TaxTMI 
TaxTMI 
2024 (8) TMI 1205
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....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 export of the goods, f) Insurance (hospital), g) GTA out ward, h) Association subsc....
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.... 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: (c) Penalty should not be imposed under Rule 15 (1) of Cenvat Credit Rules, 2004 for the contraventions mentioned above". 5. The show cause notice as well as the statement of dema....
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....r 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 Excise Act 1944 towards the duty amount demandedfor Rs. 4,33,68,282/-as mentioned (iv) (a) above. (c) I impose Penalty of Rs. 4,33,68,282/-under Rule 15 (2) of Cenvat Credit Rules, 2004 read with Section 11AC of Central Excise Act 1944. (v) (a) I demand an amount of Rs.3,97,0....
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....ion 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 execution of works contract of a building or a civil structure or a part thereof, or (b) laying of foundation or making of structures for support of capital goods, except for the provision of one or more of the specified services; or) [(B) [services provided by way of renting of a motor vehicle), in so far as they relate to a motor vehicle which is not a capital goods; or [(BA) service of ....
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....ote 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 contested by the appellant for the reason that after reversal, the EOU unit has availed the credit and the department has not disputed the same till date. 10. The department has denied credit availed on courier services used for export of goods. The appellant had incurred courier charges for outward transportation of goods from the place of manufacture to the customer's premises. The purpose of manufacture is to enable the goods manufactured to reach t....
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....12 (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 the appellant has availed credit on common input services used for EOU unit as well as the DTA unit. The allegation of the department is that the appellant has availed Cenvat credit on services in the nature of group audit, internal audit, security, banking and financial services, preparation of transfer pricing documentation, consultancy services etc., which were commonly used by the DTA unit and the EOU unit situated adjacently. The DTA unit and EOU unit are ....
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....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. As the appellant had sufficient credit balance in their Cenvat account during the relevant period, the appellant cannot be saddled with the guilt of intention to evade payment of duty on this allegation. It is prayed that the demand may be set aside. 18. The next issue is the demand confirmed alleging that the credit has been taken without documents. The appellant had a DTA unit and another EOU unit adjacently. Consequent to the debonding of EOU unit, the appellan....
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....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 judgment dated 06.08.2019 reported in 2019 (29) GSTL 605, the Hon'ble High Court held that the Cenvat Credit on inputs (raw materials) is also eligible and cannot be denied. In view of the order passed by the Hon'ble High Court, this part of the demand confirmed (alleging transfer of credit from EOU to DTA) in the impugned order is not sustainable. It is submitted that the demand of interest on the amounts confirmed is not sustainable, as the appellant had sufficient credit bal....
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....004. 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 passed by Hon'ble High Court. 27. The argument of the appellant that they are not liable to pay interest on the credit that has been reversed by them was countered by the Ld. AR by submitting that Rule 14 of CCR 2004 uses the words "taken and utilized wrongly". Though appellant may have credit balance, when they have taken credit erroneously the Rule 14 would apply. The appellant is liable to pay interest. 28. In regard to the extended period the Ld. AR submitted that the violation....
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.... 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 the register. Therefore, this is a procedure whereby the manufacturers can utilise the credit to make payment of duty to discharge his liability. Before utilization of such credit, the entry has been reversed, it amounts to not taking credit. Reversal of cenvat credit amounts to non-taking of credit on the inputs. 21. Interest is compensatory in character, and is imposed on an assessee, who has withheld payment of any tax, as and when it is due and payable. The levy of interest is on the actual amount....
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.... 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 current year, during the said relevant period." 6. The first objection of the Department therefore that the credit from one unit was utilized for the purpose of duty liability of other unit without pro rata distribution by the input service distributor therefore would not survive in view of no previous restriction of this nature flowing from Rule 7 of the Rules of 2004. In fact, the Tribunal has seen entire situation as a Revenue neutral, since as pointed out by the assessee, it had availed only 20% of the credit for payment of service tax and the balance....
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.... 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 in balance as on the date of de- bonding ought to be admissible and has been rightly transferred to the DTA unit. It is his contention that the issue of admissibility of CENVAT Credit lying in balance in the accounts of 100% EOU, on the date of its conversion to DTA unit, is no more res integra and covered by the following judgment of the Tribunal. i) Technocraft Industries (India) Ltd Vs CCE 2018 (12) TMI 8-CESTAT, Mumbai ii) Tecumseh Products India P.Ltd Vs CC,CE&ST, Hyderabad-IV 2016 (336) ELT 685 (Tri-Bang.) iii) John Deere India Pvt. Ltd Vs CCE, Pune-III 2015 (326) ELT 205 (Tri-....
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....vat 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 Rules, 2004 provides for only allowing Cenvat credit in respect of the amount equal to the Central Excise duty paid on the capital goods at the time of debonding of the unit in terms of para 8 of the Notification No. 22/2003-C.E. 13. The appellant has pleaded that the Central Excise duty paid on indigenous excisable raw material and additional duty of Customs paid on imported raw materials should be allowed because there is neither denial nor barring provision in the Cenvat Credit Rules, 2004 to debar the appellant from taking Cenvat credit of additional duty of Customs paid on imported raw materials and excise duty paid on indigenous raw mate....
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....acture 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 Special Steel Industrial Area Ltd. - 2010 (262) E.L.T. 685 (Tri.-Del.) is in relation to a stay application, which is a prima facie view, and cannot be relied upon while deciding the appeal. The second case law in the case of Agarwal Indotex Ltd. - 2010 (261) E.L.T. 935 (Tri.-Del.) is not applicable to the facts of this case. In that case, the inputs on which Cenvat credit was claimed have been used in the manufacture of final products which had been exported. This is not the situation in the instant matter. 19. As regard the admissibility of Cenvat credit on imported capital goods (Sl. No. 3 of the Table at page 6 of OIO), the Commissioner has held that the assessee is eligible ....