT AHMEDABAD] the Co-ordinate Bench of this Tribunal have held that the penalty under Section 112(b) of the Customs Act, 1962 and Rule 209A of the Central Excise Rules, 1944 is not sustainable in the absence of establishing that the appellant was aware for forgery or fake nature.
It is found that in the case Nirmal Transports [2011 (1) TMI 758 - CESTAT, MUMBAI] the Coordinate Bench of this Tribunal have held that the penalty under Rule 209A of the Central Excise Rules, 1944 is not imposable on mere allegation and the act of aiding and abetting of the appellant is to be proved by the department.
The impugned order imposing penalty on the appellant under Rule 209A of the Central Excise Rules, 1944, is not legally sustainable.
Conclusion - i) Penalty under Rule 209A of the Central Excise Rules, 1944 cannot be imposed unless it is established that the person had knowledge or had reason to believe that the goods were liable to confiscation under the Act or Rules. ii) In the absence of confiscation of goods or evidence of knowledge or intent, imposition of penalty under Rule 209A is not legally sustainable. iii) Mere allegation or suspicion of aiding and abetting evasion without concrete evidence is insufficient for penalty.
The impugned order dated 31.12.2012 to the extent it had imposed penalty on the appellant is set aside and the appeal is allowed in favour of the appellant.
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2025 (5) TMI 1216
Benefit of concessional rate of excise duty under Notification No. 01/2011-C.E. dated 01.03.2011 and Notification No. 16/2012-C.E. dated 17.03.2012 - Bamboo Mat Corrugated Sheets - Bamboo Mat Ridge Caps - invocation of extended period of limitation - HELD THAT:- It is observed that concessional rate of duty @1% and 2% has been provided for the goods “Resin Bonded Bamboo Mat Board, with or without veneer in between” vide N/N. 01/2011-C.E. dated 01.03.2011 (Sl. No. 52) and N/N. 16/2012-C.E. dated 17.03.2012.
“Bamboo Mat Board”, “Bamboo Mat Corrugated Sheets” and “Bamboo Mat Ridge Caps” are all identical products and classifiable under the same heading of 4412 1000 of the Tariff. In this regard, it is observed that N/N. 01/2011-C.E. dated 01.03.2011 and Notification No. 16/2012-C.E. dated 17.03.2012 fixes the rate of duty for “Resin Bonded Bamboo Mat Board, with or without veneer in between” initially to 1% and later, to 2% and there is no separate Notification for Bamboo Mat Corrugated Sheets and Bamboo Mat Ridge Caps as the nature of these products are almost identical. The raw materials and the process of manufacture is also same for all the three products.
The “Bamboo Mat Corrugated Sheets” and “Bamboo Mat Ridge Caps” manufactured by the appellant are also required to be clubbed along with “Resin Bonded Bamboo Mat Board, with or without veneer in between”. Accordingly, all the three products manufactured by the appellant would be eligible for the benefit of concessional rate of duty as provided under N/N. 01/2011-C.E. dated 01.03.2011 and N/N. 16/2012-C.E. dated 17.03.2012. Thus, the demands confirmed in the impugned orders by denying the concessional rates of duty in respect of the two products namely “Bamboo Mat Corrugated Sheets” and “Bamboo Mat Ridge Caps" is legally not sustainable and hence we set aside the same.
Since the demand of Central excise duty is not sustainable, the question of demanding interest and imposing penalties does not arise.
Time limitation - Suppression of facts or not - HELD THAT:- It is observed that the various letters have been sent by the appellant to the Revenue and no information has been suppressed by them from the Department with the intent to evade payment of duty. Therefore, since the appellant was always in correspondence with the Department and have time and again sought clarification, we are of the view that there has been no suppression of facts on the part of the appellant in this case. Hence, the demand confirmed in the first Show Cause Notice dated 09.07.2015 by invocation for the extended period of limitation is not sustainable - the demands confirmed by invoking the extended period of limitation are not sustainable.
Conclusion - i) The benefit of concessional rate of duty provided under N/N. 01/2011-C.E. dated 01.03.2011 and N/N. 16/2012-C.E. dated 17.03.2012at the rates of 1% and 2% respectively are available to all the three products viz. “Bamboo Mat Board”, “Bamboo Mat Corrugated Sheets” and “Bamboo Mat Ridge Caps” during the periods under dispute. Hence, the demands confirmed in the impugned orders are not sustainable and accordingly, the same is set aside. ii) Since the demands against the appellant are not sustainable, the demand of interest and imposition of penalties thereon are also not sustainable and consequently, the same are set aside.
The impugned order set aside - appeal allowed.
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2025 (5) TMI 1128
Reversal of Cenvat credit availed on inputs and input services - appellants were admittedly clearing certain exempted goods along with certain dutiable goods from their factory or otherwise - applicability of Rule 6 of the Cenvat Credit Rules, 2004 - HELD THAT:- On going through the SCN dt.05.03.2010, we find that the appellants are primarily engaged in manufacture of sugar but are also manufacturing certain specialized products which are cleared to ISRO in terms of Notification No.64/95-CE, being an exemption notification. The department’s view is that since they have taken certain credit in respect of certain input services including services used by appellant for transportation of gas by pipeline used for generation of electricity and not maintained separate account, Rule 6(3) is invokable.
As per the provision of Rule 6(2), the appellants who are admittedly manufacturing both dutiable and exempted excisable goods were required to maintain separate record for receipt and use of input services. Apparently, the appellants have not been able to adduce any evidence that they have maintained any record for receipt and use of input services separately though they have claimed that they have not at all used the input services for manufacture of exempted goods. As per Rule 6(2), in the event of nonmaintenance, the appellants will have the right to choose any one of the options governed by Rule 6(3)(i), (ii) and (iii). In this case, though claimed but they are not able to establish that they have maintained separate account for receipt and use of input services even though admittedly they are engaged in manufacture of both dutiable and exempted goods.
As per the provisions of Rule 6(3) of CCR post 01.04.2008, there is a provision for payment of an amount equivalent to Cenvat credit attributable to inputs and input services used in or in relation to manufacture of exempted goods subject to condition and procedure specified in Rule 6(3A). Whereas, prior to 01.04.2008, there was no such provision except for in terms of retrospective amendment in 2010, which provided for specialized procedure under Rule 6(7) for payment of amount equivalent to the credit attributable to exempted goods along with 24% interest before a specified date - In this case, they have clearly not availed of the said provision and thus, in terms of the extant rules, when there was no provision for reversal of Cenvat credit attributable for period prior to 01.04.2008, as such, then the only option left was to pay an amount at the specified rate indicated in the respective SCNs. However, for the period post 01.04.2008, the option is to be chosen by the manufacturer and it cannot be imposed on him by Department. Further, even if the procedure under Rule 6(3A) has not been followed in full, they can work out the credit attributable to said exempted goods, if any.
The appellant’s reliance on the judgment of Hon’ble High Court in the case of Principal Commissioner, CGST, Ludhiana Vs Suraj Solvents & Vanaspati Industries [2023 (3) TMI 7 - PUNJAB AND HARYANA HIGH COURT], is distinguished as in that case the assessee could not apply because of pendency of proceedings in other forum, which is not the case here. Hence it is distinguished.
For the period prior to 01.04.2008, the appellant would be required to pay an amount as indicated in the respective SCNs. However, for the period post 01.04.2008, they will be at liberty to pay an amount equivalent to the Cenvat credit attributable to the exempted goods. In case no credit is found attributable to the exempted goods, then no amount shall be liable to be payable. As far as the issue of limitation is concerned, it is found that the Adjudicating Authority has considered their submission and has held that in the facts of the case, it is rightly invokable. It is found that in this issue of reversal of credit, options under Rule 6, etc., were subject matter of differing interpretations during material time and even retrospective amendment was made to allow certain relief for period prior to 2008.
The issue is interpretative in nature and there is no other strong and cogent ground for invoking extended period, hence, extended period cannot be invoked.
Conclusion - i) The manufacturers engaged in production of both dutiable and exempted goods must maintain separate accounts for inputs and input services as per Rule 6(2). ii) Failure to maintain such records invokes Rule 6(3) requiring reversal or payment of proportionate credit. iii) For periods prior to 01.04.2008, statutory provisions did not allow reversal of credit, limiting recovery to specified amounts. iv) Post 01.04.2008, manufacturers have the option to pay proportionate credit attributable to exempted goods, which cannot be unilaterally imposed by the Department. v) Extended period for demand recovery was not justified given the interpretative nature of the issue and vi) Penalty cannot be imposed without evidence of fraudulent or willful conduct.
Appeal is partly allowed by way of remand.
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2025 (5) TMI 1127
Refund of CENVAT credit of Countervailing Duty [CVD] and Special Additional Duty [SAD] paid by the appellant - non-fulfilment of export obligation in respect of Advance Authorisation - HELD THAT:- It is clear from the decision of the Tribunal in Shakti Pumps [2024 (7) TMI 541 - CESTAT NEW DELHI] that Shakti Pumps was held entitled to claim refund of CENVAT credit in cash under the provision of section 142(3) of the CGST Act even though Shakti Pumps had paid CVD and SAD post implementation of the CGST Act and in terms of the 2004 Credit Rules, as applicable prior to 01.07.2017, Shakti Pumps was entitled to claim CENVAT credit of CVD and SAD paid on imports. The appellant would, therefore, be entitled to refund in cash CENVAT credit of the amount of CVD and SAD paid after 01.07.2017.
It would be seen that the Jharkhand High Court after acknowledging that under section 142(3) of the CGST Act a refund application can be filed with respect to any amount relating to CENVAT credit paid under the existing law and it has to be disposed of in accordance with the provisions of the existing law, the refund was not granted for the reason that the writ petitioner had not claimed transactional credit, but had claimed the amount of service tax on ‘port service’ as credit in the ST-3 returns to which it was admittedly not entitled to as it was an assessee under service tax only on reverse charge mechanism and admittedly the “port services” availed by the writ petitioner was not covered under reverse charge mechanism. Thus, it was found as a fact that the writ petitioner had not only illegally taken credit of service tax on “port services” as credit in the ST-3 returns, but had filed an application for refund of the same under section 142(3) of the CGST Act, which was not permissible in law. This decision of the Jharkhand High Court in Rungta Mines [2022 (2) TMI 934 - JHARKHAND HIGH COURT] would, therefore, not come to the aid of the department.
The decision of the Larger Bench of the Tribunal in Collector of Central Excise, Chandigarh vs. Kashmir Conductors [1997 (7) TMI 186 - CEGAT, COURT NO. II, NEW DELHI - LB] relied upon by the learned authorized representative appearing for the department is also not applicable to the facts of the present case since it deals with time limit for filing refund claim. In the instant case, the refund claim has not been rejected as being barred by time under section 11B of the Central Excise Act, 1944.
Conclusion - The appellant would be entitled to refund of CENVAT credit in cash under the provisions of section 142(3) of the CGST Act of the amount of CVD and SAD paid after the coming into force of the CGST Act on 01.07.2017.
Appeal allowed.
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2025 (5) TMI 1126
Time limitation - availment of CENVAT Credit on Customs Education Cess and Customs Secondary & Higher Education Cess paid on imported inputs and capital goods under the CENVAT Credit Rules, 2004 - HELD THAT:- The availment of irregular availment of CENVAT Credit on Customs Education Cess and Customs Secondary & Higher Education Cess was noticed by the Department only during the course of CERA audit conducted in the month of December, 2013. The appellant was subsequently asked to submit evidence regarding admissibility of the said credit availed by them vide letters dated 20.12.2013, 20.01.2014, 30.01.2014, 10.02.2014, 25.02.2014 and 11.03.2014. However, the appellant has not submitted any reply to the above said communications issued by the Departmental authorities. From the above, it is found that the appellant had not provided any evidence to the Department in support of admissibility of the said credit availed by them as asked for by way of several letters issued to them.
The Department has calculated the credit availed by the appellant on Customs Education Cess and Secondary & Higher Education Cess on the imported inputs and imported capital goods and wanted to verify the correctness of such calculation from the appellant by means of various communications. However, the appellant has not cooperated with the Department or submitted any evidence to that effect. Thus, it is clear that the delay in issuing the Notice was only on account of non-cooperation of the appellant in producing the required documents - the Revenue has arrived at the irregular credit availed by the appellant on the basis of the available documents, in the absence of any evidence being submitted by the appellant in support of their claim.
The irregular availment of CENVAT Credit on Customs Education Cess and Customs Secondary & Higher Education Cess in a combined manner and not showing it separately in the returns clearly establishes that there was suppression of facts on the part of the appellant, with an intent to avail the said irregular credit. Accordingly, the demand for recovery of irregularly availed credit from the appellant by invoking the extended period of limitation is sustainable in the present case.
Penalty - HELD THAT:- Since suppression of facts with intent to avail irregular credit stands established in this case, the appellant is required to be penalized. Consequently, the penalties imposed on the appellant are upheld.
Conclusion - Since the Appellant had intentionally not mentioned the availment of CENVAT Credit on Customs Education Cess and Customs Secondary & Higher Education Cess in the Returns filed by them, it was not possible for the Revenue to know about the irregular availment of credit. Hence, suppression of facts with intent to avail irregular CENVAT Credit on the part of the Appellant stands clearly established in this case. Accordingly, in these facts and circumstances, invocation of the extended period of limitation and imposition of penalty are justified.
There are no infirmity in the impugned order - appeal dismissed.
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2025 (5) TMI 1017
Refund claim - Area Based Exemption - refund amount should be computed on the basis of total duty paid (from both PLA and CENVAT credit) collectively for all products falling under Serial No.16 of Notification No. 33/2008-CE or not - no appeal would lie in view of the issue already having being decided by Commissioner (Appeals) by order dated 25.03.2009 which has achieved finality - HELD THAT:- The adjudicating authority has sanctioned the refund to the petitioner for subsequent period taking into consideration the total duty paid in PLA and total duty paid utilising Cenvat Credit together for arriving at percentage on all the products together. The department being aggrieved has challenged the same before the Commissioner (Appeals) though no appeal would lie in view of the issue already having being decided by Commissioner (Appeals) by order dated 25.03.2009 which has achieved finality. Therefore, the action of the department to challenge the refund order before the Commissioner (Appeals) was an exercise in futility.
Above reasons given by respondent no.2 is required to be deprecated by all means in view of the fact that respondent no.2 could not have taken a different view than what was taken by his predecessor in order dated 25.03.2009. Respondent no.2 being Commissioner (Appeals) could not have differed with his coordinate rank Commissioner (Appeals) who was his predecessor by observing that the said appellate order of the predecessor not being an order from higher authority is not binding precedent for successor. Such an opinion of the Commissioner (Appeals) is contrary to the judicial discipline as any order passed by the same ranking officer is binding upon the successor when the said order of his predecessor has achieved finality.
Conclusion - i) The Commissioner (Appeals) order dated 25.03.2009 in favor of the petitioner is final and binding on the department and all authorities of equal rank, including respondent no.2. ii) The petitioner is justified in invoking writ jurisdiction to challenge the impugned order which violated binding precedent and judicial discipline.
The impugned order passed by Commissioner (Appeals) dated 18/19.5.2023 is hereby quashed and set aside and the order granting refund to the petitioner is hereby restored - petition allowed.
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2025 (5) TMI 1016
Non-submission of re-warehousing certificate in respect of certain clearances made by the Appellant to EOUs and SEZs - benefit of N/N. 22/2003-CE and 53/2003-Cus (NT) and related circulars - HELD THAT:- The entire section/unit dealing with 100% EOU/SEZ matters was closed by the Customs department in its office at New Customs House, Mumbai and the jurisdiction of the Commissioner had travelled into the hands of multiple Commissioners in the meantime for which no document was traceable from the department side and surprisingly Appellant who is contesting to get necessary relief had refused to produce documents concerning proof of receipt of goods by the consignee, as reveal from para 17. Therefore, neither the department has any right to raise a demand in the absence of any documentary proof to substantiate such demand nor the Appellant could be absolved of its liability since it refused to cooperate in the adjudication process, in furnishing proof of delivery of goods to the customers.
However, having regard to the fact that there was specific direction given by this Tribunal in its order dated 13.03.2023 that Officer at the consignee’s end would be in a better position to confirm the receipt of goods or otherwise available their own record as well as records of the consignee’s and as consignee had not been examined or contacted to furnish the required proof of receipt of goods by them, that would have met the requirement of para 3b of Circular No. 579/16/2001-CX dated 26.06.2001, the demand for non-furnishing of proof of re-warehousing certificate alone can’t form the basis to confirm the said demand.
Conclusion - i) The appellant did not comply with the obligation to produce re-warehousing certificates but also did not cooperate in submitting collateral evidence. ii) The department failed to verify receipt of goods from consignee offices despite attempts. iii) The demand for duty based solely on non-submission of re-warehousing certificates was unsustainable.
The order passed by the Commissioner of Central Tax, Raigarh (Appeals) vide Order-in-Appeal No. NA/96/RGD APP/2021-22 dated 05.07.2021 is hereby set aside - Appeal allowed.
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2025 (5) TMI 1015
Refund of Central Value Added Tax (CVD) and Special Additional Duty (SAD) under the transitional provisions of the CGST Act, 2017 in view of the fact of non-availability of cenvat credit post 01.07.2017 - HELD THAT:- The appellant was eligible to take cenvat credit of CVD and SAD paid by them. However, since the payments were made after 01.07.2017, they were not able to take cenvat credit of the same. It is found that the transitional provisions under Section 142 of CGST Act, 2017 have made provisions for such contingencies. Sub-section (3) of Section 142 ibid provides for cash refund of such cenvat credit subject to the provisions of sub-section (2) of Section 11B of Central Excise Act, 1944.
On going through the provisions of sub-section (2), it is clear that the said sub-section (2) deals with unjust enrichment. It provides that if the incidence of tax has been borne by the appellant, then the appellant is eligible for refund and if the incidence of such tax is passed on by the appellant to any other person, then such amount shall be credited to Consumer Welfare Fund. In the present case the appellant has paid CVD and SAD and, therefore, the incidence is not passed on to anybody and, therefore, they are fulfilling the requirement of the provisions of sub-section (2) of Section 11B of Central Excise Act, 1944. Thus the appellant is eligible for cash refund of Rs.12,84,696/- Rs.6,28,923/- and Rs.2,25,780/-.
Conclusion - The appellant has paid CVD and SAD and, therefore, the incidence is not passed on to anybody and, therefore, they are fulfilling the requirement of the provisions of sub-section (2) of Section 11B of Central Excise Act, 1944.
Appeal allowed.
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2025 (5) TMI 1014
Entitlement to claim the benefit of Entry No. 1A of Notification No. 4/2007-CE dated 1.3.2007 for cement cleared in packaged form to institutional/industrial consumers, despite affixation of retail sale price (RSP) on the packages - liability to pay duty under Entry No. 1C of the said notification, which applies to cement cleared in unpackaged form, for sales to non-trade parties (industrial/institutional buyers) - HELD THAT:- As apparent from Entry No. 1A, the following conditions are required to be met with. (i) All goods (cement herein) is to be cleared in packaged form. (ii) The retail price is not exceeding Rs.190 per 50 kg bag or not exceeding Rs. 3800 per tonne in which case duty at the rate of 350 per tone is to be paid. (iii) The retail price is exceeding 190 per 50 kg but is not exceeding Rs. 250 per kg. Similarly, the price is not exceeding Rs.5,000/- per tonne in which case duty at the rate of 12% of retail sale price is to be paid. The another clarity as is apparent from the said notification is that the notification as amended during the relevant period, is silent about any distinction between trade (consumer) and non-trade (industrial/institutional buyers) parties as has been raised in the impugned show cause notice.
From these admitted facts it stands clear that once the appellant was not selling goods to the ultimate consumer but to DGS&D who had to supply it further to the actual consumers, it becomes clear from the Explanation (2) of the Notification No. 4/2007 that irrespective the cement was cleared in packaged form RSP was not required on those bags. As already observed above there was otherwise no bar of fixing RSP on the packaged goods not meant for direct consumers - Once it is an admitted fact that the goods were cleared in packaged form, we do not see any reason for applicability of S.No. 1C of Notification No. 4/2007 which talks about the rate of duty on the goods which are cleared in unpackaged form.
The entire show cause notice and even the Order-in-Original is held to be mere presumptive of the fact that once the goods are cleared in packaged form the clearance cannot be the institutional/industrial clearance. It is a retail clearance where retail price has to be mandatorily fixed and duty has to be paid based on the retail price - it was Entry no. 1A which is applicable to the given set of facts, specifically in light of the admitted fact that the goods were cleared in packaged form.
Conclusion - Since the appellant has cleared cement in packaged form i.e. in the bags of 50 kg each with RSP printing thereupon to the institute DSD&G, the appellant is held entitled for the benefit of Entry No. 1A of the said N/N. 4/20027 dated 1.3.2007.
Appeal allowed.
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2025 (5) TMI 1013
Disallowance of CENVAT Credit - appellant has not received the goods and they have only received the Invoices based on which Cenvat credit has been availed - HELD THAT:- The appellant has purchased machine and mechanical appliances such as moulds, machine tools, dies for forging, EOT crane of 3MT capacity, furnace and ovens, from the supplier M/s Ashok Electrical Stampings Pvt. Ltd. vide 27 numbers of Central Excise invoices, during the period between 01.07.2004 and 07.01.2005. The appellant claimed that they have received the goods purchased by them under the 27 Invoices goods at the appellant’s factory on the same date on which those goods were cleared from the factory of the supplier. Upon receipt of the inputs under cover of the Central Excise Invoices, they have availed the credits of duty paid on the said goods after entering the details in the appellants RG-23A part 1 and 2 registers maintained by them.
The aforesaid inputs were used by the appellant for manufacture of MS Ingots, alloy steel forging machine square and non-alloy steel forging square. When they became unusable in normal course due to wear and tear, the same were scrapped - It is observed that non-availability of logo/stamp of Supplier in the goods does not mean that those machines were not purchased from the supplier. If supplier did not supplied those goods then who supplied those machines. The machines and machine tools were available in the factory and the same were used for the manufacture of MS Ingots, alloy steel forging machine square and non-alloy steel forging square in the factory for the past four years.
The finding of the adjudicating authority that the appellant has availed the credit without receipt of the goods into the factory is erroneous and not supported by any evidence. Accordingly, the disallowance of the credit to the appellant in the impugned order is not sustainable and hence, the same is set aside. As the disallowance of the credit is not sustained, the question of demanding interest or imposing penalty does not arise and hence the same also set aside.
Conclusion - Disallowance of credit without evidence is unsustainable, and consequential interest and penalty cannot be imposed.
Appeal allowed.
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2025 (5) TMI 1012
Clandestine removal of Sponge Iron - demand based on the evidence and materials recovered during the search and investigation - demand raised on the basis of the input:output ratio arrived at by the Department based on the expert opinion received - HELD THAT:- It is observed that only based on the input-output ratio taking the 'Fe' content of the ore, the allegation has been built up without looking the other quality aspect of the materials i.e. tumbler index in the Iron ore and FC content on the coal which are vital factors for determination of actual production. The expert opinion relied upon in the Order-In-Original also give stress on these aspects, but the Ld. Commissioner has ignored this aspect to confirm the demand.
The law is well settled that the electricity consumption cannot be the only factor or basis for determining the duty liability that too on imaginary basis. It is well known and accepted that the electricity consumption varies from one unit to another and from one date to another and even from one heat to another within the same date. There is, therefore, no universal and uniformly acceptable standard of electricity consumption, which can be adopted for determining the excise duty liability that too on the basis of imaginary production assumed by the department with no other supporting document to justify its allegations.
The Revenue has not brought in any corroborative evidence to the effect that the manufactured goods have been cleared clandestinely and cash transactions have taken place. No statements have been recorded from any of the purported buyers, vehicle owners. No private records with reference to the cash transactions have been seized. All these make us to conclude that the Department has proceeded purely based on the assumptions and presumptions basis without verifying their allegations.
It is observed that clandestine removal of goods is a serious offence, which requires to be established with tangible, clinching and corroborative evidence. In this case, there is no tangible or corroborative evidence in respect of purchase of raw materials, use of excess electricity, actual removal of final products, actual movement of clandestine removals, the mode and flow back of funds, excess purchase of input materials & production details, statement of buyers, etc., so as to bring home the allegation of clandestine removal.
Since the demand itself is found to be unsustainable, the question of demanding interest or penalty on the appellant-company thereon does not arise.
Penalty on Managing Director of the appellant-company - HELD THAT:- It is observed that the allegation in the Show Cause Notice is that the appellant no. 2 / Managing Director was actively involved in the manufacture and clandestine removal of the goods in question. However, it is seen that there is no evidence brought on record by the Revenue regarding the actual involvement of the Managing Director in the alleged offence. Further, in view of findings above wherein the allegation of clandestine removal has been held to be not sustainable, the allegation against the Managing Director also does not sustain. Hence, the penalty imposed on Managing Director of the appellant-company under Rule 26 of the Central Excise Rules, 2002 set aside.
Conclusion - The demand of duty and imposition of penalties based solely on presumptions drawn from input-output ratios and electricity consumption, without direct evidence of clandestine removal, is unsustainable.
Appeal disposed off.
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2025 (5) TMI 1011
SVLDRS - Reopening of case by adjudicating authority, where discharge certificate has already been issued in terms of Section 129 (C) of the Finance Act, 2019 - HELD THAT:- The appellant is eligible for this scheme as show cause notice has been issued to the appellant before 30.06.2019. Admittedly, it is a case where show cause notice has been issued to the appellant before 30.06.2019. Therefore, the appellant was entitled to opt for SVLDRS. Section 126 of the said scheme provides that the designated Committee shall verify the correctness of the declaration made by the appellant and thereafter issue a demand notice, if the amount payable by the appellant and shall issue a discharge certificate to the appellant on payment of amount for which demand notice is issued. Admittedly, in this case, discharge certificate has been issued. Further, Section 129 provides that if the discharge certificate has been issued, the matter shall be concluded and the appellant is not liable to pay any duty/interest/penalty. But, in a case, where it is a voluntary disclosure then within one year of the issuance of the discharge certificate the proceedings can be re-opened.
Admittedly, the provision to Section 129 is not applicable to the facts of this case as it is a case, where show cause notice has been issued to the appellant before 30.06.2019 and after due verification, the demand was raised against the appellant and thereafter on payment, the discharge certificate has been issued to the appellant in form of SVLDRS–IV. Therefore, the proceedings against the appellant shall be concluded against the show cause notice dated 18.09.2017 issued to the appellant.
Conclusion - As discharge certificate has been issued to the appellant, therefore, the demand confirmed in the impugned order amounting to Rs. 84,46,631/- alongwith interest and penalty under Section 11AC of the Act are not sustainable.
With regard to the show cause notice dated 07.11.2017 the registry is directed to place the matter before the Division Bench of this Tribunal for consideration in due course.
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2025 (5) TMI 1010
CENVAT Credit - input services used in relation to “setting up of factory” even after deletion of the phrase “setting up of factory” from the definition of input service with effect from 01.04.2011 under rule 2(l) of the Cenvat Credit Rules, 2004 - HELD THAT:- A Division Bench of this Tribunal in M/s Kellogs India Pvt Ltd vs. Commissioner of Central Tax [2020 (7) TMI 414 - CESTAT HYDERABAD] observed that 'we find that the services used in relation to setting up of a plant are neither specifically included nor specifically excluded during the relevant period. That takes us to the main part of the definition which, with respect to manufacturer allows CENVAT credit of services used in or in 6 relation to manufacture whether directly or indirectly. This definition, in our considered view, is wide enough to cover in its compass any services used for setting up a Plant especially when the services are used for obtaining the land on lease. Without such land no factory can be set up nor can any manufacture take place. We find a direct nexus between the manufacture of the final products and the services used for setting up of plant by leasing the land.'
In the grounds of appeal it has been stated that since the decisions rendered by the Tribunal in Kellogs India and Pepsico India [2021 (7) TMI 1094 - CESTAT HYDERABAD] have been assailed before the Telangana High Court, it cannot be said that the decisions of the Tribunal had attained finality - This ground taken in the appeal is without any basis. So long as the decisions of the Tribunal have not been set aside, the Principal Commissioner was bound to follow the decisions.
Conclusion - CENVAT credit on input services used in relation to setting up of factory is admissible under Rule 2(l) of the CENVAT Credit Rules, 2004, despite the deletion of the phrase "setting up of factory."
In view of the aforesaid decisions of the Tribunal in Kellogs India and Pesico India, there is no error in the order passed by the Principal Commissioner - appeal dismissed.
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2025 (5) TMI 1009
CENVAT Credit - input services used in relation to “setting up of factory” even after deletion of the phrase “setting up of factory” from the definition of input service with effect from 01.04.2011 under rule 2(l) of the Cenvat Credit Rules, 2004 - HELD THAT:- A Division Bench of this Tribunal in M/s Kellogs India Pvt Ltd vs. Commissioner of Central Tax [2020 (7) TMI 414 - CESTAT HYDERABAD] observed that 'we find that the services used in relation to setting up of a plant are neither specifically included nor specifically excluded during the relevant period. That takes us to the main part of the definition which, with respect to manufacturer allows CENVAT credit of services used in or in 6 relation to manufacture whether directly or indirectly. This definition, in our considered view, is wide enough to cover in its compass any services used for setting up a Plant especially when the services are used for obtaining the land on lease. Without such land no factory can be set up nor can any manufacture take place. We find a direct nexus between the manufacture of the final products and the services used for setting up of plant by leasing the land.'
In the grounds of appeal it has been stated that since the decisions rendered by the Tribunal in Kellogs India and Pepsico India [2021 (7) TMI 1094 - CESTAT HYDERABAD] have been assailed before the Telangana High Court, it cannot be said that the decisions of the Tribunal had attained finality - This ground taken in the appeal is without any basis. So long as the decisions of the Tribunal have not been set aside, the Principal Commissioner was bound to follow the decisions.
Conclusion - CENVAT credit on input services used in relation to setting up of factory is admissible under Rule 2(l) of the CENVAT Credit Rules, 2004, despite the deletion of the phrase "setting up of factory."
In view of the aforesaid decisions of the Tribunal in Kellogs India and Pesico India, there is no error in the order passed by the Principal Commissioner - appeal dismissed.
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2025 (5) TMI 1008
Refund claim - eligibility for exemption under N/N. 33/99-C.E. dated 08.07.1999 based on substantial expansion of installed capacity exceeding 25% after 24.12.1997 - delay of approximately seven years in filing the exemption/refund claim.
Refund claim - eligibility for exemption under N/N. 33/99-C.E. dated 08.07.1999 based on substantial expansion of installed capacity exceeding 25% after 24.12.1997 - HELD THAT:- The respondent has claimed the benefit of Notification No. 33/1999-C.E. dated 08.07.1999 under Para 2(a) read with Para 3(b) of the said Notification. The claim of the respondent was verified by the Ld. Assistant Commissioner of Central Excise, Digboi on 17.06.2008 and it was found that the percentage of increase in installed capacity by way of substantial expansion during the post expansion period was made by way of (i) withering troughs = 25.39% and (ii) fermenting floor – 88.88%. Thus, the respondent had fulfilled the condition prescribed in the Notification No. 33/99-C.E. dated 08.07.1999 and thus the ld. adjudicating authority found the respondent to be eligible for the refund and sanctioned the refund and the said order has been upheld by the Commissioner (Appeals). However, the Revenue has objected to it stating that the refund claims in these cases were filed by the respondent after a lapse of seven years from the date of eligibility to Notification No. 33/99-C.E. dated 08.07.1999 which is not a reasonable period, as contended.
The respondent have fulfilled the condition of 25% substantial expansion in the capacity and have also filed the statement of duty paid by way of RT-12 / ER-1 every month. Accordingly, it is observed that they have fulfilled both the conditions stipulated in Notification No. 33/99-C.E. dated 08.07.1999 for availing the benefit.
Delay of approximately seven years in filing the exemption/refund claim - HELD THAT:- The Tribunals in a number of cases, namely, (1) Commissioner of Central Excise vs Vinay Cement Limited, [2001 (4) TMI 723 - CEGAT, KOLKATA]; (2) Commissioner of Central Excise vs Napuk Tea Estate [2006 (7) TMI 554 - CESTAT, KOLKATA] and (3) Dhanseri Tea Estate vs. Commissioner of Central Excise, [2011 (7) TMI 760 - CESTAT, KOLKATA] have held that statements of duty paid submitted in RT-12 returns amount to full compliance of Clause 2(a) of the said notification and refund of duty paid cannot be denied for want of separate claim for refund of duty paid.
In an identical case of disposing multiple Central Excise appeals including C.Ex.App. 8/2016 MK Jokai Agri Plantations Limited & Anr. vs. Commissioner of Central Excise, Dibrugarh [2018 (9) TMI 566 - GAUHATI HIGH COURT], the Division Bench of the Hon'ble Guwahati High Court has held that an incumbent having been once found to be eligible for exemption and refund of duty paid, denial of benefit of exemptions and refund on the ground of delay, would cause grave injustice which cannot be permitted.
Conclusion - The respondent has fulfilled the condition of 25% expansion in capacity as has been verified by the adjudicating authority. Secondly, the respondent has been filing their RT-12 / ER-1 Returns indicating their duty liability. In these circumstances, by relying on the decision of the Hon'ble Gauhati High Court referred, it is held that the respondent has fulfilled the conditions prescribed in the Notification No. 33/99-C.E. dated 08.07.1999 and the refund has been rightly sanctioned to the respondent.
The lower authorities have rightly allowed the refund claims filed by the respondent - appeal of Revenue dismissed.
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2025 (5) TMI 1007
Rejection of refunds of amounts paid as duty (or deposits equivalent to duty) during the period from March 2005 to mid-2014 - Classification of 'Coconut Oil' packed in containers of less than 200 ml - to be classified under Heading 1503 (Fixed Vegetable Oils) or Chapter 33 (Cosmetics and Toiletries) of the Central Excise Tariff Act, 1985? - HELD THAT:- There is no denial of the facts that what was paid, may be as a ‘deposit’ by the appellant, was an amount equal to the duty element, the appellant itself had classified the ‘Coconut Oil’ pack of less than 200 ml. under Chapter 33 [and not under Chapter 15], there was a serious issue regarding the very classification of ‘Coconut Oil’ below 200 ml. package as the Board had issued Circulars [145, 890, etc.], there were Hon’ble High Court [of Bombay, Kerala & Madras] rulings in support of tax payers and the jurisdictional High Court’s order in W.P dated 29.04.2014 coupled with the dismissal of SLP/Civil Appeal by the Apex Court resulting in the very withdrawal of Circular No. 890/10/2009-CX supra by the Government. The Commissioner (Appeals) has relied heavily on this Circular and therefore, when the same is withdrawn, then the same becomes non-est and any order passed following the said Circular also becomes non-est.
Conclusion - There is no justification in rejecting the refund claims since primarily the ground on which rejection was made is itself not there anymore in the statue book.
The impugned order set aside - appeal allowed.
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2025 (5) TMI 1006
Classification of non-woven fabrics - to be classified under the CETH 5603 or under CETH 39021000? - HELD THAT:- The issue involved was examined by the Tribunal in the case of Tirupathi Nonwoven Pvt.Ltd. v. Commissioner of C.Ex., Nagpur [2016 (10) TMI 646 - CESTAT MUMBAI] and had held the product as correctly classifiable under CET 5603. As the Department had not conducted any fresh tests, as were directed by the Tribunal, to support the department’s claim, that the product would call for classification under Chapter 39, the issue cannot be considered and interpreted rather differently.
As the case is pivoted around a classification dispute, the process of manufacturing and also laboratory test report are a key factor in deciding the instant issue. The Regional Laboratory at Kolkata of the Textile Committee, Ministry of Textiles, described the product as non-woven fabric wherein polyolefin fibers are made use of. From the reports it transpires that polyolefin fibers are present in the sample. Also a report was obtained from the Joint Director, CRCL, Kolkata Customs House who clarified that the sample was found to be Non Woven Sheet Compound of fibers of Polypropylene.
The learned adjudicating authority has extensively analyzed the relevant section and chapter notes and as to why the product would merit classification as claimed by the assessee and not as alleged by the Revenue. He has also taken note of such product being cleared by other manufacturers in the jurisdiction classifying them under Chapter 56 - For coming to a conclusion that the product will merit classification under Chapter 39, it is found that no corroborative evidence in the form of any test report has been placed by the Revenue. Further it is found that the basis of classification proposed by the Revenue is a bland statement, since the allegation is that the non-woven fabric manufactured by them should be classified under Chapter 39 of CETA, 1985. Section VII of the Central Excise Tariff Act deals with Plastic and Articles thereof and Rubber and Articles thereof where under Chapter 39 specifically deals with plastic and articles thereof. It consists of various items falling under Central Excise Tariff 3901 to 3906 with several 6 digits and 8 digits sub-classifications. The 6 digits and 8 digit sub-classifications are important to arrive at the correct rate of duty applicable to a product. In this particular case, the Revenue has not even made any attempt to give the details of 6 digits/8 digits of Chapter 39 under which they feel that the product should be classified.
Conclusion - Non-woven fabrics made of polypropylene fibers, not entirely embedded or coated with plastics, are classifiable under Chapter 56, Heading 5603, as non-woven fabrics of man-made filaments.
The order of the adjudicating authority is upheld - appeal dismissed.
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