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2023 (5) TMI 599
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....appellant. The appellant informed to the Range officer that the Cenvat credit on the said capital goods sold to M/s. JK Envirotech Limited has been availed and utilized amounting to Rs. 1,23,67,128/-. A show cause notice dated 09.10.2012 was issued for the period April 2007 to March 2009 wherein the demand of Cenvat credit of Rs. 1,23,67,128/- was raised on the capital goods which was sold to M/s. JK Envirotech Limited. Subsequently on the same issue periodical show causes notices dated 22.05.2013, 25.09.2013, 29.04.2014, 11.03.2013 and 09.03.2015 were issued for the period from May 2012 to September 2014 demanding Cenvat credit on the capital goods sold to M/s. JK Envirotech Limited. The show cause notice dated 09.10.2012 was adjudicated by the Commissioner vide order-in-original dated 19/20.03.2013. Subsequent show cause notices were adjudicated for the periodical show cause notices. In all the adjudication the demand of Cenvat credit was confirmed and except the order passed in show cause notice dated 09.10.2012, the appellant filed appeals before the Commissioner (Appeals) who also upheld the demand. Accordingly, the appellant filed the present five appeals on the issue of Cenv....
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....nnai-CESTAT) (q) ST Electricals Pvt. Limited vs. CCE 2019 (20) GSTL 273 (Tri.) (r) CCE vs. Ballarpur Industries Limited - 2007 (215) ELT 489 (S.C) (s) CCE vs. Gas Authority of India Limited - 2008 (232) ELT 7(SC) (t) Commissioner vs. Reliance Ports and Terminal Limited - 2016 (334) ELT 630 (Guj) 3. He further submits that in the present case, there is no suppression of facts for the reason that the appellant had informed the department as early as in 2008 itself vide letter dated 24.08.2008 that the Lime Kiln plant would belong to M/s. JK Envirotech Limited but the appellant would be availing credit on capital goods pertaining to the same. The department did not dispute the availment of credit at that time. Subsequently the sale of the Lime Kiln plant was reflected in the balance sheet in 2008 and there was no objection by the department even then. In this fact, there is no suppression of fact on the part of the appellant. Therefore the demand for the extended period is not sustainable on the ground of time-bar also. 4. As regards the demand of Cenvat credit of service tax availed in respect of input service used at the Lime Kiln plant, he submits that the service wa....
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....he amount so calculated is less than the amount equal to the duty leviable on transaction value, the amount to be paid shall be equal to the duty leviable on transaction value." From the plain reading of the above Rule, it is clear that the assessee is required to pay duty on the use of capital goods only when it is removed from the factory of the assessee. In the present case, since the plant was remained installed in the factory of the appellant and moreover the same was undisputedly used for conversion of lime sludge into lime and the said lime was used in the manufacture of the final product of the appellant. The demand in terms of sub-Rule (5A) of Rule 3 of Cenvat Credit Rules, 2004 is not legal and correct. In the present case, first the capital goods was not removed from the factory consequently the same was exclusively used in or in relation to manufacture of final product of the appellant. Therefore, in this position, Rule 3(5A) has no application. The Revenue's only contention is that since the capital goods were sold by the appellant to M/s. JK Envirotech Limited and the ownership of the same stood transferred to M/s. JK Envirotech Limited the appellant is not entitled ....
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....ll be available only if the burden of duty is borne by the input purchasing manufacturers. Applying the aforesaid ratio to the facts of the case, the Tribunal has allowed the appeal holding that the denial of credit was not correct. CENVAT Credit Rules, 2002, define "capital goods" under Rule 2(b) of the Rules. Rule 3, as is material for the present, reads as under : "(1) A manufacturer or producer of final products shall be allowed to take credit (hereinafter referred to as the CENVAT credit) of - (i) the duty of excise specified in the First Schedule to the Tariff Act, leviable under the Act; (ii) the duty of excise specified in the Second Schedule to the Tariff Act, leviable under the Act; (iii) the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Textile and Textile Articles) Act, 1978 (40 of 1978); (iv) the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957); (v) the National Calamity Contingent duty leviable under section 136 of the Finance Act, 2001 (14 of 2001), as amended by section 169 of the Finance Act, 2003 (32 of 2003); (v....
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....iginal authority is reproduced as below :- "(5) When inputs or capital goods, on which CENVAT credit has been taken, are removed as such from the factory, or premises of the provider of output service, the manufacturer of the final products or provider of output service, as the case may be, shall pay an amount equal to the credit availed in respect of such inputs or capital goods and such removal shall be made under the cover of an invoice referred to in rule 9 : Provided that such payment shall not be required to be made where any inputs are removed outside the premises of the provider of output service for providing the output service : Provided further that such payment shall not be required to be made when any capital goods are removed outside the premises of the provider of output service for providing the output service and the capital goods are brought back to the premises within 180 days, or such extended period not exceeding 180 days as may be permitted by the jurisdictional Deputy Commissioner of Central Excise, or Assistant Commissioner of Central Excise, as the case may be, of their removal." The admitted fact of the case is that, there is no physical removal ....
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....e are of the view that all the decisions cited by ld. Counsel in support of the assessee's contention that Rule 3(5) of the CCR, 2004 would not be invocable unless there was physical removal of capital goods/inputs are in accordance with the ruling of the Apex Court. ... ... ... ... 11. We are also in agreement with ld. Counsel's proposition that a deeming provision should be express. Any quasi-judicial authority, however learned, cannot deem the existence of a deeming provision where there is none in the text of the relevant statute. The Hon'ble Supreme Court's judgment rendered in Shyam Oil Cake Ltd. (supra) seems to support the assessee's case on this point." The said decision of the Tribunal was affirmed by the Hon'ble Madras High Court (supra). The High Court observed that when there is no removal of goods under cover of invoice, as provided under Rule 9, there is nothing in Rule 3(5) to invoke the deeming fiction as insisted by the department. The language of Rule 3(5) is plain and simple when the inputs are capital goods :- "17. In this case, we find there is no removal of goods under cover of invoice as provided under Rule 9 of the Cenvat Credit Rules, 2004 and th....
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....order to attract the provisions of Rule 3(5) of Cenvat Credit Rules, 2004, we find that there is no justification to invoke such provision to demand and recover any amount from the appellant in this case. As such, we find no justification for the confirmation of demand towards capital goods. The same reasoning is applicable to the recovery of amount for the inputs amounting to Rs. 91,76,449/-. The demand towards such recovery is also not sustainable. There is no allegation or finding regarding any irregular credit availed on inputs or capital goods or usage of these goods for other than approved purposes. 11. Regarding demand of the amount equal to credit availed to LPG transferred to M/s. RCIPL by the appellant during Oct., '08 to Jun., '09, the appellant conceded that the said amount is payable by them. The said LPG was cleared to M/s. RCIPL after the new Unit coming into existence. 12. We find that the show cause notice in the present case was issued on 17-9-2009 invoking suppression, misstatement, etc. The original authority confirmed the allegation and imposed equal amount of penalty on the appellant. We find that the creation of new joint venture company, transfer of Cha....
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....g any provision of law to a given set of facts unless the law contains an express deeming provision. He has submitted that, under Rule 3(5) of the CCR, 2004, inputs or capital goods, on which Cenvat credit had been taken, were to be removed as such from the factory so as to make the manufacturer liable to pay an amount equal to the credit availed. Rule 3 does not contain any deeming provision which could support the Commissioner's view that the capital goods and inputs used in relation to the setting up of the power plant upon lease of the power plant by the assessee to M/s. KPPL can be deemed to have been removed from the assessee's factory. Ld. Counsel is heavily relying on the Tribunal's decision in Steel Authority of India Ltd. v. CCE, Bhubaneshwar - 2007 (219) E.L.T. 960 (Tri. - Del.) = 2007-TIOL-438-CESTAT-DEL, wherein M/s. SAIL were held not liable to reverse the Modvat credit taken on a rotor received and used in their captive power plant, by reason of the power plant having been hived off into a new company (subsidiary). Ld. Counsel has also placed strong reliance on Final Order No. 814/07 dated 19-6-2007 - 2007 (216) E.L.T. 217 (Tribunal) passed by this Bench in E/746/05 ....
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....along with the land on which it stood, to another legal entity viz. M/s. KPPL. The capital goods and inputs used in relation to the setting up of the power plant, thus, ceased to be in the actual possession or use of M/s. DCL. Therefore, according to ld. Consultant, the capital goods and inputs must be deemed to have been removed from the cement factory of M/s. DCL, for purposes of sub-rule (5) of Rule 3 of the CCR 2004. In this connection, he has referred to paragraphs 38 and 39 of the Apex Court's judgment in J.K. Spinning and Weaving Mills Ltd. v. UOI, 1987 (32) E.L.T. 234 (S.C.), wherein certain deeming provisions of Rules 9 and 49 of the erstwhile Central Excise Rules, 1944 were examined. Ld. Consultant has also pointed out that there is no warrant for holding that specific mention of the word "physical" as adjective for the word "removal" used in sub-rule (5) of Rule 3 of the CCR, 2004 and, therefore, it cannot be said that the provision applies only to cases where physical removal takes place. In this context, he has referred to the Tribunal's decision in CCE, Jaipur v. Shree Prithvi Rolling Mills (P) Ltd., 2003 (162) E.L.T. 353 (Tri.-Del.) wherein the Modvat credit taken on....
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....sessee's factory and whether, consequently, they should be directed under Rule 3(5) ibid to pay an amount equal to the sum of the capital goods credit, input duty credit and input service tax credit utilized for payment of duty on their final product (cement) from 15-3-2005. Ld. Commissioner held that, as the land on which the power plant was situated had also been transferred together with the power plant and ancillary equipments to M/s. KPPL under the lease deed, the power plant ceased to be part of, or stood excluded from, the factory premises of M/s. DCL and thereby attracted provisions of Rule 3(5) of the CCR, 2004. On the above facts, ld. Commissioner further held that the capital goods and inputs used in the setting up of the power plant stood removed from the factory premises of M/s. DCL, by virtue of the lease of the power plant along with the land, on which it was situate, to M/s. KPPL. He appears to have taken the view that, by virtue of the said lease arrangement between DCL & KPPL, the capital goods and inputs should be deemed to have been removed from the cement factory of the assessee. Sub-rule (5) of Rule 3 of the Cenvat Credit Rules, 2004 reads as follows :- "Rul....
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....ort on payment of duty of excise, such duty of excise shall in no case be less than the amount of credit that has been allowed in respect of such capital goods under Rule 57Q ; (b) where capital goods are removed after being used in the factory for home consumption on payment of duty of excise or for export under rebate on payment of duty of excise, such duty of excise shall be calculated by allowing deduction of 2.5 per cent of credit taken for each quarter of a year of use or fraction thereof, from the date of availing credit under Rule 57Q ; and (c) where capital goods are sold as waste and scrap, the manufacturer shall pay the duty leviable on such waste and scrap". It appears that clause (c) of sub-rule (2) of Rule 57S covered a case of removal of capital goods as waste and scrap from the factory by the manufacturer of final product, while clauses (a) and (b) of the sub-rule covered two different cases of removal of capital goods as such from the factory by the manufacturer of final product. Though the expression 'as such' was not used in clause (a) or clause (b) of sub-rule (2) of Rule 57S, it must not be difficult for a prudent man to understand the distinction betwe....
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....ule 4 of the CER, 2002 (which corresponds to Rule 9 of the erstwhile CER, 1944) mandates that no excisable goods, on which any duty is payable, shall be removed from factory/warehouse without payment of duty, the scheme is quite clear. Duty of excise can be collected only at the stage of removal of the excisable goods from the factory/warehouse and such removal must be effected under an invoice issued by the owner of the factory or his authorised agent. Interpretation of sub-rule (4) of Rule 3 of CCR, 2002 has to be harmonious with this scheme. Accordingly, for a manufacturer of final products to be asked to pay an amount equal to the credit availed by him in respect of his capital goods, under Rule 3(4) of the CCR, 2002, the Revenue must satisfy at least two conditions viz. (a) the capital goods must have been physically removed from his factory and (b) such removal should be under cover of invoice referred to in Rule 7 of the CCR, 2002 read with Rule 11 of the CER, 2002. But Rule 11 of the CER, 2002 stipulates that removal of excisable goods from a factory/warehouse must be made under an invoice signed by the owner of the factory or his authorised agent...." 7. In the present c....
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....their factory to another company. It was held that they had no such liability in the absence of removal of the capital goods from the factory. A similar view as taken by the Tribunal in the case of Associated Cement Co. Ltd. v. Commissioner of Central Excise, Belgaum [2004 (173) E.L.T. 210 (Tri.-Bang.)] cited by learned Counsel. All these decisions were followed by the Tribunal in the case of Tata Motors Pvt. Ltd. v. Commissioner of Central Excise, Jamshedpur [2005 (190) E.L.T. 269 (Tri.-Mumbai)] cited by learned Counsel. However, the decision in Majestic Auto (supra) relied on by learned SDR is to the contra. As rightly pointed out by learned Counsel, the Bench in that case apparently did not consider the decision rendered in Jamna Auto Industries (supra). The decision in Whirlpool of India (supra) or the one Metzeller Automotive Profiles (supra) was apparently not cited before the Bench which dealt with the case of Majestic Auto Ltd. Learned SDR has relied on the referral order passed by a co-ordinate Bench in the case of SAIL. We note that the question referred by the said Bench was not addressed by the Larger Bench, which returned the case to the regular Bench for decision on m....
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.... a part of the assessee's cement factory and could be called "captive power plant". Consequently, it has also to be held that the capital goods in question, which formed an integral part of the power plant, remained within the factory premises of M/s. DCL even after the lease of the power plant to M/s. KPPL. In other words, there was no physical removal of any capital goods from the cement factory. 11. We are also in agreement with ld. Counsel's proposition that a deeming provision should be express. Any quasi-judicial authority, however learned, cannot deem the existence of a deeming provision where there is none in the text of the relevant statute. The Hon'ble Supreme Court's judgment rendered in Shyam Oil Cake Ltd. (supra) seems to support the assessee's case on this point. 12. We have already found that the provisions of Rule 3(5) of the CCR, 2004, are not attracted on the facts of the present case. Accordingly, we have to set aside the demands raised on the assessee by the Commissioner. 13. In the result, the impugned order is set aside and the assessee's appeal is allowed and, consequently, the Revenue's appeal gets dismissed." (d) The Hon'ble Madras High Court in ....
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.... of the Cenvat Credit Rules, 2004, we find that Rule 3(5) only speaks about the removal of goods under cover of invoice referred to in Rule 9 on inputs or capital goods on which cenvat credit has been taken and if such goods are removed as such from the factory or premises of the provider of output service, the manufacturer of the final products or provider of output service, shall be liable to pay an amount equal to the credit availed in respect of such inputs or capital goods. 17. In this case, we find there is no removal of goods under cover of invoice as provided under Rule 9 of the Cenvat Credit Rules, 2004 and there is nothing in Rule 3(5) of the Cenvat Credit Rules, 2004 to invoke the deeming fiction as insisted by the adjudicating authority. The language of Rule 3(5) is plain and simple. When the inputs or capital goods on which cenvat credit has been taken are removed as such from the factory, then subject to compliance of other requirements, the credit availed in respect of inputs on capital goods shall be paid. This situation has not arisen in the present case, as no invoice has been issued for removal of the goods from the factory premises and, therefore, the said ru....