AI Drafter 
TaxTMI 
TaxTMI 
2020 (1) TMI 378
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....ling under Chapters 52, 55 & 60 of the First Schedule to the CETA. Appellant has seven spinning mills in its factory and a separate plant for manufacture of cotton shirting/ denim fabric, which is in operation since March, 2012. Cotton shirting/Denim fabric is cleared in the domestic market, partly on payment of excise duty, and partly without payment of duty, availing exemption under Notification No.30/2004-CE. 3. In Mill Nos. 1, 2, 3, 4 and 5 only PV yarn is manufactured, which is cleared both on payment of duty and exported under the claim of rebate. There is no dispute with regard to these mills. In October 2013, appellant installed various capital goods in Mill No. 6, for manufacture and captive use of cotton yarn in cotton/ denim fabric. 4. Mills No. 7 was installed by the appellant in February, 2015 for manufacturing cotton yarn, which was cleared partly on payment of duty. Cotton yarn manufactured in both mill Nos. 6 and 7 was cleared without payment of duty under Notification No. 30/2004-CE, as well as on payment of duty, and also exported. 5. Since appellant had made some clearances of both the products, viz cotton/ denim fabric and cotton yarn on payment of exci....
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.... the same registered premises of the appellant. Capital goods are used in manufacture of various qualities of yarn as well as denim fabric, which were cleared on payment of duty. In the registered premises, cotton yarn is also manufactured by the appellant capital goods in question is being used in the nature of intermediate goods and various yarn as well as denim fabric manufactured from the said intermediate goods alone can be termed as final product. Hence, they are eligible to cenvat credit on the capital goods in question used in manufacture of intermediate goods which have been further used in the manufacture of dutiable output. 7. Revenue further summoned Shri Durgesh Bangar, Director of the assessee who in his statement inter-alia stated that they were exporting PV yarn by availing the cenvat credit facility on input and they were not exporting cotton yarn and denim fabric, but they were clearing the said goods in domestic market. They were availing cenvat credit on capital goods used for manufacture of cotton yarn and cotton denim fabric. They were also manufacturing cotton polyester blended yarn with the help of the capital goods in question. Further, appellant by lett....
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....of duty. However, they have cleared five consignments of cotton yarn in DTA on payment of duty to M/s Sai Leela Synthetic Pvt. Limited, Bhilwara. 10. Further statement of Prakash Bohra, CEO was recorded on 28.01.2016. He inter alia stated that he was working with the appellant company since February, 2012. He looks after all the works of the company and is head of the spinning division including purchase of raw material, production efficiency and sale of goods etc. He stated that the said unit is engaged in manufacture of cotton yarn, PV yarn and denim fabric. The unit was established in 2009. In 2013, open end mill bearing No. 6 was installed. Further, in 2015, one cotton spinning mill bearing No. 7 and one yarn dyeing house was created. Further, in 2015, expansion of the fibre die house was done. He also provided the details of cenvat credit availed by the appellant company for the period 2011-12 to 2015-16 (upto September, 2016). In respect of clearance of cotton yarn and denim they were availing the exemption under Notification No. 30/2004, however, they have cleared five consignments to M/s Sai Leela Synthetic Pvt. Limited, Bhilwara, on payment of duty during the period Feb....
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....d list are used for cotton yarn manufacturing / spinning'. 13. Further, it appeared to Revenue that the transaction shown by the appellant company the removal of cotton yarn on payment of duty to M/s Sai Leela Synthetics Pvt. Limited, is a shame transaction created only for the purpose of availing cenvat credit on capital goods. Further, enquiries was made from the machine supplier - M/s Laxmi Machine Works Limited, Coimbatore who confirmed that the machinery in question are designed for manufacturing of synthetic blended cotton yarn with PV yarn cotton blended yarn with polyester and cotton yarn of different qualities. Therefore, cenvat credit of Rs. 1,13,57,316/- as per Annexure-A to the show cause notice availed by the appellant was pertaining to the machine/ parts used exclusively for manufacture of cotton yarn. Further, as per list provided by the CEO of the appellant, who submitted the details of parts used for cotton machine and in respect of such parts appellant have availed cenvat credit of Rs. 3,18,126/- as per Annexure-B to the show cause notice, in respect of six invoices during the period March, 2015 to June, 2015 totalling Rs. 1,16,75,442/-. Further, it appeared th....
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....tal cenvat credit on capital goods amounting to Rs. 4,50,73,264/- (Rs. 1,16,75,442/- +Rs. 3,33,97,822/-) during the period March, 2012 to September, 2015 appear to be not admissible and wrongly availed in respect of capital goods and parts thereof used in Mill No. 6 and 7 and the denim fabric mill. 17. Further, on scrutiny of invoices it appeared that appellant have availed cenvat credit of Rs. 1,12,19,926/- on 128 invoices, Annexure-D to show cause notice pertaining to capital goods, however, these invoices were issued in the name of other units of Kanchan Group such as Kanchan India Limited at Mandal, Distt- Bhilwara having registration No. AABCK0452CXM001 and also another unit having registration No. AA3CK0452CEM003. As per rule 9(2) of Cenvat Credit Rules, no credit shall be taken unless all the particulars as prescribed are contained in the document. It also appeared that out of 128 invoices, 49 invoices involving credit of Rs. 89,31,420/- are also covered in the invoices of plant and machinery of denim fabrics. Thus, the amount of Rs. 89,31,420/- is also included in it. Thus, credit of Rs. 22,88,306/- (Rs. 1,12,19,726/- (-) Rs. 89,31,420/-) did not appear admissible as the....
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....acture of exempted goods. Further, clearance for export without payment of duty is equivalent to dutiable clearance. Further, contended that Rule 6(4) of Cenvat Credit Rules does not envisage that the manufacture and clearance of dutiable goods should be substantial as compared to exempt goods for availing of cenvat credit on capital goods. Therefore, even in case of a single consignment is cleared on payment of duty then also the capital goods in question are eligible for taking of cenvat credit, and thus Rule 6(4) will not be applicable were capital goods will be used in manufacture of dutiable goods during their economic lifetime. The appellant relied upon the five invoices where cotton yarn was sold to M/s Sai Leela Synthetics Pvt. Limited on payment of duty and further submitted copy of invoices where certain consignments were exported, alongwith proof of export. It was also contended that export of goods without payment of duty is at par with clearance of goods on payment of duty under claim of rebate. Further, the appellant have disclosed export sale in their ER-1 returns for the relevant period where exports have been shown under Notification No. 19/2004-CE. It was contende....
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....cted by him Ans.: It was received approximately 4-5 days ago. Question 2: Whether any person from M/s. Kanchan India Limited as contacted him during this period? Ans.: Yes, Shri Rajesh Bansal working in M/s. Kanchan India Limited contacted him during this period and got him met with Shri Keshav Maloo, Consultant. Question3: when he was departmental witness, then why he admitted to meet Shri Keshav maloo. Ans. Shri Nand Lal Jalan could not reply. Shri Kishav Maloo, Consultant of the noticee asked the following question during cross examination: Question 1: Shri Keshav Maloo stated that the cross examination is for the purpose of bringing out the truthfulness. He asked whether Shri G.P. Dadhich has contacted him and discussed about the case. Ans. Shri G.P. Dadhich contacted him just before a day and asked him that he would go with him and accordingly he came with him. Question 2: Whether he received the goods under 5 invoices as mentioned at page 9 of Show Cause Notice. Ans. Shri Jalan stated that he had tendered statement in this regard and same is correct. Question 3: It means you hav....
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....e cross-examination, but still he has stood by his statement in cross-examination and it was only on subsequent persuasion that Shri Nand Lal Jalan has written the letter dated 03.10.2017, which has got no evidentiary value. It was also observed that the letter dated 03.10.2017 is evidently written by Shri Nand Lal Jalan only under influence of the officer and Consultant of KIL. 24. So far the claim of export is concerned, as to export of four consignments of cotton yarn, learned Commissioner observed that goods can be cleared for export under Rule 19 of Central Excise Rules without payment of duty subject to condition, safeguards and procedure as may be specified by way of notification. As per Notification No. 42/2001-CE (NT) as amended, lays down the conditions and procedure for export of excisable goods, without payment of duty from the factory of production. The notification stipulates that an exporter shall furnish a general bond to the Central Excise authority having jurisdiction over the factory of a sum equal to atleast the duty chargeable on such goods which such surety or sufficient security as the officer may approve for the due arrival thereof at the place of export ....
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....der Rule 15(2) of Cenvat Credit Rules read with Section 11AC of the Central Excise Act. Further, on the other appellant Shri Durgesh Banger and Shri Prakash Bohra, penalty of Rs. 10 lakh each under Rule 26 of Central Excise Rules, 2002 was imposed. 26. Being aggrieved, the appellants are before this Tribunal. 27. Heard the parties and perused the records. 28. Learned Counsel for the appellant made the following submissions:- 28.1 Cenvat credit availed on the capital goods used in the manufacture of dutiable cotton/ denim fabric. • It is an admitted fact that cotton/ denim fabric has been cleared by Appellant on payment of duty from March 2012 onwards (i.e. right from the start of this plant), as is evident from the sample invoices indicating payment of excise duty on clearances of such denim fabric, which was duly disclosed in the ER-1 returns. 28.2 Denial of Cenvat Credit on capital goods used in the manufacture of cotton/ denim fabric on the ground of negligible clearances on payment of duty is not sustainable in light of the decision of this Tribunal in the case of CCE &ST-Udaipur v. Chairman Processors Ltd., 2018 (9) TMI 169, wherein it was held that....
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....ountry internationally competitive; further, the intention is not to export taxes but only to export the goods; Rule 6(6)(v) has been consciously and expressly enacted with the objective to ensure that duty is not levied on inputs going in the export products and that considering the conscious and express provisions contained in Rule 6(6)(v) for export goods, to deny permission to export the goods would be incorrect and that this will completely nullify and frustrate Rule 6(6)(v). • The judgment in the case of Repro India Ltd. (supra) was followed by the Hon'ble Himachal Pradesh High Court in the case of CCE v. Drish Shoes Ltd., 2010 (254) ELT 417 (H.P.), to hold that Rule 6(1) is subject to the exception contained in Rule 6(6), one of the exception being that in respect of excisable goods cleared for export. This judgment of the Hon'ble High Court was affirmed by the Hon'ble Supreme Court, 2018 (360) ELT 119 (S.C.). • To similar effect is the judgment of Hon'ble Tribunal in the case of Sangam India Ltd. v. CC& ST, Udaipur, 2018 (1) TMI 1012-CESTAT, New Delhi, observing that the benefit of Rule 6(6)(v) has to be extended when goods have been exported, thus....
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.... exempted from payment of duty, as there is no risk to the Govt. revenue. This does not however, mean that export of such goods is not allowed or the goods, when exported, lose the character of export goods. Para (iv) of the notification expressly provides that in cases where the goods are chargeable to nil rate of duty or are wholly exempted from payment of duty, the conditions/procedure provided under Notification No. 42/2001-CE(NT) are not applicable, the goods however, still remain as export goods. Since, the Appellant had cleared cotton yarn, availing exemption under Notification 30/2004-CE, there was no requirement to execute a Bond for export, under Rule 19 of the Excise Rules. • In the case of Repro India Ltd. (supra) & Drish Shoes Ltd. (supra), it was Department's own contention that no bond/ LUT is required to be executed for export of the exempt goods. • Without prejudice to the above, non-execution of Bond for export of goods has been held to be only a procedural requirement when the basic principle of excise taxation is that only goods have to be exported and not the domestic taxes/ levies. In this regard, reliance is placed on the case of Neo....
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....nt as well. Appellant has always contended that they intended to use the subject capital goods for the manufacture of dutiable as well as exempted goods, which is clearly reflected from the evidence available on record, as stated above. • It is submitted that the 'intention to use' has been held to be a decisive factor and Cenvat credit cannot be denied on the ground that the capital goods were initially used to manufacture exempted goods only and the dutiable goods were manufactured only subsequently. In this regard, reliance is placed on the judgment of Hon'ble Gujarat High Court in the case of CCE v. Gujarat Propack, 2009 (234) ELT 409 (Guj.). • Further, Rule 6(4) was substituted w.e.f. 01.04.2016, vide Notification No. 13/2016-CE(NT) dated 01.03.2016 to provide that no Cenvat credit shall be allowed on capital goods used exclusively in the manufacture of exempted goods for a period of two years from the date of commencement of commercial production. It is therefore, evident that prior to the above, there was no restriction of time limit for use of the goods in the manufacture of dutiable goods. In the case of Gujarat Propack (supra) it was held that us....
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....) clearly provides that only the name and address of the factory/ warehouse/ premises of first stage or second stage dealer is required, and not that of the recipient. Hence, the Appellant is entitled to the exception carved under proviso to Rule 9(2). Without prejudice to the above, the Appellant had also obtained and submitted the rectified invoices, however, the same have been rejected by the Ld. Commissioner on the specious ground that the Appellant has not applied to the jurisdictional authority for allowing the credit. • It has been consistently held by various judicial foras that substantive benefit cannot be denied for procedural infractions: • Century Metal India v. CGST, CCE, Alwar, 2018 (7) TMI 984-CESTAT - NEW DELHI. • Adbur Pvt. Ltd. v. CST, Delhi, 2017 (5) GSTL 334 (Tri. - Delhi) • CC, CE & ST, Guntur v. Viki Industries Pvt. Ltd., 2017-TIOL-794-CESTAT-HYD. Bhalla Techtran Industries Ltd. v. CCE, Noida, 2016 (342) ELT 448 (Tri. - Delhi) OTHER SUBMISSIONS Extended period not invocable; Penalty not imposable and interest not recoverable. A.1 It is submitted that the present demand has been raised for t....
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.....2 Similarly, the penalties imposed under Rule 15A of the Credit Rules are also not sustainable and are liable to be set aside. 29. Learned Authorised Representative for the Revenue reiterates the findings in the impugned order. 30. Having considered the rival contentions, we find that the receipt and installation of the capital goods, on which cenvat credit is objected, is not disputed. As regards the error in the address of the particular unit of the assessee company is concerned, we find that this is not a good reason for rejection of the cenvat claim as the invoice is in the name of the appellant company only, and subsequently they have got the error rectified by the supplier of the capital goods. Further, it is not disputed that the machinery in question although being used for manufacture of cotton yarn and cotton fabrics is also capable for manufacturing PV yarn, as certified by the manufacturers / supplier of the machinery. Further, we find that the fact of export is not disputed of the cotton yarn /fabrics, which were removed from the factory without payment of duty and were exported. The appellant have led evidence also before this Tribunal wherein they have produce....