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Central Excise - Case Laws
Showing 221 to 240 of 80349 Records
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2024 (2) TMI 1249
Principles of unjust enrichment - Refund amount ordered to be credited to the Consumer Welfare Fund instead of being paid to the appellant - HELD THAT:- The appellant paid the disputed amount as differential duty after the SCN was issued and it was not paid at the time of clearance of the goods nor was an invoice raised for this amount at that time. It is also an admitted fact that the appellant had attempted to recover the differential duty from its customers M/s Bharat Broadband Network Ltd. by issuing a supplementary invoice, but the customer refused to pay it on the ground that central excise duty @ 10.3% was already paid as per the purchase order and the differential duty paid after calculating excise duty at the higher rate of 12.36% was not required to be paid by it.
The appellant had borne the burden of the differential duty and had not passed it on to its customer or to anyone. Thus, the appellant’s case falls squarely under Clause (e) of the third proviso to section 11B of the Central Excise Act, 19445, i.e., the duty of excise and interest paid on such duty were borne by the appellant manufacturer and it had not passed on the incidence of such duty and interest to any other person.
The appellant is entitled to the refund of the amount sanctioned which should be paid to it instead of it being credited to the Consumer Welfare Fund. Needless to say the consequential interest must also be paid as per section 11BB.
The refund amount along with interest under section 11BB should be paid to the appellant instead of being credited to the Consumer Welfare Fund - the impugned order is set aside - appeal allowed.
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2024 (2) TMI 1248
CENVAT Credit - common inputs/input services used for manufacture of stock transferred exempted goods (lime stone) and dutiable products (Cement/Clinker) - non-maintenance of separate accounts as required under Rule 6(2) of Cenvat Credit Rules, 2004 - liability to pay an amount of 5%/6% of the value of exempted goods (stock transferred lime stone) as under Rule 6(3)(i) of Cenvat Credit Rules, 2004 - Time Limitation - HELD THAT:- The lime stone stock transferred being exempted product there is no question of payment of duty or consequent availment of credit by receiving unit. When appellant has used common inputs/input services for stock transferred limestone, appellant has to maintain separate accounts. The appellant not having maintained separate accounts and not having exercised any option under Rule 6(3), the demand raised invoking Rule 6(3)(i) is legal and proper.
The decision of the Hon’ble Apex Court in the case of JAYPEE REWA CEMENT VERSUS COMMISSIONER OF CENTRAL EXCISE, MP [2001 (8) TMI 1332 - SUPREME COURT] is referred by Ld. Consultant to argue that lime stone is only an intermediate product and cannot be considered as a final product. The issue that was considered in the said case was whether Modvat credit is eligible on explosives used for extraction of limestone which is the raw material used in manufacture of cement. The Hon’ble Court was considering the applicability of Rule 57A of erstwhile Central Excise Rules, 1944. The assesse therein contended that explosives used in the mining operation must be regarded as inputs. The Tribunal came to the conclusion that as the inputs (explosives) had not been brought into the factory and had been used in the mines outside the factory are not eligible for credit. The Hon’ble Apex Court held that even in respect of inputs used in the manufacture of intermediate product, which product is then used for manufacture of a final product (Cement) the credit is eligible. The issue in the case on hand is not on the eligibility of credit on explosives, and not applicable.
In the case of VIKRAM CEMENT VERSUS COMMISSIONER OF CENTRAL EXCISE, INDORE [2006 (1) TMI 130 - SUPREME COURT] the question that was considered was again the eligibility of credit on explosives used in captive mines. The Hon’ble Apex Court held that the credit would be eligible and that the decision in the case of M/s.Jaypee Rewa Cement would apply. It was also held that CENVAT Rules in effect substituted the Modvat Rules. The issue on hand is not eligibility of credit on explosives used in captive mines, and therefore not applicable.
Time Limitation - Penalty - HELD THAT:- The appellant had periodically filed returns and disclosed the credit availed by them. Further, the demand has been raised on the basis of the accounts maintained by the appellant. The appellant has maintained proper delivery challans and documents for the amount of lime stone stock transferred. There is no positive act of suppression established by the department. Further, the department for the period 1/2017 to 6/2017 has set aside the demand interpreting the issue in favour of appellant - there are no grounds for invoking the extended period. The issue on limitation is answered in favour of appellant and against the Revenue - Being stock transfer of limestone to appellant’s own units, and also of interpretational nature, the penalties are to be set aside entirely. The appellant is liable to pay duty along with interest for the normal period.
The impugned order is modified to the extent of upholding the demand and interest for the normal period only. The penalties for normal period is set aside - The appeal is partly allowed.
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2024 (2) TMI 1185
Maintainability of appeal - all the issue related to question of fact - Clandestine removal - Whether CESTAT has erred in not appreciating the suppression of production arisen on calculating annual electricity consumption which shows that there was excess production of excisable goods as compared to the productions reflected in their statutory records?
HELD THAT:- All the questions which the appellant has raised in the present appeal, are essentially questions of fact and there is no question of law as such which is required to be adjudicated by this Court.
Taking into consideration the concurrent findings of fact, this appeal need not be entertained.
The appeal stands dismissed.
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2024 (2) TMI 1158
Liability of Excise duty equal to Special Additional Duty of customs (SAD) under Section 3(5) of the Customs Tariff Act 1975 - Intraocular Lens cleared to DTA - SCN dated 2-6-2015 issued under Section 11A (1)/ (5) of the Central Excise Act 1944 is without jurisdiction since the said Section 11A (5) stood omitted with effect from 14-5-2015 - Extended period of limitation - suppression of facts or not - HELD THAT:- The exemption under N/N. 23/2003-CE is not required and further that the goods cleared in DTA, if imported, were also exempt from SAD under Sr. No.1 of N/N. 29/2010-CUS dated 27-2-2010 up to 16-3-2012 and thereafter under Sr. No.2 of N/N. 21/2012-Cus dated 17-3-2012 since the same are pre-packaged goods for retail sale to which provisions of Legal Metrology Act and Rules apply. Therefore, excise duty equal to SAD payable under the Proviso to Section 3 (1) of the Central Excise Act 1944, will be NIL. Consequently, the exemption under N/N. 23/2003-CE is not required.
It is thus clear that exemption from Excise duty equal to SAD under Notification No.23/2003-CE is not required since the said goods if imported are exempt from SAD and therefore Excise duty equal to SAD payable under the Proviso to Section 3 (1) of the Central Excise Act 1944, will be NIL.
The Show Cause Notice dated 27-5-2015, which is purportedly issued under Section 11A(1)/A (5) of the Central Excise Act 1944 was barred by time and not maintainable in law. If the Notice is purported to be issued under Section 11A(1), the same is barred by time, having been issued beyond the period of one year then specified in Section 11A (1). If the Notice is purported to be issued under Section 11A (5), the same is not maintainable in law, since the said Section 11A (5) stood omitted with effect from 14-5-2015. The show cause notice having been issued under a non-existing provision is not maintainable in law.
Section 11A (5) read with Section 11A (4) applies in cases of fraud, collusion, wilful mis-statement, suppression of facts or contravention with intent to evade, none of which is present in this case. In the ER-2 Returns it is duly disclosed that the Appellant were availing Notification No.23/2003-CE. The Appellant have been subjected to audit from time to time. The Audit report records that the Appellant were availing Notification No.23/2003. The department was therefore fully aware that the Appellant were availing benefit of Notification no.23/2003. Moreover, No Dues certificate was also issued by the department at the time of exit from EOU. Accordingly, it is not a case of fraud, collusion, wilful mis-statement, suppression of facts or contravention with intent to evade and the larger period of limitation is inapplicable in the present case.
The impugned order is not tenable both on merits and on limitation - appeal allowed.
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2024 (2) TMI 1157
Valuation - taking local Maximum Retail Price (MRP) for calculating the aggregate of Customs duties (Basic, CVD, SAD, Cess) to arrive at the Excise duty payable by 100% EOU under the Proviso to Section 3(1) of the Central Excise Act 1944 - correctness of demanding Education Cess and Secondary and Higher Education Cess once again on the aggregate of customs duties which already includes such Cess on the basic customs duty and CVD - SCN purportedly issued under Section 11A (5) of the Central Excise Act 1944 is without jurisdiction since the said Section 11A (5) stood omitted with effect from 14-5-2015 or not - whether Notice is barred by time and the larger period of limitation apply since the goods were cleared after verification of duty payment and issue of No dues certificate by the central excise officer?
HELD THAT:- It would be evident from the calculation that the Principal Commissioner has wrongly calculated the Basic customs duty on the MRP of the goods, which is contrary to the provisions of Proviso to Section 3 (1) of the Central Excise Tariff Act. As per Proviso to said Section 3 (1), Excise duty on goods manufactured by a 100% EOU and brought to any place in India shall be an amount equal to aggregate of customs duties leviable on like goods when imported into India and the value of such goods shall be as per the Customs Act 1962 and the Customs Tariff Act 1975. The said Acts do not provide for calculating the basic customs duty on the local Maximum Retail price (MRP) but require adoption of the transaction value as per Section 14 of the Customs Act 1962. Instead of taking such value which is mentioned in the Column before the Column of MRP on page 55 of the Appeal, the Principal Commissioner has taken the MRP, which is plainly erroneous. Accordingly, the assessable value taken for calculating the Basic Duty is ex-facie erroneous.
As regards the CVD, the Principal Commissioner has wrongly calculated the same on MRP instead of MRP less abatement under Notification No. 49/2008-CE (NT) dated 24-12-2008. Accordingly, the value taken for calculation of CVD is also ex-facie erroneous.
Further, the Principal Commissioner has wrongly taken Education Cess and Secondary and Higher Secondary Education Cess once again on the aggregate of customs duties, although the same were already considered while calculating the aggregate of customs duties.
Extended period of limitation - HELD THAT:- Even otherwise, the Show Cause Notice dated 27-05-2015, which is purportedly issued under Section 11A (5) of the Central Excise Act 1944 was not maintainable in law since the said Section 11A (5) stood omitted with effect from 14-05-2015. The show cause notice having been issued under a non-existing provision is not maintainable in law. Further the said Section 11A (5) read with Section 11A (4) is applicable in cases of fraud, collusion, willful mis-statement, suppression of facts or contravention with intent to evade, none of which is present in this case. As evident from letter dated 22-5-2012 of the Superintendent, prior to de-bonding, the factory was visited by the Central Excise officers and the stock and calculation of duty were duly verified by the Central Excise officers. It is evident from the letter that the department was fully aware of availing of notification No.23/2003-CE. Therefore, the larger period of limitation is inapplicable in the present case.
The impugned order is not tenable and is liable to be set aside - appeal allowed.
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2024 (2) TMI 1156
Denial of CENVAT Credit - inputs/capital goods or not - HR, MS and SS plates received and utilized during 2003 to 2005 for setting up of Copper III plant - impugned order has disallowed such Cenvat credit on the ground that the plant and machinery so fabricated, are immovable and fixed to earth and cannot be called "capital goods" - HELD THAT:- There is no restriction in Rule 2(k) of Cenvat Credit Rules, 2004, for the availment of the Cenvat credit of the duty paid on goods used for manufacture of capital goods. All that the said rule requires is whether such capital goods are used for manufacture of excisable goods in the factory. Once this requirement is satisfied, the fact that such capital goods came into existence as an immovable property is irrelevant or immaterial to avail Cenvat Credit.
The Appellants have used MS and SS plates used in the fabrication of chimneys. Chimneys are pollution control equipment and are thus specified capital goods under sub-clause (ii) of clause (A) of the definition of "capital goods" under Rule 2(a) of the Cenvat Credit Rules, 2004. The Hon'ble Supreme Court in COMMISSIONER OF CENTRAL EXCISE, JAIPUR VERSUS M/S RAJASTHAN SPINNING & WEAVING MILLS LTD. [2010 (7) TMI 12 - SUPREME COURT] has examined the issue of eligibility of Cenvat credit availed on MS plates items used in the fabrication of chimneys. The Hon'ble Supreme Court has held that, once it is not under dispute that the impugned items are used in the fabrication of chimneys, Cenvat credit availed on the same cannot be denied. Thus, ground in impugned order is also rejected.
Iron and steel items used in the fabrication of supporting structures for capital goods - HELD THAT:- Cenvat credit has been denied on iron and steel items used in the fabrication of supporting structures for capital goods is eligible. The Appellants have availed Cenvat credit on H.R. M.S. & S.S. plates used in the fabrication of supporting structures of capital goods. There are cetena of decision wherein it has been held that the credit of steel used to support capital goods is eligible for credit.
Denial of credit on account of an inordinate delay in availing Cenvat credit in violation of Rule 4(1) of the Cenvat Credit Rules, 2002 and/or 2004 - HELD THAT:- There is no specific time limit prescribed for availment of Cenvat credit on inputs under Rule 4(1) of the Cenvat Credit Rules. The sub-rule which prescribes that "CENVAT credit in respect of inputs may be taken immediately" in Rule 4(1) makes it clear that the said provision is an enabling provision and enables the assessee to avail Cenvat credit immediately on receipt of the inputs.
There are no merit in the impugned order. The same is set aside and the appeal is allowed.
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2024 (2) TMI 1080
Levy of penalty under Rule 12(6) and Rule 27 of the Central Excise Rules, 2002 and Rule 15A of the Cenvat Credit Rules, 2004 - non-filing of returns namely ER-4, ER-5, ER-6 and ER-7 for the period from February 2012 to March 2016 - invocation of extended period of limitation as provided under Section 73, sub-section (4) of the Finance Act, 1994 - HELD THAT:- As per Section 174(2)(e) of the CGST Act, 2017 the proceedings can only be continued under the new regime if it is arising/emerging out of investigation, inquiry, verification (including scrutiny and audit), assessment proceedings, adjudication and any other legal proceedings etc. Further, it is found that violation of non-filing of the returns under the existing law has not been saved under the present regime of GST. Further, in the present case the period involved is February 2012 to March 2016, whereas the show cause notice was issued on 23.04.2018 which is beyond the period of limitation.
In fact, neither in the show cause notice nor in the impugned order, the grounds for invoking the extended period of limitation have been discussed. Nothing emerges from the impugned order that the appellant have not filed the requisite returns with intent to evade the payment of tax. Further, the decisions relied upon by the appellant as well as the respondent, are not strictly applicable in facts and circumstances of the present case.
The imposition of penalties amounting to Rs.96,000/- is not sustainable - The impugned order is set aside - appeal allowed.
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2024 (2) TMI 1079
Recovery of CENVAT Credit alongwith interest and penalty - credit availed by the appellant on inputs during 12.02.2004 onwards - process amounting to manufacture or not - HELD THAT:- The issue involved in the present case is no more res integra and has been consistently held by various decisions of the Tribunal, upheld by the Hon’ble Supreme Court and High Court wherein it has been held that when process undertaken by the assessee does not amount to manufacture, even then the CENVAT credit is admissible if such inputs are cleared on payment of duty which would amount to reversal of credit availed.
Reliance can be placed in the case of COMMISSIONER OF CENTRAL EX. & CUS., SURAT-III VERSUS CREATIVE ENTERPRISES [2008 (7) TMI 311 - GUJARAT HIGH COURT] which was upheld by the Hon’ble Apex Court in COMMISSIONER VERSUS CREATIVE ENTERPRISES [2009 (7) TMI 1206 - SC ORDER] wherein it was held that once duty on final products has been accepted by the Department in the case, CENVAT credit cannot be denied even if the activity does not amount to manufacture.
The impugned order is not sustainable in law and therefore is set aside - appeal allowed.
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2024 (2) TMI 1078
Valuation - inclusion of secondary packing charges recovered by the Respondent from their customers in the assessable value - Freight Cost recovered by the Respondent from their customers for the onward movement of the goods from the factory gate to Railway Station is includable in the assessable value or not - HELD THAT:- On going through the OIA, it is found that the Commissioner (Appeals) has given very detailed findings on the issue raised in the Show Cause Notice - it was held that When the appellant has sold the goods at the factory gate, then such charges which are collected for providing services beyond the factory gate cannot be added to or included in the assessable value. It is not the case of the Department, that the appellant is collecting these as part of the price of the goods and in the guise of forwarding charges. Such a proposition would be contrary to evidence as there is uniform sale price of goods at the factory gate and inclusion of such forwarding charges to be declared price would lead to differential price of goods. Hence, such forwarding charges cannot be included in the assessable value of goods.
In case of UNION OF INDIA & ORS. ETC., ETC. VERSUS BOMBAY TYRE INTERNATIONAL LTD. ETC., ETC. [1983 (10) TMI 51 - SUPREME COURT], the Hon’ble Supreme Court has held If any special secondary packing is provided by the assessee at the instance of a wholesale buyer which is not generally provided as a normal feature of the wholesale trade, the cost of such packing shall be deducted from the wholesale cash price.
These decisions are squarely applicable to the facts of the present Appeals. Therefore, there are no reason to interfere with the detailed findings and conclusion arrived at by the Commissioner (Appeals).
The Appeals filed by the Revenue is dismissed.
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2024 (2) TMI 1077
Interest on delayed refund - period prior insertion of the Section 11BB of CEA - HELD THAT:- There is no dispute that this order was in respect of a refund application filed on 07.04.1997. If Revenue was aggrieved by the facts as recorded in this order they should have filed an application under Section 35 C (2) of the Central Excise Act, 1944 for getting the facts as recorded in the final order of tribunal or could have filed an appeal to the concerned appellate authority. Having not done so there cannot be any dispute about the fact that entire proceedings are in respect of the refund application filed on 07.04.1997. Commissioner (Appeals) findings in this regard cannot be faulted with.
As the entire issue is in sequel of the Tribunal order directing payment of due interest as due. Without challenging the direction to pay the interest at appropriate forum the same cannot be challenged in these proceedings whether for the period prior insertion of the Section 11BB before or after, there are no merits in this appeal.
In the case of RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. [2011 (10) TMI 16 - SUPREME COURT], SC held that liability of the revenue to pay interest under Section 11BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund under Section 11B(1) of the Act and not on the expiry of the said period from the date on which order of refund is made.
There are no merits in this appeal filed by the revenue - appeal dismissed.
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2024 (2) TMI 1018
Denial of CENVAT Credit - process amounting to manufacture or not - goods received from Unit-I (and cleared to Unit-II) required manufacturing activity or not - whether the demand raised alleging that the credit availed by the appellant is ineligible for the reason that there is no manufacturing process undertaken by the appellant on goods received from Unit I and cleared by them is sustainable or not? - HELD THAT:- It is an undisputed fact that the appellant has cleared all goods from unit 2 by payment of duty. When the department has collected duty on the finished products, the credit availed on the inputs cannot be denied alleging that the activity does not amount to manufacture. This issue is settled by the decisions in the case of Ajinkya Enterprises [2012 (7) TMI 141 - BOMBAY HIGH COURT] wherein the Hon’ble High Court of Bombay held CENVAT credit availed need not be reversed even if the activity does not amount to manufacture.
In the case of M/s. R K Packaging Vs. CCE, Mumbai [2019 (3) TMI 1500 - CESTAT MUMBAI], the issue considered was whether the credit availed has to be reversed when the activity is alleged to be not manufacture. The demand was set aside by the Tribunal following the decision of the Hon’ble High Court of Bombay in Ajinkya Enterprises.
The demand cannot sustain and requires to be set aside. The impugned order is set aside - Appeal allowed.
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2024 (2) TMI 1017
Method of Valuation - section 4 of Central Excise Act, 1944 or section 4A of Central Excise Act, 1944 - packages of cake mixes manufactured having been affixed with retail sale price (RSP) - recovery of differential duty by resort to ‘transaction value’ specified by section 4 of Central Excise Act, 1944 alongwith interest and penalty - HELD THAT:- The demand for the disputed period straddles two governing enactments by reference to which levy of duties of central excise on ‘retail sale price’, less permitted abatement, was enabled. Till the notification of Legal Metrology (Packaged Commodities) Rules, 2011 with effect from 1st April 2011, Standards of Weights and Measures (Packaged Commodities) Rules, 1977 , issued under the authority of The Standards of Weights and Measures Act, 1976, was in force even after the parent statute was substituted by the Legal Metrology Act, 2009. Both the laws have undergone streamlining and consolidation through amendments as did the respective Rules framed thereunder.
The specific bar on ‘retail sale’ on packages cleared by appellant is adequate discharge as evidence of overriding intent with fact prevailing over presumption of intent. Consequently, for the period preceding commencement of Legal Metrology (Packaged Commodities) Rules, 2011, the impugned notification does not apply to goods cleared by the appellant. - For the period thereafter, such ‘intent’ does not circumscribe ‘packages’ deployed anywhere in chapter II of Legal Metrology (Packaged Commodities) Rules, 2011 and, therefore, does not restrict the empowerment of notifying of ‘goods’ for the purpose of section 4A(1) of Central Excise Act, 1944. The substantive distinction between deemed circumscribing of ‘packages’ for the enforcement of rule 5 of Standards of Weights and Measures (Packaged Commodities) Rules, 1977 and absence of such curtailed meaning of ‘package’ for requirement to comply with rule 6 of Legal Metrology (Packaged Commodities) Rules, 2011 makes for the difference in interpreting the extent and reach of power conferred on the Central Government to resort to ‘retail sale price’ assessment. Consequently, all commodities in ‘pre-packaged’ form, to the extent incorporated in the impugned notification, are subject to assessment on ‘retail sale price’ less abatement as prescribed therein after March 2011.
The distinguishment of ‘ultimate consumer’ as the criteria for applicability of section 4A of Central Excise Act, 1944 to the impugned transactions has no basis in law. It is worth noting that even in relationship to ‘industrial’ usage or ‘institutional’ deployment, the buyer yet remains consumer. There is no reason to suppose, as the adjudicating authority has, from the tax statute or the consumer protection laws that ‘bakeries’ are not intended recipients of such protection. The adjudicating authority has stretched logic to conclude that the transformation on a product, by change of form and attributes, does not alter the product for ascertainment of actual consumer. These unsubstantiated conclusions on the intent of consumer protection law and the extent of taxing statute are inappropriate justification for alteration of assessment methodology.
The adjudicating authority has placed reliance on the decision of the Hon’ble High Court of Karnataka in re Ewac Alloys Ltd. [2011 (9) TMI 688 - KARNATAKA HIGH COURT] - Reference was also made to the decision of the Hon’ble Supreme Court in re Jayanthi Food Processing (P) Ltd. [2007 (8) TMI 3 - SUPREME COURT]. On behalf of respondents, the decision of the Hon’ble Supreme Court in Commissioner of Central Excise & Service Tax, Kanpur v. AR Polymers Pvt Ltd [2023 (3) TMI 951 - SUPREME COURT] was cited. The two judgements of the Hon’ble Supreme Court found that institutional consumers, which were the recipients of goods impugned therein, are not final consumers because the goods are subject to further sale in that very form. The facts of the present case are totally at variance as the goods impugned here lose the form in which they have been cleared by the appellant in the hands of those erroneously held as not being final consumers even on the admitted reality that customers of ‘bakeries’ are in the market for ‘cakes’ and ‘bakes’ which would render the ‘bakeries’ to be the final consumer.
The demand of differential duty for the period prior to 1st April 2011 is upheld while setting aside the demand for the period thereafter. The intention of the appellant not to clear for retail sale during the former period is evident despite which they resorted to abatement from ‘retail sale price’ even though not entitled thereto. Nothing has been brought on record to evince that such intent, espoused in the markings, was not prompted by clear appreciation of the legal limitation on the jurisdiction of the Central Government to notify goods for alternative assessment - there are no reason to interfere with the penalty mandated under section 11AC of Central Excise Act, 1944.
Appeal allowed in part.
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2024 (2) TMI 1016
Correctness of erasure of credit already availed by prospective invalidation of eligibility for retention of credit that would subject those services already procured and used in manufacture/rendering of services to the test of eligibility once again - deletion of rule 6(5) of CENVAT Credit Rules, 2004 with effect from 31st March 2011 - whether credit availed legally and validly up to 31st March 2011 is entitled to be carried forward in the books for subsequent utilization even if the enabling provision was erased from the Rules on that day?
HELD THAT:- The operation of law by erasure of rule 6(5) of CENVAT Credit Rules, 2004 could not impact the credit taken under rule 3 of CENVAT Credit Rules, 2004, at the time of procurement of the impugned services; nor is that entitlement thereof under challenge in the proceedings initiated by the notice issued to the appellant. Proceeding onward, the operation of erasure of rule 6(5) of CENVAT Credit Rules, 2004 would not impact credit relating to ‘inputs’ or ‘input services’, already consumed and not determined as attributable exclusively to production of exempted goods or exempted services as on date of erasure. The amendment was effected only for withdrawal of the privilege of exclusion from the general provisions of the rule 6 of CENVAT Credit Rules, 2004 that permitted retention of credit even after the factum of utilization in or deployment in exempted goods and exempted services become apparent. Consequently, the operation of rule 6(5) of CENVAT Credit Rules, 2004 did not, or does not, impact taking of credit but is only pertinent to the retention of credit and, being exclusion by special provision, would have to operate only with effect from the date on which such exclusion came into effect.
It is in this context that the decision of the Hon’ble Supreme Court in EICHER MOTORS LTD. VERSUS UNION OF INDIA [1999 (1) TMI 34 - SUPREME COURT] in SAMTEL INDIA LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, JAIPUR [2003 (3) TMI 121 - SUPREME COURT] and in COLLECTOR OF CENTRAL EXCISE, PUNE VERSUS DAI ICHI KARKARIA LTD. [1999 (8) TMI 920 - SUPREME COURT] must be seen i.e., non-operation of rule 3 of CENVAT Credit Rules, 2004 both at the threshold and at the time of utilization of the impugned goods/services. It is clear that the ‘vested right’ affirmed by the Hon’ble Supreme Court in re Eicher Motors Ltd clearly applies to the case of the appellant as there is no evidence that the impugned services had been utilized only after 31st March 2011.
The continued eligibility for credit cannot be curtailed or impacted - the impugned order does not sustain - appeal is allowed.
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2024 (2) TMI 1015
Levy of Automobile Cess - manufacture of Electrically Operated Vehicles named Yo–Bikes by assembling various Parts, components and Assemblies - exempt under N/N. 25/2008-CE - time limitation - suppression of facts or not - HELD THAT:- The appellant is assembling various parts and components in order to produce Yo-Bikes falling under the chapter heading 87 which qualifies for exemption vide Notification No. 25/2008-CE. Further it is observed that the Appellant has paid automobile cess upon being pointed out by auditors for the period February, 2010 to February, 2011 under protest only because the Appellant was under bona fide belief that their product does not qualify under the category of automobiles and thus they were not liable to pay cess for which they received no clarity from the department with respect to their liability. It is pertinent to note here that the department has taken no effort to establish any tests/ingredients as to why the product of the appellant will be classifiable as “automobile” for the levy of automobile cess and has simply taken the support of Notification 67/88 dated 09/01/1989 to levy automobile cess on the Appellant.
The entire demand for automobile cess has been raised from the Audit Objection and records maintained by the Appellant which goes on to show that the department never raised any objection regarding non–deposit of automobile cess even when the cess was paid by the Appellant under protest. Therefore it cannot be denied that the Department had enough time to investigate for the purpose of levy of cess.
Time limitation - HELD THAT:- The entire demand in this case is time barred as for the period 2008 – 09 to 2011 - 12 show cause was issued on 03.04.2013 which is not only beyond the period of normal limitation but also that the Department has incorrectly invoked extended period of limitation without sufficiently establishing ingredients to give effect to the same.
The demand is barred by limitation. The issue on merit is left open. Thus the impugned order is set aside - Appeal allowed.
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2024 (2) TMI 1014
Levy of penalty u/r 26 of the Central Excise Rules, 2002 - clandestine manufacture of Pan Masala - recovery of duty alongwith interest and penalty - HELD THAT:- The penalty under Rule 26 can be imposed if one is concerned in a manner indicated in the Rule with goods which were liable for confiscation or was in any way concerned such goods or any person who is connected with issue of invoices without delivering goods so as to enable the person to enable the other person to avail CENVAT credit incorrectly.
In this appeal, no penalty has been imposed with respect to the confiscation of the goods (first SCN). The second SCN was only concerned with recovery of duty. It is in this SCN, penalty of Rs. 10,00,000/- was imposed on the appellant under Rule 26. This Rule does not provide for imposing penalty on the ground that no excise duty was not paid or short paid.
In the first SCN, where there was confiscation of goods, no penalty was imposed on the appellant by the adjudicating authority and in the proceedings related to the second SCN, where duty is to be demanded, penalty was imposed under Rule 26 which is clearly beyond the scope of this Rule - Since there is no basis for imposing penalty on the appellant under Rule 26 in the second SCN (which neither involved confiscation of goods nor issue of invoices without supplying goods), the penalty cannot be sustained.
Appeal allowed.
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2024 (2) TMI 1013
Non-fulfillment of input output norms as per the allegation of the Department - defective PETs also should be considered as part of the output or not - Applicability of Note 2 of the SION - submission of the Appellant is that in the course of manufacture of PET even hypothetically speaking, no manufacture can produce 100% correct quality quantity of PET - time limitation - HELD THAT:- There are force in the Appellant’s contention that the Adjudicating Authority should have considered the defect PETs emanating in the course of their final manufactured product towards the SION fulfillment.
It is also seen from the records that Note 2 was issued by the Committee after proper verification of the technical details furnished by the Appellant. This Note 2 cannot be treated as a new norm prescribed for the future manufacture only. This simply prescribes the norms for normal production which are being carried out by the Appellant all along. Therefore, the Adjudicating Authority is in error in taking the stand that this Note 2 cannot be applied for the goods manufactured during the past period.
Time Limitation - HELD THAT:- So far as the Appellant’s submissions on limitation are concerned, there are force in the same. The Appellant was registered EOU and was filing the ER-2 and ER-5 Returns regularly and data contained in these Returns have been considered by the Department for issue of the Show Cause Notice. Therefore, allegation of suppression does not sustain. The Department has committed a grave error by issuing the second Show Cause Notice once again invoking the extended period.
It is surprising that the Adjudicating Authority has relied on the Nizam Sugar Factory Larger Bench decision, after this LB [1999 (10) TMI 123 - CEGAT, NEW DELHI] was overturned by the Hon’ble Supreme Court long ago in NIZAM SUGAR FACTORY VERSUS COLLECTOR OF CENTRAL EXCISE, AP [2006 (4) TMI 127 - SUPREME COURT]. In view of these facts, we hold that the confirmed demands cannot sustain for the extended period in respect of the both Show Cause Notices.
For the confirmed demand in respect of the normal period, (March 2009 to October 2009), the matter is remanded to the Adjudicating Authority to consider the following facts.
(i) Get the details of defective PET manufactured during this period and give the benefit of such quantities holding that they are part of the total manufactured quantity.
(ii) Consider the amendment brought in under Note 2 of the SION and give the benefit to the Appellant.
After considering these two issues, the net quantification is required to be done. If any demand is confirmed by the Adjudicating Authority after such re-quantification, the Appellant is required to pay the interest - Appeal disposed off.
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2024 (2) TMI 961
Permission to withdraw the petition - Maintainability of petition - availability of alternative remedy - HELD THAT:- Learned counsel for petitioner seeks leave to withdraw the petition, reserving the right of the petitioner to avail of appropriate remedies in law.
Petition is dismissed as withdrawn.
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2024 (2) TMI 960
Demand of unutilized carried forward Cenvat balance invoking the Rule 11(3) (ii) of the Cenvat Credit Rules, 2004 - denial of carrying forward of balance credit on the ground that the same shall stand lapsed as the appellant have opted for simultaneous benefits under notification no. 29/2004 & 30/2004-CE - HELD THAT:- As submitted the Appellant has maintained separate records, however the adjudicating authority without verifying the said fact demanded the Cenvat of unutilsed balance while opting for exemption notification No. 30/2004-CE by invoking the Rule 11(3)(ii) of Cenvat Credit Rules, 2004.
From the careful reading of the Rule 11(3), it makes clear that the sub Rule (3)(i) covers the goods that are exempt conditionally whereas sub Rule (3)(ii) would apply to those goods to which exemption under Section 5A of the Central Excise Act, 1944 is granted absolutely. The said rule provides that in any case, the Cenvat credit on stock of input lying in stock, in process and contained in finished goods needs to be reversed however, as regard the balance Cenvat credit after such reversal shall lapse only in a case where the exemption notification is absolute. In the present case, notification no. 30/2004-CE is not an absolute notification - Since the above condition contained in the notification No.30/04-CE, in such case in terms of clause (ii) of Rule 11(3) of Cenvat Credit Rules, 2004, the provision of lapsing of balance Cenvat credit will not be applicable. This issue has been considered in a catena of judgments which are cited by the appellant.
However it is observed that the lower authority confirmed the demand of unutilized carried forward Cenvat balance only invoking the Rule 11(3) (ii) of the Cenvat Credit Rules, 2004 but not properly verified the factual aspects such as whether appellant have reversed the credit in respect of stocks as provided under Rule 11(3)(i) of the Rules, 2004, the claim of the appellant maintaining separate records and not availing the Cenvat credit on the input used in the goods cleared under Notification No. 30/2004-CE, etc. therefore we are of the view that the matter needs to be reconsidered.
The impugned order is set aside. Appeals are allowed by way of remand to the adjudicating authority.
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2024 (2) TMI 959
Interest on refund of Education Cess - interest denied on the ground that the refund claimed was on account of pre-deposit whereas the principal amount was reversed by the appellant - HELD THAT: This Bench has considered the impugned issue in the case of M/S CADILA PHARMACEUTICALS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, JAMMU [2024 (2) TMI 668 - CESTAT CHANDIGARH] where the Bench observed If the Department is barred from raising demands for the refunds already granted, the appellants also cannot seek interest on the refunds already granted.
Hon’ble Apex Court in the case of COMMISSIONER OF CGST AND CENTRAL EXCISE (J AND K) VERSUS M/S. SARASWATI AGRO CHEMICALS PVT. LTD. [2023 (7) TMI 542 - SC ORDER] observed that the subsequent decision of this Court overruling M/S. SRD NUTRIENTS PRIVATE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE GUWAHATI [2017 (11) TMI 655 - SUPREME COURT] in the case of M/S. UNICORN INDUSTRIES VERSUS UNION OF INDIA & OTHERS [2019 (12) TMI 286 - SUPREME COURT] cannot have a bearing on past decisions which had attained finality although they had followed SRD Nutrients (P) Limited, which was subsequently overruled in M/s Unicorn Industries. Otherwise, a pandora’s box would be opened and there would be no end to litigation, which is against public policy.
The appellants have not made out any case for grant of refund - Appeal dismissed.
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2024 (2) TMI 958
Recovery of of erroneously availed refund under Section 11A of the Central Excise Act, 1944 along with interest under Section 11AB of the Act and also imposed equivalent penalty under Section 11AC of the Act - failure to comply with the substantive condition of N/N. 56/2002-CE dated 14.11.2002 requiring utilization of available credit before payment of duty from the PLA - appellant have received certain inputs by virtue of which Cenvat Credit was available to them, was never disclosed to the department till its detection by the department - suppression of facts with intent to avail exemption by way of irregular refund - time limitation.
Whether the ground on which the refund has been denied is legally sustainable or not? - HELD THAT:- The appellant have in fact complied with the conditions of the Notification No. 56/2002-CE dated 14.11.2002 and in terms of conditions of the Notification, the appellant had utilized the entire amount of Cenvat Credit lying in their Cenvat Credit account and thereafter, balance amount was paid through PLA and accordingly, claimed the refund of such amount of the duty. Further, it is seen that the appellant have not availed the Cenvat Credit on furnace oil under bonafide belief that the same is not available, but the learned Commissioner has drawn the conclusion that the Cenvat Credit was not availed with intention to claim excess refund.
The learned Commissioner failed to appreciate that had there been the balance in their Cenvat Credit account, the appellant could not have paid the duty through PLA. The learned Commissioner has also wrongly interpreted the meaning of the expression ‘Cenvat Credit available to the appellant on the last day of month’ used in the Notification No. 56/2002-CE. In this regard, it is to be noted that when the manufacturer receive the inputs/capital goods, subject to fulfillment of other conditions, the Cenvat Credit pertain to the said inputs/capital goods would accrue to them but would not automatically be available in the Cenvat Register, but when the manufacturer took the Cenvat Credit in the Cenvat Register, at that time it can be said that the credit is available to the appellant.
It is pertinent to mention that para 1A of the said Notification provides the utilization of Cenvat Credit which comes into existence only after making entry in the Cenvat Credit account and till that time, it is not a Cenvat Credit. Further, the refund sanctioning authority also examined the Cenvat Credit account before sanctioning the refund and the refund will only be sanctioned of the duty paid in cash/through PLA after utilization of Cenvat Credit for the relevant month as per the condition of the Notification. It is the common practice that self credit /refund claimed on duty paid in cash/through PLA, is allowed after considering the balance of Cenvat Credit available/lying in the Cenvat Register on the last day of the month.
It is further found that in the present case, it is not the stand of the Department that it has sanctioned/approved, refund of duty which was not paid by the appellant, but this is the case, in which the Department has sanctioned refund equal to the amount which was paid by the appellant in cash or through PLA, therefore, it cannot be said that this is a case of excess availment of refund by not complying with the condition of the said Notification.
Time Limitation - Suppression of facts or not - HELD THAT:- It cannot be understood that how in the facts of the present case, suppression can be alleged. If the appellant could have availed Cenvat Credit on inputs i.e. furnace oil, then, they would not have paid more duty in cash and would have claimed refund of lesser amount, whereas, in fact in this case, the appellant have paid the duty in cash/through PLA and thereafter claimed refund and hence, entire transaction is revenue neutral and therefore, extended period is not invokable in the present case. Accordingly, the demand is barred by limitation.
The impugned order is not sustainable in law and same is set aside - appeal allowed.
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