TMI Blog2022 (3) TMI 1098X X X X Extracts X X X X X X X X Extracts X X X X ..... There is no detailed mechanism laid down for recovery under Rule 14 of CCR, 2004 and for this purpose the provisions of Section 11A have been made applicable mutatis mutandis for Rule 14 also. Nevertheless, any recovery of irregularly availed Cenvat credit under Rule 14 is not demand of duty at all. Section 11A deals with the duty which the assessee has to pay on final products. Rule 14 deals with the credit of duty on inputs which someone else had paid which the assessee has taken credit of. Any denial of Cenvat taken will not affect the duty liability. Similarly, any demand of duty will not affect the Cenvat credit. If Cenvat credit is wrongly availed, a penalty can be imposed under Rule 15 of CCR, 2004. If duty is short paid, penalty can be imposed under Section 11AC - there are no illegality in the Revenue issuing two show cause notices; one for recovery of irregular availed Cenvat credit (which is subject matter of the present appeal) and another show cause notice for recovery of duty short paid. It does not amount to two assessments for the same period in this case. Distribution of input service credit only to the appellant - HELD THAT:- From the impugned order, it is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the input service do not qualify under Rule 2(l) of the CCR, 2004 because the appellant was not put to notice on this ground. It is apparent from the records produced by the learned Counsel that the headquarters of the appellant had distributed the Cenvat credit to the appellant as well as to other units - the matter needs to be remitted to the adjudicating authority for determining the above two facts and re-computing the liability of Cenvat credit, if any. The appeal is allowed by way of remand to the adjudicating authority. - EXCISE APPEAL NO. 50702 OF 2017 - Final Order No. 50207/2022 - Dated:- 3-3-2022 - MR. DILIP GUPTA, PRESIDENT AND MR. P.V. SUBBA RAO, MEMBER (TECHNICAL) Shri Bimal Jain, Advocate for the Appellant Shri O.P. Bisht, Authorized Representative for the Respondent ORDER This appeal is filed by the appellant assailing order-in-original dated 1.12.2016 passed by the Commissioner, Central Excise Service Tax, Alwar [ impugned order ] whereby Cenvat credit amounting to ₹ 1,18,89,509/- was disallowed to the appellant and its recovery ordered along with interest and a penalty of equal amount was imposed upon the appellant under Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7,65,432/- during the period April 2012 to December 2015 in contravention of Rule 3 and Rule 9 of Cenvat Credit Rules, 2004 and Rule 4A of Service Tax Rules, 1994 and proposing to recover it under Rule 14 of the CCR, 2004 read with Section 11A of the Central Excise Act, 1944. The Commissioner passed the impugned order, which is assailed in this appeal on the following grounds: (i) The adjudicating authority has gone beyond the scope and ground of the show cause notice which is not permissible. In the impugned order, the Commissioner has denied the Cenvat credit on services on the ground that they do not qualify as input services under Rule 2(l) of the CCR, 2004. This ground could not have been taken in the impugned order because the appellant was not put to notice of this ground at all; (ii) Even otherwise, the input services qualify as input services in terms of Rule 2(l) of CCR, 2004 as they were used directly or indirectly in or in relation to manufacture of the final products. The term directly or indirectly and in or in relation to as mentioned in the input service definition is very wide and encompasses the services in dispute. The input services have a ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax attributable to service used in more than one unit shall be distributed pro rata on the basis of the turnover during the relevant period of the concerned unit to the sum total of the turnover of all the units to which the service relates during the same period ) . 5. Learned Counsel of the appellant submitted documents on a sample basis to demonstrate that the head office of the appellant has been distributing Cenvat credit to all the units and not only to the appellant. 6. It has also been submitted that even if the ISD had not distributed the Cenvat credit of input services to all its units on pro rata basis, it will not cause any revenue loss to the Department as the company could not have taken any excess Cenvat credit of input services. 7. On the question as to whether the Cenvat credit was distributed as per applicable Rules during the period or not, it has been submitted that the allegation in the show cause notice is that the ISD was distributing service tax credit on monthly basis whereas the pro rata turn over unit for distribution was taken for previous year. The appellant submits that Explanation (3) to Rule 7 of CCR, 2004 has undergone an amendmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the impugned period 1,45,58,275 C Cenvat credit required to be distributed by ISD to the Company in terms of the correct provisions under Rule 7 of the Credit Rules 1,58,37,291 Difference (C-B) 12,79,116 10. On the question of nature of the service provided and the details of services in respect of Cenvat credit distributed by the ISD not being shown in the challans, the appellant submitted that these details were shown in annexures to ISD challans, each of which mention as per details attached . The attachment gives details. Therefore, the allegation that the nature of service provided etc. are not provided is not correct. 11. Without prejudice to the above submissions, it has also been asserted that since the mistake in distribution of Cenvat credit was at the end of the ISD, notice should have been sent to the ISD unit and not to the appellant. It is the responsibility of the ISD to pass credit of only those services which qualify as input service as defined in Rule 2(l) of Rule, 2004. 12. It ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd (iv) of Rule 4A of Service Tax Rules require some details to be mentioned in ISD challans which were not found in the statements enclosed with the challans and, therefore, these challans were not valid documents as per Rule 9 of CCR, 2004. It has also been asserted that the credit was distributed by ISD only to the appellant instead of distributing to all the 16 units of the company on pro-rata basis as required. It is further asserted that the input service credit had distributed credit on monthly basis, whereas pro-rata turnover of unit for distribution was taken for the previous year. It has been asserted that since the Cenvat credit was taken on the strength of the ISD invoices issued as per Rule 4A of CCR, 2004, such invoices should be as per the requirement of the said rules and contain full information failing which no Cenvat credit will be admissible. Reliance is placed in the case of State of Jharkhand Vs. Ambay Cements [ 2004 (178) ELT 55 (SC) ] and JCT Electronics Ltd. Vs. Commissioner of Central Excise Service Tax, Vadodara [ 2014 (34) STR 778 (Tri.-Ahmd.). ] 16. On the question as to whether two show cause notices could have been issued for the same p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt is that a show cause notice dated 10 February 2016 was issued by the Department demanding duty short paid by irregularly availing exemption under Notification No. 1/2011-CE along with interest and penalty. The present show cause notice dated 18 February 2016 was issued for the same audit period seeking to deny Cenvat credit alleged to have been availed by the appellant. It has been asserted that two show cause notices cannot be issued by the Department on piecemeal basis for the same period and for this submission reliance was placed on the Simplex Infrastructures Ltd. , in which Calcutta High Court held as follows : there cannot be a double assessment for the period 10 September 2004 to 31 September 2005 as the Department has sought to do. The periods pertaining to which the show cause notice dated 21 April 2006 and the show cause notice dated 7 September 2009 were issued overlap to an appreciable extent . It has also been submitted that this is not permissible in law as held by the Calcutta High Court in Avery India Ltd. Vs. Union of India [ 2011 (268) ELT 64 (Cal.) ]. Learned Counsel also relied upon in Duncans Industries Ltd. Vs. Commissioner of Central Excise, New De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion before the Commissioner which has been recorded in paragraph 10 of the impugned order. The Commissioner has recorded his findings as follows in the impugned order: From the above notification, if is clear that the provisions of pro rata distribution on turnover basis apply only to credit attributable to services used in more than one unit. In view of the above, the turnover of the assessee and their entire company was enquired from the jurisdictional Assistant Commissioner. The Assistant Commissioner vide his letter dated 10.11.2016 provided the turnover figures of M/s Varun Beverage Limited, Chopanki which are based upon figures provided by the assessee vide their e-mail dated 2.11.2016 and the same are reproduced in Table 2 below: Table 2 (Amount in Rs.) Period Turnover of Bhiwadi Unit Turnover of all other than Bhiwadi Unit Depot turnover Total turnover Ratio of Bihwadi Unit to total turnover Jan-Dec. 2012 20995.24 111744.94 32676.39 165416.57 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the year 2015 as discussed above. Therefore, I have no hesitation in holding that the ISD has distributed the entire amount of service tax involved in the said challans to the assesee up to September 2015 and have passed excess credit from October 2015 to December 2015 in contravention provision of Rule 7 of the Cenvat Credit Rules, 2004. 21. Learned Counsel for the appellant has demonstratred through challans and documents that the Cenvat credit has, indeed, been distributed by the head office of the appellant to other units of the appellant. We find that the Commissioner has, in the impugned order, held that the ISD has distributed the entire amount of service tax involved in the challan up to September, 2015 only to the Bhiwadi unit, i.e. the appellant and thereafter for the period October 2015 to December 2015 passed on excess credit to the appellant. However, from the impugned order, it is not clear how the Commissioner has come to the conclusion that the entire credit has been distributed to only Bhiwadi unit up to September 2015 and excess credit has been distributed to the appellant i.e. Bhiwadi unit from October 2015 to December, 2015 based on his examination of two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... done it correctly as per Rule 7 read with Explanation 3, as applicable during the relevant period. This issue also needs thorough examination by the Commissioner. 26. In view of the above, we find that the impugned order is not vitiated on the ground that another show cause notice demanding short paid duty of excise was issued to the appellant during the same period. The Commissioner was not correct in denying Cenvat credit on the ground that the input service do not qualify under Rule 2(l) of the CCR, 2004 because the appellant was not put to notice on this ground. It is apparent from the records produced by the learned Counsel that the headquarters of the appellant had distributed the Cenvat credit to the appellant as well as to other units. However, there are two issues which require verification by the Commissioner. The first is whether the essential details required in the ISD challans were available in the challans along with any Annexures thereto as asserted by the learned Counsel or otherwise. The second issue is whether credit was properly distributed by the headquarters of the appellant as per the new Explanation 3 to Rule 7 of CCR 2004 applicable from 1st April, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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