TMI Blog2023 (1) TMI 342X X X X Extracts X X X X X X X X Extracts X X X X ..... of the view that the process carried out by the appellant within the factory do not bring about any new product. After undertaking of testing there is no new products with distinctive name, use and character is emerged and the components/spares of the EPBAX systems remains same even after mere electrical and functional testing which can not be considered as manufacture as defined under Section 2(f) of the Central Excise Act, 1994. Therefore, the contention is that the spares/ components cleared to EOUs are nothing but removal of Input as such and in terms of Rule 3 (5) of the Cenvat Credit Rules, 2004 assessee have to reverse the cenvat credit - there is no justification for demand of an amount in terms of Rule 3(5) of the Cenvat Credit Rules. Clearly, the process carried out is in the nature of finishing process which can be considered as ancillary to the manufacture of a finished product. In the facts and circumstances of the case, we find no justification for demand of such amount under Rule 3(5) on the clearances made to 100% EOU. Cenvat demand of Rs. 1,25,65,890/- on input services rendered by the Foreign Service providers - HELD THAT:- Under the un-amended provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s- Assessees Shri Vijay G Iyengar, Superintendent (AR) for the Revenue. ORDER These appeals are filed by Revenue as well as Assessee against the same Order-in-Original No. AHM-CEX-003-COM-010-to-016-12 dated 25.04.2012. Since a common order has been passed by the adjudicating authority therefore we are also disposing of these appeals by this common order. 2. The relevant facts that arise for consideration are that based upon an intelligence regarding evasion of Central Excise Duty, the factory premises of the assessee was searched by the officers and records which were found relevant and useful for the investigation were seized under panchanama dated 27.05.2007.After recording the statement of Shri Sasi Nair, Senior Executive of the assessee including other persons, the investigation came to the conclusion that the assessee had indulged in the removal of spares/ components as such to EOUs under CT-3 certificates without paying/reversing the Cenvat Credit. Shri Sasi Nair in statements categorically admitted /stated that all the spares/ components cleared as such to EOUs under CT-3 certificates were imported components/ spares, which were randomly tested in order to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entical grounds involving different periods. The adjudicating authority vide impugned order, confirmed the demands of Rs. 2,23,44,289/- out of total demand of Rs. 7,12,73,240/- and rest of demand are dropped. The assessee filed this appeal against that portion of the order which is against them in Appeal No. E/631/2012 while Revenue is in appeal under appeal No. E/647/2012 against that portion of the order which has dropped the demands. 5. Shri P.P. Jadeja, learned Consultant appearing on behalf of assessee-appellant submits that Revenue has not correctly appreciated that clearances to 100% EOU against CT-3 certificates are considered Deemed Exports and in such clearances, Cenvat Credit is not required to be reversed and Refunds of Cenvat Credit in terms of Rule 5 of the Cenvat Credits are also allowed. This is a settled position in law by now. In the present matter Goods in question were cleared vide Notification No.22/2003-CE dt. 31-3-2003 to 100 % EOU against CT-3 certificate procedure without payment of duty which was on the condition that the user industry brings the excisable goods directly from the factory of manufacture or warehouse . There is no dispute on the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded to be allowed by Notification. It is a well-settled principle of law that wherever literal meaning leads to an anomaly and absurdity, it should be avoided. Such settled principles of law are required to be considered to set aside the demands of Central Excise on clearances of inputs to 100 % EOU. He placed reliance on the following decisions:- (i) Com. of Cus. (Imp.) vs. Tullow India Operations Ltd. - 2005 (189) E.L.T. 401 (S.C.) (ii) Malwa Industries Ltd. - 2009(235) ELT- 214 (S.C.). (iii) Commr. Cus (IMPORT), Mumbai vs. Dilip Kumar Co. - 2018 (361) E.L.T. 577 (S.C.) 7. He further submits that the facts are not in dispute that after clearance of inputs as such from Appellant‟s factory against CT-3, such goods (inputs) have reached in 100 % EOU. Even otherwise for receiving Inputs in the 100 % EOU, without payment of duty against CT-3 Certificates, the receiver 100 % EOU submits Bond for discharging duty liability, in case of violations or contraventions of Rules. The supplier of inputs does not have liabilities in such case. 8. As regard the demand of Rs. 1,25,65,890/- he submits that assessee has utilized services of Foreigners i.e. the persons not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 99,281/- for undue reasons shown in the Appeal. This view of the Revenue in Appeal cannot be sustained, as the same is contrary to law and accepted by CBEC Circular F. No. 276/8/2009-CX. 8A dated 26-9-2011. Settled law is that the Field officers under CBEC can not take any plea against the Circulars issued by the CBEC. He placed reliance on the following decisions. (i) Ranadey Micronurients vs. CCE- 1996 (87) ELT 19(SC) (ii) CCE vs. Usha Martin Industries 1997 (94) ELT 460 (SC) (iii) CCE vs. Dhiren Chemical Industries 2002 (139) ELT 3 (SC) (iv) CCE, Meerut vs. Maruti Foam Pvt. Ltd. 2004 (164) E.L.T. 394 (S.C.) (v) CCE vs. Ratan Melting Wire Industries- 2008 (231) ELT 22(SC). 9. He also submits that Revenue has contended in its Appeal that it is not permissible to pay Service Tax from Cenvat Credit Account in such payment under RCM. However for using Services of Foreigners, Service Tax is payable only from 18-04-2006 i.e. from enactment of Section 66A of Finance Act, 1994. There was no restriction for Payment of Service Tax under reverse charge mechanism under Rule 3(4) of Cenvat Credit Rules 2004. Explanation is introduced under Rule 3(4) of Cenvat Credit Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period from June 2006 to March 2007 by show cause notice No. V.85/15-150/OFF/OA/08-09 dated 07.07.2008, invoking extended period of limitation, which is not sustainable in facts of this case. There must be a deliberate attempt by assessee to suppress facts from Department with intention to evade payment of Excise duty or Service Tax which is absent in present case. He placed reliance on the following decisions:- (i) Cosmic Dye Chemical v. CCE 1995 (75) ELT-721 (SC) (ii) Tamil Nadu Housing Board -1994 (74) ELT-9 (SC) On the basis of above, he submits that there is no justification for demand of any amount out of demand of Rs. 1,25,65,890/- and the Revenue‟s Appeal No. E/647/2012-DB deserves to be dismissed on this point. 12. As regard the demand of Cenvat Credit of Rs. 90,45,338/- on the ground that such credit pertained to other premises of Appellant not registered, he submits that impugned order has denied credit of Rs. 6,32,118/-, out of demand of Rs. 90,45,338/- for the period from November 2003 to March 2004. The Ld. Commissioner has taken the view that the assessee vide its letter dated 29-03-2004 has informed that they have adopted Centralised Billin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als Ltd. vs. CCE Rajkot- 2005 (192) ELT 658 (iii) Stadmed Pvt Limited vs. C.CE Allahabad- 1998 (102) ELT 466. (iv) M N Dastur Company Pvt. Ltd. Kolkata - 2010 (20) STR 230 (Tri. Kolkata), (v) Mportal India Wireless Solutions P. Ltd vs CST, Bangalore 2012 (27) STR-134 (Kar). 14. He further submits that in the present case, services received at those premises and Services provided by said premises were only on payment of due Service Tax. Therefore, credit availed in respect of input services used in the said premises is clearly admissible. Further, credit is demanded from November, 2003 to July 2006 by SCN No. V.85/15-150/OFF/OA/08-09 dated 07.07.2008 invoking the extended period of limitation, which is not sustainable in the facts of this case. The ingredients required to invoke extended period are not existing in this case. The case is of interpretation of whether Cenvat Credit can be taken or otherwise. In such cases of interpretation of provisions and without any intention to evade duty/tax, extended period of time limitation can not be invoked. Therefore, entire demand is not sustainable on merits or on time limitation in the facts of this case. Therefore, the entire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Review order within 3 months from the date of O-I-O dated 25-04-2012. However, Review Order No. R-08/2012 in the case is passed on 08-08-2012, which is beyond three months in any case. Hence, the Appeal No. E/647/2012 on this Review Order is not maintainable. He placed reliance on the following decisions. (i) CCE vs. M.M. Rubber Co. - 1991 (55) E.L.T. 289 (S.C.) (ii) GTC Industries Ltd. vs. CCE, New Delhi- 1997(94)ELT 9(SC) (iii) Amtrex Hitachi Appliances Ltd vs. CCE2009 (234) ELT-126 (Tri. - Ahmd.) (iv) CCE vs. Bhilai Wires Limited 2009(236)ELT 40 (HP) 15.1 Shri Vijay G Iyengar, learned Superintendent Authorised Representative for the Revenue reiterates the findings of impugned orders in respect of party appeals and grounds of appeal in the Revenue appeal. 16. We have heard both sides and perused the records of the case. On going through the rival submissions and the records of the case, we find that assessee was registered with the Central Excise authorities as a manufacturer of goods and was also holding Service Tax Registration as service providers. Assessee was availing the facility of Cenvat Credit. Assessee had imported and also indigenously procured v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvat credit has been availed are cleared as such then amount equal to the Cenvat credit availed on inputs is to be reversed. Taking above provisions of Rules into consideration I find that during the relevant period when Rule 57F was on Statute there was no provision equivalent to Clause (ii) of sub-rule (6) of Rule 6 of Cenvat Credit Rules, 2004. Therefore, the ruling by the Larger Bench is not applicable in the present case. I, therefore, hold that if the Cenvat credit is availed on inputs and if the same are cleared to 100% EOU as provided under sub-rule (6) of Rule 6 of Cenvat Credit Rules, 2004, Cenvat credit of duty paid on such inputs cannot be denied. I, therefore, allow the appeal filed by the appellant by setting aside impugned Order-in-Appeal. The ratio of above judgment squarely applicable in the present matter and we following the same are of the view that demand confirmed on this count in impugned order is not sustainable. 18. Further we have also gone through the provisions of Rule 3(5) of Cenvat Credit Rules 2004 applied by the revenue for denial of Cenvat Credit to the Appellant. Before proceeding further, we feel it appropriate to analyze said provision. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the market. In such a view in the matter there is no justification for demand of an amount in terms of Rule 3(5) of the Cenvat Credit Rules. Clearly, the process carried out is in the nature of finishing process which can be considered as ancillary to the manufacture of a finished product. In the facts and circumstances of the case, we find no justification for demand of such amount under Rule 3(5) on the clearances made to 100% EOU. 20. We find that the words as such are being the subject matter of interpretation by the various Courts. Punjab and Haryana High Court in the case of Commissioner of Central Excise, Ludhiana vs. Khalsa Cotspin (P) Ltd., reported in 2011 (270) E.L.T. 349 (P H) has held as under : The assessee having validly availed Cenvat credit, same is required to be reversed only if goods were cleared in the same position without payment of Excise duty. In the present case, it has been held by the Tribunal that goods were not cleared in the same position but after having been used and in such situation Rule3(5) of the Rules will not apply. The Hon‟ble Bombay High Court in the case of Cummins India Ltd. v. Commissioner of Central Excise, Pune-I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pril 2003 to March 2007 discharged by the assessee by debit from Cenvat Credit account and Rs. 62,77,683/- by challans. However the service tax liability on any taxable services provided by a non resident or a person located outside India, to a recipient in India, would arise with effect from 18.04.2006 i.e. the date of enactment of Section 66A of the Finance Act., Central Board of Excise and Customs has also accepted this position. We agree with the argument of learned Consultant that the amount debited from Cenvat Credit was not required to have been debited and if re-credit is taken of the said amount it is revenue neutral situation. Further from 18.04.2006, Appellant has paid service tax and they are eligible for the cenvat credit thereon. Hence entire action of the revenue in this matter is illegal and unsustainable, both on facts and in law. Further in this matter Cenvat demand is on the basis that the service tax liability cannot be discharged from the cenvat account. We, however, propose to accord to the dispute a more empirical analysis. 22. Section 66A of the Finance Act, 1994 makes the recipient of any service, specified in Section 65(105) of the Finance Act, 1994 - w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able for paying Service Tax , under the Cenvat Credit Rules. (vii) The Indian recipient of the Taxable Service also, consequently, becomes the provider of Taxable Service , as defined in Rule 2(r) of the Cenvat Credit Rules. (viii) Rule 3(4) of the Cenvat Credit Rules permits Cenvat credit to be utilised for payment of Service Tax on any Output Service is defined, in Rule 2(p) of the Cenvat Credit Rules as service provided, by a provider of Taxable Service. It has already been pointed out, hereinabove, that the Appellant was, by dint of the definition of the expression, as contained in Rule 2(r) of the Cenvat Credit Rules, the provider of Taxable Service . Section 66A of the Finance Act, 1994, provides that, in cases where service, provided by a provider located outside India, is received by a recipient in India, the service would be deemed to have been provided by the Indian recipient. (ix) Resultantly, the services received in India, by the appellant, from the service providers located outside India, were deemed to be output services, provided in India, for which the appellant was the deemed service provider. (x) In this scenario, Service Tax, on such services, wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2004 (effective up to 30-6-2012), there were no specific restrictions imposed for utilization of credit for discharging the liability of service tax under reverse charge mechanism by the recipient of service. Such restriction was brought with effect from1-7-2012, by amending the provisions of the said rule. In the present case, since the period of dispute is prior to 01.07.2012, the case of the appellant will be governed under the provisions of unamended Rule 3(4) ibid and in absence of specific restrictions contained therein for non-utilisation of Cenvat credit by the service recipient, the benefit of the existence rule is available to the assessee for utilization of Cenvat credit for payment of service tax under reverse charge mechanism. 27. In view of the above, keeping in view the statutory provisions and judicial pronouncements as referred to hereinabove, it is clear that the argument of revenue for confirming the demand cannot sustain in law. 28. As regard the 3rd issue regarding denial of Cenvat Credit pertaining to other premises/ branch offices of the Appellant we find that in the present matter Ld. Commissioner allowed the Cenvat credit of input services received by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Cenvat Credit Rule 2002 / 2004 read with section 73 and 75 of the Finance Act, 1994. 29. As regards admissibility of CENVAT credit of service tax paid in respect of services received in the branches or invoices in the name of the branches the decision in the case of mPortal India Wireless Solutions Pvt. Ltd. v. CST, Bangalore [2011-TIOL-928-HC-KAR-ST = 2012 (27) S.T.R. 134 (Kar.)] Covers the issue. Therefore credit could not have been denied on the ground that the appellant did not have centralized registration during the period. As regards availment of credit by Appellant without a centralized registration, the fact that appellant had applied for centralized registration. The non obtaining the centralized registration at the best is a technical issue, since there is a substantive adherence of law in view of the fact that service tax has been apparently paid on the basis of centralized registration therefore credit could have been taken in the centrally registered office. Therefore it cannot be said that credit has been availed wrongly. It is not a case of the department that on the input services/ invoices, no service tax was paid and there is no dispute about receipt a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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