TaxTMI 
TaxTMI 
2024 (2) TMI 965
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....ub Heading) 27 16 0000 which is not leviable to excise duty. During the course of audit of records of the assessee such as ST-3 returns for the period 2007-08, Cenvat credit account up to October-2008 and balance sheet for the year 2007-08, it was observed that under the head income, the assessee had shown "electricity generating receipt" of Rs. 1,47,99,356/- and under the head of "other income" in schedule "O" to the profit and loss account, the assessee had shown to have earned Rs. 91, 24,000/- by raw salt sales. 1.2 Further, assessee had availed Cenvat credit of service tax paid in respect of terminal charges, Stevedoring services, Telephone Service, Mobile Services, courier services, Travel services, etc. as input services. Out of these services many services except Stevedoring services, survey charges, terminal charges, etc. are common input services which have been used for taxable as well as exempted goods/ services. 1.3 As per definition of exempted goods and exempted services given in Rule 2(d) and 2(e) of Cenvat Credit Rules, 2004, the electricity generated by assessee is not leviable to duty and comes under exempted goods. So also the sale of raw salt is an activity of....
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....hority has wrongly dropped the demand by considering the issue relating to trading of raw salt only. In their appeal department contends that as the assesse is engaged in generating and selling electricity also the same has to be considered as exempted goods. The department has filed appeal against the impugned order on the ground that the adjudicating authority while dropping the demand of Rs. 59,32,265/- has not given any specific findings with regard to manufacture/ sale of electricity. 2.1 It is submitted by the learned Counsel that even if Rule 6(3)(c) puts restrictions on an assesse for utilization of Cenvat credit in excess of 20% in a particular financial year, the assesse would be eligible to avail 100% credit in the subsequent years as after 2008 the said restriction was ommitted. Therefore, when 80% remaining credit would be available in the next financial year and when many years have been passed since the dispute arose, the demand has been correctly dropped. The learned Counsel submitted that the very same issue was considered by the Tribunal in the case of M/s Duraflex Services and Construction Technologies Ltd. Vs. Commissioner of Customs CE & ST 2019 (25) GSTL 226 ....
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....ation of suppression of facts without stating as to what is the act of suppression committed by the assessee. The learned Counsel relied upon the decision in the case of M/s Musaddilal Projects LTD. Vs, Commissioner of C EX, Cus & ST, Hyderabad-I 2017 (4) GSTL 407 Tribunal Hyderabad to argue that in the said case the Tribunal held that when the investigation conducted by the DGCEI did not bring out any act of suppression by the assessee and the entire Cenvat credit was disclosed in ST-3 returns which were filed regularly, the show cause notice issued alleging suppression of facts is not sustainable. The decision of the Hon'ble Gujarat High Court in the case of M/s. Dynamic Industries Ltd. 2014 (307) ELT 15 as well as decision of Hon'ble High Court of Madhya Pradesh in the case M/s. ZYG Pharma Pvt. Ltd. 2017 (358) ELT 101 (M.P.) was also relied. The Learned Counsel prayed that the demand raised invoking the extended period may be set aside. 4. Shri R K Agarwal, Learned Superintendent (AR) appeared and argued for the department. 4.1 It is submitted that the department has filed the appeal against order passed by the Commissioner who dropped the demand of Rs. 59,32,265/- being the C....
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.... raw salt. The Learned AR submitted that the assessee has not been able to establish that they have not availed the above input services for generation of electricity, sale of electricity as well as sale of raw salt. For the said reason, the demand confirmed is legal and proper. 4.3 The fact that the assessee has availed common input services for both taxable services as well as exempted services would not have come to light, if the audit had not been conducted. For this reason, the show cause notice issued invoking the extended period is proper and requires no inference. It is prayed by the Learned AR that the appeal filed by the assessee may be dismissed. 5. Heard both sides. 5.1 The first issue that arises for consideration in the appeal filed by the department is whether the dropping of the demand of Rs. 59,32,265/- which was proposed in the show cause notice alleging that the assessee has utilised in excess of 20% of the credit in violation of Rule 6(3)(c) of Cenvat Credit Rules, 2004 is legal and proper. The very same issue was considered by the Tribunal in the case of M/s Duraflex Services and Construction Technologies Ltd. (supra). The Tribunal observed in the said case ....
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....ousing Services' for Soya Bean Meal, for the period 2004-05 to 2008-09 in respect of the services which they rendered. They also came to the conclusion that they had, in violation of the provisions of Rule 6(3)(c) of CCR, 2004, utilized Cenvat credit to the extent of 100% in respect of common input services while they should have utilized only 20% of this credit as per the rules prevalent during the period. Accordingly, a show cause notice was issued : (a) Demanding service tax amounting to Rs. 1,37,12,690/- for the period 2004-05 to 2008-09 along with interest, under Section 75 of the Finance Act, 1994. (b) Proposing to impose penalties under Sections 76 & 78. (c) Seeking to deny and recover an amount of Rs. 49,69,486/- being the irregularly utilized Cenvat credit in cash under the proviso to sub-section (1) of Section 73 of the Finance Act, 1994, read with Rule 14 of CCR, 2004 along with interest. (d) Proposing to impose penalty upon them under Section 78 of the Finance Act, 1994 read with Rule 15 of CCR, 2004. 13. As far as the demand for recovery of Cenvat credit wrongly utilized by the assessee is concerned, we do find that Rule 6(3)(c) as it stood during the relevan....
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.... exempted services. The assessee in the present case, has availed the credit of service tax paid on input services in the nature of Telephone Services, Mobile Services, Courier Services, Travel Services etc. Such services cannot be said to have been used only for taxable output services when the activity of the assessee includes generation/sale of electricity as well as sale of raw slat. These expenses have been accounted in the common Profit and Loss account. It is the burden of the assessee to establish with documents that they have not used common input services for trading. The argument of the Learned Counsel for assessee that since assessee is situated in Gandhidham and is providing output services only in Gandhidham they have not used common input services for generation of electricity in Tamil Nadu is too flimsy and not acceptable. We find that the assessee has not been able to establish that common input services have not been used for trading activity also. The issue on merit is found against the assessee and in favour of the Revenue. 6.1 Learned Counsel for the Assessee has argued on the ground of the limitation also. The definition of exempted services was amended with ....
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....d that, but for the detailed verification and scrutiny of the records, the availment of irregular credit would not have to come to light. That it is not an inadvertent or genuine mistake and the credit has been availed with intention to evade payment of duty. That the Show Cause Notice issued invoking the extended period of limitation is therefore correct and proper." 6.3 Hon'ble High Court of Gujarat in the case of M/s. Dynamic Industries Ltd. held that when the Cenvat Credit availed by the assessee is disclosed in the ER-1 returns filed by them it was not proper on the part of department to invoke the extended period. The relevant Para reads as under:- "12. Accordingly, the substantial question of law raised in respect of the following three categories of services i.e. (i) Customs House Agents Services, (ii) Shipping Agents and Container Services and (iii) Services of Overseas Commission, is answered partly in favour of the assessee so far as aforesaid category Nos. (i) and (ii) are concerned. Insofar as category No. (iii) i.e. Services of Overseas Commission, is concerned, the same is answered in favour of the Revenue and against the assessee. So far as present appeal is conc....
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.... service ie., (i) Customs House Agents Services, (ii) Shipping Agents and Container Services and (iii) Services of Overseas Commission is answered partly in favour of the assessee so far as aforesaid category nos. (i) and (ii) are concerned. Insofar as category No. (iii) ie., services of Overseas Commission, is concerned, the same is answered in favour of the Revenue and against the assessee. So far as present appeal is concerned, after extending the period of limitation under the proviso to Sec. 11 A and 11 AB of the Act, the Show Cause Notice is issued by the Joint commissioner, Central Excise, upon the respondent-assessee on the ground of contravention of provisions of Rule 2(l)(ii) and 9(2) read with Rule 3(1) of the Rules admittedly, the respondent-assessee had shown availment of Cenvat credit in part (iv) and (v) of E.R.-l Returns filed by it. The assessee-Department has sought to justify its action by submitting that during the course of audit by the Office of the Accountant General, when a detailed examination of the material was done, it was realised that the respondent-assessee has availed Cenvat Credit on the services of all the three categories. The respondent-assessee ....
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....td. v CST reported in 2016 (42) S.T.R. 634 (Kar.); Gopal Zarda Udyog v CCE reported in 2005 (188) E.L.T. 251 (S.C.); Apex electricals Pvt. Ltd. v UQI reported in 1992 (61) E.L.T. 413 (Guj.); Unique Resin Industries v CCE reported in 1995 (75) E.L.T. 861 (T); CCE v Chemphar Drugs and Liniments reported in 1989 (40) E.L.T. 276 (S.C.); Padmini Products v CCE reported in 1989 (43) E.L.T. 195 (S.C.); Pushpam Pharmaceuticals Co. v CCE reported in 1995 (78) E.L.T. 401 (S.C.); Anand Nishikawa Co. Ltd.- v. CCE reported in 2005 (188) E.L.T. 149 (S.C.); CCE v Pioneer Scientific Glass Works reported in 2006 (197) E.L.T. 308 (S.C.); Uniworth Textiles Ltd. v CCE reported in 2013 (228) E.L.T. 161 (S.C.); Pahawa Chemicals Pvt. Ltd. v CCE reported in 2005 (189) E.L.T. 257 (S.C.); CCE v. N. R. Agarwal Industries reported in 2014 (300) E.L.T. 213 (Guj.); CCE v Triveni Engineering & Industries Ltd., reported in 2005 (317) E.L.T. 408 (Allh.); Associated Pigments Ltd. v CCE reported in 1993 (68) E.L.T. 514 (Cal.); CCE v Punjab Laminates Pvt. Ltd. reported in 2006 (202) E.L.T. 578 (S.C.); and, Cadila Pharmaceuticals Ltd. v CCE order dated 10-11-2016 [2017 (349) E.L.T. 694 (Guj.)] passed by the Gujarat Hi....