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TaxTMI 
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TaxTMI 
2022 (7) TMI 194
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....' 2004 read with proviso to Section 73(1) of the Finance Act, 1994. (b) The Interest involved on the aforesaid amount should also be recovered from the party under rule 14 of CENVAT Credit Rules, 2004 read with provisions to Section-75 of Finance Act 1994. (c) The Penalty of Rs.66,36,774/- under Rule 15(3) of the CENVAT Credit Rules, 2004 read with Section-78 of the Finance Act, 1994 is imposed upon the party for fraudulent availment of cenvat credit. 2. (a) The demand of Service Tax amounting to Rs.7,59,918/- is hereby confirmed under proviso to Section 73(1) of the Finance Act,1994. The party is directed to pay it forthwith. (b) The Interest involved on the aforesaid amount should also be recovered from the party under the provisions of Section-75 of Finance Act 1994. (c) The Penalty of Rs.7,59,918/- is also imposed upon the party under Section-78 of the Finance Act, 1994. 3. (a) The demand of Service Tax amounting to Rs.75,555/- is hereby confirmed under proviso to Section-73 of the Finance Act,1994. As Service Tax of Rs.75,555/- already stands deposited vide Challan no.1024,1313 & 1327 all dated 25.07.2014, the same is appropriated. (b) The Interest amounting ....
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....e mechanism on rent-a-cab services April 2013 to March 2014 INR 7,59,918/- III Penalty imposed under Section 73 (4A) of the Finance Act, 1994 April 2013 to March 2014 INR 75,555/- IV Penalty imposed under Rule 15 (3) of CENVAT Credit Rules read with Section 78 of the Finance Act, 1994 and Interest under Rule 14 of CENVAT Credit Rules read with Section 75 of the Finance Act, 1994 31.03.2014 INR 18,62,067/- V Recovery of amount of Cenvat credit taken on various input services along with interest 2013-14 & 2014-15 INR 8,59,239/- 3. Each of these heads would be taken up separately. I Disallowance of CENVAT credit taken on service tax paid on input services received by the SEZ unit. 4. During the relevant period, the appellant had availed and utilised the CENVAT credit of service tax paid on input services received in its Special Economic Zone [SEZ] Unit. The appellant could also have claimed exemption by way of refund of the said service tax by virtue of Notifications dated 01.03.2011 and 20.06.2012, but it opted to take CENVAT credit of the same amount instead. The Additional Commissioner and the Commissioner (Appeals) have justified the disallowance of....
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....ants to claim a refund, the Central Government recognized that an SEZ unit may take CENVAT credit as an alternative benefit to the refund and such taking of CENVAT credit is a legally permissible option under the CENVAT Credit Rules, 2004 [the Credit Rules ]. In support of this contention, learned Counsel placed reliance upon the judgment of the Delhi High Court in Commissioner of Central Excise vs. Grand Card Industries [2014 (305) ELT 19 (Del.) ]. 8. Shri B.K. Jain, learned authorized representative appearing for the Department, however, supported the impugned order and contended that an Exemption Notification should not be liberally construed and the beneficiary must fall within the ambit of the exemption and fulfil the conditions thereof. In support of this contention, learned authorized representative placed reliance upon the judgment of the Supreme Court in Krishi Upaj Mandi Samiti, New Mandi Yard, Alwar vs. Commissioner of Central Excise and Service Tax, Alwar [2022 (LiveLaw) (SC) 203]. 9. The submission advanced by learned Counsel for the appellant has substance. The eligibility to take input tax credit as an alternative to an exemption under a notification has been settl....
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....itled to clear goods at nil duty or lesser duty only up to a limit. Because he cannot pass on the Modvat credit, to the purchaser, he is denied a level playing field and suffers disadvantage. This clearly is not the purpose behind the Modvat scheme and the exemption notification. 22. A manufacturer cannot simultaneously avail of double benefits one of the Modvat Scheme and the other of the exemption notification unless expressly permitted to do so. In case a manufacturer is covered both under the Modvat scheme and an exemption notification, then the manufacturer should have the right to choose to avail the benefit of either of the two whichever is more attractive and beneficial. The choice once exercised is binding and final and interchange may not be permissible, unless allowed but this is different to arguing that choice is not available. The two provisions are in alternative but the right of choice is not curtailed. 23. The Supreme Court of India in the case of Collector of Central Excise v. Indian Petro Chemicals - 1997 (11) SCC 318 = 1997 (92) E.L.T. 13 (S.C.) upheld the decision of the Tribunal wherein it was held that where two exemption notifications were applicable, th....
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....facturer discharging the liability of appropriate duty of excise on these manufactured goods. Any job worker who undertakes services of processing is not free to avail the benefit of the said notification unless the recipient of the services pays appropriate duty of excise on the goods returned back by the job worker. This condition of payment of appropriate duty of excise by the recipient i.e., the principal manufacturer is sine qua non for availing the benefit of the notification by the job worker. Thus, the condition stipulated in the notification establishes that it is a conditional notification. 11. Section 5A(1A) of the Central Excise Act provides for power to grant exemption from duty of excise. Section 5A(1A) of the Central Excise Act specifically provides that "for the removal of doubts, it is hereby declared that where an exemption under sub-section (1) in respect of any excisable goods from the whole of the duty of excise leviable thereon has been granted absolutely, the manufacturer of such excisable goods shall not pay the duty of excise on such goods". 12. The words "shall not pay" enumerated in the said provision specifically denotes that it is the mandatory requ....
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....in Belarpur Sugar & Allied Indus. Ltd. vs. Collr. Of C.Ex., Aurangabad [1999 (108) ELT 9 (SC)]. The issue involved was whether an assessee would be entitled to duty reduction available under an amending Notification before the date of issue of that Notification. The Supreme Court held that denial of the Exemption Notification for the period prior to the date of the amending Notification shall defeat the object and purpose of the Notification itself since the purpose of both the original and the amending Notifications was to give incentive for increasing production of goods which would be effectively served only if the amending Notification was made available to the prior period as well. The relevant portion of the judgment of the Supreme Court is reproduced below : "9. Before we proceed to scrutinise the Notifications, the law to interpret is settled. Unless there is anything to the contrary in the Act, Rules or Notification, if there be two possible interpretation, it is that interpretation which subserve the object and purpose should be accepted. The objective of this Notification is by conferring rebate in excise duty, an incentive is given to a factory for increasing the suga....
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....d of such service tax cannot be sustained. II Service tax liability under reverse-charge mechanism on rent-a-cab services 17. The Order has confirmed the demand of Rs. 7,59,918/- of service tax with interest and penalty upon the appellant on the ground that the appellant had recovered expenses incurred on rent-a-cab services from its customers, but had not paid service tax on a reverse-charge mechanism on these services. 20. It transpires from the records that a letter dated 14.10.2014 was issued by the Superintendent, Service Tax Range-1, Noida to the appellant alleging that the scrutiny of records submitted by the appellant showed that the appellant had recovered expenses amounting to Rs. 1,72,70,301/- from its customers towards rent-a-cab services and for this allegation reliance was placed on a chart. In this chart titled "Details of Hire of Vehicle expense for FY'14, the appellant showed relevant ledger line items for the expenses incurred during the year to be Rs. 3,44,67,299/- and the abated value @40% had also been duly disclosed in the service tax returns for the year 2013-14. The Superintendent, however, referred to certain ledger items mentioned in the chart. One of ....
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....III Penalty imposed under section 73(4A) of the Finance Act 25. This demand was confirmed against the appellant on the ground that the appellant had received services from outside India and was liable to pay service tax of Rs. 75,555/- under the reverse charge mechanism. This amount was originally not reflected in the service tax returns, and had been paid belatedly by the appellant with interest of Rs. 7,774/- on 25.07.2014, much prior to the issuance of the show cause notice dated 31.03.2016. Despite the payment of the service tax with interest, the Department raised a demand of Rs. 75,555/- with penalty under section 73(4A) of the Finance Act. 26. It is pertinent to note that the case of the appellant is squarely covered by the provisions of sub-section (3) of Section 73 of the Finance Act, 1994 read with Explanation 2 thereto. These provisions, as they then stood, are reproduced below: "73. Recovery of service tax not levied or paid or short-levied or short-paid or erroneously refunded. (3) 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 suc....
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....ised in the show cause notice; and (f) Specific submissions had been raised by the appellant that its case was covered by the provisions of rule 4 (7) of the Credit Rules, 2004. 30. Learned counsel for the appellant had submitted that in such circumstances taking CENVAT credit and reversing the same is permissible under rule 4 (7) of the Credit Rules. This rule is reproduced below: "4. Conditions for allowing CENVAT credit. (7) The CENVAT credit in respect of input service shall be allowed, on or after the day on which the invoice, bill or, as the case may be, challan referred to in Rule 9 is received: Provided that in respect of input service where whole or part of the service tax is liable to be paid by the recipient of service, credit of service tax payable by the service recipient shall be allowed after such service tax is paid: Provided further that in case the payment of the value of input service and the service tax paid or payable as indicated in the invoice, bill or as the case may be, challan referred to in rule 9 is not made within three months of the date of the invoice, bill or, as the case may be, challan, the manufacturer or the service provider who has t....