TaxTMI 
TaxTMI 
2024 (7) TMI 58
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....re, Eleven lakh Ninety Three Thousand One Hundred Sixty only) on the party, in terms of both Rule 15 of the Cenvat Credit Rules 2004 and Rule 25 of the Central Excise Rules, 2002 for contravention of sub-rule (4) of Rule 3 of CENVAT Credit Rules, 2004 and Rule 4 and Rule 8 of Central Excise Rules, 2002.' 2.1 The Appellant was 100% EOU under the EHTP scheme. They manufacture Mobile Phone handsets classifiable under Tariff entry no. 85171210 of the First Schedule to the Tariff Act. The Appellant was availing CENVAT Credit of Service Tax paid on input services. 2.2 The Mobile handsets manufactured by the Appellant attract 'Nil' rate of Excise duty. However, they chargeable to NCCD as they are included in the Seventh Schedule to the Finance Act, 2001. 2.3 Apart from export of mobile phones, the Appellant clears mobile phones to DTA on payment of NCCD 2.4 The Appellant filed refund claim on 7.12.2009 of the accumulated CENVAT Credit of Service Tax paid on input services for the period July, 2009 to September, 2009. Such Credit accumulated due to export of the goods. However, the same refund claim was rejected by the Assistant Commissioner, Customs and Central Excise, Division IV....
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....for payment of NCCD. * The SCN illegally inserts and reads the words 'Service Tax' in such proviso, whereas the relevant proviso uses the words 'CENVAT Credit of any duty specified in Sub-rule (1)'. The said proviso does not refer to the CENVAT Credit of Service Tax. * It is a settled jurisprudence that the words cannot be inserted or read into a statutory provision, if the same were not present in such statutory provision, particularly, when the statutory provision uses the terms/ words distinctively for different provisions. Reliance is placed on Mathuram Agrawal v. State of Madhya Pradesh reported at ATR 2000 SC 109. * The word used any duty is significant as NCCD is also a duty, therefore, to clarify that any duty specified under rule 3(1) other than the duty specified at clause (v) cannot be utilized for payment of NCCD * The impugned order illegally includes the words service tax m such proviso as well as in Rule 3(1). A bare reading of Rule 3(1) establishes that distinct words have been used 'the duty of excise', the additional duty of excise', the education cess', 'the secondary and education cess, 'the addition duty', 'the service tax', etc. alongwith the provision....
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....er of Lankashi Tea and Seeds Estates P. Ltd. and Anr. v. Commissioner of Taxes [2006] 284 ITR 5 15 (Gauhati). * The Appellant relies on Order-in-Original dated 16.09.2010 wherein the Ld Assistant Commissioner has held that the Appellant is eligible to utilize the credit of service tax for payment of NCCD. The Order has already attained finality without any challenge. The Appellant cannot be deprived of benefits in an unjust manner by denying the refund adopting one interpretation and then denying the utilization of credit by adopting another contrary interpretation * Department is estopped from denying utilisation of service tax credit after rejection of refund * Without prejudice to the above submission, assuming that utilization of service tax for payment of NCCD is not permissible, the Appellant submits that the Department should allow of refund the credit with interest accumulated in its books of accounts with respect to service tax paid on input services. In terms of Section 140 of the Central Goods and Services Tax, 2017, the CENVAT Credit which is held to be admissible is required to be refunded in cash. * The confirmation of demand under proviso to Section 11A(1) is....
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....y are chargeable to NCCD as they are included in the Seventh Schedule to the Finance Act, 2001. Apart from export of mobile phones, the Noticee clears mobile phones to DTA on payment ot NCCD 6.2.2 I observe that during the scrutiny of ER-2 Returns for the month of January 2011 and February 2011 (RUD 1 & 2) filed by M/s SIEPL, it was noticed that the party had paid National Calamity Contingent Duty (NCCD) amounting to Rs. 2,11,93,160/- (NCCD Rs. 2,05.75.883/- Ed. Cess Rs. 4.11,518/- S&H Ed Cess Rs. 2,05,759/-) by utilizing credit of service tax availed in respect of input services, which was apparently found not permissible under the provisions of CENVAT Credit Rules. 2004. Accordingly, a show cause notice was issued to the party proposing recovery of the amount of service tax credit utilized for the payment of NCCD, as detailed above 6.2.3 I however, observe that the Noticee has mentioned in their defense that the Rules do not bar the utilization of Cenvat credit of service tax paid for payment of NCCD They submitted that the SCN is based on incorrect interpretation and the Department has also extracted the provisions wrongly in the SCN 6.3.1 I would like to go through the....
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....t services on or after 10th day of September, 2004; and (ii) any input service received by manufacturer of final product or provider of output services on or after 10th day of September, 2004 including the said duties. Further the provisions contained under RULE 3 (4) of the CENVAT Credit Rules,2004 states as under;- "....the Cenvat Credit may be utilized for payment of- (a) any duty of excise on any final product; or (b) an amount equal to CENVAT credit taken on inputs if such inputs are removed as such or after being partially processed; or (c) an amount equal to CENVAT credit taken on capital goods' if such capital goods are removed as such: or (d) an amount under sub-rule (2) of Rule 16 of Central Excise Rules 2002: or (e) service tax on any output service Provided that. Provided further that Provided also that Provided also that....... Provided also that the CENVAT credit of any duty ,specified in sub rule (1),except the NCCD in item (v) thereof shall not be utilized for payment f the said NCCD on goods falling under tariff items 85171210 and 85171290 respectively of the first schedule of Central Excise Tariff' 6.3.2 It may seen from the above ....
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....the credit of NCCD specified in item (v) thereof and there is therefore, no ambiguity in its interpretation 6.4.2 I observe that the Noticee has tried to drag the term 'duty', as has been used in the statute to the effect that the abovementioned definition of duty apparently does not include service tax, I however, do not find any justification for going into such dispute on the interpretation of such a clearly worded provision of the law. I therefore, hold that it has been correctly interpreted in the notice issued that the the phrase any duty specified in sub rule (1) also includes service tax 6.4.3 Thus it may be seen from the above that while the different duties, taxes and cesses, derive their respective authorities from the different Sections/ Finance Acts. I find that it is a settled position of law a proviso to any statute, has to be strictly interpreted as per the wardings given therein only and nothing can be added to what is already provided therein. In fact the purpose of any given proviso is to restrict the general application of that statute, to be applied in accordance with the given / specified conditions of that proviso I observe that the Law Lexicon (Bennion ....
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....rule (1) except the item (v) thereof and nothing more could be adduced out of it. Further. following the above guide lines of Hon'ble Supreme Court, I observe that in the instant case, reading service tax into the phrase 'any duty specified in sub- rule (1)' does not lead to any absurdity Therefore, when the legal provision is clear and plain / strict / logical interpretation thereof does not lead to any absurd conclusion, in such a scenario, it could be reasonably concluded that the intention of the legislature was ta include all the entries of sub rule (1) except item (v) thereof, as given in this proviso. Hence, following the ratio of the above cited cases, I find that that no additional interpretation is given by the department and the notice issued in this regard is perfectly in order and I hold accordingly 6.5.1 Based on the discussions and findings in the foregoing paras, I find that the said proviso is to be interpreted to include the entries given in the items in respect of 'service tax' also, as interpreted and extracted by the Department in the Show Cause Notice. Hence, l find that the Show Cause Notice issued in this case has put a strong case to present that the ....
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.... refunded by reason of fraud, collusion or any willful misstatement 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. Explanation 2. : For the removal of doubts, it is hereby declared that the interest under section 11AB shall be payable on the amount paid by the person under this sub-section and also on the amount of short-payment of duty, if any, as may be determined by the Central Excise Officer, but for this sub-section.' The words 'on the basis of his own ascertainment of such duty or on the basis of duty ascertained by a Central Excise Officer' in sub-section 2B was inserted by Act 32/2003 which came into effect from 14-5-2003. 10. Therefore, the legislature has not kept anyone in doubt. Section 11AB of the Act provides for interest on delayed payment of duty. It provides that, where any duty of excise has not been levied or paid or has been short-levied or short paid or erroneously refunded the person who is liable to pay the duty as determined under sub-section (2), or has paid the duty under sub-section (2B), of Section 11A shall, in addition to the duty, be liable....
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....e non-payment or short payment etc., of duty is by reason of fraud collusion etc., are dealt with under sub-section (1A) of Section 11A and the cases where the non-payment or short-payment of duty is not intentional under sub-section (2B). Sub-section (2B) of Section 11A provides that the assessee 10. in default may, before the notice issued under sub-section (1) is served on him, make payment of the unpaid duty on the basis of his own ascertainment or as ascertained by a Central Excise Officer and inform the Central Excise Officer in writing about the payment made by him and in that event he would not be given the demand notice under sub-section (1). But, Explanation 2 to the sub-section makes it expressly clear that such payment would not be exempt from interest chargeable under Section 11AB, that is, for the period from the first date of the month succeeding the month in which the duty ought to have been paid till the date of payment, of the duty. What is stated in Explanation 2 to sub- Section (2B) is reiterated in Section 11AB that states where any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded, the person who has pa....
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.... remains undisputed, namely, accrual of price differential. What does differential price signify? It signifies that value which is the function of the price, on the date of removal/clearance of the goods was not correct. That, it was understated. Therefore, the price indicated by the supplementary invoice is directly relatable to the value of the goods on the date of clearance, hence, enhanced, duty. This enhanced duty is on the corrected value of the goods on the date of removal When the differential duty is paid after the date of clearance, it indicates short-payment/short-levy on the date of removal hence, interest which is for loss of revenue, becomes leviable under Section 11AB of the Act. In our view, with the entire change in the Scheme of recovery of duty under the Act particularly after insertion of Act 14 of 2001 and Act 32 of 2003, the judgment of this Court in the case of M.R.F Limited (supra) would not apply.' 12. However, this Court in the case of Bharat Heavy Electricals case (referred to supra) held as under : - "6. Having heard the counsel on both sides and on perusal of the material on record, we find that the show cause notice issued on 19-10 2004 was not in....
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....the retrospective revision of the price and therefore, on the date the goods were cleared, the differential duty had to be paid and the same had not been done which was held to be a short payment of duty as the differential duty was paid only later when the assessee issued supplementary invoices to the customers demanding the balance amounts. Under the said circumstances, the Apex Court held that it was a case of short payment of duty though it was not intentional and without any allegation of deceit. The facts of the present case are that after the goods were initially cleared and the appropriate duty had been paid subsequently, the price escalation was due to the increase in input labour and other costs which was determined by the All India Industrial Price Indices and by the Reserve Bank of India communicated by all India Electrical Manufacturers Association. In terms of the said direction, the supplementary invoices were issued to facilitate the recovery of the expenditure of cost escalation and the enhanced duty thereon was paid. Therefore, as on the date the goods were cleared initially, if such a price escalation had not taken place, then the assessee could not foresee, the ....
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....f interest is attracted to bridge the loss of revenue. When the legislature consciously inserted these provisions in Section 11AB, the legal effect flowing from such provisions is to be given effect to. Therefore, a harmonious reading of the aforesaid provision makes it clear that interest is leviable on the differential duty paid in pursuance of a subsequent invoice as the proper duty payable under the law had not been paid on the date of clearance.' 6.5.3 Further I observe that in the case of Neptune Spin Fab Pvt Ltd Vs CCE Ahemedabad-2009 (241)ELT 467(Tri-Ahmd.) it has been held as follows: "4. Further, the appellants have paid duties so required to be paid by them not on the specified requisite date but subsequently. Admittedly, there was delay in deposit of such duties and hence gap in doing so. As such, we are of the view that the appellants would be liable to interest on the said delayed payments. The appellant's plea that the said duty was already assessed against them and was not required to be adjudicated in terms of Section 11A and hence would not attract the interest provisions, does not convince us inasmuch as, the non deposit of duty by the appellants on the spec....
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.... the decision of Hon'ble Supreme Court in the case of Bajaj Auto Ltd. [2019 (366) ELT 577 (SC)] wherein following has been observed: "16. The real bone of contention which survives for consideration is the NCCD. The reason for this is that while the two cesses discussed aforesaid were in the nature of levy on the excise duty payable, the NCCD is levied on the product itself, as per Section 136 of the Finance Act, 2001. It is this aspect, inter alia, which was canvassed by the Department to persuade this Court to take a different view from the one taken qua the other two cesses. 20. We may notice that the primary reasoning contained in the impugned order is common for the three cesses, i.e., NCCD; Education Cess and Secondary & Higher Education Cess. These were in the nature of surcharges levied in other Acts, which have not been specifically excluded under the Notification in question. That reasoning does not prevail, more so because of the judgment in SRD Nutrients Pvt. Ltd. (supra). The question, thus, is whether, even though the NCCD is in the nature of an excise duty, its incidence being on the product, rather than on the value of the excise duty, that itself would make an....
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....lowing was held: 2. After hearing both sides for some time, we find that the issue involved in this case is whether the credit of basic duty earned by the appellants can be utilized for payment of NCCD on the final product. Hence, we are prima facie of the view that the decision of the Bangalore Bench cited above is not relevant to resolve the issue in hand. Accordingly, we allow the miscellaneous application for modification and waive the requirement of executing a Bank Guarantee and proceed to decide the appeal itself with the consent of both the sides. 3. The appellants are working under Notification No. 32/99 applicable to the goods manufactured in the North Eastern Region under which they are allowed to take refund of duty paid in cash through PLA. Ld. Consultant clarifies that they have not paid any NCCD by cash, nor they are seeking any refund of the same. As such, the appeal does not involve interpretation of Notification No. 32/99. 4. The ld. Consultant further clarifies that they are partly paying the NCCD on the final product by utilizing the credit of NCCD paid on the inputs. The remaining part of the NCCD has been paid by them by utilizing the credit of basic ex....
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....ble or not. According to the Revenue, CENVAT credit on NCC duty can be utilized only for paying NCC duty and CENVAT credit on basic excise duty cannot be utilized for paying NCC duty. 14. On the above broad facts, the matter was adjudicated before the Commissioner of Central Excise at Dibrugarh and he came to the conclusion that CENVAT credit of duty paid on inputs can be utilized only for payment of duty on the final product as per the second proviso to Rule 3(4) but CENVAT credit on any other duty could not be utilized for payment of NCC duty. Accordingly, the said Commissioner confirmed the demand of Rs. 82,07,125/- and passed an order for recovery of NCC duty from the assessee. 15. Feeling aggrieved, the assessee preferred an appeal before the Customs, Excise and Service Tax Appellate Tribunal at Kolkata. The appeal filed by the assessee was registered as Excise Appeal EDM 648/2006. The CESTAT noticed the provisions of Rule 3(4) as well as the provisions of Rule 3(7) of the CENVAT Credit Rules and held that though credit of NCC duty could be utilized for paying NCC duty only, the restriction would not extend to utilization of credit of duty which is not specifically listed....
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....200 (Uttarakhand)] held as follows: "31. A perusal of Rule 3(1) unravels the mind of the Rule-maker as to the component parts of the Cenvat credit. In Rule 3(4)(a), the Rule-maker has unambiguously declared that the amounts standing to the credit of Cenvat can be utilized for payment of any duty of excise on any final product. No doubt, this is subject to the injunctions in the form of limitations and restrictions contained in the provisos, seven in number. Unless, the Revenue establishes the case within four walls of any of the provisos, in our view, there can be no embargo against utilization of Cenvat credit, which consists of duties and taxes paid on inputs, inter alia, for payment of any duty of excise on any final product. NCCD and the cesses, as we have noted from the Finance Acts, are undoubtedly surcharges by way of duties of excise. Undoubtedly, they are not levies under the Act. They are imposed under the respective Finance Acts, namely, Finance Act of 2001, Finance Act of 2004 and finally Finance Act of 2007 respectively. The provisions of the aforesaid Acts make it clear that the collection of the aforesaid levies can be made under the provisions of the Excise Act an....
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....xt, as also, the purpose of the enactment, besides the phraseology of the statute otherwise. 39. It is brought to our notice that Circulars have been issued. Appellant relies on Circular No. 641/32/2002/CX, dated 26-6-2002 and other Circulars, which are dated 13-1-2006, 7-1-2009, and 11-12-1996. Reliance is placed on all these Circulars to demonstrate that the Authorities have understood that NCCD shall be treated as 'duty of excise', for the purpose of exemption on products meant for export within the meaning of Rule 19, from payment of NCCD and hence, the contention appears to be that the words 'duty of excise' are to be appreciated as it occurs in the Cenvat Credit Rules also, having regard to the Finance Acts, under which NCCD and the cesses are imposed, whereunder they are referred to as the duties of excise. The NCCD and the cesses would also be part of duties of excise under Rule 2(d) and also Rule 6 of the Cenvat Credit Rules. 40. It is undoubtedly true that if the basic excise duty is paid on inputs, then it can be used ordinarily to pay the basic excise duty on the final product. We must consider, what is the scope of the expression 'exempt from whole of ....
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....hen final goods are exempted, the rule-maker intended that a manufacturer is entitled to Cenvat credit on the duty paid on the goods, which are lying in stock or in process or inputs contained in the final products lying in stock, when the shadow cast over the claim for the Cenvat credit in the form of an exemption is lifted, inter alia. We are not concerned with the clause, which also likewise applies when the goods become excisable otherwise. 43. For our purpose, there can be no doubt that the words 'duty paid' may take in the whole of the duties, which are contemplated under Rule 3(1). Likewise, the language of Section 3(4)(a) of the Cenvat Credit Rules, which provides that Cenvat credit may be utilized for payment of any duty of excise on any final product clearly indicates that Cenvat credit is available with reference to all its component parts for payment of any duty of excise on the final product, subject to the restrictions or limitations under the provisos or any other provision, as for instance, Rule 6. It is clear that with reference to the facts of this case, for instance under the law as stood then, basic excise duty paid would be available for payment of NCCD a....
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....when the final product is exempted from the payment of the substantial part of the aggregate of the levies in a case where apart from the excise duty, there are surcharges, as NCCD and cesses in this case, then when the assessee opts for the benefit of the exemption from the duty under Section 3, then it would not also, at the same time, claim further benefit by way of Cenvat credit. It is to be noticed that there is no case for the appellant that the appellant did not exercise his option in the matter of claiming benefit of Notification No. 50 of 2003. We would think that though, no doubt, Modi Rubber was rendered in the context of Excise Rules and it was not rendered in the scenario of the Cenvat credit, having regard to the language used in Rule 6 read with Rule 2(d) in conjunction with the language used in Section 5A of the Act, the conclusion would be that when there is exemption from the whole of the duty under Section 3 of the Act, the goods would be treated as exempted goods within the meaning of Section 2(d) of the Rules. As far as the case based on Rule 19 of the Central Excise Rules and the Circulars, which have been issued with reference to the same, whereunder NCCD, in....
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....of Guruswamy & Co. v. State of Mysore [(1967) 1 SCR 548], 'cess' means nothing but 'tax' and must be judged of in the same way as the validity of the tax (here, excise duty) to which it is an increment; and as for the taxing power of the State for its levy, it can be traced only to Entry 84 of Schedule VII to the Constitution, which is 'tax on manufacture of goods', i.e. excise duty. Besides, as explained in TVS Motor Co. Ltd. v. Union of India [2015 (323) E.L.T. 57 (Kar.)] , the phrase 'duties of excise' and 'duty of excise' were used originally in the Act inter-changeably, namely, sometimes in plural and sometimes in singular. When the new term 'Cenvat' came to substitute these terms as on 12 May 2000, in order to overcome the difficulty of replacing these words in the entire Act, Section 2A was introduced in the Act with effect from 12 May 2000 by Finance Act, 10/2000, whereunder the expressions 'duty', 'duties', 'duty of excise' and 'duties of excise' were to be construed to include a reference to 'Central Value Added Tax (Cenvat)'. As the Supreme Court said in TVS Motor Co. Ltd., this clearly indicated that there could be no distinction between ....