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2023 (6) TMI 146
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.... demanded at Sl. No. (1) above in terms of Rule 14 of the Cenvat Credit Rules, 2004 read with Section 11AA of the Central Excise Act, 1994; and section 174 of the CGST Act, 2017. (ii) A penalty of Rs. 18,55,671/- (Rupees Eighteen lakh Fifty Five Thousand Six Hundred Seventy One only) is hereby imposed on M/s. K. K. Associates Builders & Developers, Plot No. 5 & of the finance Act 6, 6 Floor, Landmark, Wardha Road, Ramdaspeth, Nagpur, under Rule 15(2) of Cenvat Credit Rules, 2004 read with section 78 of the Finance Act, 1994 & section 174 of the CGST Act, 2017. However, the said penalty is liable to be reduced to Rs. 4,63,918/- (25% of the amount payable) in case the amount of demand as determined in (1) above is paid along with interest and reduced penalty amount within 30 days from the date of communication of this order. The Show Cause Notice C.No. III(20)A-37/SCN/NGP-1/Cir- 11/09/2017/1876 dated 11.03.2019 is accordingly disposed off." 2.1 Appellant is engaged in providing services of construction of residential complex and construction service other than residential complex including commercial/industrial buildings or civil structures and paying service tax....
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....3 37,20,09,224 2,60,40,646 UNIT PARTICULAR STATUS NO. OF UNITS APPROX. UNIT COST APPROX. TOTAL COST PAYMENT OF AN AMOUNT EQUAL TO SEVEN PER CENT RESIDENTIAL UNSOLD 40 35,00,000 14,00,00,000 98,00,000 COMMERCIAL/ SHOPS UNSOLD 8 25,00,000 2,00,00,000 14,00,000 TOTAL 48 60,00,000 16,00,00,000 1,12,00,000 2.6 Accordingly Revenue was of the view that as per 6(3)(i) of Cenvat Credit Rules, appellant was required to reverse the amount of Rs.3,72,40,646/- towards the Cenvat credit availed in respect of common input services for providing both taxable and non-taxable service. 2.7 A show cause notice dated 11.03.2019 was issued to the appellant asking them to show cause as to why:- "(i) The amount of Rs. 3,72,40,646/- (including SBC and KKC) should not be demanded and recovered from them under Rule 14 of the Cenvat Credit Rules, 2004 read with proviso to Sub- Section (1) of Section 73 of the Finance Act, 1994 and Section 174 of the CGST Act, 2017. (ii) Interest at appropriate rate should not be levied and recovered from them under Rule 14 o....
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....ssee did not follow the procedure prescribed under rule 6 of the rules and the same came to light only during the course of audit conducted by the audit team. Therefore, it was a clear case of suppression of facts which warrants the invocation of extended period and imposition of mandatory penalty under Section 11AC of the Act in the light of the decision of the High Court in the case of Lally Automobiles Pvt. Ltd. (supra)." 4.3 Rule 6(3A) of the Cenvat Credit Rules, as amended by Notification No. 13/2016-CE (NT) dated 01.03.2016 reads as follows:- "(3A) For determination of amount required to be paid under clause (ii) of sub-rule (3), the manufacturer of goods or the provider of output service shall follow the following procedure and conditions, namely :- (a) the manufacturer of goods or the provider of output service shall intimate in writing to the Superintendent of Central Excise giving the following particulars, namely :- (i) name, address and registration number of the manufacturer of goods or provider of output service; (ii) date from which the option under this clause is exercised or proposed to be exercised; (iii) description....
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.... (a) value of non-exempted services provided, (b) value of exempted services provided, (c) value of non-exempted goods removed, and (d) value of exempted goods removed, during the preceding financial year : Provided that where no final products were manufactured or no output service was provided in the preceding financial year, the CENVAT credit attributable to ineligible common credit shall be deemed to be fifty per cent. of the common credit; (v) remainder of the common credit shall be called eligible common credit and denoted as G, where,- G = C - D; Explanation.- For the removal of doubts, it is hereby declared that out of the total credit T, which is sum total of A, B, D, and G, the manufacturer or the provider of the output service shall be able to attribute provisionally and retain credit of B and G, namely, eligible credit and eligible common credit and shall provisionally pay the amount of credit of A and D, namely, ineligible credit and ineligible common credit. (vi) where manufacturer or the provider of the output service fails to pay the amount determined under sub-clause (i) or sub-clause ....
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.... [{A(Annual) + D(Annual)} - {(A+D) aggregated for the whole year)}], where the former of the two amounts is greater than the later; (e) where the amount under clause (d) is not paid by the 30th June of the succeeding financial year, the manufacturer of goods or the provider of output service, shall, in addition to the amount of credit so paid under clause (d), be liable to pay on such amount an interest at the rate of fifteen per cent. per annum, from the 30th June of the succeeding financial year till the date of payment of such amount; (f) the manufacturer or the provider of output service, shall at the end of the financial year, take credit of amount equal to difference between the total of the amount of the aggregate of ineligible credit and ineligible common credit paid during the whole year and the total of the amount of annual ineligible credit and annual ineligible common credit, namely, [{(A+D) aggregated for the whole year)} - {A(Annual) + D(Annual)}], where the former of the two amounts is greater than the later; (g) the manufacturer of the goods or the provider of output service shall intimate to the jurisdictional Superintendent of Central ....
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....nterest Total Payable Challan Paid on 2015-16 (Upto 15/1/2016) Rs. 21,46,308/- N.A N.A N.A N.A 2015-16 (From 15/1/2016 onwards) Rs. 217,035/- Rs. 13,022/- Rs. 7,813/- Rs. 20,835/- 4/1/20 2016-17 Rs. 58,931/- Rs. 58,260/- Rs. 26,217/- Rs. 84,477/- 4/1/20 2017-18 (Till 30/6/17) Rs. 140,818/- Rs. 125,448/- Rs. 37,634/- Rs. 163,082/- 4/1/20 Total Rs. 25,63,092/- Rs. 196,730/- Rs. 71,664/- Rs. 268,394/- 4.5 As seen from the above, the appellant was required to reverse under Rule 6(3A) credit of Rs.1,96,730/- which they paid along with interest on 04.01.2020. It is now settled law that procedural violation while making the above reversal should not come in way allowing the benefit under Rule 6(3A). Commissioner also does not do so. Commissioner has imposed penalty in terms of Rule 15(2) of the Cenvat Credit Rules, 2004 read with the provisions of Section 11AC of the Central Excise Act, 1944. Appellant has challenged imposition of such penalty relying on the following decisions:- o Prajapati Developers [Appeal No. E/30719/18 (CESTAT Hyderabad)] o TPL Developers [Appe....
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..... A careful reading of the above shows that, as per UOI v. Dharamendra Textile Processors [2008 (231) E.L.T. 3 (S.C.)], once the Section is applicable, the concerned authority would have no discretion in quantifying the amount and penalty equivalent to the duty determined must be imposed. In Para 24 it is clarified by the Apex Court that what is stated in regard to the decision in Dharmendra Textile is applicable in respect of Section 11AC. 18. Under 11AC of Central Excise Act, 1944, penalty is payable where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reasons of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty. 19. Thus the sine qua non to impose penalty under Section 11AC of Central Excise Act is, commission of fraud, collusion or any willful misstatement or suppression of facts, or contravention of any of the provisions of the Act. 20. Under Section 78(1) of Finance Act, 1994, penalty may be imposed if the service tax is not paid due to any rea....