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M/s BEML Limited Versus Commissioner of Central Excise, Bangalore

2016 (7) TMI 988 - CESTAT BANGALORE

Cenvat Credit - manufacture of dutiable and exempted final products - revenue submitted that assessee has neither maintained separate accounts nor paid an amount equal to 5%/10% on the value of clearances of exempted final products in terms of Rule 6(3)(i) of the Cenvat Credit Rules, 2004. - Extended period of limitation - Held that:- though the appellant claims that they reversed Cenvat credit on account of input services, the Revenue has not got such proof of reversal of Cenvat credit on input .....

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f fraud or collusion or any willful mis-statement or suppression of facts or contravention of any provisions of laws concerning Central Excise and/or Service Tax with an intention to evade payment of duty on the part of the appellant for recovery of any short levy or short payment of duty for the period of five years from the relevant date. Here, the Show-cause notice has been issued on 17.8.2012. - Therefore, any demand for the period prior to July 2011 is clearly barred by limitation as p .....

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llant : Mr. G. Shivadass, Advocate For the Respondent : Mr. Mohd. Yusuf, A.R. ORDER Per Ashok K. Arya 1. The appellant namely, BEML Limited is before this Tribunal in appeal against the Order-in-Original No. 31/2013 dated 30.4.2013 passed by the Commissioner of Central Excise, Bangalore-I Commissionerate, Bangalore. 2. The Commissioner in the impugned order dated 30.4.2013, has held that ₹ 49,71,88,770/- is recoverable from the appellant under Rule 14 of Cenvat Credit Rules, 2004, read wit .....

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1.3.1997, 6/2006-C.E. dated 1.3.2006 and 12/2012-C.E. dated 17.3.2012, is not recoverable from the assessees and, accordingly, dropped the said demand. The Commissioner in the impugned order also appropriated an amount of ₹ 5,18,94,953/-, which was paid / reversed by the appellant in their Cenvat credit account during the period September 2007 to June 2012. 3. The appellant has been represented by the learned advocate, Shri G. Shivadass. The appellant in their appeal and the learned advoca .....

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ovides for payment of 10% of the price of exempted goods other than the goods described in Rule 6(3)(a). Therefore, Rule 6(3)(b) is not applicable to the goods cleared under Notification No. 63/1995-CE. (iv) Assuming that the amount of credit reversed does not include proportionate credit on input services, the demand if any, should be restricted to proportionate credit on input services. Reliance is placed on C.B.E.&C. Circular No. 645/45/2002-CX, dated 19-8-2002. (v) In terms of Section 73 .....

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that the proportionate credit of inputs has been reversed by the appellant, which implies that the appellant has exercised the option under Section 6(3)(ii). Therefore, the option under 6(3)(i) cannot be forced upon the appellant. (iii) Further, for the period from 01.04.2011, Rule 6(3)(iii) provides for the option for maintaining separate account for inputs and reversing proportionate credit of input services. (iv) Therefore, demand, if any, should be limited to the proportionate credit on inpu .....

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arred by limitation. (C). Demand of ₹ 4,25,000/- towards the clearances for the period August 2009 : (i) The appellant for the period August, 2009 has reversed the proportionate credit. For the reasons stated above, the appellant submits that the demand, if any, is to be restricted to the proportionate credit on input services. (ii) In any case, the demand is barred by limitation. 3.1. The learned advocate for the appellant further submitted as follows : (i) The appellant has maintained se .....

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credit in the impugned order amounts to acceptance of reversal of proportionate credit and hence, the question of demand @ 10% / 5% of the value of clearances of exempted final products in terms of Rule 6(3) of the CCR, 2004 does not arise. (v) Reliance is placed on the following decisions: Mercedes Benz Pvt. Ltd. v. CCE, Pune-2015 (40) STR 381 (Tri-Mum.) CCE vs. Himalaya Drugs - 2011 (271) E.L.T. 350 (Kar.) CCE, Salem v. Burn Standard Co. Ltd.-2013 (295) ELT 671 (Mad.) CCE v. Bombay Dyeing &am .....

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ns by clearly indicating the clearance of goods under exemption notifications and reversal of proportionate credit in terms of Rule 6 of CCR; (c) The provisions of Rule 6 of the Cenvat Credit Rules, 2004 have undergone tremendous change during the relevant period and the department itself was not very clear on the exact legal position. Reliance is placed on the decision of the Tribunal in CCE., Chennai vs. Gayatrishakti Paper & Boards Ltd. - 2013 (294) ELT 260 (Tri.-Ahmd.) (vii) If according .....

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venue s submissions are inter-alia as follows : (i) The appellant has availed the credit on various inputs and input services used in the manufacture of dutiable and exempted final products and has neither maintained separate accounts nor paid an amount equal to 5%/10% on the value of clearances of exempted final products in terms of Rule 6(3)(i) of the Cenvat Credit Rules, 2004. (ii) The appellant has not produced any documents to show that they have paid/reversed the proportionate credit avail .....

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or followed the procedure prescribed under the provisions of Rule 6(3A) of the CCR, 2004. (iv) The appellant has deliberately suppressed the facts from the Department with intent to avail irregular credit. 5. We have carefully considered the facts on record and the submissions of both the sides. 6. We find that the total demand against the appeal is in three parts. These three parts are as follows : (A). The first part of the demand confirmed is ₹ 13,78,91,547/- for the period upto March, .....

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Notification No. 10/97-C.E. The goods cleared during November 2007 have been valued at ₹ 18,75,000/- and goods cleared during August 2009 have been valued at Rs. 85,00,000/-. 7. We are taking up for discussion and decision these demands as per above three parts. 7A. Demand of ₹ 13,78,91,547/- : In this regard, the impugned order in its Para 15.1 on page 10-11 inter-alia holds/observes as under : . The assessees were required to pay an amount equivalent to the Cenvat credit attributab .....

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credit attributable to the Cenvat availed inputs and input services, during the relevant period. From their submissions, it appears that they have paid proportionate credit relating to only inputs but no input services, whereas provisions of Rule 6(3)(a)(vii) of Cenvat Credit Rules, 2004 requires payment of amount equal to Cenvat credit attributable to input services also. Further, in their additional submissions dated 12.03.2013, they have enclosed a sample calculation sheet showing proportion .....

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f the price of exempted goods, as required under Rule 6(3)(b) of CCR, 2004, as demanded in the show cause notice dated 17.08.2012. The value of exempted goods cleared during the period upto 31.03.2008 under Notification No. 63/95-CE is ₹ 137,89,15472/- and the amount payable under Rule 6(3) of CCR, 2004 works out to ₹ 13,78,91,547/-. 7A.1 In this regard, the appellant has argued that they have reversed an amount of ₹ 1,03,82,529/- towards the proportionate credit. The appellant .....

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ions of Rule 6(3) of Cenvat Credit Rules, 2004, as prevalent during the period 2007 2008, which is the relevant period : RULE 6 . Obligation of manufacture of dutiable and exempted goods and provider of taxable and exempted services. . .. .. (3) Notwithstanding anything contained in sub-rules (1) and (2), the manufacturer or the provider of output service, opting not to maintain separate accounts, shall follow either of the following conditions, as applicable to him, namely :- (a) If the exempte .....

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dit attributable to inputs and input services used in, or in relation to, the manufacture of such final products at the time of their clearance from the factory, or (b) if the exempted goods are other than those described in condition (a), the manufacturer shall pay an amount equal to ten per cent of the total price, excluding sales tax and other taxes, if any, paid on such goods, of the exempted final product charged by the manufacturer for the sale of such goods at the time of their clearance .....

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demand has to be restricted only to the proportionate credit on input services. 7A.1.3 The appellant also argues that this demand is barred by limitation as there has not been any malafide intention on the part of the appellant for non-payment and non-reversal of the said demand of Cenvat credit. 7A.2 After careful consideration of the above facts and the submissions of the Department and the appellant, it is clear that this demand could theoretically be restricted only to the proportionate cre .....

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e following against the assessee : Fraud or collusion or willful mis-statement or suppression of facts or contravention of any of the provisions of laws and rules concerning Central Excise/Service Tax, with intention to evade payment of duty. 7A.2.1 We find on record that the Revenue has failed to prove any fraud or collusion or willful mis-statement or suppression of facts or contravention of any of the provisions of law and rules concerning Central Excise and/or Service Tax with an intention t .....

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dit availed on input services. The Revenue also says that the appellant did not either exercise the option or followed the procedure prescribed under the provisions of Rule 6(3) of Cenvat Credit Rules, 2004. 7B.1 In this regard, the appellant has argued that for this period, they reversed an amount of ₹ 4,15,12,424/-. The appellant says that when they have undisputedly reversed the proportionate credit of inputs/input services, it implies that the appellant has exercised the option provide .....

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services. The appellant states that they have reversed the Cenvat credit of input services for the period of 2010-11, 2011-12, 2012-13 and it is claimed by the appellant that proof of such reversal of Cenvat credit has been produced. The appellant further argues that the demand for the period prior to July 2011 is barred by limitation. 7B.2 After careful consideration of the facts on record and the submissions of both the sides, we find that though the appellant claims that they reversed Cenvat .....

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tion is a valid argument as there has not been any clear cut proof available to substantiate any kind of fraud or collusion or any willful mis-statement or suppression of facts or contravention of any provisions of laws concerning Central Excise and/or Service Tax with an intention to evade payment of duty on the part of the appellant for recovery of any short levy or short payment of duty for the period of five years from the relevant date. Here, the Show-cause notice has been issued on 17.8.20 .....

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is the months of November 2007 and August 2009, where the goods were cleared under exemption Notification No. 10/1997-C.E. 7C.1 Here, we find that the Revenue s contention is that the appellant did not produce any documents showing proportionate credit or reversal of amount equal to the credit availed on input services. The Revenue also argues that the appellant neither exercised any option nor followed the procedure prescribed under Rule 6(3)(a) of Cenvat Credit Rules, 2004. 7C.2 The appellant .....

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pellant submits that the demand could be restricted to the proportionate credit on input services. We find that there is argument of time limitation also submitted by the appellant. As per the impugned order, this demand is for the period of November 2007 and August 2009; and these periods are completely beyond the time limitation i.e. beyond the normal period of one year. Consequently, said demand is barred from recovery by the provisions of Section 11A(4) of Central Excise Act, 1944, unless th .....

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