TaxTMI 
TaxTMI 
2016 (7) TMI 154
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....0/- for each credit entry in CENVAT A/C April 2007 to March 2008 MSPL EOU II O-in-O No 6/09 dated 20.3.2009 ST/484/09 93,64,460/- & penalty of 2000/- for each entry in CENVAT A/C April 2007 to March 2008 MSPL EOU II O-in-O No 7/09 dated 20.3.2009 ST/485/09 1,05,73,348/- and demand of ST of 19,432 and 8,96,340 and app of ST and interest paid. Penalty of Rs. 2000/- per entry & 19,432/- April 2006 to March 2007 Table 2 - Appeals filed by the Revenue (C.C.E., Belgaum) UNIT IMPUGNED ORDER APPEAL BY DEPT-NoS. CENVT REFUND (RS.) PERIOD MSPL EOU II Common Order-in-Appeal No 7/2008 dt 5.3.2008 (in respect of 2 Appeals) decided in favour of the assessee ST/224/08 39,82,339 [Rs. 18,43,805/- disallowed in O-in-O 18/2007 & Rs. 21,38,534/- disallowed in O-in-O 19/2007] 4/2006 to 6/2006 And 7/2006 to 9/2006 MSPL EOU I Order-in-Appeal No 8/2008 CE dt 5.3.2008 decided in favour of the assessee ST/411/08 53,533/- refund of unutilized Cenvat credit rejected [O-in-O 20/2007] 4/2006 to 8/2006 2. In case of the appeals Nos. ST/483 to 485/2009 wher....
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....n satisfied, the transaction of sale in the course of export takes place when the goods cross the customs frontiers, etc are not acceptable. (iv) Outward transportation up to the port of shipment is not an input service in terms of the Hon Tribunal decision in the case of Gujarat Ambuja Cements Ltd Vs CCE - 2007 (6) STR 249 (T). 4.1. The Commissioner has disallowed CENVAT credit in three appeals Nos. ST/483 to 485/2009 on identical grounds. 4.2. In Appeal No ST/485/09 against Order-in-Original No 7/2009 the Commissioner has recorded in Para 15.1 that prior to substitution of Rule 2 (p) of the CENVAT Credit Rules, 2004 with effect from 1.3.2008, there is no restriction for utilization of CENVAT Credit by the manufacturing Unit towards payment of service tax on GTA service as provider of output service. However, in Para 15.2, it is recorded that since it is held that CENVAT credit cannot be allowed in the light of Rule 6 (1) of the CENVAT Credit Rules, 2004 as the iron ore is exempt from duty under Notification No 4/2006 CE dated 1.3.2006 the EOU is required to pay service tax on GTA service by cash. Accordingly, the dema....
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.... ore products manufactured in a 100% EOU. The iron ore manufactured and cleared by a 100% EOU are thus not exempted goods. • The Hon Tribunal in the case of Sahajanand Technologies (P) Ltd Vs CCE, Daman - 2007 (210) ELT 108 (T) has held that the exemption notification issued under Section 5A will not be applicable in respect of clearances effected by 100% EOUs unless specifically provided for in the notification itself. The EOUs are required to pay excise duty on iron ore cleared in DTA. 4.8. Rule 6 not applicable to excisable goods exported: • The iron ore classified under CHH 2601 is excisable goods. The iron ore produced in the EOU is not exempted goods. The provisions of Rule 6 (1) to (4) of the CENVAT Credit Rules, 2004 are not applicable to iron ore manufactured and exported by 100% EOU. • Even otherwise, it is well settled law that the provisions of Rule 6 (1) to (4) of the CENVAT Credit Rules, 2004 are not attracted to the "excisable goods" exported even if they are otherwise exempt from payment of excise duty. The Appellants (M/s MSPL Ltd.)rely on the following decisions : (i) Repro India Ltd Vs Union of India ....
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....In such cases the credit of service tax paid on the transportation up to such place of sale would be admissible. The Hon High Court of Punjab and Haryana in the case of Ambuja cements Ltd Vs Union of India - 2009 (236) ELT 431 (P & H) has approved the said circular. 5.3. The appellants further argue that the Hon High Court of Gujarat in the case of CCE Vs Dynamic Industries Ltd - 2014 (307) ELT 15 (Guj) has held that where the exports are on FOB basis the place of removal is the port and not factory gate. Hence, the services of CHA, Shipping Agents, Container Services used for export of finished goods by the manufacturer are eligible for CENVAT credit. 5.4. The appellants further argue that it is also well settled law that service tax paid on various services up to the port is available as CENVAT Credit to the manufacturer-exporter and the port is to be considered as the place of removal. The Appellants rely on: (i) Ashirvad Pipes Pvt Ltd Vs CCE, Bangalore [2012 (31) STR 693 (T- Bang)] (ii) Oriental Containers Ltd Vs CCE [2012 (28) STR 397 (T- Mum)] 6. In case of the appeals Nos. ST/224/2008 and ST/411....
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....bration', 'commercial or industrial construction' and 'transportation of goods by road ' by a goods transport agency' services cannot be allowed in the light of the conditions prescribed under Rule 6(1) of the CEVAT Credit Rules, 2004, as the activities of crushing, grinding, screening, and washing of iron ore undertaken by M/s MSPL Ltd. cannot be called as manufacturing activity and do not amount to manufacture, where on iron ore specified in the First Schedule to the Central Excise tariff Act, 1985, no duty of Excise is payable under Section 3 of the Central Excise Act, 1944. 7.1. The Departments further contention is that once it is held that no duty of excise is payable on the process such as crushing, grinding, screening and washing of iron ore undertaken by M/s MSPL Ltd. EOU-I, no CENVAT credit is admissible to M/s MSPL Ltd. 7.2. The learned A.R. for Revenue has reiterated the findings of the impugned order(s) and state that the credit of service tax paid on various services such as 'sampling and analysis' service, audit service, security agency supply service, m....
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....nbsp; In all these five appeals, the subject matters are inter-related. The Revenue (Department) is in appeal (Nos. ST/224 & 411/2008) and is pleading to deny the refund of Cenvat credit to M/s MSPL Ltd. where Commissioner (Appeals) allowed the Cenvat credit to M/s MSPL Ltd. M/s MSPL Ltd. have filed three appeals (Nos. ST/483 to 485/2009) where Cenvat credit has been disallowed and duty demand along with interest has been confirmed against them. 10. We find that on this subject matter, there has been precedent decisions available. The Department has denied Cenvat credit mainly stating that the activity of extraction, crushing, grinding, sorting and washing of iron ore undertaken by the assessee does not amount to manufacture under Section 2(f) of the Central Excise Act and therefore, no duty is payable under Section 3 of the Central Excise Act and the goods, therefore, cannot be termed as excisable. In this regard, there are two C.B.E.C. Circulars which are No. 314/30/97-CX dated 6.5.1997 and No. 54/2004-Cus dated 13.10.2004. 10.1. Further, we find that the Foreig....
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....lso. As a trade facilitation measure, it has been decided to allow EOUs (including STP/EHTP units) an option either to procure the goods from DTA without payment of duty under CT-3 procedure or to procure the goods on payment of duty and avail CENVAT credit. The credit could be utilized by them as per the Cenvat Credit Rules, 2004, including payment of duty on their DTA sales. 5. The EOUs can also take credit of the 5. Service Tax borne by them which will in effect provide them relief from Service Tax [Para 6.1) of the FTP]. 6. For availing CENVAT Credit, the procedure 6. and provisions as specified in CENVAT Credit Rules, 2004, will apply. However, as regards job work, the EOU/EHTP/STP shall not be allowed to send the goods directly to the job worker without bringing the goods to the units (as the goods will then not acquire the status of EOU goods) and will be governed by Board's existing Circulars on this issue relating to EOU/EHTP/STP. 7. Rule 17 of the Central Excise Rules, 7. 2002, has been amendment suitably by Notification No. 18/20....
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....p; Paragraphs 7 and 9 of this decision of the Hon'ble Bombay High Court are reproduced below : "7. We may also consider the provisions of Rule 6 of the Cenvat Credit Rules, 2004 (emphasis supplied). The relevant portion of Rule 6(6)(v) reads as under : "(6) The provisions of sub-rules (1), (2), (3) and (4) shall not be applicable in case the excisable goods removed without payment of duty are either - (i) ..... (ii) ..... (iii) ..... (iv) ..... (v) cleared for export under bond in terms of provisions of the Central Excise Rules, 2002". (emphasis supplied) The petitioners had manufactured both dutiable and exempted final product....
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.... It would thus appear that the direction of the respondent No. 2 to the petitioners to pay 10% even though printed books were exported is not legally sustainable. It is only in the event the petitioners does not export the printed goods and do not maintain the account as contemplated by rule 6(2) the petitioner would be required to pay 10% on the sale price of the printed books not so exported. Even though Rule 6(1) of the Cenvat Credit Rules, 2004 provides that no Cenvat credit will be available in respect of the inputs used in the manufacture of exempted products, Rule 6(6)(v) of the Cenvat Credit Rules creates an exemption inter alia in respect of the excisable goods removed without payment of duty for export under bond in terms of Central Excise Rules, 2002. Considering the language of Rule 6(6)(v) of the Cenvat Credit Rules, 2004 the petitioners are entitled to avail Cenvat credit in respect of the inputs used in the manufacture of the final products being exported irrespective of the fact that the final products are otherwise exempt." 8. xxx &n....
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....duty are either - (i) cleared to a unit in a special economic zone; or (ii) cleared to a hundred per cent export oriented undertaking; or cleared to a unit in an Electronic Hardware Technology Park or Software Technology Park; or (iv) supplied to the United Nations or an international organization for their official use or supplied to projects funded by them, on which exemption of duty is available under notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 108/95-Central Excise, dated the 28th August, 1995 number G.S.R. 602(E) dated the 28th August, 1995; or (v) cleared for export under the items of the provisions of the Central Excise Rules, 2002; or (vi) gold or silver falling within Chapter 71 of the said First Schedule, arising in the course of manufacture of copper or zinc by smelting." A perusal of the aforesaid Rules would clearly show that sub-rule (i) to (vi) are identical and the difference in Rule 6(6) of the Cenvat Credit Rules, 2004 and Rule 6(5) of the Cenvat Credit Rules, 2002 is not relevant for the purpose of the present case. Rule 6(1....
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.... exception clause contained in sub-rule (5) of Rule 6 was applicable in case of only exempted goods, while exception clause contained in sub-rule (6) of Rule 6 of 2004 rules, applies both to exempted goods, as also goods subject to duty, because the term used in sub-rule (6) is " excisable goods" and not exempted goods, as was the case in Rules of 2002." 10.4.3. In respect of the interpretation of the wordings "place of removal", the Departments contention is that input services used for bringing the goods to the port of export cannot be covered under the term "input service" as in case of M/s MSPL Ltd., the Department considers the factory as the "place of removal". The Departments assumption and contention is that sale of the goods took place within the factory premises only. But from the facts on record, it is clear that in respect of the subject goods exported by M/s MSPL Ltd., the "place of removal" is the port of shipment and not the factory gate. The Hon'ble High Court of Gujarat in the case of CCE Vs. Dynamic Industries Ltd. [2014 (307) E.L.T. 15 (Guj.)] has held that where exports are on FOB basis, pl....