TaxTMI 
TaxTMI 
2024 (8) TMI 1328
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of Section 11AC of the ACT and personal penalties imposed under Section 26(1) of Central Excise Rules, 2002 (Rules). The details of the Appeals are as follows provided below:- Appeal No E/41457/2014 E/41458/2014 E/41459/2014 E/41460/2014 E/41461/2014 Appellant Premier Roofing and Building Systems Pvt. Ltd. (PRBSPL) Oriental Metals India Pvt. Ltd. (OMS) Oriental Metals India Pvt. Ltd. (Oriental Metal) Rainbow Metals (RM) Vikas Sanghrajka Demand (Rs.) 4,53,45,054/- (Duty) 42,00,000/- (Penalty) 33,00,000/- (Penalty) 16,00,000/- (Penalty) 1,00,00,000/- (Penalty) Levy Section 11A(4) of Central Excise Act, 1944 Rule 26(1) of Central Excise Rules, 2002 Rule 26(1) of Central Excise Rules, 2002 Rule 26(1) of Central Excise Rules, 2002 Rule 26(1) of Central Excise Rules, 2002 Impugned Order No. 03/2014 dated 28.02.2014 SCN No. 10/2012-Commr dated 17.10.2012 As all these appeals are connected and involving similar issues and so being taken up together for disposal by this common order. 2. Brief facts emerging from the appeals are that M/s Premier Roofing and Building Systems Pvt. Ltd. (PR....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iled investigation, the Department has concluded that A1 was liable to pay duty on job worked goods also along with applicable interest and as the Appellant resorted to suppression of facts with an intent to evade payment of appropriate duty, penalty was imposable under Section 11AC of the ACT. 2.5 Consequently, a Show Cause notice dated 17.10.2012 was issued to A1-A5 proposing interalia to demand excise duty of Rs.4,53,45,054/- under Section 11A(4) along with interest under Section 11AA of the ACT ibid and to impose penalty under Section 11AC of the ACT & Rule 25(1) of Rules, besides seeking to impose personal penalty on Shri Vikas Sanghrajka (Appellant-A5), Executive Director of A1 under Rule 26 and to confiscate goods seized from the premises of A2-A4, under Rule 25(1) of the Rules. The Show Cause Notice also sought to impose penalties under Rule 26(1) of the Rules on A2, A3 & A4 for keeping, depositing and selling excisable goods which were liable for confiscation. 2.6 During the course of the proceedings, the Appellant i.e., Premier Roofing and Buildings System Pvt. Ltd. deposited the entire amount of excise duty with the Government on various dates as tabulated below:- ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at Scheme which was erroneous as the object and purpose of the Modvat and Cenvat schemes was one and the same as held in (a) Vikram Cement Vs. CCE, Indore [2006 (194) ELT 3 (SC)] and (b) CCE, Belgaum Vs. Vasavadatta Cement [2008 (230) ELT 335 (Tri.-Bang.)]. Further, the Appellant cited the CBEC Circular No. 962/05/2012-CX8 dated 28.03.2012 which permitted utilisation of cenvat credit towards payment of duty demand. ii. The Appellant contested the ground as held in the impugned order that the Appellant had failed to discharge duty liability with an intention to evade payment of duty. It was submitted that the Appellant was paying excise duty on roofing profiles manufactured on its own account from the year 2010 and was on the erroneous impression that duty was not payable on roofing profiles manufactured on job work basis, as no cenvat credit was admissible on raw materials received for job work. It was pointed out that if the Cenvat credit would have been verified and found eligible, it would prove that there was no intention to evade payment of duty. iii. It was submitted that the internal audit wing of the department visited their premises during January 2012 an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssioner of Customs Vs. Jayathi Krishna & Co. [2000 (119) ELT 4 (SC)]. 6.1 Shri Raghavan Ramabhadran and Ms. Nimrah Ali, Ld. Advocates for the Appellants reiterated their contentions as submitted in the Grounds of Appeals. They have mainly emphasised that the Appellants were eligible to avail CENVAT Credit on the inputs received for the discharge of output duty liability placing reliance on the following cases: - • Jai Balaji Industries vs. Commissioner of Central Excise, Bolpur, [2023 (6) TMI 1102-CESTAT Kolkata] • Commissioner of Central Excise, Pune vs. Coca-cola India Private Limited, [2007 (213) E.L.T. 490 (S.C.)] • Hindalco Industries Ltd. vs. CCE, Bhubaneshwar-II, [2023 (5) TMI 720-CESTAT Kolkata] • Hindustan Zinc Ltd. vs. Commissioner of Central Excise, Jaipur-II, [2008 (232) E.L.T. 687 (Tri. - Del.)] • Commissioner of Central Excise vs. Rane NSK Steering Systems Ltd., [2009 (13) S.T.R. 327 (P&H)] 6.2 The Ld. Advocate has pleaded that since the Appellant were not liable to pay the excise duty due to revenue neutrality and as the Appellant had sufficient balance in their CENVAT Account, interest on the exc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....manufacturing process on their own account and on job work basis and stressed that duty was payable on the job worked goods. He further submitted that there is no provision in the law for availment of Cenvat Credit from a retrospective date and as the Appellant had suppressed the fact of job work with an intent to evade payment of appropriate duty, Penalty was imposable. Hence it was prayed to dismiss the Appeals filed by the Appellants and affirm the impugned order. 8. Heard both sides and carefully considered the submissions and evidences on record. 9. The issues which arise for decision in these appeals are: - (i) Whether the Appellant is eligible to the input Cenvat credit and its utilisation for payment of duty demanded on job worked goods? (ii) Whether Extended Period is invokable or not considering the evidence and facts in this appeal? and, (iii) Whether the imposed fines and penalties are justifiable or not? 10. A scrutiny of the relevant records and documents in these appeals indicate that the Appellant (A1) had commenced its manufacturing activity in the year 2009-2010 and started paying excise duty on the roofing profiles manufactured....
X X X X Extracts X X X X
X X X X Extracts X X X X
....supplier of materials. In view of the above, the Appellant (A1) in whose hands a different, distinct marketable product viz., roofing sheets, emerge is the manufacturer of Excisable goods and so liable to pay appropriate Central Excise duty on the goods manufactured on job work basis in respect of the raw materials supplied by the traders. 12. The Appellant has mainly submitted that he was under mistaken impression that on the job worked goods, he was not required to pay excise duty as the iron & steel and aluminium coils were not received under excise duty paying documents and not availed Cenvat credit on these inputs received. A reference was also made to the Audit Report of the Central Excise Department conducted during January 2012 wherein, the Appellant was advised to pay Service Tax as job work undertaken amounted to provision of service under Business Auxiliary Services and not manufacturing. Based on the Audit Report dated 16.03.2012, the Appellant discharged the Service Tax on the job charges which amounted to Rs.12,27,183/- from June 2010 to April 2012. 13. We find that the Appellant (A1) has not challenged and rather accepted that the activity undertaken on job wor....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... duty liability. The delay on the part of the jurisdictional officers in completing the verification of documents, could not be used against the Appellants to deny the Cenvat credit. The Appellant (A1) has brought to the notice of the Adjudicating Authority that they were eligible for Cenvat credit of Rs.4,50,26,647/- as against the duty demand of Rs.4,53,45,054/-. As the Cenvat credit being a substantive right, the same ought to have been extended at the time of quantifying the demand subject to availability of duty paying documents and after their verification. In respect of job worked goods, it appears that the duty paid invoices and Bills of Entry for transfer of raw materials to the Appellant (A1) were in the name of the suppliers and these need to be transferred in favour of the Appellant (A1) by the suppliers. These iron & steel and aluminium coils were sent by the Coimbatore Branches of the Appellants (A2-A4) under delivery challans to the Appellant's factory for conversion into roofing profiles. While examining the Appellant's claim for Cenvat credit, the relevant provision of CENVAT Credit Rules, 2004 have to be kept in view. The provision of Rule 4 of CENVAT Credit Rules....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e utilized only to the extent such credit is available on the last day of the month or quarter, as the case may be, for payment of duty or tax relating to that month or the quarter, as the case may be." 2. Doubts have been raised whether these restrictions will be applicable to duty payable in terms of Section 11A or duty paid after due date in terms of rule 8 of the Central Excise Rules, 2002. 3. The matter has been examined in the Board. Practice ascertained from field formations points out that in majority of cases the payment of demands confirmed under Section 11A are being permitted to be paid by utilizing cenvat credit without linking the same to the period to which these demand pertain. 4. A harmonious reading of rule 8 of Central Excise Rules, 2002 and first proviso to rule 3(4) of the Cenvat Credit Rules, 2004 indicates that the restriction with regard to the utilization of cenvat credit is relating to the normal payment of duty in terms of rule 8 of the Central Excise Rules, 2002, where duty for a particular month or quarter is to be discharged by the 5th of the next month. For this proviso, the cenvat credit allowed to be used is what was in ba....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hority. In paragraph 46.15 of the Order of Adjudicating Authority, it was mentioned that all the documents in five spiral bound booklets for examining the Appellant's eligibility for input Cenvat credit were sent to the Assistant Commissioner of Central Excise, Coimbatore-II division for conducting verification. As there is a considerable delay, verification of the documents submitted to be got completed within a period of 6 months from the date of communication of this order. Invocation of Extended Period: 17. It is to be noted that the Appellant has commenced its manufacturing activity in 2009 and started job work for the Appellant traders since June 2010. They have neither paid service tax nor central excise duty uptill the date of receipt of audit objection which was intimated on 16.03.2012. The relevant para in Audit report reads as under: - From the above, it is clear that the Appellants (A2-A4) who are the traders in profiled roofing sheets have supplied galvanized iron and steel coils and also aluminium coils to the Appellant (A1) for carrying out the manufacture of profiled roofing sheets on job work basis starting from June 2010. Whereas, the first Audit of the u....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... head office for both the company and the firm and the suppliers supply the goods directly to their two branch offices situated at Coimbatore. ii. that their Coimbatore branches deliver these raw materials under Delivery challans to the Appellant (A1) for manufacture of the final product viz., Roofing Sheets - strong profile and wide profile under the cover of Delivery Challan. iii. that the final products after manufacture were delivered to their Coimbatore office under the cover of delivery challan and from there, the final products were transported to their Head Office at Cochin. iv. that they delivered the goods received from Appellant (A1) as such to their various branches under the cover of stock transfer for sale and that they were selling the goods directly from the Head Office as well as through the above mentioned branches. v. that they had purchased and supplied two profiling machines (Capital goods) to Appellant (A1) on loan basis and the price of the same is being adjusted against the payment of labour charges through debit notes. 21. Further, we find that Smt. Libra, Director of M/s. Premier Roofing and Building Systems P. Ltd. (....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in the ER-1 Returns filed or by service tax payment or in any other manner. 23. Even, the conduct of appellant defies logic when they have not discharged the excise duty on job worked goods but were paying on its own production of identical goods. In view of the above detailed reasoning, we have to hold that larger period has been rightly invoked. Consequently, demand of duty and imposition of mandatory penalty is legal and proper. As the issue of limitation is decided in favour of Revenue, the orders of confiscation and imposition of fines are upheld. As to the Appellant's submission that they are eligible for refund of service tax paid as the job work manufacturer which cannot be subjected to both duties of excise and service tax, we find merit in these contentions and hold that the Appellant (A1) is entitled to claim refund and we order so accordingly. The mandatory penalty imposable will be equivalent to the net duty payable after adjusting the eligible Cenvat credit on inputs used in job work manufactured goods. 24. We do not find any merit in submission of Shri Vikas Sanghrajka (A5), Executive Director of Appellant (A1) that they were under mistaken impression that job....
X X X X Extracts X X X X
X X X X Extracts X X X X
....le to penalty under the Rule 26 (1) of the Central Excise Rules, 2002. The Original Adjudicating Authority has imposed the penalties on Appellants (A2-A5) as follows:- Appellants Penalty Imposed Mr. Vikas Sanghrajka (A5) Rs.1,00,00,000/- M/s. Oriental Metals & Steels Pvt. Ltd. (A2) Rs.42,00,000/- M/s. Oriental Metals (A3) Rs.33,00,000/- M/s. Rainbow Metals (A4) Rs.16,00,000/- 26. Considering the overall facts in these appeals, we are of the view that penalties imposed are on the higher side and to meet the ends of justice, it will suffice, if the same are reduced as follows:- Appellants Penalty Reduced Mr. Vikas Sanghrajka (A5) Rs.10,00,000/- M/s. Oriental Metals & Steels Pvt. Ltd. (A2) Rs.5,00,000/- M/s. Oriental Metals (A3) Rs.5,00,000/- M/s. Rainbow Metals (A4) Rs.5,00,000/- 27. In summary, i. The duty demand and invocation of extended period are decided against the Appellant (A1) and in favor of the Department. ii. The issue of eligibility of Cenvat credit on the raw materials received is decided in favor of the Appellant (A1) who would be eligible for adjustment of such credit towards the duty ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... No. KL 07 BH 8492 Driver 1 Quantity In Kgs Unit Qty/Wt. Rate/Kilo Value 3065.000 5.50 16857.50 3470.000 5.50 19085.00 320.000 7.70 2464.00 1210.000 7.70 9317.00 Total Value 47723.50 GRAND TOTAL 47723.50 6688.000 Terms & Conditions: 1.All claims respecting this labour bill must be presented in writing within 3 days from the receipt of this labour bill. 2.Subject to Coimbatore jurisdiction only. 3.Other terms shall remain the same as per the terms agreed upon. E&O.E. Tor Preme Roofing & Building Systems LIM, M.b. (Authorhed signatory) Document 3 Premier Roofing & Building Systems Pvt. Ltd. No. 14, Vedapatti Road, Perur, Coimbatore - 641 010. Telefax: 0422-260 5560, 646 7733 E-mail: [email protected] To, M/s.... BRIENTAL METALS, ASHCAL PURAM, ALUXA, ROCHI (REBALP) No.: U LABOUR BILL 004 Date: 23-06-10 TIN: 33171464698/Area Code 0714 CST No.: 873700/Dt. 05-03-2009 Ref. No. S.No. Value Unit Qty/Wt. Rate/Fenne Rs. Ps. Description LABOUR CHANGES FOR PROFILING ALUMINUM FOOFING SHEETS (IN-RM) FROM ALU....