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2023 (5) TMI 806
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.... Notice and order to recover the same from the noticee under Rule 14 of the erstwhile Cenvat Credit rules, 2004, read with Section 11A of Central Excise act, 1944 and Section 174 of the Central Goods and Service Tax Act, 2017. 8.2 I impose a penalty of Rs 69,007/- (Sixty Nine Thousand Seven Only) on the Noticee under rule 15 (1) of the erstwhile CENVAT Credit Rules, 2004 read with section 76 (1) of the Finance Act, 1994 and Section 174 of the Central Goods and Service Tax Act, 2017. 8.3 I impose a penalty of Rs 5000/- under Rule 15 of the erstwhile CENVAT Credit Rules, 2004 for the contravention of its provisions. 8.4 I order recovery of interest at appropriate rate in terms of Rule 14 of the erstwhile CENVAT Credit Rules, 2004 read with Section 11AA/ 11AB of Central Excise Act, 1944 and Section 174 of the Central Goods and Service Tax Act, 2017." 2.1 Appellant is engaged in manufacture of excisable goods viz. Cement and Clinker falling under chapters 25232930 and 25231000 respectively of the erstwhile Central Excise Tariff Act, 1985. They are availing the benefit of Cenvat Credit Scheme and are availing the Cenvat Credit of inputs, Capital Go....
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....r Rule 6(3A) of the Rules, 2004. Hence, it appeared that ACL had distributed the credit without deducting the amount of credit attributable to the exempted services as required under Rule 6(3)(ii) of the Cenvat Credit Rules, 2004, for the period from 2011, 2012, 2013 and 2014. Under the self-assessment procedure, the onus is on ACL to take Cenvat credit of Service Tax paid only on those services that are eligible for Cenvat credit as per the provisions of the Rules, 2004. Further, as per Rule 9(6) of the Rules, 2004, the burden of proof regarding the admissibility of Cenvat credit shall lie upon the manufacturer or provider of output service taking such credit. 2.6 A show cause notice dated 25.11.2016 amounting to Rs.91,21,237/- for the period 2011 to 2014 was issued to ACL by the Joint commissioner, LTU (Audit) asking them to show cause as to why: (i) the amount of Input Service credit of Rs.91,21,237/- being wrongly availed by them during the year from 2011, 2012, 2013 and 2014 should not he demanded and recovered from them under Rule 14 of the Rules, 2004 read with Sec. 11A(4) of the Central Excise Act, 1944 and /or Section 73 of Finance Act, 1944; (ii) Appr....
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.... as per order referred in para 1.2 above. Being aggrieved Appellants are filed Appeal, to the Commissioner (Appeals) which was dismissed as per impugned order referred in para 1, above. 2.10 Aggrieved appellants have filed this appeal. 3.1 I have heard Shri Rajesh Ostwal, Advocate with Ms. Manisha Jatania, Chartered Accountant for the Appellant and Shri P K Acharya, Superintendent, Authorized Representative for the revenue. 3.2 Arguing for the appellant learned counsel submits that- The subscription and redemption of the liquid mutual fund units cannot be termed as 'trading in securities' and hence, do not qualify as 'exempted services'. Therefore, Rule 6 of the Cenvat Credit Rules, 2004 is not applicable in the present case. As per the definition of terms 'sale', 'purchase', 'trading', 'redemption' and 'subscription', as per the various dictionary meanings and as understood in common parlance, the activity of redemption and subscription of the mutual funds by the appellant is different from sale and purchase of securities/ trading in securities. Issue is squarely covered in their favour by ....
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.... 89.3 The Appellant has been registered with the Department for manufacture of 'Clinker' and 'Cement'. The Appellant has classified these items as 'input service' as per Rule 2(1) of the Rules, 2004 and have availed Cenvat credit in respect of the same, which is sought to be disallowed by the Department. 89.4 The definition of 'input service', under Rule 2(1) of the Cenvat Credit Rules, 2004, as it stood during the material period covered under the subject Statement cum Notice, is re-produced below: 'input service' means any service, (i) used by a provider of [output service] for providing an output service, or (ii) used by the manufacturer whether direct or indirect in or in relation to the manufacture of final products and clearance of final products upto the place of removal, and includes, services used in relation to modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, accounting, auditing, financing, recruitment and q....
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....uld qualify to be 'input service' under Rule 2(1) of 2004 Rules. 89.4.3 The above definition, read as a whole, makes it clear that the said definition does not cover services, which do not have direct nexus or which are not integrally connected with the business of manufacturing of the final product. 89.4.4 It is further seen that the Noticee has quoted various case laws in their written submissions, as highlighted above. 89.4.5 I find that, in the case of ROCA BATHROOM PRODUCTS PVT. LTD. Vs. COMMISSIONER OF C. EX., JAIPUR-I [2017 (51) S.T.R. 432(Tri.- Del.)], the Hon'ble Customs, Excise & Service Tax Appellate Tribunal, Principal Bench, New Delhi, held as under: "Cenvat credit Input services Distribution by ISD - Trading activity - Credit distributed by head office on various input services as ISD not used in Manufacturing activity but in trading of goods Submission of appellant that input services used exclusively in manufacturing activity not supported by any evidence of nexus between input services and manufacturing activity, rather their nexus with trading established - In view of clear statutory provisions that credit available ....
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....r marketable securities of a like nature in or of any incorporated company or other body corporate. Units or any other such instrument issued to the investors under any mutual fund scheme." Para 2.6.9 of the Revised Education Guide reads as under: "2.6.9 Would buying or selling of mutual funds or debentures be a 'service"? No, buying or selling of mutual funds or debentures would not be a service as the same would be a transaction in securities. The activity of making investment in the mutual fund units does not qualify as service per se under Section 65 B (44) of the Finance Act, 1994. Rule 2(e) of the Cenvat Credit Rules, 2004 which defines 'exempted service' reads as under: "2 (e) (1) taxable service which is exempt from the whole of service tax leviable thereon.' The conclusion arrived by me is supported by the following decisions: i. Orion Appliances Ltd [2010 (19) STR 205 (T)] "4. The issues to be decided in this case are : (i) Whether trading activity can be called a service. (ii) ..... (iii) ...... 5. As regards the issue as to whether trading activity can b....
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....n). The ingredients of the definition of 'purchase' are as follows: i. There shall be acquisition of goods; ii. The acquisition shall be for cash or deferred payment or other valuable consideration; and iii. The said valuable consideration shall be other than under a mortgage, hypothecation, charge, or pledge. SALE The Penguin International Dictionary of FINANCE; 3rd Edition Cession of ownership of an instrument or bond against payment of its face value with either a discount or a premium. Collins dictionary of Business "The purchase of good or service by a buyer from a seller at a stated price or in some instances, through Barter or Countertrade arrangement. The Concise Commercial Dictionary, First Indian Reprint 1997 "A transfer of the whole right of property in a thing in consideration of a sum of money." Wharton's Law Lexicon; 15th edition "In order to constitute a sale there must be an agreement for sale of goods for a price and the passing of property therein pursuant to such an agreement, in order to constitute a sale it is necessary th....
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....action of redeeming or the state of being redeemed." SUBSCRIPTION Webster's Dictionary of English "The action or fact of subscribing.* An arrangement by which access is granted to an online service * A payment to subscribe to something. 2. formal a signature or short piece of writing at the end of a document * archaic a signed declaration or agreement. 4.5 From the definitions as above, I am convinced that following are the ingredients of trading: i. There should be two parties and a market to purchase and sell the good involved; ii. There should be transfer of right/title involved from the seller to the buyer, while selling the same; iii. There should be a fixed price known in advance while selling or buying the said good etc. If we test the activities undertaken by the appellant, against the above criteria the activity of subscription and redemption of the units of the mutual fund is not an activity of sale and purchase of the securities. When the units of mutual fund are redeemed, the units cease to exist i.e., gets cancelled or relinquished, It does not get transferred to the thir....