TaxTMI 
TaxTMI 
TaxTMI 
2019 (7) TMI 590
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....led in the State of Jammu and Kashmir and as the provision of the Finance Act, 1994 are not applicable to the State of Jammu and Kashmir, it has been alleged that the appellant have wrongly availed Cenvat credit and accordingly reversal of the Cenvat credit has been demanded as per the provision of Rule 14 of the Cenvat Credit Rules, 2004 readwith the proviso to the Section 73 (1) of the Finance Act, 1994; (ii) the second issue on which the demand has been raised in the above-mentioned show cause notice pertains to the matter that the appellant need to reverse back the Cenvat credit on the CPEs (Consumer Premises Equipment) installed on complementary basis at the premises of certain customers/subscribers. A demand of Rs. 8,71,650/- has been raised on this issue as per the provision of Section 73 (1) of the Finance Act, 1994, (iii) a demand of Rs. 62,66,437/- has also been demanded for wrong availment of the Cenvat credit on the CPEs lost in transit or lost at the distributors premises before same being put for the final utilization; (iv) and a demand of Rs. 9,84,62,871/- has also been made under Rule 14 of the Cenvat Credit Rules, 2004 readwith Section 73 (1) of the Finance Act, 19....
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....ax payment (Rs.) Cenvat credit utilized for payment of service tax (Rs.) Service Tax paid in cash (Rs.) Date of filing of relevant ST-3 return 2009-2010 1,216,050,209/- 1,141,968,929/- 74,081,280/- April - September 2009 - 23/10/2009 October - March 2010 - 23/07/2010 2010-2011 1,589,642,450/- 1,548,505,832/- 41,136,618/- April - September 2010 - 26/10/2010 October - March 2011 - 25/04/2011 2011-2012 1,94,57,90,608/- 1,87,55,28,002/- 7,02,62,606/- April - September 2011 - 25/12/2011 October - March 2012 - 25/04/2012 01/4/2012 to 31/01/2013 2,26,47,56,192/- 1,58,43,18,011/- 68,04,38,181/- April - June 2012 - 22/11/2012 July - September 2012 - 22/04/2013 October - March 2013 - 31/08/2013 Total 701,62,39,459/- 615,03,20,774/- 86,59,18,685/- 4. It can be seen from above chart that the appellant made payment of service tax by utilization of Cenvat credits as well as by making cash payments. It has further been submitted by the learned Advocate that they have discharged service tax on the output services of broadcasting on the considerations charged by them from the subscribers in Jammu and Kashmir for rendering ....
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....hat if the activity of the respondent - assessee does not amount to manufacture there can be no question of levy of duty, and if duty is levied, Modvat credit cannot be denied by holding that there is no manufacture." This decision was upheld by the Supreme Court by dismissing the SLP filed by the revenue. The order of dismissal is reported at 2009 (243) E.L.T. A 121. (ii) Commissioner of Central Excise, Pune - III vs. Ajinkya Enterprises - 2013 (294) E.L.T. 203 (Bom.) On similar facts, the High Court in this case dismissed the appeal of the Revenue on the ground that if duty is paid where it is not required under law to be discharged, Cenvat credit availed need not be reversed. (iii) The Mumbai Tribunal in the case of PSL Holdings Ltd. vs. Commissioner of Central Excise - 2003 (156) E.L.T. 602 (Tri. - Mum.) held : "By utilization of credit for payment of duty which was not required to be paid, credit was effectively reversed and Revenue cannot once again ask for reversal of credit". (iv) Similar view was taken by the Delhi Tribunal in the case of Asian Colour Coated Ispat Ltd. vs. Commissioner of Central Excise - 2015 (317) E.L.T. 538 (Tri. - Del.). Thus it is a set....
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....been received. The fact that certain CPEs have not been received on or have been lost comes to light on later date. It has been also contended that the Commissioner has been provided with the details of set-top boxes which have been lost during 2010-2011 to 2011-2012 and for 2013-2014, on which Cenvat credit have already been reversed. It has further been mentioned that only for a short period of 2012-2013 by oversight the Cenvat credits have not been reversed. It has further been argued that even without any prejudice the maximum penalty could have been 50% of the credit Cenvat credit wrongly availed by them as per the provisions of 1st proviso to Section 78 of the Finance Act, 1994 and further since entire amount of wrongly availed Cenvat credit alongwith the interest and penalty have already been deposited in the form of voluntarily payment of Rs. 5 crores with the Department, the benefit of reduced penalty of 25% should have been given to them. 6. With regard to issue No. IV, which pertains to the Cenvat credit on deactivated CPEs for which Cenvat credit have not been reversed by the appellant though they have officially written off such deactivated CPEs in their books of acco....
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....s dropped by the Commissioner, CGST, Noida by order dated 12/01/2018 holding that the capital goods had been put to use as also the capital goods have not been fully written off. The Commissioner in that order has also noted the fact that the local Range office had objected to the denial of credit by letter dated 31/01/2013. A copy of the order passed by the Commissioner CGST, Noida dated 12/01/2018 has been filed along with the compilation of judgments to this Bench. It is further been submitted that no appeal has been preferred by the Department before CESTAT against the above-mentioned order-in-original. Thus, the Department was fully aware, prior to issuance of the present show cause notice of the appellant's practice, and when the appellants are following the same practice all throughout, without prejudice to the merits of the case, invoking the extended period of limitation and imposition of penalty contending there was mala fide intent, cannot be sustained. 8. We have also heard learned Departmental Representative who has supported the findings of the order-in-original. 9. After hearing both the sides and on perusal of the appeal record, we find that the following issues....
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....Service Tax paid in cash (Rs.) Date of filing of relevant ST-3 return 2009-2010 1,216,050,209/- 1,141,968,929/- 74,081,280/- April - September 2009 - 23/10/2009 October - March 2010 - 23/07/2010 2010-2011 1,589,642,450/- 1,548,505,832/- 41,136,618/- April - September 2010 - 26/10/2010 October - March 2011 - 25/04/2011 2011-2012 1,94,57,90,608/- 1,87,55,28,002/- 7,02,62,606/- April - September 2011 - 25/12/2011 October - March 2012 - 25/04/2012 01/4/2012 to 31/01/2013 2,26,47,56,192/- 1,58,43,18,011/- 68,04,38,181/- April - June 2012 - 22/11/2012 July - September 2012 - 22/04/2013 October - March 2013 - 31/08/2013 Total 701,62,39,459/- 615,03,20,774/- 86,59,18,685/- 11. Thus, it has been claimed by the appellant that though they have availed the Cenvat credit in respect of CPEs installed in the state of Jammu and Kashmir and the credit so availed had been utilized for payment of service tax in respect of service tax paid by them to the Central Government on the output service arising in the state of Jammu and Kashmir. The appellant this way try to explain that the credit which have been availed by them has actually been rev....
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....he relevant extract of certain relevant decisions are reproduced here below :- "(a) Commissioner of Central Excise & Customs, Surat - III vs. Creative Enterprises - 2009 (235) E.L.T. 785 (Guj.) In the present case, the assessee was under the impression that the activity undertaken by it amounted to manufacture and accordingly paid excise duty and also availed Cenvat credit of the inputs utilized. The department contended that as the activity of the assessee did not amount to manufacture, the assessee is liable to reverse the CENVAT credit availed. The Gujarat High Court held that Cenvat credit cannot be denied when the assessee has paid the tax, as payment of tax amounts to reversal of credit. The court in paragraph 7 of the decision held as follows : "The Tribunal is justified in holding that if the activity of the respondent - assessee does not amount to manufacture there can be no question of levy of duty, and if duty is levied, Modvat credit cannot be denied by holding that there is no manufacture." This decision was upheld by the Supreme Court by dismissing the SLP filed by the revenue. The order of dismissal is reported at 2009 (243) E.L.T. A 121. (b) Commissio....
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....partment at that time. 15. We also note that the appellant have kept record of all the services which have been provided by them as well as the Cenvat credit which have been availed and utilized by them during the period covering from April 2009 to March 2014. We feel that ingredients of invoking the extended time proviso under Section 73 (3) of the Finance Act, 1994, such as, fraud, mis-representation, mis-statement and willful suppression of facts with an intent to evade payment of duty are not present in this case and therefore we hold that the provisions of Section 78 of the Finance Act, 1994 cannot be invoked in given circumstances. We also find that as per the provisions of Section 73 (3) which are reproduced here below :- "Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the person chargeable with the service tax, or the person to whom such tax refund has erroneously been made, may pay the amount of such service tax, chargeable or erroneously refunded, on the basis of his own ascertainment thereof, or on the basis of tax ascertained by a Central Excise Officer before service of notice on him under sub-secti....
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....an Loyd Chiles Offshore Limited and Ors. (supra), this Court made the following observations : "21. This Court while interpreting Section 11-A of the Central Excise Act in Collector of Central Excise v. H.M.M. Ltd. (supra) has observed that in order to attract the proviso to Section 11-A(1) it must be shown that the excise duty escaped by reason of fraud, collusion or willful misstatement of suppression of fact with intent to evade the payment of duty. It has been observed : '...Therefore, in order to attract the proviso to Section 11-A(1) it must be alleged in the show-cause notice that the duty of excise had not been levied or paid by reason of fraud, collusion or willful misstatement or suppression of fact on the part of the assessee or by reason of contravention of any of the provisions of the Act or of the Rules made thereunder with intent to evade payment of duties by such person or his agent. There is no such averment to be found in the show cause notice. There is no averment that the duty of excise had been intentionally evaded or that fraud or collusion had been practiced or that the assessee was guilty of wilful misstatement or suppression of fact. In the absence of a....
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....he fact that during the financial year 2012-2013 they have failed to reverse back an amount of Rs. 62,66,437/- on 32,078/- CPEs which were lost either in transit or at the distributor's premises before being used or put for use for providing the output service. However, it has been contended by the appellant that they have regularly been reversing back the Cenvat credit on the lost CPEs which were not put for use for providing output service. In this regard, the following details have been provided by the learned Advocate appearing for the appellant :- Financial year No. of CPEs lost Cenvat credit availed (in Rs.) Cenvat credit already reversed (in Rs.) 2009-2010 0 0 0 2010-2011 2,261 3,07,406/- 3,07,406/- 2011-2012 1,24,276 2,27,52,634/- 2,27,52,634/- 2012-2013 32,078 62,66,437/- 0 2013-2014 74,164 1,86,89,328/- 1,86,89,328/- 19. A glance at the above table thus points out that during financial year 2010-2011, 2011-2012 and 2013-2014 a substantial amount of Cenvat credit had already been reversed by the appellant for the CPEs which were lost or destroyed before being put for use. However, due to oversight the amount of Rs. 66,66,437....
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....it availed initially at the time of the purchase of such capital goods required to be reversed in the manner as prescribed under Rule 3 (5) of the Cenvat Credit Rules, 2004. The basic premise on which the Cenvat credit has been asked for the reversal is that the CPEs installed at the consumer premises and where either connection has been disconnected or deactivated and as such no output service is being provided by such CPE; Secondly, as per the facts of the case, the CPEs remained in the custody of the consumer and they are not taken back by the appellant after the consumer has either stopped the subscription or the appellant himself has deactivated services to the such customers. In these circumstances, it is presumed that the CPEs has been removed from the premises of the appellant and accordingly the provisions of Rule 3 (5A) of Cenvat Credit Rules, 2004 will be applicable. During the course of hearing, the learned Advocate has taken us through a chart of deactivation/activation of the CPEs for various subscribers. The learned Advocate has tried to show that it is not the case that a deactivated CPE is not being used at the following years for availing the output service. He ha....
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....saction value, the amount to be paid shall be equal to the duty leviable on transaction value. (b) If the capital goods are cleared as waste and scrap, the manufacturer shall pay an amount equal to the duty leviable on transaction value. (5B) If the value of any, (i) Input, or (ii) Capital goods before being put to use, [on which CENVAT credit has been taken is written off fully or partially or where any provision to write off fully or partially has been made in the books of account then] the manufacturer or service provider, as the case may be, shall pay an amount equivalent to the CENVAT credit taken in respect of the said input or capital goods : Provided that if the said input or capital goods is subsequently used in the manufacture of final products or the provision of [output] services, the manufacturer or output service provider, as the case may be, shall be entitled to take the credit of the amount equivalent to the CENVAT credit paid earlier subject to the other provisions of these rules.]" 22. It can be seen from the provisions of Rule 3 (5) that the law has provided that in case the inputs or capital goods on which Cenvat credit has been availed are removed....
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....his case are appropriately covered by the provisions of Rule 3 (5) "proviso" which say that the capital goods can be removed to the subscribers premises for further provision of the output service. It is also relevant to mention here that during the course of arguments, the learned Advocate has taken us through the record of the appeal wherein it has been pointed out that certain deactivated CPEs gets activated after lapse of certain months or years and, therefore, it is also wrong to assume that the CPEs (capital goods) on which the Cenvat credit has been taken by the appellant are not being put for providing the output service. In these circumstances, we feel that the appellant have rightly availed the Cenvat credit on the CPEs which have been placed for utilization at the subscribers premises and there is no provision under Cenvat Credit Rules for reversal of the Cenvat credit on such CPEs if they are being used for providing output service. We also take note that the impugned order-in-original has wrongly confirmed the reversal of the Cenvat credit under Rule 3 (5A) of the Cenvat Credit Rules, 2004 which is primarily meant for the capital goods which are put for use for certain....
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....pellant need to reverse back the Cenvat credit amounting to Rs. 87,35,678/- as per the provisions of Section 73 (1) of the Finance Act, 1994 readwith Rule 14 of Cenvat Credit Rules, 2004 ; (II) we also uphold the reversal of Cenvat credit amounting to Rs. 62,66,437/- on set top boxes which were lost in transit or lost at the distributors premises before being put to use as per the provision of Section 73 (1) of the Finance Act, 1994 readwith Rule 14 of the Cenvat Credit Rules, 2004 ; (III) we set aside the confirmation of the reversal of Cenvat credit amounting to Rs. 9,84,62,671/- as discussed in the preceding paras on the set top boxes which were deactivated at the subscribers premises. 27. We also confirm appropriate amount of interest as per the provisions of Section 75 of the Finance Act, 1994 readwith the Cenvat Credit Rules, 2004 on the above-mentioned two amounts of the Cenvat credits as confirmed for reversal under para 26 (I) to 26 (II) above. 28. Since, the appellant have already deposited an amount of Rs. 5 crores vide challan No. 00173 dated 30 July 2014, challan No. 00391 dated 01/08/2014, challan No. 00176 dated 11/08/2014 before issue of the show cause noti....