TMI Blog2023 (5) TMI 332X X X X Extracts X X X X X X X X Extracts X X X X ..... sit contemplated in section 73A of Finance Act, 1994 and that, with the consequent erasure of documentation evincing supply of service, the principal manufacturers find themselves barred by rule 9 of CENVAT Credit Rules, 2004 from continued retention of credit. Presumption based on inferred inter-connection of job-worker and principal manufacturer cannot be the basis for determination of compliance with condition. Section 73A of Finance Act, 1994 comprises three elements: the requirement of depositing with the government any collection in excess of tax, or collection of tax not leviable, by such person of his own volition, empowerment of Central Excise Officer to place such person on notice and determine the amount so due, and the disposition of such amount so deposited culminating in refund to the person who has borne the incidence of such amount. It is plainly obvious from a bare reading thereof, that the said provision may be invoked only for recovery of such amounts as have not been deposited with the Central Government. It does not envisage such amount to be segregated from tax paid as a deposit in the manner accomplished by the adjudicating authority - The logical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies at any stage till now. Consequently, the demand of the same under rule 14 of CENVAT Credit Rules, 2004 is not tenable. Denial of credit to the ten job workers and consequent deeming of tax paid under Finance Act, 1994 as deposit in terms of section 73A of Finance Act, 1994 - HELD THAT:- The denial is not maintainable. With the tax having been properly discharged, there is no scope for denial of such amount as credit available under CENVAT Credit Rules, 2004 to the three principal manufacturers. The recovery of ₹ 5,65,95,738 from the three principal manufacturers for the period from April 2010 to March 2015 under rule 14 of CENVAT Credit Rules, 2014 lacks authority of law. The recovery of ₹ 64,76,017 of credit availed on capital goods under rule 14 of CENVAT Credit Rules, 2004, having already been reversed by the principal manufacturers, is redundant. The demand for appropriate interest and imposition of penalties also fails. Appeal allowed. - EXCISE APPEAL NO, 85384 OF 2016 , SERVICE TAX APPEAL NO. 85385 OF 2016 - FINAL ORDER NO. A / 85501 - 85513 / 2023 - Dated:- 27-3-2023 - SERVICE TAX APPEAL NO: 85410 OF 2016, SERVICE TAX APPEAL NO: 85411 OF 2016 SER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ken and utilized by them on capital goods received by them during the former period, was directed to be recovered under rule 14 of CENVAT Credit Rules, 2004, besides applicable interest thereon, in order [order-in-original no. PUN-EXCUS-002-PR.COM-009-010-15-16 dated 27th November 2015] of Principal Commissioner of Central Excise, Pune II while imposing penalty of ₹ 49,59,792 under rule 15 of CENVAT Credit Rules, 2004. Attendant thereto, is the redesignation of ₹ 25,44,180, ₹ 2,42,64,876 and ₹ 82,11,226, paid as tax under Finance Act, 1994 by M/s Metfarm Industries, M/s Shreekant (Shrikant) Auto Engineering Pvt Ltd and M/s Dattatraya Industries during the span of the dispute, as credit of theirs under deposit with the exchequer. 2. Apparently, such happening did not occur singly for, by another order [order-in-original no. PUN-EXCUS-001-PR.COM-095-96-15-16 dated 28th January 2016] , ₹ 1,40,04,098 availed by M/s SM Rolling Works, a manufacturer registered under Central Excise Act, 1944, in their CENVAT credit account from April 2010 to September 2014 and from October 2014 to March 2015 respectively on discharge of tax liability under Finance Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. The entire, and labyrinthine, exercise is all about a scheme for job-work born from economic compulsion of specialization-driven operational efficiency, and acknowledged in central excise procedure after several disputes of over half century ago, in which the ten, offering support facilities , viz., bending, welding, powder coating, forming, notching, piercing, pressing, cutting, assembling etc., to the three manufacturers of automotive parts , discharged tax devolving upon on them under section 65(105)(zzb) and section 65B(44) respectively of Finance Act, 1994 as providers of business auxiliary service from April 2011 to June 2012 and taxable services thereafter on value as agreed upon in advance on piece rate for which invoices are raised even though, as tax authorities contend, activity amounting to manufacture is specifically excluded from the ambit of section 65(19) of Finance Act, 1994 as well as by notification 8/2005-ST dated 1st March 2005, issued under section 93 of Finance Act, 1994, even when such activity did not amount to manufacture; for the period from 1st July 2012, activity amounting to manufacture was excluded from the ambit of tax under Finance Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndertaking production, or to be processed by job-workers , and discharged duties of central excise on the clearances effected by them. Likewise, the ten jobworkers undertook taxable services in relation to those very goods and discharged appropriate levy under Finance Act, 1994. By discharge of duties on excisable goods and of taxes under Finance Act, 1994, all thirteen of the appellants became eligible to take credit of duties/taxes borne by them on procurement of goods and taxable services and could discharge duty/tax liability devolving on them by drawing upon the credit permissible under CENVAT Credit Rules, 2004. The structuring of the transactions, culminating in clearance of sheet metal parts of automobiles , thus had all the appearances of a wholesome door panel made of properly treated solid wood that could be faulted either for its aesthetics or for being unassailably impregnable. Nothing bizarre here, too. 9. It was a combination of the relationship among the thirteen entities, along with the manner in which the production of goods was arranged among them, which brought the interlinked flow of goods and sequence of activity under the scanner of investigative a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e proposition of the tax authorities that exemption provided by notification issued under section 93 of Finance Act, 1994 is mandated to be availed is not tenable as the facility, so far as notification no. 8/2005-ST dated 1st March 2005, as well as the successor notification no. 25/2012-ST dated 20th June 2012, are concerned, is conditional and, being conditional, cannot be imposed on an assessee opting not to comply with the conditions therein. It was also contended that eligibility of the job workers for the exemption is contingent upon the activity not amounting to manufacture which has not been considered by the adjudicating authority. He relied upon the decision of the Hon ble High Court of Karnataka in Commissioner of Central Excise, Bangalore-II v. Federal Mogul TPR India Ltd [2016 (334) ELT 476 (Kar)] in support of this contention. 12. Furthermore, according to him, the entitlement to CENVAT credit could not be disputed once the taxability issue stood resolved. As far as the movement of capital goods was concerned, he argued that the procedure laid down in CENVAT Credit Rules, 2004 did permit such temporary transfer and that, even if the prescribed period had been e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 94 was decided upon by the Hon ble High Court of Karnataka in re Federal Mogul TPR India Ltd thus 9. A bare reading of this notification denotes that this notification is issued under Section 93 (1) of the Finance Act, 1994 which exempts the taxable services of production of goods on behalf of the principal manufacturer from the whole of service tax leviability under Section 66 of the Finance Act. However, this exemption notification is subject to the condition that the said exemption shall apply only in cases where such goods are produced using raw materials or semifinished goods supplied by the client, i.e., the principal manufacturer and good so produced a return back to the said client for use in or in relation to the manufacture of other goods on which appropriate duty of Excise is payable. 10. Thus, this notification is condition precedent. The applicability of this notification shall be subject to the condition stipulated, i.e., The principal manufacturer discharging the liability of appropriate duty of excise on these manufactured goods. Any job worker who undertake services of processing is not free to avail the benefit of the said notification unless the recipi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... With that decision, the denial of credit availed by the job workers for having undertaken exempted services fails in law. The domino effect leading up to the recovery of credit of tax availed by the principal manufacturers on the tax paid on service procured from the job workers discharged by availment of credit is, thereby, halted at the start. 15. It also would not be appropriate for us to overlook the invoking of section 73A of Finance Act, 1994 by the adjudicating authority for reconciling the oddity of tax already paid by the job workers while, at the same time, holding that exemption from tax in the two periods were deemed to have been availed on the service for which levy stood discharged. Section 73A of Finance Act, 1994 comprises three elements: the requirement of depositing with the government any collection in excess of tax, or collection of tax not leviable, by such person of his own volition, empowerment of Central Excise Officer to place such person on notice and determine the amount so due, and the disposition of such amount so deposited culminating in refund to the person who has borne the incidence of such amount. It is plainly obvious from a bare readin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h are sent to a job worker. The only condition in Rule 4 (5) (a) is that the said capital goods has to be received back within 180 days of that being sent to job worker and this condition not complied with, then assessee shall traverse an amount equivalent to the Cenvat credit taken and can take the Cenvat credit when the capital goods are received back in the factory or the job worker s premises. I find that there is no dispute that the said capital goods are utilised by the job worker, it would lend support to the argument that there would be a revenue neutrality and the reversal of Cenvat credit would be revenue neutral as the appellant is entitled to take credit on such amount as soon as he receives the capital goods back from the job worker s premises. This being the case, I do not find any reason for reversal of the Cenvat credit on the capital goods which are found in the factory premises the job worker, who is undisputedly one of the group concerns of the appellant. I also find that the ratio of the decision of the Division Bench of the Tribunal in the case of Pooja Forge Ltd. v CCE-2006 (196) ELT 18 (Tribunal) = 2007 (8) STR 318 (Tribunal) will cover the issue in favour of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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