TaxTMI 
TaxTMI 
2022 (9) TMI 1283
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....ection 11AB of Central Excise Act, 1944 read with Rule 14 of the Cenvat Credit Rules, 2004. (iii) I impose penalty of Rs. 50,56,154 /-(Rupees fifty lakhs fifty six thousand one hundred fifty four only) upon the Noticee under Rule 15 of CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944." 2.1 Appellant is engaged in the manufacture of products falling under Chapter No. 73 of Central Excise Tariff, 1985. They are availing the CENVAT Credit on inputs, capital goods and input services under the provisions of CENVAT Credit Rules, 2004. They also pay service tax on reverse charge basis under the category goods transport operator by Road for inward goods carriage. 2.2 During the scrutiny of records, it is noticed that they paid service tax inward goods carriage under the provisions of the Notification No. 36/2004-ST dated 2004.Howeverthey paid service tax on gross amount charged/ paid by them to transporter on inward transportation, and availed the CENVAT Credit of the service tax so paid. 2.3 Notification No.32/2004-ST Dated 3.12.2004 exempted service tax on 75 % of gross amount charged in respect of taxable service provided by a goods transport agency ....
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....ioner, Authorized Representative for the revenue. 3.2 Arguing for the appellant learned counsel submits that: * Notification 32/2004-ST dated 3.12.2004 is a conditional notification and hence optional. Relied upon Section 5A of Central Excise Act, 1944 and Section 93 of Finance Act, 1994. * Boards Circular No. B1/6/2005-TRU dated 27.7.2005: declaration by GTA in the consignment note issued to the effect that neither credit on inputs or capital goods used Board's Circular No B1/6/2005-TRU dated 27.7.2005: declaration by GTA in the consignment note issued to the effect that neither credit on inputs or capital goods used for provision of service has been taken nor the benefit of notification 12/2003-ST has been taken by them. Admittedly no such declaration as consignment notes. * CBEC issued Section 37B Order No. 5/1/2007-ST dated 12.3.2007 prescribed procedure that a declaration by the service provider in all such cases on the consignment note to the effect that the conditions of the aforesaid exemption notification have been satisfied would be sufficient for availing of the benefit under the said notifications. And further clarified that, in all such cases where the above pro....
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....tax due on the services provided by him. Thus, it was the responsibility of the appellant to have correctly assess/determine and pay the Service Tax on the GTA service. * Central Govt. vide Notification No. 32/2004-ST dated 03.12.2004 exempted Service Tax on 75% of gross amount charged in respect of taxable service provided by a Goods Transport Agency to a customer provided that credit of duty on inputs or capital goods used for providing such taxable service is not taken and benefit of Notification no. 12/2003-ST not availed by the GTA. This notification was rescinded and a new Notification No.1/2006-ST dated 01.03.2006 was issued. Hence, Service Tax which is not leviable under Section 66 of the Finance Act, 1994 but even paid and subsequently utilized by the Appellant is not admissible under Rule 3(1)(ix) of CCR, 2004. * Further, vide this office letter dated 15.07.2022, Commissioner of Central Excise, Nagpur was requested to submit the Copy of the consignment notes where the GTA has given the disclaimer for non availment of the credit as required under CBEC Circular F.No.B1/6/2005-TRU dated 27.7.2005. In response, Asstt. Commissioner (R&T), CGST & C. Excise, Nagpur has infor....
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.... no. B1/6/2005-TRU dated 27.07.2005 in which a procedural requirement was specified for GTA to mention disclaimer in the consignment note to the effect that no Cenvat Credit was taken by them, to contend that none of the GTA's had mentioned the same. The Noticee's contention is not acceptable in view of the fact that after being pointed out by audit they started paying Service Tax appropriately on 25% value. Thus it is clearly an afterthought. 17.8. Another contention put forth by the Noticee is that the notification was conditional and that it was not possible for them to obtain the declaration from the GTAS. It is observed that the contention of the Noticee that the Noticee had made the payment of the freight to the GTAs. At the time of making payment it was very ascertainable and further the Cenvat Credit of the input service is available only after making the payment of the Service Tax amount to the service provider. Hence their contention is not tenable. 17.9 It is further observed that the rate of Service Tax for the GTA service was unconditionally fixed at 25% on value of taxable service with effect from 01.03.2008 vide Notification no. 14/2008- ST dated 01.03.20....
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...., the Noticee has paid excess service tax on inward freight under the category of "Transport of Goods by road in a goods carriage": and subsequently availed excess Cenvat credit on input services. However, as per the Notification No. 1/2006-ST dated 1-3-2006 the service tax leviable under Section 66 of the Finance Act, 1994 is equivalent to 25 % of the gross amount charged by such service provider. Therefore, in the instant case, I held that since the Noticee has paid service tax on the gross amount of inward freight instead of paying the same on 25% amount of the freight, the credit availed on the said excess amount is not admissible under the Rule 3(1) (ix) of Cenvat Credit Rules, 2004. 18. Revenue Neutrality - The Noticee has also contended that there is revenue neutrality in the case. It has been submitted that the Noticee was entitled to full Cenvat Credit had they paid Service Tax on 25% of the Gross amount. It is observed that the contention of the Noticee is not correct. The Noticee had paid excess Service Tax which is nothing but an amount' and no Cenvat Credit is available on any amount'. Secondly, the Noticee was required to pay the Service Tax amount on beha....
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....erest at the rate as applicable from time to time on the amount of Cenvat credit proposed to be demanded as above, is also to be recovered from the Noticee under Section 11AB of Central Excise Act, 1944 read with Rule 14 of Cenvat Credit Rules 2004 by following the judgment of the Hon'ble Supreme Court in the case of Commissioner of Trade Tax (UP) Vs Kanhai Ram Thekedar reported in 2005 - TIOL- 76 - SC- CT, wherein it was stressed that the interest amount is inbuilt in the recovery provision itself-in this case Rule 14 of CCR 2004- and there is no requirement of a notice to be given to the assessee for recovery of interest, which the assessee was required by law to pay on the tax admittedly payable but which was paid beyond the time limit. In the case of Precot Mills Ltd Vs CCE reported in 2007 (212) ELT 483 (Tri.-Che) the Hon'ble Tribunal has held that as per the statutory provisions. it is mandatory that when Cenvat credit has been taken wrongly, the same shall be recovered along with interest in terms of rule 57AH (2) of erstwhile CER 1944 or Rule 12 of CCR 2001. Applying the ratio decidendi derived from the above decisions, I hold that the proposal for the recovery ....
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....M/s Punjab Tractors Ltd Vs CE, Chandigarh [2005 (181) ELT 380 (SC)] has held that, "for the violation of rules. the appellant will undoubtedly be liable to pay the penalty as prescribed under the said Rules for such violations". 21.3.2. In the case of CCE Indore Vs Ives Drugs (I) Pvt Ltd reported in 2005 (191) ELT 639 (Tri. Del) the Hon'ble Tribunal has held in Para 4 as under: "3. Regarding imposition of the penalty on the respondents, we are also completely in agreement with the contention of the ld. SDR that the same deserves to be imposed as the respondents have wrongly deliberately availed the credit which was not available to them under the law.....' 21.3.3. In the case of V.B. Information Systems Vs CCE Pondicherry reported in 2005 (188) ELT 424 (Tri. Che) the Hon'ble Tribunal has upheld the imposition of penalty for the contravention of the provisions of Modvat rules. Para 3 of the above decision are as under: "3.Ld. Counsel has submitted that, in the above circumstances, any penalty is not justifiable. Before Finance Act, 2005 came into force, there was no statutory mechanism for recovery of Rule 57CC dues and accordingly the appellants resisted the dem....
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....ets or strips constitutes manufacture. Admittedly, the assessee had carried on additional activities such as pickling and oiling on the decoiled HR / CR coils, which is a complex technical process involving huge investment in plant and machinery. Since these additional activities were not considered by the Board in its Circular dated 7th September 2001, the withdrawal of the said Circular cannot be a ground to hold that the activity carried on by the assessee did not constitute manufacturing activity. It is only on 24th June 2010, the Board has issued a Circular to the effect that the process of pickling does not amount to manufacture. Therefore, during the relevant period, that is, during the period from 2nd March 2005 to 31st December 2005, it could not be said that the issue was settled and that the assessee paid duty on decoiled HR/CR coils knowing fully well that the same were not manufactured goods. If duty on decoiled HR/CR coils was paid bona fide, then availing credit of duty paid on HR/CR coils cannot be faulted. 10. Apart from the above, in the present case, the assessment on decoiled HR / CR coils cleared from the factory of the assessee on payment of duty has neither....