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C.C.E. & S.T. Meerut-II Versus Jubilant Life Science Ltd.

2016 (9) TMI 679 - CESTAT ALLAHABAD

Cenvat credit - reversal of credit availing on transportation of inputs removed as such - acetic acid was their input which was used in manufacture of final product and that input was also sold by them and while clearing said input as such they reversed Cenvat credit as required by Rule 3(5) of Cenvat Credit Rules 2004 and that they did not reverse Cenvat credit of Service Tax paid on inward transportation. - Held that:- The show cause notice contended that the respondent imported Acetic Aci .....

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e. Therefore, the grounds of appeal are not sustainable. Therefore, the appeal filed by Revenue is not maintainable - Decided against the revenue. - E/54415/2014-EX(SM) - Final Order No. 70497/2016 - Dated:- 14-7-2016 - Shri Anil G. Shakkarwar, Member (Technical) For the Appellant: Shri Ashutosh Nath (Assistant Commissioner) A.R. For the Respondent: Shri Devinder Sharma, Advocate ORDER The present appeal is filed by Revenue against Order-in-Appeal No. MRT/EXCUS/002/APP/18/2014-15 dated 13-05-201 .....

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s were procured only for the purpose of trading. The respondent through their letter dated 16-9-2011 informed the authorities that acetic acid was their input which was used in manufacture of final product and that input was also sold by them and while clearing said input as such they reversed Cenvat credit as required by Rule 3(5) of Cenvat Credit Rules 2004 and that they did not reverse Cenvat credit of Service Tax paid on inward transportation. There was exchange of correspondence between the .....

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customers." Further on Page 5 of said show cause notice it is stated as follows: "From the above it appears clearly that total Cenvat credit availed on the inputs should be recovered at the time of clearance of inputs as such because this is a trading activity." On Page 6 of the said show cause notice it is stated that it appears to Revenue that Cenvat credit taken on input services on trading goods for the period September 2007 to March 2011 amounting to ₹ 25,74,831/- avai .....

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gain quoted in his finding and after going through various pronouncements the original authority has confirmed the demand raised in the said show cause notice and imposed equal penalty. 3. Aggrieved by said Order-in-Original dated 28-02-2014 respondent filed appeal before Commissioner (Appeals), Meerut-ll. Ld. Commissioner (Appeals), Meerut-ll as held that the department has failed to established that the said inputs were only procured for trading purpose and that they were used in the manufactu .....

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(P&H). Through said Order-in-Appeal Commissioner (Appeals) set aside the said Order-in-Original dt. 28-02-2014 4. Aggrieved by the said Order-in-Appeal dated 13-05-2014 Revenue is in appeal before this Tribunal. The grounds of appeal by Revenue are given on Page 3,4,5, of their authorization for filing appeal which are as follows:- 1. That, the Rule 2(I) of the Cenvat Credit Rules, 2004 reads are under-; "input service" means any service,- (i) used by a provider of taxable service .....

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ement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal; Thus, the goods, which have been brought into factory for trading activity, do not fall in the ambit of the definition. Thus, the services involved cannot be considered as input servic .....

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es used in trading activity is not admissible. 2. The party started reversing cenvat credit of inputs services taken on inputs cleared as such' from 01-04-11 onwards after the amendment in the definition of exempted service' in Rule-2(e) of cenvat credit Rules, 2004 w.e.f. 01-04-2011, by which trading activity was also included within its ambit. The goods cleared prior to 01-04-2011 were also traded goods, but, the party deliberately twisted the facts towards Rule-3(5) of the Cenvat Cred .....

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erately availed wrongly cenvat credit of input service on the goods which were procured for trading and the adjudicating authority had rightly imposed penalty under Rule-15 of Cenvat credit Rules, 2004 read with section 11-AC of the Central Excise Act, 1944. The Apex Court in the case of UNION OF INDIA Versus RAJASTHAN SPINNING & WEAVING MILLS cited in 2009 (238) E.L.T. 3 (S.C.) had held as under:- Para 18. "One cannot fail to notice that both the proviso to sub-section 1 of Section 11A .....

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as the result of any conscious and deliberate wrong doing and in the order passed under Section 11A(2) there is a legally tenable finding to that effect then the provision of Section 11 AC would also get attracted. The converse of this, equally true, is that in the absence of such an allegation in the notice the period for which the escaped duty may be reclaimed would be confined to one year and in the absence of such a finding in the order passed under Section 11A(2) there would be no applicati .....

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ussion it is clear that penalty under Section 11Ac, as the word suggests, is punishment for an act of deliberate deception by the assessee with the intent to evade duty by adopting any of the means mentioned in the section." 5. Heard the department Counsel. He reiterated the grounds of appeal and submitted following case laws:- (a) 2015 (39) S.T.R. 903 (Tri. - Mumbai) SYNISE TECHNOLOGIES LTD. Versus COMMISSIONER OF CENTRAL EXCISE, PUNE (b) 2015 (38) S.T.R. 431 (Tri. - Mumbai) GODREJ & B .....

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rading which is not substantiated. He has further, brought to the notice of this Tribunal a latter F.No.96/85/2015-CX-I,dated 07-12-2015 issued by Central Board of Excise & Customs, New Delhi wherein the decisions regarding issues of assessment taken in Tariff Conference held on 28th & 29th October 2015 were circulated for clarity of understanding and uniformity of practice in assessment. Point B. 26 of the said letter is reproduced below: B.26 - Meerut zone - CENVAT Credit - Reversal of .....

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l be made under the cover of an invoice referred to in rule 9" An audit objection has been raised that Cenvat credit taken in respect of service tax paid on input services like Customs Brokers charges, Clearing and Forwarding Agencies Services (C&F), GTA etc. used for procurement/transportation of inputs/capital goods, should also be reversed at the time of clearance of inputs/capital goods as such from the factory of the manufacturer. The present Rule 3(5) of the Cenvat Credit Rules, 2 .....

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goods are received in the factory. Thus on receipt of inputs and capital goods, the associated input services have to be considered as consumed within the factory and become a cost to the business. Demand for reversal of the input services credit, when such input services cannot be reused, unlike inputs and capital goods which are available for reuse would not be fair to the trade. Therefore, the conference concluded that the present rule represents the correct provision in accordance with the .....

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