TaxTMI 
TaxTMI 
2022 (10) TMI 957
X X X X Extracts X X X X
X X X X Extracts X X X X
....er the provisions of Rule 14 of the Cenvat Credit Rules, 2004 read with proviso to Section 11A (1) of the Central Excise Act, 1944. II) I order appropriation of the amount of Rs. 3,08,58,313/- (i..e Basic Rs. 2,32,93,117/-, E. Cess Rs. 4,65,851/-, H.C- Rs 2,32,419/-, Addl. Duty Rs. 68,66,926/-) already reversed by them, against the demand as mentioned at (1) above. III) I order for recovery of interest at appropriate rate on the demand amount confirmed at (1) above from them under the provisions of Rule 14 of the Cenvat Credit Rules, 2004 read with Section 11AB of the Central Excise Act, 1944. IV) I impose penalty of Rs. 4,02,49,979/- (Rupees four crores two lakhs forty nine thousand nine hundred seventy nine only) on M/s GEE Ltd. under the provisions of Rule 15(2) of the Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944; V) I do not order confiscation of the goods on which the above Cenvat credit is wrongly taken by M/s GEE Ltd. under Rule 15 (1) of the Cenvat Credit Rules, 2004, as the same are not available for confiscation by way of any seizure/ detention, though the same are liable for confiscation. therefore d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....viso to Section 11A (1) of the Central Excise Act, 1944; and ii) the amount of Rs. 3,08,58,313/- (ie Basic Rs. 2,32,93,117/-, E. Cess Rs. 4,65,851/-, H.C-Rs 2,32,419/-, Addl. Duty Rs. 68,66,926/- already reversed by them should not be appropriated against the demand as mentioned at (i) above iii) interest at appropriate rate should not be demanded and recovered from them under the provisions of Rule 14 of the Cenvat Credit Rules, 2004 read with Section 11AB of the Central Excise Act, 1944; and iv) penalty should not be imposed and recovered from them under the provisions of Rule 15(2) of the Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944: v) the goods on which Cenvat credit is availed should not be held liable for confiscation; vi) since, the goods on which credit was availed were not available, a fine in lieu of confiscation should not be imposed on them under the provisions of Rule 15(2) of the Cenvat Credit Rules, 2004, 13. Shri S.M Agarwal, Executive Director, by the notice, was also called upon to show cause to the Commissioner, Central Excise, Thane-I, as to why penalty should not be impos....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mpugned order. 4.1 We have considered the impugned order along with the submissions made in appeal and during the course of argument. 4.2 For confirming the demand against the appellant, the impugned order records as follows:- "24. The process carried out by M/s GEE Ltd. is certainly not covered by any Chapter Note or Section Note of the Central Excise Tariff Act, 1985. The goods dealt by M/s GEE Ltd. also do not fall under any of the Chapters of the Tariff covered by Third Schedule, hence as far as the first two situations are concerned; it is not possible that their activity will be covered by these two categories: 25. On testing the activity carried out by M/s GEE Ltd, on above detailed criterion set out by Hon'ble Supreme Court, it can be observed that their process does not answer to these criterion and so it can not be considered as "manufacture" in terms of Section 2(f) of the Central Excise Act, 1944, and after subjecting to the test laid down by the Apex Court. This is because of the fact that, the activity does not bring any new different commercial product into existence. The wires are wires before, and wires after, the spooling and the heat t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....overable after being found it to be unavailable and the payments made from it can not be equated to reversal of the wrongly taken credit. Similarly, after taking credit, even if it is exclusively used for "payment of duty" on the same product or even if the product in question is cleared for export under bond, or as an aftermath the assesee transfers the goods to so called "Trading Account", the credit is inadmissible initially and continues to be wrong and therefore, the calculations given by M/s GEE Ltd are of no consequence with regard to the demand. The ratio of the decision in the case of M/s Maruti Udyog Ltd. reported at 2007(214)ELT A50(SC) substantiates this view. 31. In support of the contention that the payment of duty done by them from the Cenvat credit availed by them has to be equated to reversal of the wrongly taken credit and so the demand has to be treated as nil, they have cited a number of case laws. It is seen in this regard that the case laws cited by them relate to a period prior to amendment in the Section 5A (1A) of the Central Excise Act, 1944 made w.e.f. 13.05. 05 discussed at length above. In the light of this amendment, now, the assesee can not a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....also kept properly, it is seen that the monthly returns do not show what activity is being carried out by the assessee at their premises and from the Cenvat records also it can not be stated that whether any process amounting to manufacture is being carried out on their goods or not. As regards reviewing their assessments by known method of law before demanding duty, it is seen that, in the self-assessment era the returns filed by the assessee is assessed by noticee themselves. 37. Once it is held that the Cenvat credit was taken wrongly by M/s GEE Ltd. as discussed above, the penalty under Section 11 AC ibid and Rule 15(2) of the Cenvat Credit Rules, 2004 finds application in the present facts and circumstances. The case laws cited in this regard do not cater to their case in the above detailed background. In spite of being aware that they were not carrying out any activity not amounting to manufacture there was intention to avail wrongful credit. In view of this also penalty is imposable. In these circumstances the demand of duty is correct, and also attracts interest under Section 11AB ibid, too. 38. The other noticee, Shri. S. M. Agrawal, Executive Director, o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t in the above contentions. As rightly contended by the representative of the assessee appearing in person, till 1st March, 2005 the Revenue has accepted that the activity carried on by the assessee constituted manufacturing activity in view of Board Circular dated 7th September, 2001 and accordingly held that the assessee is entitled to take credit of duty paid on HR/CR coils. It is only because, the Board, on 2^nd March, 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 into sheets or strips constitutes manufacture. Admittedly, the assessee had carried on additional activities such as pickling and oiling on the decoiled HR/CR coils, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... payment of central excise duty has to be set aside. 5.1 In the paper book at page 106, Annexure-12 the appellants have filed a detailed statement of imported input - M.S. coated wire 2007-2009, which is reproduced below:- 5.2 A part of these imported goods has been used for manufacture of the goods cleared on payment of duty and duly reflected in the ER-1 returns filed. The remaining imported goods which were available in stock as such or contained in finished goods have been allowed to be traded by the Revenue. 5.3 A detailed calculation needs to be made by the lower authorities to determine how much of the credit amounting to Rs.3,08,58,313/- pertained to the inputs which were used by the appellants for manufacture and clearance of the dutiable goods. To that extent, the amount reversed needs to be restored to the appellants. For the purpose of this computation, the matter needs to be remanded back to the original authority. It is made clear that Section 142(3) of the CGST Act has to be followed strictly. The said section provides as below:- "(3) Every claim for refund filed by any person before, on or after the appointed day, for refund of any amount of CENVAT....