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2016 (1) TMI 972

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..... s of clause (c) read with clause (h) and have deposited the amount so determined, by 30 th June in the succeeding financial year as prescribed. There is no dispute with regard to the CENVAT Credit reworked by the assessee which is attributable to the exempted output services. Further, there is merit in the contention of the assessee that Rule 6 cannot be used as tool of oppression to extract the amount which is much beyond the remedial measure and what cannot be collected directly, cannot be collected indirectly, as well. In case of substantive compliance made by the assessee i.e. calculation of the amount of CENVAT Credit reversible on annual basis and payment of the amount before the prescribed date, the substantial benefit cannot be denied. We also hold that in the garb of Rule 6, the provisions of Section 93 of the Finance Act, 1994 cannot be overridden and/or the exemption provided under the Section 93 of the Finance Act, 1994 cannot be negated by the Cenvat Credit Rules, which is a delegated legislation and subservient to the main Act. Demand set aside - Decided in favor of assessee. - Appeal No. ST/419/10 & ST/92/11, ST/CO/20/11 - Final Order Nos. A/85171-85173/20 .....

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..... how cause notice alleged that Rule 6(3)(ii) provides for requirement of filing declaration under Rule 6(3A) which is mandatory in nature and this option would not be available, if the declaration is filed belatedly. Exercising the option belatedly amounts to not exercising the option at all. The show cause notice also proposed to recover interest under section 75 of the Act, and impose penalty under section 78 of the Act. 2.2 On adjudication of the show-cause notice, the Ld. Commissioner, vide Order-in-Original No. PI/COMMR/ST/01/2010 dated 28.05.2010 confirmed the demand of ₹ 1,62,52,969/- and appropriated the amount of ₹ 5,06,736/- already paid by the appellants towards the same. The Commissioner also ordered for recovery of interest under Rule 14 of the Cenvat Credit Rules, 2004 and appropriated the amount of ₹ 21,658/- already paid by the appellants towards the same. The Commissioner however, waived the penalty under Section 78 read with Section 80 of the Finance Act, 1994. Being aggrieved, the appellant is in appeal before the Tribunal. 3. The learned Counsel urges that for minor procedural irregularities, the substantive benefit cannot be taken away un .....

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..... ed on the decision in the case of M/s Golden Dew Tea Factory v. CCE, Coimbatore, 2007 (219) ELT 362 (Tri - Chennai) as affirmed by the Supreme Court 2008 (221) ELT A 28(SC) to stated that the conditions which give relief from taxation cannot be held to be procedural and are mandatory in nature. Ld counsel submits that the decision in the above case is not applicable to the present case. The above case dealt with an exemption notification where the assessee was eligible to claim exemption from payment of excise duty on fulfillment of certain conditions. The condition to be fulfilled were material for availing the exemption. However, in the present case, the declaration is required to be filed only to provide certain information to the department which is also already available on record through other documents. It is not the case that the department is required to decide the eligibility of the appellants to avail the option under Rule 6(3)(ii), on the basis of the information provided in the declaration. Therefore the ratio of the Golden Dew Tea Factory case (supra) is inapplicable in the facts of the present case. Further a provision cannot be interpreted in such a manner that it f .....

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..... s placed on the ruling of Hon'ble Supreme Court in the case of CIT Vs. National Taj Traders - 1980 (1) SCC 370, wherein it is held that the intention to produce an unreasonable result is not to be imputed to a statute if there is some other construction available. Reliance is also placed on the ruling of the Apex Court in the case of Tirath Singh Vs Bachittar Singh - 1955 (2) SCR 457, wherein it is held as under:- But it is a rule of interpretation well-established that, Where the language of a statute, in its ordinary meaning and grammatical construction, leads to a manifest contradiction of the apparent purpose of the enactment, or to some inconvenience or absurdity, hardship or injustice, presumably not intended, a construction may be put upon it which modifies the meaning of the words, and even the structure of the sentences. (Maxwell's Interpretation of Statutes, 10th Ed., p. 229). Reading the proviso along with clause (b)_ thereto, and construing it in its setting in the section, we are of opinion that notwithstanding the wideness of the language used, the proviso contemplates notice only to persons who are not parties to the petition. It is further conte .....

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..... he receipt of the capital goods in factory and availing credit of duty. The goods were received on 31.3.2000. However, declarations were filed on 12.7.2000 by which time period for filing declaration had expired. Rule 57-T(1) required that before receipt of capital goods, the manufacturer shall file a declaration with the Assistant Commissioner of C. Ex. It was observed that the substantive requirement of claiming Modvat credit of duty paid on the input or capital goods received in the factory is that such goods must have suffered excise duty required to be paid thereon. Further, the capital goods must be received in and used in the manufacturing of end products in the factory. If these conditions are fulfilled then the procedural lapse on part of the assessee in making of declaration or furnishing incomplete particulars should not come in the way of assessee availing Modvat benefit. 3.9 The learned Counsel also relied on the ruling of the Apex Court in the case of CIT vs. Lakshmi Machine Works (2007) 290 ITR 668 (SC), wherein the deduction was provided under Section 88D of the IT Act on the total turn over wherein the formula prescribed, the business profit is proportionately r .....

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..... rda Industries by the assessee under the cover of 'transfer challan' describing therein the said goods as addictive Mixtures or KIMAM/K . The factories of the assessee were inspected and samples drawn of the findinshed products and also statements were recorded. Other units of the assessee were also inspected and it was noticed that the Addictive Mixtures (Kimam) was manufactured at the factory at Delhi was being clandestinely removed for the manufacture of chewing tobacco. It was also noticed that the assessees were manufacturing excisable goods - 'Kimam' falling under the Central Excise Tariff Act, 1985 under Chapter sub-heading No. 2404.49 (upto 22.7.1996) and w.e.f 23.7.1996 under Chapter sub-heading 2404.40, pack the same in the containers of different capacities without obtaining Central Excise Act registration certificate in contravention of the provisions of Central Excise Tariff Act, 1985 read with Rule 4 of the Central Excise Rules, after 14.10.1996 and removal from the factory clandestinely without payment of duty in contravention of the provisions of the Act and the Rules. In such facts, it was held by the Apex Court that the law is well settled that .....

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..... -operative society owns a holding exceeding ten hectares under tea cultivation. Further, clause (c) of the condition provided that the manufacturer shall submit a statement of accounts, in the first week of April, 2000, in a format to be prescribed as proof of having fulfilled the undertaking. Further clause (d) provided that in the event of his failure to satisfy the undertaking, the manufacturer shall be liable to pay duty of excise specified in the First Schedule to the said Central Excise Tariff Act. Admittedly the undertaking was filed after much delay, it was held by this Tribunal that although the assessee who have been held liable to pay duty on the Tea cleared by them during the initial part of the financial year 2000-01, had availed themselves of the benefit of Notification No. 41/99-C.E. in respect of the clearances made prior to 1-4-2000 after satisfying the conditions for such benefit. For 2000-01, they did not file undertakings at the beginning of the financial year. They filed it belatedly. This delay, however, is not enough to hold that it was with intent to evade payment of duty that they chose to clear their product without payment of duty from 1-4-2000 up to t .....

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..... manufacture of exempted goods or for provision of exempted services subject to the conditions and procedure specified in sub-rule (3A). Explanation I.- If the manufacturer of goods or the provider of output service, avails any of the option under this sub-rule, he shall exercise such option for all exempted goods manufactured by him or, as the case may be, all exempted services provided by him, and such option shall not be withdrawn during the remaining part of the financial year. Explanation II.- For removal of doubt, it is hereby clarified that the credit shall not be allowed on inputs and on input services used exclusively for the manufacture of exempted goods or for provision of exempted service. 6.1 Having considered the rival contentions, we find that clause (b) of Rule 6(3A) provides that the manufacturer of goods or the provider of output service shall, determine and pay, provisionally for every month, the amount equivalent to CENVAT Credit attributable to inputs used for provisions of exempted service. Further clause (c) provides, the manufacturer of goods or the provider of service, shall determine finally the amount of CENVAT Credit attributable to the exempted .....

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..... equent period the Commissioner has passed the reasoned order holding that the assessee have filed the declaration, though belatedly, and due to minor procedural lapses, substantial benefit cannot be denied. Learned Commissioner has further observed that the intention of the legislation is that the assessee should not get undue benefit in form of CENVAT Credit, which is attributable to input services used in providing exempted output service. 6.4 It is further observed that there is no dispute with regard to the CENVAT Credit reworked by the assessee which is attributable to the exempted output services. Further, there is merit in the contention of the assessee that Rule 6 cannot be used as tool of oppression to extract the amount which is much beyond the remedial measure and what cannot be collected directly, cannot be collected indirectly, as well. In line with the decision of the Hon'ble Karnataka High Court in the case of Grasim Industries Ltd. (supra), we hold that in case of substantive compliance made by the assessee i.e. calculation of the amount of CENVAT Credit reversible on annual basis and payment of the amount before the prescribed date, the substantial benefit c .....

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