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Central Excise - Case Laws
Showing 501 to 520 of 81910 Records
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2024 (12) TMI 77
Denial of CENVAT credit - levy of penalties - huge physical shortage of raw materials, than the recorded stock - HELD THAT:- It is found that the impugned order was passed on the same issue in the matter of four show cause notices. In the matter of two show cause notices bearing Nos. DGCEI/AZU/36-105/2014-15 dated 15.07.2015 and DGCEI/AZU/36-106/2014-15 dated 15.07.2015, this Tribunal in ANUPAM INDUSTRIES LIMITED, DHARAMPAUL ASSOCIATES, KESHAV STEEL AND MEHUL PATEL VERSUS COMMISSIONER OF C.E. & CUSTOMS-ANAND [2024 (6) TMI 842 - CESTAT AHMEDABAD] allowed the appeals by setting aside the impugned order. Since the present appeals are out of the same impugned order involving same issue and identical facts, the issue in the present case is no longer res-integra.
In view of above order, it can be seen that issues in the present appeal as well as in the appeals disposed of by the above order are identical in all respect, therefore, following the ratio of the above decision, in the present case also, the demand is not sustainable.
Appeal allowed.
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2024 (12) TMI 76
Reversal of CENVAT Credit on input services - amount of 10.3% reversed by the appellant in terms of Rule 6(3) of Cenvat Credit Rules, 2004 - application of Section 11D of Central Excise Act, 1944 - HELD THAT:- From the plain reading of Section 11D, it is found that firstly the recovery under Section 11D can be made only when an asseesee recovers any amount in the name of excise duty and does not deposit to the government exchequer. In the present case the amount so recovered, firstly not a duty of excise and secondly, the same amount has been reversed by the appellant. Therefore, on both the counts Section 11D cannot be invoked. This very issue has been clarified by the CBEC Circular No.870/08/2008-CX dated 16.05.2008 - From the circular it is has been clarified that any amount reversed under erstwhile Rule 57CC of Central Excise Rules, 1944 or Rule 6 (3) (1) of Cenvat Credit Rules, 2004and even though the same is recovered from the customers, the provision of Section 11D shall not apply. Therefore, the present issue stands clarified by the board under the aforesaid circular.
Thus, the amount reversed by the appellant under Rule 6(3) and even though recovered from the customer, provision of Section 11D shall not apply. Hence, the demand under Section 11D is not sustainable.
The impugned order is set aside - Appeal is allowed.
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2024 (12) TMI 75
Clandestine removal - evasion of Central Excise Duty by diversion of duty paid inputs i.e. imported plastic granules of various grades from Mumbai port to Halol, Ahmedabad, Vadodara, Vapi - non-receipt of the inputs in the factory of the Appellant - shortages of finished goods detected at the time of visit of the officers - denial of Cenvat credit.
Evasion of duty - HELD THAT:- Inasmuch as in the present case the entire case of the Revenue is based upon the shortages detected at the time of visit of the officers, without there being any other evidence. It is seen that the judicial view is that the stock taking would be conducted in a proper manner and considering all the stock lying in the factory. It cannot be on the basis of eye estimation or otherwise. The Hon’ble Gujarat High Court in the matter of COMMR. OF C. EX., CUS. & SER. TAX, DAMAN VERSUS NISSAN THERMOWARE P. LTD. [2010 (12) TMI 487 - GUJARAT HIGH COURT], observed that mere statement of the representative of the assessee at the time of stock verification is not sufficient which was retracted subsequently. The confessional statement of an accused in criminal proceedings cannot be put on a par with a statement recorded during preventive checks - In the present case, it is found that Appellant claimed that the said materials were lying at their factory and during the search officers not considered the finished goods available in various sections/sheds, appellant also produced the CCTV footage which was also not considered by both the adjudicating authority and no enquiry was conducted thereon - the shortage found at the time of physical verification is not sustainable and that the allegations in the instant case of clandestine removal of the finished goods is not sustainable Accordingly, demand on this account is set aside.
Denial of Cenvat credit of Rs. 72,91,056/- on the allegation that the appellant has availed Cenvat Credit on the strength of invoices issued by M/s. Siddhi Trading Corporation, M/s Eskay-Bee International Pvt. Ltd., M/s. Deluxe Karan Imports Pvt. Ltd. and M/s. Kookey Multi Trading Corporation without receipts of the inputs in their factory - HELD THAT:- On perusal of orders we find that the request for cross-examination of the persons whose statements have been relied upon has been turned down on the ground that witnesses did not appear for cross –examination. The reasons assigned by the Ld. Adjudicating authority below to reject cross-examination is clearly unsustainable in legal parlance for the obvious reason that no adverse inference can be drawn against assessee whose statements are to be relied by the Revenue without ascertaining the veracity in the absence of cross-examination - In an almost identical situation, this Tribunal in the case of ARSH CASTINGS PVT. LTD. VERSUS COLLECTOR OF CENTRAL EXCISE, CHANDIGARH [1995 (9) TMI 156 - CEGAT, NEW DELHI] has observed that 'If witness do not turn up for cross-examination, it is open to the adjudicating authority to proceed with the adjudication without relying on these statements against the person so charged. Failure of a witness to appear for cross-examination will not be a ground to penalise the appellants in law when the appellant is entitled to an opportunity of cross-examination of third party on whose statement’s reliance is placed.'
The statement of persons whose cross-examination was allowed but they do not turn up for cross-examination cannot be relied upon and have to be excluded from evidences. On the basis of said statements no cenvat demand is sustainable. Revenue if chooses not to examine any witnesses in adjudication their statement are not considerable as evidence - the Tribunal in the case of M/S NIDHI AUTO PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, NOIDA-I [2019 (6) TMI 899 - CESTAT ALLAHABAD], while relying on the ratio laid down by the Hon’ble High Court in the case of Parmarth Iron Pvt. Ltd. has held that when the Revenue does not allow cross-examination of any prosecution witness then Revenue cannot rely on the statement given by such prosecution witness for confirmation of demand.
In the present matter receipts of the goods in factory clearly established by the Appellant with documentary evidences. Further, the investigation is silent as to how the Appellant-manufacturer, manufactured finished material without receiving the inputs. The law is settled that as long as duty payment is accepted on outputs, the benefit of credit available on input cannot be denied. Therefore, there are no substantial evidences which result the disallowance of credit - the appellant have satisfied the requirement of receipt of inputs along with cenvatable invoices in their factory and accordingly, the Cenvat credit taken by them is in accordance with the scheme of the Act read with Cenvat Credit Rules.
The impugned order is set aside - appeal allowed.
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2024 (12) TMI 74
Refund claim of CVD and SAD paid - non-fulfilment of export obligations in respect of goods imported before 01.07.2017 under AA and EPCG schemes - HELD THAT:- The appellant have paid CVD & SAD for the relevant period that is prior to 01.07.2017 at that time the appellant was eligible for Cenvat credit in respect of CVD & SAD, since the said duties were paid after 01.07.2017, neither the same could have been used as Cenvat credit under Cenvat Credit Rules, 2004 nor the same can be credited to electronic credit ledger to meet these eventualities. The legislature have provided the refund of the said amount under Section 142 (3) of CGST Act, 2017 read with Section 11B of Central Excise Act, 1944. Therefore, there is absolutely no ambiguity in the provision for refund of such duties which was availed as Cenvat credit for the period prior to 01.07.2017 in terms of Section 142 (3) of CGST Act, 2017.
This issue is no longer res-integra as the same has been decided in various judgments - In CCE v. Aculife Healthcare Pvt. Ltd [2024 (5) TMI 190 - CESTAT AHMEDABAD] wherein, this Tribunal has upheld the granting of refund to the assessee of CVD & SAD paid after introduction of GST, on imports made prior to introduction of GST, due to non-fulfilment of export obligations. This Hon’ble Tribunal has upheld the granting of refund under Section 142(3) of the CGST Act, 2017 read with Section 11B of Central Excise Act, 1944, after taking into consideration the judgment of the Hon’ble Tribunal at Chennai in the case of Servo Packaging Ltd. [2020 (2) TMI 353 - CESTAT CHENNAI].
The appellant are legally entitled for the cash refund of Cenvat credit of CVD & SAD, eventhough, paid after 01.07.2017 in terms of Section 142 (3)of the CGST Act, 2017.
The impugned order is not sustainable, hence the same is set aside. The appeal is allowed.
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2024 (12) TMI 73
CENVAT Credit - availment of credit based on forged invoices without getting material - rejection of cross-examination of witnesses - violation of principles of natural justice - HELD THAT:- This Tribunal in the case of M/s Mittal Ceramics [2024 (11) TMI 397 - CESTAT CHANDIGARH] arising out of the same investigation, has remanded the matter back to the adjudicating authority for a fresh decision after affording opportunity of cross-examination of the material witnesses after relying upon the decision of the Hon’ble Punjab & Haryana High Court in the case of Jindal Drugs Pvt. Ltd. Vs UOI [2016 (6) TMI 956 - PUNJAB & HARYANA HIGH COURT] as well as by this Tribunal in the case of M/s Lauls Ltd. [2023 (7) TMI 1113 - CESTAT CHANDIGARH] and M/s Tibrewala Industries (P) Limited [2023 (7) TMI 1112 - CESTAT CHANDIGARH] wherein it was held that the cross-examination of witnesses whose statements were relied upon by the Revenue to make out a case against the assessee has to be allowed. By following the ratio of the above said decisions, the impugned orders are not sustainable and therefore, the same is set aside and the cases remanded back to the Adjudicating Authority for a fresh decision after affording opportunity of cross-examination of the material witnesses and by following the procedure as prescribed in Section 9D of the Central Excise Act.
The appellants are directed to cooperate with the Adjudicating Authority for a speedy disposal of the case - appeals are allowed by way of remand.
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2024 (12) TMI 10
Clandestine manufacture and removal - alleged fraudulent availment of cenvat credit on the strength of invoices issued by their Unit-II located at Coimbatore without actually receiving the goods - levy of penalty on the appellants - HELD THAT:- The appellant’s factory was visited on 14.09.2005 on the basis of intelligence about indulgence in clandestine manufacture and clearance of electrical stampings and parts of motors and also fraudulent availment of cenvat credit on invoices without receiving the inputs. Voluminous records have been seized during the search operation and subsequently statements of various persons including the employees of the appellant have been recorded. The evidences that have been brought on record revealed that the appellant has indulged in clandestine manufacture and clearance of the excisable goods without payment of duty; also in the truck load cleared excess quantity of goods than the quantity mentioned in the invoices for clearance.
The argument of the appellant that only on the basis of these statements and without any corroborative evidence from the suppliers of raw materials, consumption of electricity, purchaser of the goods since not investigated and brought on record, the confirmation of the demands and recovery of cenvat credit alleging fraudulent availment cannot be sustained. Similar arguments have been raised by the appellant before the Special Court for Economic Offences at Bangalore which has been dealt at length and ultimately the Court analysing the evidences and statements of witnesses called for who were subjected to examination-in-chief and cross-examination, and also referring to various documentary evidences placed before the Court by the prosecution and taken on record, arrived at the conclusion that there had been manufacture and clandestine clearance of excisable goods and consequently convicted all the accused who are appellants.
The requirement of evidence to prove a case in a criminal case is more rigorous than in comparison to confirmation of demand by the adjudicating authority on the principle of preponderance of probability. In the present case, on a trial to criminal liability, the Court has arrived at the conclusion that there has been evidence of clandestine manufacture and clearance of the goods and fraudulent availment of cenvat credit which rests on the evidences and the witnesses who have admitted before the Court in addition to their admission before the authorities which have been recorded under Section 14 of the Central Excise Act, 1944. The argument of the learned advocate disputing the said evidences cannot be acceptable. Further, it is found that the learned Commissioner analysing the records recorded a detailed finding which corroborates the statements furnished by the witnesses. Therefore, the contention of the appellant that allegation of clandestine clearance of goods cannot be sustained is also devoid of merit.
The confirmation of demand of duty on goods manufactured and cleared clandestinely amounting to Rs.27,46,833/- confirmed in the impugned order with interest and equivalent penalty under Section 11AC of the Central Excise Act, 1944 is upheld. Also, wrong availment of cenvat credit of Rs.2,72,388/- only on the basis of invoices without receipt of inputs confirmed in the impugned order with interest and equivalent penalty under Rule 15(2) of Cenvat Credit Rules, 2004 read with Section 11AC of Central Excise Act, 1944 is upheld.
The penalty imposed on the other appellants viz. Mr. G.R. Govindarajan, Managing Director, Mr. S. Rajamannar, CEO, Mr. R. Rajendran, Manager-Accounts and Mr. R.N. Ramesh, In-charge of Despatches under Rule 26 of the Central Excise Rules, 2002 is upheld but reduced to Rs.25,000/- each in respect of Mr. G.R. Govindarajan, Managing Director, Mr. S. Rajamannar, CEO; to Rs.5000/- each in respect of Mr. R. Rajendran, Manager-Accounts and Mr. R.N. Ramesh, In-charge of Despatches. Similarly, the penalty imposed under Section 26 of Central Excise Rules, 2002 on M/s. Raaja Magnetics (RML-II), Coimbatore is reduced to Rs.25,000/- to meet the ends of justice. Penalty imposed under other provisions on all appellants are set aside.
The impugned order is modified to the above extent - the appeals filed by the appellants are disposed of.
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2024 (12) TMI 9
Admissibility of CENVAT Credit availed on inputs at B-59 transferred to Unit B-165 - credit on inputs used in the final product not amounting to manufacture - credit on rejected goods and procedural discrepancies.
Admissibility of the credit availed on inputs received in their factory and later transferred to their other Unit B-165 having separate Central Excise registration - HELD THAT:- The appellant had accounted for the receipt of the inputs and its transfer to their other Unit at B-165 under proper challans which have been accounted there in their records, later consumed in the manufacture of finished goods cleared for export on payment of duty. Thus, the entire movement of the inputs from the stage of receipt at B-59 till the clearance of the final product on payment of duty from B-165 had been duly recorded. On going through the said documents, it is opined that the appellant could able to establish the receipt and transfer of inputs and its proper use at Unit B-165 to the satisfaction of the authority. In these circumstances, there is no justification for denial of the cenvat credit of Rs.72,97,860/- merely because necessary permission was not obtained for clearance of finished goods on payment of duty from Unit B-165 , instead of bringing it back to their Unit at B-59.
CENVAT credit of Rs.18,24,719/- availed on inputs that were used in the manufacture of finished goods was denied on the ground that the process of conversion of inputs into final products does not amount to ‘manufacturer’ - HELD THAT:- This issue has been considered by this Tribunal in their own case and it has been observed that the process viz. drilling, burr removal, grinding, blackening etc. as per the specification of customers undertaken by the appellant result into the emergence of a new product having distinct identity, use and hence amount to manufacture, vide Final Order [2023 (10) TMI 958 - CESTAT BANGALORE]. Thus, the credit on this count is also admissible.
Admissibility of cenvat credit of demand of Rs.5,60,978/- on rejected goods - HELD THAT:- Credit cannot be denied merely on the ground of affixation of wrong seal indicating the receipt of returned goods at Unit B-165, which pertains to B-49, when the documents submitted reveal that the rejected goods were duly received recorded as inputs and reprocessed and cleared on payment of duty on the processed goods.
Extended period of limitation - penalty - HELD THAT:- The demand pertains to the period December 2004 to July 2005 and the show-cause notice was issued on 08.08.2007 invoking suppression of facts which cannot be sustained when all movements of inputs from B-59 to B-165 had been duly recorded by the Appellant and clearance of finished goods effected on payment of appropriate Central Excise duty. Therefore, the demand is also barred by limitation and cannot be sustained. Further, we find that the transfer of raw materials and utilisation of credit availed on inputs used in the manufacture of finished goods later cleared on payment of duty relate to the appellant’s own units at B-59 and B-165, therefore imposition of penalty on the appellant also cannot be sustained.
The impugned order is set aside - appeal is allowed.
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2024 (12) TMI 8
Liability to pay Excise duty on the scrap/waste generated during the job work - whether the appellant who is the principal manufacturer and has sent these raw materials to the job workers for conversion in terms of Notification No. 214/86-CE dated 25.03.1986, is required to pay Central Excise duty in respect of waste and scrap generated at the job workers factories and cleared by the job workers without payment of duty for the disputed period? - HELD THAT:- The Tribunal Chennai vide its Final Order No. 41199/2024 dated 10.09.2024 [2024 (9) TMI 1245 - CESTAT CHENNAI] has decided the issue in favour of the assessee.
The Impugned Order dated 15.03.2016 of the Commissioner of Central Excise (Appeals-I), Chennai cannot sustain and so ordered to be set aside - Appeal allowed.
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2024 (12) TMI 7
Default in timely payment of duty on goods cleared - Contravention of Rule 8(3A) of the Central Excise Rules, 2002 (Rules) - extended period of limitation - penalty - period from April 2011 to July 2011 and August 2011 to December 2011 - doctrine of merger - HELD THAT:- The issue as to whether the Assessee can utilise the CENVAT credit toward payment of duty when in default is no more res integra and many judicial authorities have held that the provision of Rule 8(3A) of Central Excise Rules, 2002 as ultravires to the Main Act. The Hon’ble Gujarat High Court in the case of M/s. Indsur Global Ltd. Vs. UOI [2014 (12) TMI 585 - GUJARAT HIGH COURT] struck down the condition in Rule 8(3A) for payment of duty “without utilizing the CENVAT credit” as unconstitutional and invalid.
It is found that the Department had preferred an appeal against the decision passed in Indsur Global Ltd. before the Hon’ble Supreme Court. The Ld. Counsel for the appellant has submitted before us that the appeal filed by the Department in Indsur Global Ltd. has been disposed by the Hon’ble Apex Court in UNION OF INDIA & ORS. VERSUS INDSUR GLOBAL LTD. [2024 (7) TMI 1559 - SC ORDER (LB)]. The appeal was referred to the Lok Adalat proceedings before the Hon’ble Supreme Court and settlement has been arrived at. The effect is that the stay order having merged with the order of settlement, stands vacated. The decision rendered by the Hon’ble High Courts of Gujarat and Madras in the above cases would revive and be in force as a precedent.
The demand raised alleging violation of Rule 8(3A) cannot sustain and requires to be set aside. Ordered accordingly. Since the demand itself does not sustain, the invocation of extended period and imposition of penalties does not arise.
The impugned order is set aside - appeal allowed.
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2024 (12) TMI 6
CENVAT credit - denial of credit paid by sender units, based on the allegation that sender units inflated the value of Soap Noodles stock transferred to the appellants, as compared to the cost of such materials debited by each of the sender units, and the appellants took excess credit - recovery alongwith interest and penalty - whether appellant is entitled to take Cenvat credit of duty paid on inputs in terms of Rule 3 of Cenvat Credit Rules, 2004 or not? - HELD THAT:- Admittedly, the appellant has paid duty on the invoices issued by the sender unit of 115% / 110% of the cost of production in terms of Rule 8 of Valuation Rules, therefore, the appellant is entitled to take cenvat credit of what duty they have paid.
The said issue has been examined by the Hon’ble Punjab & Haryana High Court in the case of VG. STEEL INDUSTRY VERSUS CCE [2011 (5) TMI 154 - PUNJAB AND HARYANA HIGH COURT], wherein the Hon’ble High Court has observed 'even if the duty has been paid in excess of the amount finally held to be payable, unless the excess duty paid has been refunded, the assessee could claim cenvat credit as the department could not get the duty twice'.
Thus, the appellant has correctly taken the cenvat credit as higher duty paid by the supplier which has not been challenged by the Revenue and not the higher duty paid has been refunded to the sender unit.
The Cenvat credit of duty paid on procurement of inputs is admissible and cannot be asked to reverse. In these circumstances, no penalty can be imposed on the appellants - the impugned order is set aside - appeal allowed.
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2024 (12) TMI 5
CENVAT Credit - input services - Air Travel Agent service - Architect service - Business Support Service - Clearing & Forwarding service - Club Membership service - Telephone service - GTA service - Housekeeping service - Design & Development service - Chartered Accountant Services - Sponsorship services - Outdoor Catering services - denial of credit on the ground that the disputed services are not in conformity with the definition of ‘input service’ as per Rule 2(l) of the CENVAT Credit Rules, 2004 - period of dispute involved in the present case is from January, 2005 to January, 2014 - HELD THAT:- The case of the appellants is covered under both the un-amended as well amended definition of ‘input service’. Such definition clause, effective upto 31.03.2011, has specifically provided the phrase “activities relating to business”, for consideration of certain taxable services as ‘input service’, for the purpose of availment of CENVAT Credit of Service Tax paid thereon. Since the appellants are a corporate entity and maintained adequate records to demonstrate that the expenses incurred were in context with the services used by them for their business activities, the disputed services received prior to 01.04.2011 should be considered as input service for the purpose of taking of CENVAT Credit of Service Tax paid thereon.
The definition of ‘input service’ was substituted by Notification No. 03/2011-C.E. (N.T.) dated 01.03.2011 w.e.f. 01.04.2011. The effect of the substituted definition is that the phrase “means” was enumerated in the said definition clause, which covers any services used directly or indirectly, in or in relation to manufacture of the final products and clearance of the finished products upto the place of removal for consideration as ‘input service’. Since such definition clause is very wide and cover various services for consideration as input service, narrow interpretation cannot be placed to deny the benefit of CENVAT Credit availed by the appellants on the disputed services - the CENVAT Credit availed by them on the disputed services are in fact, input services and denial of the benefit of such credit in terms of Rule 14 of the CENVAT Credit Rules, 2004 read with Section 11A of the Central Excise Act, 1944, shall not stand the scrutiny of law.
Considering the submissions of the appellant that they are not contesting the credit of Service Tax paid by them on cable operator service and rent-a-cab service, we hold that the appellants are liable to reverse the CENVAT Credit amounting to Rs.68,709/- availed on such services. Learned Advocate fairly concedes that the said amount of Rs.68,709/- has already been reversed by the appellants. Since such aspect of reversal is required to be examined at the original stage, the original authority is directed to examine such reversal of CENVAT Credit.
The impugned order to the extent it has denied the CENVAT Credit benefit amounting to Rs. 9,49,18,339/- is set aside and appeal to such extent is allowed in favour of the appellants - the original authority should examine the records to ascertain whether, the CENVAT Credit amounting to Rs.68,709/- has already been reversed by the appellant and if such amount had already been reversed, no proceedings shall be initiated by the Department for recovery of the same from the appellants.
Appeal disposed off.
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2024 (12) TMI 2
Valuation of goods transferred to sister units - clinkers transferred by the appellant to their sister concern - to be valued under Rule 4 or Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000? - Revenue Neutrality - Extended period of limitation - suppression of facts or not.
HELD THAT:- This Tribunal in appellant’s own case for their own unit for the period from March 2011 to November 2013 held that Rule 4 read with Rule 11 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 be adopted following the judgment of the Larger Bench of the Tribunal in the case of Ispat Industries case [2007 (2) TMI 5 - CESTAT, MUMBAI-LB]. This Tribunal in M/S. ULTRATECH CEMENT LTD., (UNIT: RAJASHREE CEMENT WORKS), VERSUS COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS [2024 (1) TMI 663 - CESTAT BANGALORE] observed 'we have no hesitation to hold that the appropriate rules for determination of the assessable value of the goods for the transferred clinkers to sister units will be Rule 4 read with 11 of the Central Excise Valuation Rules, 2004 rather than Rule 8 of the Central Excise Valuation Rules, 2000 for the period in question.'
Revenue Neutrality - HELD THAT:- The appellant has argued that the aspect of revenue neutrality is not considered while deciding the case for earlier period. In support, they have referred to the judgment of the Hon’ble Supreme Court in Nirlon Ltd.’s case [2015 (5) TMI 101 - SUPREME COURT]. It is found that the said argument of the learned advocate is misplaced and the principle of law laid down by the Hon’ble Supreme Court has been misunderstood in ascertaining the correct method of valuation applicable for clearance of goods to own unit on stock transfer basis.
The revenue neutrality is not a statutory concept but a principle of equity developed by courts as a mitigating factor in appreciating the intention of the persons while applying the principle of law to a particular situation to determine the reason for non-payment of duty. Revenue neutrality cannot be considered as an incentive not to follow the statutory provision governing principle of valuation solely on the ground that the other unit could avail the benefit of credit of the differential duty payable.
Extended period of limitation - suppression of facts or not - HELD THAT:- This Tribunal for the earlier period while applying the principle of valuation under Rule 4 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 to the circumstances of the case has set aside the demand for the extended period of limitation holding that the same cannot be applicable to cases involving interpretation of statutory principles of valuation and in absence of suppression or misdeclaration of facts on the part of the assessee.
Appeal is modified to the extent of setting aside the demand for the extended period of limitation and the demand with interest to be confirmed for the normal period of limitation. All these appeals are remanded to the adjudicating authority to redetermine the assessable value applying the principle of Rule 4 read with Rule 11 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 and compute the differential duty with interest for the normal period. As the issue pertains to interpretation of provision of Central Excise (Valuation) Rules, 2000 imposition of penalty is also not warranted and accordingly not sustainable, hence, set aside.
Appeal disposed off by way of remand.
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2024 (11) TMI 1442
Clandestine removal - failure to provide the copy of relied upon documents to the appellant, despite the direction of this tribunal - availment of irregulat CENVAT Credit - Admissibility of statements - Violation of principles of natural justice - extended period of limitation - penalties - HELD THAT:- The Ld. Commissioner by relying the letter dated 05.01.2018 of DGGI, MZU held that relied upon documents have been provided to the appellant alongwith SCN on 07.01.2009 and the same were duly acknowledged by the authorized signatory of appellant. The said disputed acknowledgement of relied upon documents with SCN has already been disputed by the appellant before this Tribunal in first round of litigation and after that considering all the facts and correspondences, this tribunal has remanded the matter to adjudicating authority with the specific direction to supply the relied upon documents to the appellant. It is undisputed that the said dispute related to acknowledgment of relied upon document on 07.01.2019 was considered by the AJAY F GARG AND ND METAL INDUSTRIES LTD VERSUS C.C.E. & S.T. -DAMAN [2021 (10) TMI 584 - CESTAT AHMEDABAD], whereby this Tribunal remanded the matter to the Ld. Adjudicating Authority with specific directions to provide the copies of relied upon documents to the appellant and which was accepted by the department and thus became final. Therefore, it was not open for the Ld. Commissioner to pass the order ignoring the remand direction of their higher authorities and confirming the demand on the same grounds as taken in the first round which was set aside by the Tribunal.
On perusal of the adjudication order and correspondences on various dates between appellant and department, it is found that in the present matter appellant have made several correspondences with department and adjudicating authority even then the documents were not supplied to them. Even the direction of this tribunal to adjudicating authority to provide the copy of relied upon documents, who has not supplied the documents to Appellant. But the Ld. Commissioner observed that the documents were supplied with the show cause notice, which is totally misconceived, inconsistent and contradicting. The entire Cenvat demand without supply of relied upon documents is against the principles of natural justice and hence the show cause notice stands vitiated. For this reason itself, the Cenvat demand and penalty cannot sustain.
In Tribhuvandas Bhimji Javeri v. Collector of Central Excise, [1997 (1) TMI 86 - SUPREME COURT], the Hon’ble Apex Court held that non-return of the documents by the authorities may severely prejudice the right of the party to offer the proper explanation and to that extent the principles of natural justice may stand violated. In absence of supply of the copies of the documents a party may be deprived of from leading proper evidence and he may not be able to give proper answer of the case against him by adducing positive evidence in support of his own case together with the right to contradict all other allegations.
The entries made in the DLR/MLR do not prove that the container/ imported inputs were transported only up to the destination given in such DLR/MLR. It is not the entry in the DLR/MLR but the transportation charges which are relevant as these indicate the actual transportation. As observed the above, the veracity of the said documents recovered from the premises of the third party i.e. M/s PSTC, is not known. Hence, it cannot be the sole basis for alleging diversion of imported inputs by Appellant. Additionally, it is important to note that the basis of preparation of said documents has not been made available to the Appellant, therefore, it would be a miscarriage of justice if such unsubstantiated documents are used as evidence against the Appellant - Merely because the drivers have not accurately maintained the MLRs, no adverse inference can be drawn on against the Appellant on the basis of such third-party records.
If the allegation of department accepted and appellant has availed the Cenvat credit without receipts of the goods, than the duty payment on finished goods during the disputed period by the appellant could not be made from the PLA/cash. In such cases where the Cenvat credit was availed without receipt of the goods the Cenvat Credit should be accumulated in Cenvat credit ledger. However in the present case this is not a situation. Copy of PLA, Excise duty payment ledger submitted by the Appellant clearly show the duty payment by cash during the disputed period. In such circumstances huge Cenvat credit demand only on the basis of third party documents and statement of persons without corroborative evidence is clearly not sustainable.
It is clear that in adjudication, the adjudicating authority is required to first examine the witness in chief and also to form an opinion that having regard to the facts and circumstances of the case, the statements of the witness are admissible in evidence. Thereafter, the witness is offered to be cross-examined. In the present matter Ld. Adjudicating Authority failed to do such exercise. Therefore, none of the statements were admissible evidence in the present case and no Cenvat demand is sustainable on the basis of statements of persons.
Conclusion - i) The failure to provide relied upon documents constituted a violation of natural justice, rendering the adjudication order unsustainable. ii) The Cenvat credit demand was not supported by reliable evidence, as the department failed to prove the alleged diversion of inputs. iii) Third-party records, without corroboration, cannot be relied upon to substantiate claims of diversion or clandestine removal. iv) Statements not admitted as evidence under Section 9D cannot be used to confirm demands. v) The extended period for demand was inapplicable due to the absence of fraud or willful misstatement. vi) Penalties were unjustified due to the lack of cogent findings.
The impugned order is set aside - appeal allowed.
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2024 (11) TMI 1418
CENVAT Credit - invoices that are addressed to unit I (another unit) of the appellant - procedural discrepancies in the invoicing - contravention of the provisions of Rule 3(1) and Rule 9(1) of the Cenvat Credit Rules 2004 - invocation of extended period of limitation.
CENVAT Credit - HELD THAT:- The learned adjudicating authority finds that as per the provisions of Rule 9(2) of the Cenvat Credit Rules, 2004, and as per the decision rendered on the subject issue by various Tribunals, when the substantive issue of receipt of the goods in the factory of the manufacturer and its use in the manufacture of the final product is established beyond doubt, any other procedural lapses such as mistakes in the invoices, should not lead to denial of the substantial benefit like cenvat credit. Having found thus, he proceeds to indicate that the substantive point to be proved for eligibility of cenvat credit are that (a) the goods should have been received in the factory of manufacture and should have been used in or in relation to the manufacture of the final products and (b) the services should have been received by the manufacturer and should have been used in or in relation to the manufacture of the final products.
There are no reason to disbelieve the appellant’s contention of having produced the relevant records for verification, merely because the Divisional Assistant Commissioner who has otherwise conducted the verification of records as instructed has, instead of forwarding all the records and registers, chosen to forward only the screen shots of the GRNs, which documents would readily form a point of reference for the goods details of which were verified - had the learned adjudicating authority harboured any doubt that the Divisional Assistant Commissioner has not carried out the verification report as instructed, it was incumbent upon the learned adjudicating authority to have sought clarification, and if necessary, directed that the verification be done as instructed.
The burden of proof of admissibility of cenvat credit in respect of the goods and services by reflecting the requisite details in the appellant’s records has been initially discharged by the appellant. Under the said circumstances, the onus of proving that the goods have not been received and utilised as alleged in the show cause notice, has then shifted to the Department. Hence, in the absence of any allegation in the show cause notice, or a finding by the learned adjudicating authority, of the said goods having been diverted based on positive evidence of such diversion; and in the absence of any allegation in the show cause notice, or a finding by the learned adjudicating authority, that the goods manufactured and cleared as reflected in the ER1 returns, have been produced utilizing inputs other than those accounted as received in the books of accounts of the appellant, based on positive evidence of such receipt of other necessary inputs, the said onus remains undischarged by the Department.
The appellant is eligible to avail credit on the invoices that are addressed to unit I of the appellant, which substantive benefit cannot be denied for the said procedural lapse and that the verification report submitted by the jurisdictional Divisional Assistant Commissioner sufficiently proves that the goods and services have been received and consumed in the factory of the appellant to the extent verified by him. Hence, the burden to prove the admissibility of the cenvat credit in respect of such goods and services cast on the appellant in terms of Rule 9(5) and Rule 9(6) of the Cenvat Credit Rules, 2004, stands sufficiently discharged.
Extended period of limitation - Penalty - HELD THAT:- The allegation relating to wilful mis-statement/suppression of facts with intent to evade payment of duty is not sustainable and consequently extended period is not invocable and mandatory penalty is also not liable to be imposed.
Conclusion - Substantive benefits like CENVAT credit should not be denied due to procedural lapses if the substantive conditions are met. The extended period of limitation requires clear evidence of intent to evade duty.
The demand made in the impugned order in original being untenable, the demand of consequential interest and the penalty imposed also do not sustain - appeal allowed.
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2024 (11) TMI 1410
CENVAT Credit - whether a banking company would be entitled to avail CENVAT credit of service tax paid to Deposit Insurance and Credit Guarantee Corporation for insuring deposits? - HELD THAT:- It needs to be noted that after the Larger Bench of the Tribunal answered the reference, a Division Bench of the Tribunal in M/S. SOUTH INDIAN BANK, BANK OF BARODA, CANARA BANK, CORPORATION BANK, KARNATAKA BANK, SYNDICATE BANK, CATHOLIC SYRIAN BANK LTD. VERSUS C.C.,C.E. & S. T-CALICUT, C.C.E & ST, MANGALORE, C.C. CE & S.T, TRIVANDRUM, STATE BANK OF MYSORE [2020 (11) TMI 120 - CESTAT BANGALORE] and against the decision of the Division Bench of the Tribunal, the department filed an appeal before the Kerala High Court.
The reference made to the Larger Bench has, therefore, to be answered in the same terms as was answered by the Larger Bench of the Tribunal in M/S. SOUTH INDIAN BANK VERSUS THE COMMISSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX-CALICUT [2020 (6) TMI 278 - CESTAT BANGALORE - LB]. It was held in the reference that 'The insurance service provided by the Deposit Insurance Corporation to the banks is an “input service” and CENVAT credit of service tax paid for this service received by the banks from the Deposit Insurance Corporation can be availed by the banks for rendering “output services.'
Conclusion - The insurance services necessary for statutory compliance in banking operations qualify as "input services" under the CENVAT credit rules.
The appeal may now be placed before the Division Bench of the Tribunal for deciding the appeal on merits.
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2024 (11) TMI 1342
Levy of penalties - wrong availment of CENVAT credit based on fraudulent invoices without receiving goods by the assessee - HELD THAT:- Evidently, Rule 26(2) of the Central Excise Rules provides for imposing penalty on any person who either issues an excise duty invoice without delivery of goods specified therein or abets in making any such an invoice or any other document or abets in making any such document on the basis of which a user of the invoice or the document is likely to take or has taken ineligible benefit under the Act or Rules. In this case, the allegation in the SCN as well as affirmation in the impugned order is that the assessee had taken CENVAT credit on the strength of fraudulent invoices issued by M/s Ridhi Sidhi without supplying of the goods - The role of Shri Prem Jain is as the Director of the assessee and the role of Shri Gyan Jain is as the General Manager of the assessee. Neither the assessee nor Shri Prem Jain nor Shri Gryan Jain have either issued invoices or abetted issuing of the invoices according to the show cause notice or the impugned order. Therefore, Shri Prem Jain and Shri Gyan Jain are not covered by Rule 26 (2).
Rule 15A of CCR, provides for penalty for violations of CCR not elsewhere specified. The CCR provide for availment of CENVAT credit by an assessee subject to some conditions and after following certain procedures. If there are violations of CCR, they can be violations by the assessee - There is also no provision for imposing penalty upon the Director or the General Manager or other functionary of assessee under the CCR. Rule 15A of CCR, therefore, also does not apply to the Director or General Manager of the assessee.
Thus, neither Rule 26 (2) of Central Excise Rules, 2002 nor Rule 15A of CCR under which the penalty was imposed on Shri Prem Jain and Shri Gyan Jain apply to the facts of this case. The penalty imposed on them cannot be sustained as it is imposed without any authority of law - It also needs to be pointed out that while penalties were imposed under two different Rules [Rule 26(2) of the Central Excise Rules and Rule 15A of CCR ] the quantum of penalty imposed under each of them has also not been indicated in the order of the Additional Commissioner which was upheld by the impugned order by the Commissioner (Appeals).
The impugned order is set aside insofar as it relates to the penalties imposed on Shri Prem Jain and Shri Gyan Jain - Appeal allowed.
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2024 (11) TMI 1341
Liability of Appellant to pay Central Excise duty on pre-budgeted stock of branded garments lying in its godown after it has been made taxable by N/N. 12/2011 dated 01.03.2011 - HELD THAT:- The brand names were put by the job-workers and not by the Appellant on the garments manufactured and cleared at the job workers end.
For excise taxable events it is manufacturing itself that would determine the taxability but duty can be levied and collected at a later stage for convenience of administration and removal can be made taxable event in terms of Rule -9A of Central Excise Rules, 1944.
It would be worthwhile to mention that Rule 9-A that was meant for determination of the date of duty and tariff valuation has been deleted from the statute book since 2001 with introduction of New Central Excise Rules in place of old Rules of 1944 and therefore, by invoking the same, duty liability cannot be fastened on the Appellant on the basis of removal of goods from godown when these were already cleared upon payment of NIL rate of duty prevailing then.
The impugned order is set aside - appeal allowed.
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2024 (11) TMI 1340
Benefit of N/N. 33/2022-CE dated 09.07.2012 - liability to pay Education Cess and Secondary Higher Education Cess - recovery alongwith interest and penalty - HELD THAT:- The issue of liability to pay Education Cess as well as Secondary Higher Education Cess in the facts of the present case involves interpretation of statute which issue is sub-judice, before the Hon’ble Apex Court. When such is the case, no mens rea could be attributed to the Taxpayer, especially since the appellant is claimed to have remitted the disputed cess of Rs.88,494/- along with applicable interest thereon vide Challan No. 21 dated 27.10.2014 and hence, there is no scope to burden the appellant with penalty under Section 25 ibid.
The impugned order is set aside - matter remanded back to the Original Authority who shall wait for the verdict of the Hon’ble Apex Court in the case of SRD Nutrients Pvt. Ltd. [2022 (1) TMI 615 - SUPREME COURT] - appeal disposed off by way of remand.
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2024 (11) TMI 1339
Default in payment of duty beyond 30 days from the due dates - bar to utilize the Cenvat Credit - violation of Rule 8(3A) of CCR - Extended period of limitation - penalty - period from January 2011 to March 2014 - HELD THAT:- The issue as to whether the Assessee can utilise the CENVAT credit toward payment of duty when in default is no more res integra and many judicial authorities have held that the provision of Rule 8(3A) of Central Excise Rules, 2002 as ultra vires to the Main Act. The Hon’ble Gujarat High Court in the case of M/s. Indsur Global Ltd. Vs. UOI [2014 (12) TMI 585 - GUJARAT HIGH COURT] struck down the condition in Rule 8(3A) for payment of duty “without utilizing the CENVAT credit as unconstitutional and invalid.
It is found that the Department had preferred an appeal against the decision passed in Indsur Global Ltd. before the Hon’ble Supreme Court. The Ld. Counsel for the appellant has submitted before us that the appeal filed by the Department in Indsur Global Ltd. has been disposed by the Hon’ble Apex Court [2024 (7) TMI 1559 - SC ORDER (LB)]. The appeal was referred to the Lok Adalat proceedings before the Hon’ble Supreme Court and settlement has been arrived at. The effect is that the stay order having merged with the order of settlement, stands vacated. The decision rendered by the Hon’ble High Courts of Gujarat and Madras in the above cases would revive and be in force as a precedent. Under such circumstances, the judgements referred by the Ld. AR does not support the cause of revenue.
The demand raised alleging violation of Rule 8(3A) cannot sustain and requires to be set aside. Ordered accordingly. Since the demand itself does not sustain, the invocation of extended period and imposition of penalties does not arise - the impugned order is set aside - appeal allowed.
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2024 (11) TMI 1338
Levy of central excise duty - debonding of a 100% EOU unit to DTA, on finished and semi-finished goods, which are either exported on bond or cleared in domestic market on payment of excise duty, during 18.12.2012 (cutoff date) to 15.02.2013 (final exit order) - HELD THAT:- The issue of non-payment of central excise duty on final goods on debonding is settled in favour of appellant. Also, prima facie, the other issue that no duty is payable on semi-finished goods is settled in favour of appellant in terms of decisions relied upon in paragraph 2 above. However, it is seen that although the Learned Commissioner took verification report dated 20.01.2017 from jurisdictional office, the same was not furnished to the appellant.
The Hon’ble Supreme Court in KOTHARI FILAMENTS & ANR. VERSUS COMMISSIONER OF CUSTOMS (PORT) KOLKATA & ORS. [2008 (12) TMI 28 - SUPREME COURT] has held that documents relied upon in the adjudication order are required to be supplied to the appellant in terms of principles of natural justice. There are considerable force in appellant’s submission that question of demand of excise duty does not arise if goods are exported which fact can be verified from the CA certificate dated 15.11.2016 which was submitted before the Learned Commissioner, however, the same was not considered. The same needs to be considered.
The matter needs to be reconsidered by the Learned Commissioner/ adjudicating authority by (i) providing the letter dated 20.01.2017 issued by the jurisdictional Assistant Commissioner to the appellant; and (ii) considering the CA certificate dated 15.11.2016 to ascertain claim of export of goods, along with other evidence which may be put on record by the appellant.
The impugned order is set aside and the appeal allowed by way of remand to the adjudicating authority for passing a fresh order.
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