TaxTMI 
TaxTMI 
2024 (8) TMI 1205
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....of Cenvat Credit Rules 2004 after writing off input/capital goods on which credit was availed by them. The EOU was debonded on 12.08.2011 in to a DTA unit. After exit the unutilized credit lying in the EOU was transferred to the DTA unit which according to the department is not eligible for transfer. The department was of the opinion that Rule 10 does not allow for transfer of credit from the EOU unit which has been debonded and converted to DTA unit and that the credit so transferred has been availed without any documents. 3. Show cause notice No.45/2014 dated 07.05.2014 was issued to the appellant proposing to show cause and demand the following: - "(i) an amount of Rs 24,82,684/- (Rupees twenty-four lakhs eighty-two thousand six hundred and eighty-four only) (Cenvat Rs.24,10,303/-, Edu Cess of Rs.48,288/- and SHE Cess of Rs.24,093/) being the credit of Input service wrongly availed on the input service such as a) Outdoor catering, b) Rent for another unit of the assessee, c) Courier service used for transport of finished goods to customers worldwide, d) Civil work Construction service, e) Logistic services utilized for exp....
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....e recovered under Rule 14 of Cenvat Credit Rules. 2004 read with Section ILAA of the Central Excise Act, 1944 towards the duty/amount sought to be recovered under this notice. (viii) Penalty should not be imposed under Rule 15 (2) of Cenvat Credit Rules, 2004 read with Section 11AC of Central Excise Act 1944 for the contraventions mentioned above". 4. Statement of demand No.29/2014 dated 07.07.2014 was also issued proposing to show cause as to why the following should not been demanded:- "(a) A sum of Rs.3,97,029 (Rupees Three Lakhs Ninety Seven Thousand and Twenty Nine Only) (Cenvat Rs.3,85,465/- Education Cess Rs.7,709/- and SHEC Rs.3,855/-) being the credit of input service wrongly availed on certain services viz., Custom House Agent, Courier Service for export/domestic, civil work for the period June 2013 to September 20013 should not be demanded from them under Rule 14 of Cenvat Credit Rules 2004 read with Section 11A of Central Excise Act 1944; (b) Interest should not be recovered under Rule 14 of Cenvat Credit Rules, 2004 read with Section 11AA of the Central Excise Act, 1944 towards the duty/amount sought to be recovered as mentioned above: ....
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....an amount of Rs. 1,50,278/- (Cenvat Rs.1,45,901, Edu Cess Rs.2,918/- and SHE Cess Rs.1,459/-) being the excess credit availed by them on account of common input service commonly used by M/s, AVO & M/S, AVO (EOU) for the period 2009-10 and 2010-11 under Rule 14 of Cenvat credit Rules 2004 read with Section 11 A of the Central Excise Act 1944. (b) I demand interest under Rule 14 of Cenvat Credit Rules, 2004 read with Section 11AA of the Central Excise Act, 1944 towards the duty amount demanded for Rs. 1,50,278/-as mentioned in clause (iii) (a) above (c) I impose Penalty of Rs. 1,50,278/-under Rule 15(2) of CCR 2004 read with Section 11AC of Central Excise Act 1944. (iv) (a) I demand an amount of Rs.4,33,68,282/-(Rupees Four Crores thirty three lakhs sixty eight thousand two hundred and eighty two only) (Cenvat Rs.3,37,36,520/- E.Cess Rs.6,91,656/- SHE Cess Rs.3,12,266/- AED Rs 86,27,840/- being Cenvat the wrong credit availed by them without proper documents under Rule 14 of Credit Rules 2004 read with Section 11A of the Central Excise Act 1944. (b) I demand Interest under Rule 14 of Cenvat Credit Rules 2004 read with Section 11 AA of the Central E....
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....ce" means any service, (i) used by a provider of [output service) for providing an output service; or (ii) used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products up to the place of removal, and includes services used in relation to modernisation, 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 quality control, coaching and training, computer networking, credit rating, share registry, security, business exhibition, legat services, inward transportation of inputs or capital goods and outward transportation upto the place of removal; [but excludes), - (A) service portion in the execution of a works contract and construction services including service listed under clause (b) of section 66E of the Finance Act (hereinafter referred as specified services) in so far as they are used for - (a) construction or e....
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.... each other. The EOU unit was debonded in August 2011. Though they had applied for the debonding of EOU during November 2010 itself, the debonding and exit from EOU status happened in August 2011 only. They were carrying out job work activity for DTA unit alone in the debonded EOU. The credit of rent paid for the debonded EOU was earlier availed by the appellant in their DTA unit which according to the department is incorrect and ineligible. Taking note of the same, the appellant reversed the credit availed in the DTA unit and the same was taken by their EOU unit (debonded). As the credit has been reversed the demand cannot sustain. The appellant is not liable to pay interest as the appellant had sufficient credit balance during the relevant time. The Ld. Counsel produced the statement of credit balance of the DTA unit for the period April 2009 to March 2013 to argue that they were continuously holding credit balance of Rs.3 crores during the period from April 2009 to March 2013. For this reason, the credit availed by the DTA unit having been reversed by the appellant the appellant is not liable to pay interest also. It is submitted by the Ld. Counsel that this issue is not contest....
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....g the issue for the period after 01.04.2011. 13. The department has denied the credit in regard to logistic services used for export of goods. The Ld. Counsel submitted that it is settled in law that the place of removal in respect of export of goods is the port of export and all services availed till the goods are placed on board of the vessel are eligible input services. The appellant placed reliance on the decision in the case of Angiplast (P) Ltd - 2012 (9) TMI 735 - Cestat Ahmedabad and Orient Craft Ltd Versus CCE Delhi - 2017 (5) TMI 876 - Cestat Chandigarh. 14. The department has denied the credit in respect of insurance services (hospital). It is submitted that the appellant has paid service tax on the insurance premium covering employee under group insurance for life and health and these are eligible input services. The Ld. Counsel adverted to the definition of input services and submitted that for the period up to 31.03.2011, the appellant would be eligible for credit. The appellant has reversed the credit availed in regard to these services post 01.04.2011 and is not contesting the issue post 01.04.2011. 15. The second issue is the demand confirmed alleging that....
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....03.2013. Accordingly, the demands proposed for the period prior to 01.03.2011 is not sustainable. The decision in the case of GKN Driveline (India) Ltd Vs. CCE, Delhi III - 2023 (9) TMI 1131 Cestat- Chandigarh. The decision in the case of Haver Ibau India Pvt Ltd - 2023 (10) TMI 677 Cestat, Ahmedabad, Ericsson India Ltd - 2019 (3) TMI 776 Cestat, New Delhi was relied. It is submitted that the appellant has already reversed Rs.28,06,689/- for the period from 2010-11 to 2012-2013. For the period prior to 01.03.2011 to 01.03.2011 the appellant is not liable to reverse as decided in the above judgements. The Ld. Counsel referred to the table in impugned order (internal page 22 of the Order-in-Original dated 14.10.2014). It is submitted that the value written off for the period 2009-2010 (31,06,686) is fully prior to 01.03.2011. For the period 2010-2011 (19,40,623) eleven months is prior to 01.03.2011. The value for period 2011-12 (16,70,763) and for the period 2012-13 (5,18,329) has to be reversed. The total required to be reversed would only be 21,89,092/-. The appellant has reversed Rs.27,24,941/- of duty which is excess. This demand also has been raised invoking the extended period.....
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....d Counsel that when the credit is transferred, there is no requirement for any documents except debits which should be made in Cenvat credit account of the transferring unit. To support the arguments, the Learned Counsel relied upon the decision in the case of the M/s. Wipro Ltd., Vs. Commissioner of GST & CE, Chennai - 2023 (6) TMI 237 Cestat Chennai and M/s Super Auto Forge Limited Vs Commissioner of GST and Central Excise, Chennai 2023 (10) TMI 1086 - Cestat Chennai. 21. In the show cause notice it is alleged that a proceeding has been already initiated to deny credit of Rs.1,49,33,353/- taken by the debonded unit on inputs. An Order-in-Original No.16/2013 dated 10.12.2013 had been passed denying such credit. Against such order, the appellant preferred an appeal before the Tribunal and vide Final Order No.40274/2017 dated 14.02.2017, the Tribunal held that the Cenvat credit of capital goods at the time of debonding is available to the appellant but the credit in respect of inputs is not eligible. The Tribunal thus denied the credit on inputs. Aggrieved by such order, the appellant preferred appeal before the Hon'ble Jurisdictional High Court vide CMA No.3023/2017. As per judg....
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....argued by the Ld. AR that when the appellant has written off inputs on which credit have been availed, the credit should have been reversed. The appellant has reversed the credit only later which would show that they accept the situation that they have to reverse the credit. The appellant though has reversed certain amount is liable to pay interest till the date of reversal of credit. 26. The appellant has availed credit without proper documents as prescribed under Rule 9 of CCR 2004. This is because the appellant has transferred credit from EOU unit to DTA unit. The EOU unit was debonded on 12.08.2011 as a DTA unit. They have later transferred the credit lying in the EOU unit to the DTA unit. There is no provision in the CCR 2004 for transfer of credit from EOU unit to DTA unit after debonding. The amount confirmed in this regard is legal and proper. It is submitted that part of the demand under this issue is for credit availed on inputs. The said matter had been appealed by the appellant before the Hon'ble Jurisdictional High Court. The Hon'ble High Court held that the credit availed in respect of inputs is eligible. At the time of passing impugned order, the decision was not ....
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....versed the credit and had sufficient balance during the disputed period. The decision in the case of Hello Minerals Water (P) Ltd., Vs. Union of India - 2004 (174) ELT 422 - Allahabad would squarely apply. Commissioner of C. Ex & ST - LTU Bangalore Vs. Bill Forge Pvt. Ltd., 2012 - (279) ELT 209 (Kar.). The relevant part of the judgement reads as under: - 20. From the aforesaid discussion what emerges is that the credit of excise duty in the register maintained for the said purpose is only a book entry. It might be utilised later for payment of excise duty on the excisable product. It is entitled to use the credit at any time thereafter when making payment of excise duty on the excisable product. It matures when the excisable product is received from the factory and the stage for payment of excise duty is reached. Actually, the credit is taken, at the time of the removal of the excisable product. It is in the nature of a set off or an adjustment. The assessee uses the credit to make payment of excise duty on excisable product. Instead of paying excise duty, the cenvat credit is utilized, thereby it is adjusted or set off against the duty payable and a debit entry is made in....
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....rposes of distributing the credit of service tax paid on the said services to such manufacturer or producer or provider, as the case may be. 5. Rule 7 pertains to manner of distribution of credit by input service distributor. At the relevant time, this Rule 7 permitted input service distributor to distribute Cenvat credit in respect of service tax paid on the input service to its manufacturing units or units providing output service, subject to the two conditions, viz. :- "(a) the credit distributed against a document referred to in rule 9 does not exceed the amount of service tax paid thereon; (b) credit of service tax attributable to service [used by one or more units] exclusively engaged in manufacture of exempted goods or providing of exempted service shall not be distributed;" 5.1 It was only later on that additional condition by way of Clause (d) to Rule 7 was added, which reads as under : - "credit of service tax attributable to service used by more than one unit shall be distributed pro rata on the basis of the turnover of such units during the relevant period to the total turnover of all its units, which are operational in the c....
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....the existing DTA unit as one common DTA unit. Though several letters were sent to the department, there was no response. Thereafter, the appellant merged both the units and transferred the unutilized credit lying in the Cenvat account of the debonded EOU unit to the merged DTA unit. Rule 10 of Cenvat Credit Rules 2004, provides for transfer of credit from one DTA unit to another DTA unit. The department is of the view that since the unit had availed the credit as EOU unit, even though it has been debonded and become a DTA unit, the credit cannot be transferred. The same issue has been analyzed and decided by the Tribunal in the case of M/s Wipro Limited Vs Commissioner of GST and Central Excise Chennai, 2023 (6) TMI 237 Cestat Chennai, wherein it was held that the credit carried forward to the DTA unit after de-bonding cannot be denied. The relevant part reads as under:- 11. In the case of Jubilant Life Sciences Ltd. (supra), it is held as under: "3. At the outset, the learned Advocate for the Appellant has submitted that the Appellant, after conversion of their 100% EOU to DTA unit, continued to retain the same Central Excise registration, hence the credit lying ....
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....lity of credit on inputs availed by EOU consequent to de-bonding. The appellant preferred an appeal before the Hon'ble Jurisdictional High Court and the issue was held in favour of the appellant. Thus, the issue as to whether credit can be availed on inputs at the time of de-bonding stands settled in favor of appellant. The Hon'ble High Court in the appellant's own case reported in 2017 (4) TMI 428 - Cestat, Chennai considered the issue and held as under to conclude that the credit on inputs is eligible at the time of debonding. The relevant part reads as under:- 12. We find that the Commissioner has rejected the request for Cenvat credit on the raw material mentioned at SI. No. 1, Sl. No. 2, Sl. No. 4 and Sl. No. 5 of the Table at page 6 of the OIO. The Commissioner has held that the assessee is not eligible to take Cenvat credit on imported and indigenous raw materials by rejecting the reasoning that permitting to take credit of Central Excise duty paid on indigenous capital goods would equally apply to the Cenvat credit taken on imported capital goods and raw materials. The basis for taking this view is due to the fact that proviso to Rule 3(1) of Cenvat Credit Rule....
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....s whether the Cenvat credit was admissible on duty paid indigenously procured capital goods and the Hon'ble court settled that question only. The question of admissibility to Cenvat credit on raw materials was not before the Hon'ble court. Hence, that judgment is not pertinent to the issue at hand. 17. As regards the Cenvat credit on raw materials on account of wastage involving Rs. 12,022/-, the Commissioner has rightly held that in terms of Rule 2(l) of Cenvat Credit Rules, 2004, input means all goods used in the factory for the manufacture of final products. In terms of Rule 3 of the Cenvat Credit Rules, 2004, Cenvat credit can be taken on inputs used in the manufacture of the final products. In the instant case, assessee had taken credit of Rs. 12,022/- on duty paid on account of wastage of raw materials. Any waste of raw materials cannot be inputs and are not used in final product. Further Rule 2(l) specifically states input means all goods used in the factory for the manufacture of final products. Accordingly, the assessee is not eligible to take Cenvat credit on such waste. 18. Of the two case laws relied upon by the appellant, the order in the case of Anil....
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....case, the issues are mostly interpretational in nature. In respect of one issue as to the eligibility of credit on inputs at the time of debonding, the appellant had approached the Hon'ble High Court. The issue with respect to credit on various input services is also interpretational in nature, as an amendment was introduced in the definition on inputs services w.e.f. 01.04.2011. Further, there is no positive act of suppression established against the appellant. Show cause notice has been issued based on the objections raised by the audit. As and when pointed out, the appellant has reversed the credit in respect of the issue of write off as well as ineligible input services post 01.04.2011. 40. The appellant had enough credit balance during the disputed period. A statement showing the details has been filed by the Ld. Counsel along with the synopsis. Taking all these aspects, we are of considered opinion that there are no grounds for invoking the extended period. The issue of limitation is answered in favour of the assessee and against the Revenue. For the same reasons, the penalties imposed are also set aside. 41. In the result the impugned order is modified as under:- (i....