TMI Blog2024 (1) TMI 523X X X X Extracts X X X X X X X X Extracts X X X X ..... TILES PVT. LTD. VERSUS COMMR. OF CUS. C. EX., HYDERABAD [ 2000 (12) TMI 158 - CEGAT, CHENNAI ], it was held that the order of denial of MODVAT Credit is not correct in law when duty paid goods were used in the manufacture of dutiable final products. The law under CENVAT Credit Rules, 2004, does not say that the adjustment of Credit is not to be allowed, if the returns are filed belatedly. On such score, disallowance of credit is not legal and proper. Eligible credit has to be allowed for adjustment to compute the assessee s tax liability. However, the amount of credit has to be verified. The assessee has furnished the table showing the details of the credit available. Even as per Audit report, it was informed that they are eligible for CENVAT Credit. However, we are of the opinion that matter of computation on CENVAT Credit eligible needs to be remanded to the original adjudicating authority for the limited purpose of verifying the amount of credit as furnished in the table and allow the adjustment towards liability. As such, the lower adjudicating authority is directed to requantify the duty liability after adjusting the CENVAT Credit amount. Invocation of extended pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9,84,753/- and Rs.20,31,400/- under the Category of Cable Operator including Multi System Operator Service for the periods from 01.07.2006 to 31.03.2010 and April 2010 to June 2010 respectively, Rs.8,77,118/- under Business Auxiliary service for the period from 01.12.2006 to 31.03.2010, under proviso to Section 73(1) of the Finance Act, 1994 by invoking the extended period and also levy of interest under Section 75, late fee under Section 70 and imposition of penalties under Sections 76, 77(2) and 78 of the Finance Act, 1994. 2. The Service of Cable Operator has been introduced into Service Tax net with effect from 16.08.2002. The services of Multi System Operator has been included in the category of Cable Operator Service w.e.f. 10.09.2004 by virtue of Notification No. 25/2004 ST dated 10.09.2004. As per Section 65(21) and 65(22) of Finance Act, 1994, cable operator shall have the meaning assigned to it in clause (aa) of Section 2 of the Cable Television Networks (Regulation) Act, 1995 (7 of 1995); (22) cable service shall have the meaning assigned to it in clause (b) of section 2 of the Cable Television Networks (Regulation) Act, 1995 (7 of 1995). As per the definition c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the period from 01.07.2006 to 31.03.2010 and Rs.8,77,118/- on Business Auxiliary Service for the period from December 2006 to March 2010 besides proposing to levy interest under Section 75 and to propose penalties under Sections 76, 77 and 78 of Finance Act,1994. The SCN also proposed to appropriate amounts of Rs.31,36,046/- paid towards demand on Cable operator service and Rs.5,65,026 paid towards interest. Subsequently another Show Cause Notice dated 17.10.2011 was issued to the Assessee proposing to demand Service Tax of Rs.20,31,400/- on Cable Operator including Multi System Operator Service for the period April 2010 to June 2010. After due process of law, the Adjudicating Authority confirmed the above demands, appropriated an amount of Rs.66,74,966/- already paid by the Assessee under Cable Operator including Multi System Operator Service, besides levying interest under Section 75 after appropriating an amount of Rs.9,24,341/- paid towards interest and imposed equal penalty under Section 78 by invoking extended period from July 2006 to March 2010 and penalty under Section 76 and 77 and demanded late fee of Rs.54,000/- for delayed filing of ST-3 returns under Section 70 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l would refer to the observations in Para 23 of the impugned order that the adjudicating authority was not concerned with the Assessee s eligibility for CENVAT credit was bad in law and liable to be set aside. The Assessee averred that the entire exercise is revenue neutral in as much as the invoice raised would contain the tax particulars which are eligible for availing credit; that when a substantial portion of demand is available as credit, the intention to evade tax is unsustainable rendering the whole situation revenue neutral; the non-consideration of this vital fact vitiates the whole proceedings rendering the impugned order liable to be set aside. Regardless of the fact, the Assessee wished to submit that it is settled law, even in the case of clandestine removal, demand would be made only after appropriating CENVAT credit and in this regard cited the judgements in the case of (i) Rukmini Inustries Vs. Commissioner of Central Excise, Hyderabad reported in [2014 (308) ELT 649 (AP)] and (ii) Dhananiwala Textiles Vs. Commissioner of Central Exicse reported in [2001 (130) ELT 233]. 7.4 It was contended that subsequent to the above, he had received a letter dated 14.07.2010 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ystems Ltd. reported in [2009 (234) ELT 428 (Kar.)]. (iv) CCE, Mangalore Vs. Pals Microsystems Ltd. Reported in [2011 (270) ELT 305 (SC)]. (v) Right Resources management Services Vs. Commissioner of CGST,CE Customs Dehradun Ors.- [2023 (11) TMI 100-CESTAT, New Delhi]. (vi) Rangoli Division Vs. Commissioner (Appeals) CE CGST, Jaipur [2023 (9) TMI 930- CESTAT- New Delhi)]. (vii) Kushal Fertilisers (P) Ltd. Vs. Commissioner of Customs and Central Excise, Meerut- [2009 (5) TMI 13-SC]. (viii) Borana Pumps Vs. Commissioner of CGST, Customs C.Ex, Jodhpur-I- [2021 (378) ELT 189 (Tri.-Del)]. (ix) Birla Corporation Ltd.- [2003 (152) ELT 428 (Tri.-Del.)]. (x) Shri Balaji Industrial Products Ltd. Vs. Commissioner of Customs C.Ex, Jaipur [2019 (370) ELT 280 (Tri.-Del.)]. (xi) Reliance Life Insurance Company Ltd. Vs. Commissioner [2018 (19) GSTL J66 ( Tri.-Mumbai)]. (xii) Tally Solutions Limited Vs. Commissioner of C.Ex, Bangalore [2020 (41) GSTL 520 (Tri-Bang.)]. (xiii) Ace Creative Learning Pvt. Ltd. Vs. Commissioner of C.T, Bengaluru South GST Commissionerate [2021 (51) GSTL 393 (Tri.-Bang.)]. (xiv) Kanak Metal Industrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same and have suppressed the facts from the Department and therefore, the extended period of time has been rightly invoked in the instant case. The above ratio is squarely applicable in this case. 9. Heard both sides and carefully considered the submissions and evidences on record. 10. The following issues arise for decision in this appeal: (i) Whether the Assessee is eligible to avail and utilise the input service credit on various services availed? (ii) Whether invocation of extended period in terms of proviso to Section 73(1) of the Finance act, 1994 is maintainable or not considering the facts of the case? (iii) Whether imposition of penalties under Section 76, 77 and 78 of the Finance Act, 1994 are justified and whether in accordance with the provisions of the law or not? 11. We find from appeal records that the Assessee commenced business on 13.07.2006 and obtained registration for Cable Operator Service from the Department on 31.07.2006 though failed to take an endorsement for BAS. A Show Cause Notice dated 18.04.2011 was issued to the Assessee proposing to demand Service Tax of Rs.2,89,84,753/- on Cable Operator service for the period from July 2006 to Mar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he purchase of LAB, raw material, which was used in the manufacture of the dutiable product. The Modvat credit is sought to be denied to the appellant on the ground that the appellant had involved in suppressing the turnover. A perusal of the Rules would show that there is no rule prohibiting extending the benefit of Modvat credit in a case where it is found that there was a suppression of manufacture and clearance of dutiable goods. Though in the context of the Income Tax Act, we may refer to the judgment of the Supreme Court referred to above, wherein the Hon ble Supreme Court in Commissioner of Income Tax, Gujarat v. S.C. Kothari [AIR 1972 SC 391] held as follows :- The approach of the High Court in the present case has been that in order to arrive at the figure of profits even of an illegal business the loss must be deducted if it has actually been incurred in the carrying on of that business. It is the net profit after deducting the out goings that can be brought to tax. It certainly seems to have been held and that view has not been shown to be incorrect that so far as the admissible deductions under S. 10(2) are concerned they cannot be claimed by the, assessee if such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of goods out of the record, we are of the view that Modvat credit to the extent of input utilized in manufacture of dutiable finished product is leviable and the benefit of the same cannot be denied. In that view of the matter, question No. 3 is required to be answered in favour of the appellant and against the Revenue. 12.2 In Dhananiwala Textiles Vs. Commissioner of Central Excise reported in [2001 (130) E.L.T. 233 (Tri. - Chennai)], it was held that the order of denial of MODVAT Credit is not correct in law when duty paid goods were used in the manufacture of dutiable final products. The relevant portion of the judgement has been reproduced below:- 3.(b) Our findings are as under :- (i) There is no finding or allegation that POY, procured from M/s. Sanghi and texturised and cleared without duty determination thereon was non-duty paid. In fact the SCN and the findings link the invoices in different names issued by M/s. Sanghi as payment of duty. If that be so, it can be concluded that it is an admitted position that texturising was done on duty paid POY. There is no dispute that the assessee had filed declarations under Rule 57A, the duty paying invoices are avail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sallowance of credit is not legal and proper. Eligible credit has to be allowed for adjustment to compute the assessee s tax liability. However, the amount of credit has to be verified. The assessee has furnished the table showing the details of the credit available. Even as per Audit report, it was informed that they are eligible for CENVAT Credit. However, we are of the opinion that matter of computation on CENVAT Credit eligible needs to be remanded to the original adjudicating authority for the limited purpose of verifying the amount of credit as furnished in the table and allow the adjustment towards liability. As such, the lower adjudicating authority is directed to requantify the duty liability after adjusting the CENVAT Credit amount. 13.1 Regarding, the invocation of extended period, on a perusal of Section 73 it is amply clear that any tax not levied or paid, short levied or short paid is recoverable from the petitioner. The show cause notice for realization of tax not levied or paid or short levied or short paid could be issued within one year from the relevant date. After amendment with effect from 28th May, 2012 by the Finance Act, 2012, the period of limitation is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble operators had resulted in undue financial accommodation and therefore the suppression indulged has all necessary elements to be considered as having been resorted to with intent to evade payment of Service Tax. In such a situation extended proviso is rightly invokable as held by the CESTAT, Mumbai in the case of M/s. Safe Sure Marine Service Pvt. Ltd. Vs. Commissioner of Service Tax, Mumbai [2012 (28) STR (Tri.-Mumbai)] wherein it was held interalia that the appellant, after having collected the tax from their customers, have never informed the Department of the same and have suppressed facts from the Department and, therefore, the extended period of time has been rightly invoked in the instant case. The above ratio is squarely applicable in this case . Considering the facts and circumstances of this case and relying upon the above decision, we have no hesitation to hold that the extended period of limitation in terms of the proviso to Sub-Section (1) of Section 73 of Chapter V of the Finance Act, 1994 is rightly invokable in this case. 13.4 Non-payment of Service Tax and non-filing of returns would tantamount to clear cut suppression of facts committed with intention to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stigations started by the Department. The facts obtaining in this appeal are so distinguishable. 15. The Ld. Advocate has argued that the Service Tax dues have been paid substantially before the issuance of the Show Cause Notice and requested for extension of the benefit of Section 73(3) of the Finance Act, 1994. The impugned order No. 07/2013-ST dated 07.10.2013 has recorded the payments made by the Assessee amounting to Rs.68,09,156/- and the last instalment being on 02.06.2011 whereas the Show Cause Notice issued was dated 18.04.2011 covering the period from July 2006 to March 2010. Service Tax Appeal No. 40232 of 2014 16. We find, the Department has filed an appeal vide No. 40232 of 2014 for non-imposition of penalty under Section 78 of Finance Act, 1994 for Service Tax demanded and confirmed in the second Show Cause Notice No. 98/2011-ST dated 17.10.2011 which was issued demanding and confirming Service Tax of Rs.20,31,400/- for the period from April 2010 to July 2010. Though the Show Cause Notice dated 17.10.2011 was issued invoking extended period, the adjudicating authority has imposed the penalty under Section 76 of Finance Act, 1994 and not under Section 78 of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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