2022 (7) TMI 924

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....mption from central excise duty under Notification No. 214/86-CE dated 25.03.1986. As per the scheme of this notification, the appellant would clear intermediate goods to the supplier of the raw material who would complete the manufacturing process and pay excise duty on the final product at his end. It is undisputed that this job work has been taking place for a long time and that the appellant has been claiming the benefit of the aforesaid exemption of notification. On 18.06.2018, a show cause notice [SCN] was issued by the Additional Commissioner, CGST (Audit), Jaipur stating that the job work carried out by the appellant is "an exempted service" and since the appellant had not maintained separate records in respect of the common inputs and input services used for manufacture of its dutiable final products and for providing this exempted service, it was required to pay an amount as per Rule 6(3) of the Cenvat Credit Rules, 2004 [CCR]. Accordingly, a demand was made on the appellant for an amount under Rule 6 (3), equal to 7% of the value of the exempted services. In the SCN, the appellant was called upon to explain, as to why: "(i) An amount of Rs. 1,67,85,366/- not paid by th....

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....O Industrial Area, Phase-I, Bhiwadi Distt. Alwar, Rajasthan and order to recover the same from them under Rule 15 (3) (ii) of the CENVAT Credit Rules, 2004 read with proviso to Section 78 (1) of the Finance Act, 1994. However, M/s Agrawal Metal Works Pvt. Ltd., SP-144, RIICO Industrial Area, Phase-I, Bhiwadi Distt. Alwar, Rajasthan, has liberty to pay reduced amount of penalty as laid down in the clause (ii) of second Proviso to Section 78 (1) of the Finance Act, 1994, if the amount of demand confirmed at (i) above and interest leviable thereon is paid within a period of thirty days of the date of receipt of this order, the penalty shall be twenty-five per cent of the demand confirmed in this order subject to the condition that such reduced penalty is also paid within such period". 5. This order was upheld by the Commissioner (Appeals) by the impugned order and, hence, this appeal. 6. Learned Counsel for the appellant has submitted as follows:- (1) The appellant has been doing job work for several years and has been availing the benefit of Central Excise exemption Notification No. 214/86-CE dated 25.03.1986 which the Department was aware of. This exemption notification only def....

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....elf is not sustainable on merits the question of imposition of penalty also does not arise. It has, therefore, been submitted that the appeal may be allowed and the impugned order may be set aside. 8. On behalf of the Revenue, learned Authorized Representative reiterated the findings of the impugned order and the order-in-original. He further placed reliance on the judgment of the Supreme Court in the case of Commissioner of Customs (Import), Mumbai versus M/s Dilip Kumar and Company & Ors. [2018 (361) E.L.T. 577 (S.C.)] He prayed that the appeal may be dismissed. 9. We have considered the submissions on both sides and perused the records. 10. It is undisputed that the appellant has been manufacturing goods on job work basis and has been clearing them without paying duty as per the Notification No. 214/86-CE dated 25.03.1986. If the activity amounted to manufacture- which has not been disputed by the Revenue at all in the past- it cannot also simultaneously become a service. If the processes undertaken by the appellant on job work did not amount to manufacture and was only a service, Revenue should have said so while assessing its central excise returns. Revenue should have info....

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....rate accounts, as required under Rule 6(2), should follow any one of the options provided under Clauses (i) to (iii) thereunder, as applicable to him. Clause (i) provides for the option of paying an amount equal to 5% of the value of the exempted services. Pursuant to Notification No. 18/2012, dated 17-3-2012, the amount to be paid under Clause (i) was increased to 6% with effect from 1-4-2012. ***** 9. It may be noted that there is no controversy with regard to the entitlement of the petitioner to avail Cenvat Credit but for this disputed amount of Rs. 17,15,489/- out of the total extent of Rs. 1,41,51,903/-. While so, the second respondent issued show cause notice dated 19-4-2016 to the petitioner proposing to choose the option under the aforestated Rule 6(3)(i) on its behalf and calling upon it to explain as to why it should not be directed to pay an amount of 5%, upto 31-3-2012, and 6%, from 1-4-2012, of the value of the exempted services, aggregating to Rs. 3,52,65,241/-. In its reply dated 16-5-2016, the petitioner contended that it was wholly unreasonable on the part of the authorities to expect it to pay over Rs. 3.50 Crore when the total Cenvat Credit availed by it was ....