TMI Blog2017 (7) TMI 293X X X X Extracts X X X X X X X X Extracts X X X X ..... ding to a different outcome which does not concern us in this dispute. There is no prejudice to Revenue by such erasure as it has not deprived the State of any tax that was due. On the contrary, denial of abatement would be an act of encroachment by taxing sale of goods which is beyond the scope of legislative authority. To avoid such encroachment, erasure of credit is the only option. There is no allegation that such erasure has lead to deficiency of available credit at any time. Erasure would thus be substantial compliance and hence denial of abatement in the impugned order is not tenable. Appeal allowed - decided in favor of appellant. - ST/229/2012 & ST/85270/2013 - A/87903-87904/17/STB - Dated:- 12-6-2017 - M V Ravindran, Member (Judicial) And Shri C J Mathew, Member (Technical) Shri Neerav Mankar, Advocate for the assessee Shri R Kapoor Commissioner (AR) for Revenue ORDER Per: C J Mathew The genesis of these two appeals can be traced to distinctly contrary decisions on an identical issue pertaining to different periods for which notices were issued to M/s Indian Oil Tanking Pvt Ltd and M/s IOT Infrastructure Energy Services Ltd. 2. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utcome to confirm demand of ₹ 88,66,820 on improperly claimed abatement of ₹ 4,39,08,295. Assessee is in appeal against this order. 5. Considering the identical nature of the disputes, we dispose off these two appeals by this common order. It is the contention of Learned Authorised Representative that the specific disbarment in notification supra ought to have been enforced by the original authority without compromise to the rigor with which exemptions are to be implemented. It is also suggested that reliance on the decision in re Chandrapur Magnet Wires (P) Ltd was misplaced because that had been rendered in the context of the eligibility for CENVAT credit of tax paid on input services that were used for both taxable and non-taxable outcomes which was not in dispute here. It is also submitted that the reversal had not been effected before discharge of tax liability on output services and, hence, was not amenable to ex post facto regularisation as non-availment. 6. The thrust of the contention of Revenue against the order that dropped the demand is that all exemption notifications have to be construed strictly and any deviation from condition therefrom should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and to forgive non-compliance for either unimportant and tangential requirements or requirements that are so confusingly or incorrectly written that an earnest effort at compliance should be accepted. The test for determining the applicability of the substantial compliance doctrine has been the subject of a myriad of cases and quite often, the critical question to be examined is whether the requirements relate to the substance or essence of the statute, if so, strict adherence to those requirements is a precondition to give effect to that doctrine. On the other hand, if the requirements are procedural or directory in that they are not of the essence of the thing to be done but are given with a view to the orderly conduct of business, they may be fulfilled by substantial, if not strict compliance. In other words, a mere attempted compliance may not be sufficient, but actual compliance of those factors which are considered as essential. 7. Likewise reliance is placed on the decision of the Hon'ble Supreme Court in Commissioner of Central Excise v. M/s Honda SIEL Power Products Ltd [2015-TIOL-247-SC-CX] and in Meridian Industries Ltd v. Commissioner of Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, from an enforcement perspective, is the availability of sufficient eligible credit when such credit is utilised for discharge of tax on outputs/output services. Debiting of the account without sufficient balance is an overdrawal and consequent non-payment of tax/duty to that extent. 12. It would be a herculean task for tax authorities to verify availability of sufficient credit on each occasion of debit. The balance of convenience has thus dictated that the framework of the scheme should penalise wrongful availment itself. There can be no cavil to such a mechanism. However, where the assessee is able to establish that sufficient credit was available, it is not appropriate that recovery and penal provisions are invoked against the assessee. The decisions cited by Learned Counsel have been rendered by Courts and Tribunal to achieve consistency with objectives and to prevent the assessee from being troubled by unwarranted proceedings. We, therefore, have no hesitation in holding that credit is merely an accounting acknowledgement of a fact and the sole test of compliance with scheme of CENVAT credit is sufficiency of balance of credit in the CENVAT credit account after all adjus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the evolution of the doctrine of unjust enrichment that has been explicitly chronicled by the Hon ble Supreme Court in Sahakari Khand Udyog Mandal Ltd v. Commissioner of Central Excise Customs [2005 (181) ELT 328 (SC)], the condition for eligibility for abatement places an injunction on such availment of CENVAT credit. In the context of our exposition supra, non-availment and subsequent reversal have the same effect. 16. Considering the scheme of credit and nature of abatement, it merely remains to determine if the reversal meets the test of substantial compliance. Obviously, it would not pass muster as strict compliance. Strict compliance is inescapable if the statute prescribes conditions that are pre-requisites. We have held that the scheme of abatement is a valuation problem that has hitched a ride on a vehicle which was intended to provide for a reduction in the rate of tax. Ergo, the case for substantial compliance rather than strict compliance. The condition incorporated therein is intended to ensure that there is no unjust enrichment and that end is achieved by erasure of the credit. 17. There is no prejudice to Revenue by such erasure as it has not depr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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