https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=768651 https://www.taxtmi.com/caselaws?id=768651 Classification of goods - articles of silver jewellery/ articles of silver - to be classified under CETH 7113 or 7114? - applicability of benefit of exemption under Notification No. 12/2012 dated 17.03.2012 amended - demand of excise duty on goods exported - hedging amounts to trading of goods or not - availing ineligible credit in respect of renting of motor vehicles and repair and maintenance of motor vehicle - Time limitation. Time Limitation - HELD THAT:- Since the demand is made for the period from 01.03.2016 to 30.06.2017 and Show Cause Notice (SCN) was issued on 03.01.2021, the issue regarding invoking the extended period of limitation is well settled as per the judgment of the Hon'ble Supreme Court in the matter of Continental Foundation Jt. Venture Vs. Commr. Of C. Ex., Chandigarh-I [2007 (8) TMI 11 - SUPREME COURT] wherein it is held 'it is evident that the intent to evade duty is built into these very words. So far as mis-statement or suppression of facts are concerned, they are clearly qualified by the word 'wilful', preceding the words "mis-statement or suppression of facts" which means with intent to evade duty. The next set of words 'contravention of any of the provisions of this Act or Rules' are again qualified by the immediately following words 'with intent to evade payment of duty.' Therefore, there cannot be suppression or mis-statement of fact, which is not wilful and yet constitute a permissible ground for the purpose of the proviso to Section 11A. Mis-statement of fact must be wilful.' The dispute in the present appeal is regarding classification of the goods and appellant was filing ER-8 returns from time to time. Moreover the Appellant has not collected the excise duty from the customers on sale of the goods. All the transactions are duly accounted in the books of accounts and the same were audited by the Central Excise Audit team from time to time. Considering the Judgment of the Hon'ble Supreme Court in the matter of Continental Foundation Jt. Venture (supra) and Densons Pultretaknik, in the absence of any mis-statement or willful suppression of facts or contravention of any of the provisions of law with intent to evade payment of duty, there was no justifiable reason for invoking the extended period of limitation. Classification of goods - articles of silver jewellery/ articles of silver - to be classified under CETH 7113 or 7114? - HELD THAT:- Central Excise Tariff Heading 7114 relates to Articles of goldsmiths' or silversmiths' wares and parts thereof, of precious metal or of metal clad with precious metal, of precious metal. The assessee is a reputed manufacture of such products and maintaining records over a period of time. As per the documents produced by the Appellant including the ER returns and the invoices, it is evident that when such goods are sold, the presence of precious stones is specifically mentioned in the invoices. Even as per the calculation made by the Adjudication authority, it is admitted that the Appellant were selling articles of silver jewellery and other articles of silver @ Rs.56 per gram at the relevant time and based on that turn over is assessed. There is no evidence to show that such goods are studded with Diamond, Ruby, Emerald or Safire. Facts being so, the goods manufactured by the appellant can be classifiable under CETH 7113 as declared by the appellant since there is no admissible evidence to prove that the impugned goods are studded with diamond, ruby, emerald or sapphire. Whether the goods are falling under the category (I), (II) or (III) of 7113 as per Notification No. 26/2016-CE dated 26.07.2016? - HELD THAT:- As per the Notification No. 6/2017 dated 02.02.2017, condition No. 52A was introduced against the serial No. 199 of the Notification 12/2012, where the condition of not availing the cenvat credit of inputs or capital goods used in the manufacture of these goods is added with inputs or capital good or service tax on input services. Thus, appellant complied with condition No. 52A also since they have not availed cenvat credit of inputs or capital goods used in the manufacture of these goods and by reversing cenvat credit availed against service tax on input services used in the manufacture of these goods. Accordingly, they are entitled for claiming the benefit of 'nil' rate of duty for the period even after 02.02.2017 to 30.07.2017 as confirmed the impugned order. Whether hedging amounts to trading of goods? - HELD THAT:- Hedging is a risk management strategy employed to offset losses in investment which is meant to reduce a potential loss. As per the Cambridge Dictionary Hedging means "A way of controlling or limiting a loss or risk". There is no sale of gold with the bank based on forward selling contract has part of Hedging, thus there is no trading involved in Hedging. Moreover, SBI charges service tax for booking of forward contract, service tax is charged and collected from the appellant - following the ratio of the judgment of the Hon'ble Supreme Court in the matter of Sales Tax Officer, Pilibhit [1954 (5) TMI 17 - SUPREME COURT] and considering the facts and circumstances of the case including payment of service tax through SBI while Hedging activities are carried out by the Appellant, Hedging cannot be considered as trading. Thus, demand of Rs. 55,23,98,187/- under Section 11A (10) of the Act confirmed under Rule 6 (3) of the Cenvat Credit Rules, 2004 is also unsustainable since the appellant has complied with condition No. 52A by reversing the cenvat credit availed against service tax. Ineligible credit in respect of renting of motor vehicle - HELD THAT:- As evident from Show cause notice (SCN) No. 01/2021-CE dated 18.02.2021 and Order dated 18.07.2024, the said demand is considered and dropped by Commissioner (Appeals) in separate proceedings. Facts being so, the said demand is unsustainable. Conclusion - i) The goods are classifiable under CETH 7113, as there is no evidence to support classification under CETH 7114. ii) The appellant is entitled to the benefit of Notification No. 12/2012, as they complied with the conditions for exemption. iii) On the demand for excise duty on exports, it is held that the demand is unsustainable due to sufficient evidence of export provided by the appellant. iv) Concerning hedging, it does not constitute trading, and the related demand is unsustainable. v) On ineligible credit for renting motor vehicles, the previous decision to drop the demand upheld. The Appeal is allowed. Case-Laws Central Excise Thu, 27 Mar 2025 00:00:00 +0530