TaxTMI 
TaxTMI 
2022 (9) TMI 1283
X X X X Extracts X X X X
X X X X Extracts X X X X
....interest at the appropriate rate from the Noticee under Section 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 charg....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e have heard Shri P V Sadavarte, Advocate for the Appellant and Shri Dhirendra Kumar, Joint Commissioner, 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ules, 2004. • As per the provisions of Rule 3(1)(ix) of the Cenvat Credit Rules 2004, a manufacture is allowed to take credit of Service Tax which is leviable under Section 66 of the Finance Act, 1944. As per Section 70 of the Finance Act, 1994, every person liable to pay Service Tax shall himself assess the 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 th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....03 S. T. dated 20.06.03. 17.6. In other words if the above two conditions were satisfied then the Service Tax would be payable on the value equal to 25% of the gross value charged i.e. equal to 25% of the freight paid by the Noticee and not on the entire freight amount. 17.7. The Noticee in their reply to the show cause notice have drawn attention to the Board's Circular 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 ascertainabl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ned consignment notes from the GTA in terms of the circular dated 27.07.05 referred above. The Noticee has failed to obtain such declaration. Thus it is observed that the Noticee was liable to pay service tax under the provisions of Notification No.1/2006-ST dated 1-3-2006 i.e. on a value which is equivalent to a 25 % of the gross amount charged by such service provider but by paying service tax on 100% amount of the freight, 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 c....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... years only from 2005-06 onwards. Hence the same was issued within five years from the knowledge of the department. Thus the same cannot be said to be time barred. I place reliance upon the decision of the Hon'ble Apex court in the case of CCE, Viazg v/s M/s Mehta & Co reported in 2011-TIOL-17-SC-CX in which it has been held that Show Cause Notice issued within five years from the date of knowledge of the Department is valid. 20. DEMAND OF INTEREST Since the demand is sustainable, interest 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Central Excise Act, 1944. I hold that the imposition of penalty under Rule 15 of CCR, 2004 read with Section 11AC of CEA. 1944 is sustainable in law by following the judgment of the Hon'ble Apex Court in the case of Sony India Lid Vs CCE New Delhi reported in 2004 (167) ELT 0385 (SC) = 2004 (094) ECC 0033 (SC) which upheld the imposition of penalty under Section 11AC for defrauding the Government money. 21.3. In this connection, I also rely on the following decisions. 21.3.1 l find that the Hon'ble Supreme Court, in the case of 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 credi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....2005 has withdrawn the Circular dated 7th September 2001 the Revenue is claiming that the activity carried on by the assessee does not amount to manufacturing activity. The question is, whether on the facts of the present case, the Revenue, based on the Circular dated 2nd March 2005, is justified in calling upon the assessee to reverse the credit or pay the amount to the extent of the credit liable to be reversed, with interest and penalty ? 9. It is relevant to note that the Board in its Circular dated 7^th September 2001 had only held that the activity of cutting / slitting of HR / CR coils in to sheets 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....