AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (8) TMI 781
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.... of Excise (SAD) on the basis of supplementary invoice issued by the appellant's sister unit No. 2 located at Plot No. 27, GIDC, Phase-I, Vatva, Ahmedabad, which is working as 100% EOU and de-bonded with effect from 12.10.2011. A Show Cause Notice dated 27.09.2013 was issued to the appellant contending that Cenvat Credit of 4% Special Additional Duty of Excise (SAD) availed on the basis of supplementary invoice issued by their sister unit is not admissible as per the Rule 9(b) of Cenvat Credit Rules, 2004, for the reason that the duty passed on through supplementary invoices to the appellant was not paid by their supplier sister unit by reason of fraud, collusion or willful misstatement suppression of fact or contravention of any provision of Excise Act or of the Customs Act, 1962 or the Rules made thereunder with intent to evade payment of duty. Accordingly, the adjudicating authority by the impugned order confirmed the demand of Cenvat Credit availed on supplementary invoice issued by their sister unit, therefore, the present appeal filed by the appellant. 2. Shri Amal Dave, Learned Counsel with Shri Parth Rachchh, Advocate appearing on behalf of the appellant submits that the....
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....ings of the impugned order. 4. We have carefully considered the submission made by both the sides and perused the records. We find that in the present case the limited issue to be decided is that whether the appellant's Cenvat credit on supplementary invoice can be denied by invoking Rule 9 (1)(b) /9 (1)(bb) of Cenvat Credit Rules, 2004 on the ground that the payment of SAD by their sister unit was not paid by reason of fraud, collusion, willful misstatement, suppression of fact, etc. We find that it is the appellant's submission that firstly, the appellant's sister unit who have issued the supplementary invoice are not liable to pay SAD. On this count, we completely agree with the appellant, that as of now, it is a settled law that in respect of the stock transfer from one unit to the other unit of the same entity, since, the same is not considered as sale of goods but only a stock transfer, no SAD is payable by the transferor unit to the transferee unit. In the present case, same facts is involved that the appellant's sister unit has supplied the goods to the appellant without payment of SAD, but subsequently, the SAD was paid and supplementary invoice was issued. As regard th....
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....exemption for specified products by the State Government from levy of sales tax on the finished goods cleared from 100% EOU, it would be incorrect to hold that the goods were exempted from sales tax, more so when the appellant has discharged the sales tax on the same products which were cleared to independent buyers. Secondly, we find that the lower authority seems to have been guided by the argument that inter unit clearance are not taxed by the State Government and is to be construed as an exemption granted. This is totally a wrong perception of the law inasmuch as that exemption, if any, under statute needs to be granted in accordance with law i.e., by issuance of notification by the concerned authorities. It is nobody's case that the State Government has no power to exempt sales tax/VAT on specific products. In our view, the only question which needs to be addressed is whether the goods cleared into DTA to appellants sister units are exempted or not exempted, which in our considered view due to foregoing reasons, has to be held in favour of assessee, in the absence of any evidence on record to show that the said products if cleared to DTA is exempt from payment of sales tax. It....
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.... by the Revenue on the ratio of the Larger Bench decision will not carry their case any further." 13. Respectfully following Micro Inks and other decisions which followed it, we hold that the appellant is not liable to pay Central Excise duty reckoning the SAD payable on goods cleared by the appellant if they were imported into India. Consequently, both appeals are allowed and impugned orders are set aside." 4.2 Similar issue has been considered in the case of Autolite India Ltd(Supra) in the department's appeal wherein the Tribunal has passed the following order:- "6. In our considered view, the Revenue's appeal has no merits for the simple reason that identical issue has been settled by the Tribunal in the case of Micro Inks (supra) wherein the bench, after considering all the arguments made in Para 10, specifically dwelled into the entire issue of notification and exemption of sales tax. We reproduce the same:- "10. We are unable to accept the contentions raised by the ld. Departmental Representative and the findings recorded by the adjudicating authority for more than one reason. Firstly, it is the fact that the inter unit clearance from EOU to DTA....
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....he payment of sales tax/VAT. It is to be held that plain reading of Notification No. 23/2003-C.E. as amended is applicable 'Qua Goods" and exemption is across the Board and is applicable to all such goods which are not exempted by the State Government by issue of notification or an order from payment of sales tax/CST/VAT. We also find that large emphasis placed upon, by the lower authorities as well as departmental representative on the decision of the Larger Bench in the case of Moser Baer (I) Ltd. (supra). In our view, the reliance on the ratio seems to be erroneous since the question which was raised before the Larger Bench was not the question that is before the Bench in the proceedings in these appeals. The Larger Bench was specifically referring to the issue which was in respect of a 100% EOU availing sales tax exemption, for determining the Excise duty payable on aggregate value of customs duty by inclusion of SAD, whether should be taken into account or not while answering such a reference, Larger Bench has held that the assessee in that case was availing sales tax exemptions in respect of sales from their unit located in the notified backward area, as has been specified in....
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....he impugned order and allow the appeal." 4.4 In the case of STI industries (Supra) this Tribunal has given the following view:- "10. We find that the issue of demand of SAD on the goods cleared by 100% EOU to their own DTA Unit, is decided in favour of the assessee by this Bench in the case of M/s. Micro Inks v. CCE, Daman - 2013 (303) E.L.T. 99 (Tri. - Amd.) wherein the demands were set aside. In our considered view, the ratio of the decision of this Bench in the case of Micro Inks (supra) squarely settles the law in so far as this point. We are of the view that the demand of SAD on goods cleared to its own DTA Unit does not survive, accordingly, we do not find any merit in appeal of the revenue. 11. As regard CVD we find from the annexure to the show cause notice that in show cause notice and the impugned order no allegation or reasoning of any nature in raising such a demand was indicated and the demand was confirmed merely by relying upon demand chart which is an annexure to the SCN. As we find no allegations for demand has been stated either in the show cause notice nor there are any reasoning in the impugned orders for confirmation of such demand, we are ....
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.... 8. The entire dispute is correctly put forth by both sides regarding the interpretation of benefits of Notification No. 23/2003-Cus. as amended from time to time filtering out, shorn of unnecessary details, the said notification extends exemption from payment of SAD only if the products which are cleared from EOU to DTA, are cleared on payment of applicable sales tax or VAT. 9. The adjudicating authority in the case in hand has held that the clearance effected by the appellant herein to their own sister concern being stock transfer, has not passed the test of discharge of sales tax/VAT hence the appellant is required to pay SAD at the applicable rate on such clearances. The reasoning adopted by the adjudicating authority that as stated by the dept. representative, is that the notification specifically talks about the exemption of sales tax, which would mean that sales tax or stock transfer made from EOU to their sister concern needs to be discharged. 10. We are unable to accept the contentions raised by the ld. Departmental Representative and the findings recorded by the adjudicating authority for more than one reason. Firstly, it is the fact that the inter unit....
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....pting impugned goods from the payment of sales tax/VAT. It is to be held that plain reading of Notification No. 23/2003-C.E. as amended is applicable 'Qua Goods" and exemption is across the Board and is applicable to all such goods which are not exempted by the State Government by issue of notification or an order from payment of sales tax/CST/VAT. We also find that large emphasis placed upon, by the lower authorities as well as departmental representative on the decision of the Larger Bench in the case of Moser Baer (I) Ltd. (supra). In our view, the reliance on the ratio seems to be erroneous since the question which was raised before the Larger Bench was not the question that is before the Bench in the proceedings in these appeals. The Larger Bench was specifically referring to the issue which was in respect of a 100% EOU availing sales tax exemption, for determining the Excise duty payable on aggregate value of customs duty by inclusion of SAD, whether should be taken into account or not while answering such a reference, Larger Bench has held that the assessee in that case was availing sales tax exemptions in respect of sales from their unit located in the notified backward are....
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.... duty paid under proviso [to Section] 3 of the Central Excise Act, 1944 is Central Excise duty and not Customs duty. It was also argued that there are no grounds alleging suppression as it is only a case of interpretation of law. The appellant relied on Authority for Advance Ruling in the case of GE India Industrial P. Ltd. v. CC - 2013-TIOL-01-AAA Cus. = 2014 (304) E.L.T. 452 (AAR). 5. On the other hand, the learned A.R. vehemently stated that exemption under Notification 23/2003 is not available since sales tax is not leviable on inter-unit transfer and therefore, it cannot be said that the goods are in exemption by the State Govt. from payment of sales tax when the sales tax itself is not leviable. He also relied on the case of Moser Baer India Ltd. v. CCE, Noida - 2009 (240) E.L.T. 25 (Tri.-Larger Bench of this Tribunal). 6. We have carefully considered the submissions made by both the sides. 7. The core issue is whether the benefit of Notification 23/2003 is allowable or not. To be eligible for exemption from payment of SAD the condition in Notification 23/2003 to be satisfied is ".......the goods being cleared into DTA are not exempt by the State Go....