TaxTMI 
TaxTMI 
2024 (9) TMI 238
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....l Excise, Kolkata - I Commissionerate. 1.3. As the issues involved in all the three appeals are common in nature, they are taken up together for decision, by a common order. Excise Appeal No. 75048 of 2015 and Excise Appeal No. 75091 of 2015: 2. M/s. Lux Industries Limited are engaged in the business of manufacturing of hosiery goods such as vests, briefs cotts wool falling under CETH 6107. The Appellant-Assessee has got 4 manufacturing units located at different locations. One such manufacturing unit is located at Lohia Jute Press premises 28, BT Road, Cossipore, Kolkata - 700002 having the Central Excise Registration No. AAACL5023BEM003. The proceedings in these appeals is related to the aforesaid registration. The final products manufactured by the Appellant-Assessee were dutiable till 28.02.2013 and were exempted w.e.f. 01.03.2013. As the Appellant-Assessee was having considerable quantity of finished goods and inputs in stock, they were under the process of making inventory of such goods to calculate their liability to reverse the amount equivalent to the CENVAT credit availed on inputs lying in stock as well as inputs used in manufacture of finished goods/semi-finish....
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....mands and confirmed rest of them, the details of which are as follows: Sl. No. Demand (Confirmed or Dropped) Issue/Finding in brief 1. Rs.89,61,000/- (Entire demand dropped) Issue - CENVAT credit availed for brand promotion services in relation to exempted final product in contravention of Rule 6(1) of the CCR as well on the ground that invoice was addressed to head office instead of the manufacturing unit. FINDING - In terms of Rule 3(a) r/w Rule 2(e) of the Point of Taxation Rules, 2011 the service of brand promotion is deemed to be provided on the date of issue of invoice i.e., on 25.02.2013 when the final product of the Assessee was not exempted. Further, a person is entitled to avail CENVAT credit of input service on or after the day of receiving the invoice as per Rule 4(7) of the CCR, hence, CENVAT credit has been rightly availed. In respect of the issue regarding mentioning of head office address on the invoices instead of manufacturing unit, it was held that when there is no dispute regarding rendering of services and payment being made, substantial benefit cannot be denied for mere procedural lapse. 2. Rs.26,84,966/- (Demand of 26,70,004/- dr....
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....ister was maintained separately. Interest under Section 11AA of the Central Excise Act, 1944 read with Rule 14 of the CCR was levied on the confirmed amount and penalty Rs. 5,00,000/- under Rule 15(1) of the CCR was also imposed. 2.5. Aggrieved against the confirmation of the above said demands, the Appellant-Assessee has filed this appeal. 2.6. Revenue has filed appeal against dropping of part of the demands in the impugned order, as mentioned above. Excise Appeal No.76076 of 2015: 3. The proceedings pertaining to this appeal are an outcome of an EA2000 Audit conducted by the Department in the Cossipore unit for the FY 2011-12 and FY 2012-13 (up to February 2013). Based on the aforesaid audit, a Show Cause Notice dated 25.02.2015 was issued to the Appellant and the entire demand proposed in the Show Cause Notice was confirmed vide the impugned order dated 20.08.2015. The demands confirmed in this order are summarized as under: • CENVAT Credit/Excise Duty including Cess - Rs. 1,85,75,437/- (Initial amount - Rs. 1,97,97,310/- less Rs. 12,21,873/- already reversed) under 11(5) of the Central Excise Act, 1944 (CEA) r/w Rule 14 of the CENVAT Credit Rules, 20....
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....lone. 4.4. It is further submitted that Rule 11(3) which was inserted on 01.03.2007 under the CENVAT Credit Rules mandated the manufacturer to pay an amount equivalent to the CENVAT credit taken in respect of inputs received for use in the manufacture of the final product, which is lying in stock or contained in the final products, if the final products become exempted subsequently. It is submitted that Rule 11(3) is only restricted to inputs and there is no provision which requires paying of an amount in respect of input services; hence, CENVAT credit availed on input services before the final product became exempt cannot be denied to the Appellant. 4.5. In this regard, reliance is placed on Commissioner of C. Ex., Bangalore-II vs. Tafe Ltd [2011 (268) ELT 49 (Kar.)],where in for the period prior to the insertion of Rule 11(3),the Hon'ble Karnataka High Court relying on Dai Ichi Karkaria Ltd. [1999 (112) ELT 353 (S.C.)]held that reversal of credit availed on inputs contained in finished goods is not warranted when the finished goods are exempted subsequently. The Assessee states that though the aforesaid observations was made in the context of inputs prior to insertion of Ru....
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....C. Ex., Vadodara [2010 (20) STR 627 (Tri-Ahmd.)] • EEI Industries Ltd vs. Commissioner of Central Excise, Bhopal [2013 (287) ELT 475 (Tri-Del.)], and • Novozymes South Asia Pvt Ltd vs. Commissioner of C. Ex., Bangalore [2015 (38) STR 204 (Tri-Bang.)] 4.8. In light of the above, it is submitted that demand to the extent of Rs. 1,16,31,004/- has been correctly dropped against the Assessee and hence the Departmental appeal is liable to be dismissed. Further, the Appellant-Assessee submits that the demand to the extent of Rs. 14,962/- has been wrongly confirmed against the Appellant-Assessee and hence their appeal is liable to be allowed to that extent. 5. Demand of Rs. 6,25,651/- under Rule 11(3)(ii) of the CCR in respect of inputs contained in semi-finished goods (Work-in-progress) cannot be sustained. 5.1. It is submitted that the Order-in-Original has confirmed this demand on the ground that inputs and packing materials were issued to the job worker only on 28.02.2013 and it was not possible for the Appellant-Assessee to consume such large quantity of inputs in a single day; the said finding of issuance of the inputs and packing material to job-wo....
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....ogress, then this amount has to be deducted from the reversal to be made on inputs contained in final products lying in stock. 5.5. Accordingly, they prayed for setting aside the demand confirmed in the impugned order on this count. 6. Regarding the demand of Rs.31,24,345/- on inputs contained in finished products lying in stock, The Assessee is liable to be pay Rs.32,04,919/-. They have already paid Rs.19,20,801/- and are ready and willing to pay Rs.12,84,118/-more. The Appellant-Assessee further submitted that the Departmental officers visited their premises on 07.03.2013 in order to ensure compliance of Rule 11(3) of the CCR and the workings' regarding reversal was calculated by the Appellant-Assessee in presence of the Departmental officers and the Appellant-Assessee had paid Rs. 19,20,801/-at that time; Later on, after the said Show Cause Notice was issued, it was found that the formula adopted by the Appellant-Assessee was not correct and at the time of attending the personal hearing, they had filed a written submission dated 03.09.2014 and made a revised calculation of the amount payable as per Rule 11(3)(ii) of the CCR wherein the liability came to Rs.32,04,919/- T....
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....that these goods were received back during the period November 2011 to June 2012; there would be no rationale to keep these goods in stock separately up to 28.02.2013; that even during the Department's visit to the factory of the Appellant-Assessee on 07.03.2013, there was no assertion or positive evidence led by the Department that these goods were kept separately. It is submitted that the Order-in-Original completely failed to appreciate the aforesaid contention/submission of the Appellant-Assessee and inasmuch as the said inventory of returned goods was always included/subsumed/kept along with the inventory of finished goods, the demand of credit on such goods amounts to duplication and is liable to be set aside. Accordingly, they prayed for setting aside the demand confirmed in the impugned order on this count. 8. The Appellant-Assessee submitted that Rule 14 of the CCR has been invoked to levy interest on the amount to be recovered under Rule 11(3)(ii) of the CCR. As per Rule 14(2) only if CENVAT credit is taken and wrongly utilized interest can be levied. It is submitted that an amount determined under Rule 11(3)(ii) of the CCR cannot be termed as CENVAT credit taken and w....
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....44,31,147/- instead of Rs. 23,64,695/-, which has been fully consumed during the year and arrived at RS. 32,04,919/-which is liable to be paid in terms of Rule 11(3)(ii) [viz. credit on inputs contained in finished stock] against the Department's demand of Rs. 31,24,345/-; completely brushing aside the aforesaid revised calculation by the Appellant-Assessee, the demand raised in the Show Cause Notice dated 27.02.2014 was confirmed vide the Order-in-Original dated 29.09.2014. Therefore, the Assessee submitted that the instant demand in the Show Cause Notice has been raised on a total misconception/assumption that Rs. 1,20,66,182/- arrived at by deducting Rs. 23,64,695/- from Rs. 1,44,31,147/-represents the CENVAT credit on PY Yarn/Spun Yarn which are lying on stock as on 28.02.2013; that it was an admitted position in the proceedings under the Show Cause Notice dated 27.09.2014 that no stock of PV Yarn/ Spun Yarn was there as on 28.02.2013 and even during the visit of the Departmental officers no evidence to the contrary was led; this is even corroborated by the stock account of PV Yarn which shows invoice wise receipt and issuance/use of PV Yarn in manufacture of final product for ....
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....he factory as well to scrutinize all records. It is submitted that the fact of availment of CENVAT credit was duly reflected in the periodical returns (ER-1) filed by the Appellant; thus, suppression of fact with intention to evade the tax has not been established in this case and hence extended period cannot be invoked to confirm the demand. Reliance in this regard is placed on Pr. Commissioner vs. Himadri Speciality Chemical Ltd. [2022 (66) G.S.T.L. 264 (Cal.)]wherein it has been held that if availment of credit shown in ER-1 return filed with Department five years extended period of demand cannot be invoked. Further reliance is placed by the Appellant-Assessee on the following rulings: • Bordubi Engineering Works vs. Union of India [2016 (42) STR 803 (Gau.)] • Commissioner of C. Ex., Noida vs. Accurate Chemicals Industries [2014 (310) ELT 441], and • Johnson Matthey Chemicals India P. Ltd vs. Comm. of C. Ex., Kanpur [2014 (34) STR 458 (Tri-Del.)] 9.3. Thus, the Appellant-Assessee submitted that entire demand confirmed vide impugned order dated 20.08.2015 is legally unsustainable on the grounds of being time-barred. 10. The Ld. Authori....
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....lculations given by them. Both the Appellant-Assessee and the Ld. Departmental Representative had agreed to sit together and reconcile the differences in the calculations to arrive at the differential duty, if any. Accordingly, this Tribunal passed the order dated 30.04.2024, with the observation that "as there is an issue of mis-calculation of Cenvat pertaining to inputs, work in progress and closing stock lying in the stock as on 01.03.2013, which is to be ascertained on the basis of books of account of the appellant and relevant records, the adjudicating authority and Appellant are directed to sit together and find out what is the actual amount of reversal and file the report thereof within three months from today." The Appellant-Assessee was also directed to cooperate with the adjudicating authority. 11.1. As directed, the representative of the Appellant-Assessee and the adjudicating authority sat together and reconciled the figures and furnished their report dated 06.08.2024. We have perused the report dated 06.08.2024 submitted by the Department. From the report, we find that the adjudicating authority has reconciled the figures in respect of CENVAT reversal and found that....
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....ces were pertaining to February, 2013 itself and one pertaining to January, 2013; these inputs cannot be used in a single day. In the report it has been further alleged that no documentary evidences have been submitted by the Appellant-Assessee indicating that these inputs were not consumed in a single day; as per date of issuance mentioned in RG23A Register, these inputs were issued only on 28.02.2023 which cannot be used in a single day. 12.1. The Appellant-Assessee submitted that the report failed to consider that the they merely recorded the fact of usage of inputs at the end of the month, as per the prevailing accounting practice; however, such inputs were consumed in making final goods by them over the month. They have also stated that this is evident from the stock register maintained in RG-23A Part I which forms part of RUD-3 to the Show Cause Notice dated 27.02.2014. 12.2. We find that the allegation of the Department in the report and in the impugned order is merely on the basis of an apprehension or a suspicion that the Assessee could not have consumed so much inputs in a single day. This allegation has been made without any corroborative evidence on the part of th....
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.... or even checking the accounting of finished goods stock. A bare look at the goods return register would have revealed that these goods were received back during the period November 2011 to June 2012. There would be no rationale to keep these goods in stock separately up to 28.02.2013. Thus, we hold that the demand of reversal of CENVAT credit of Rs.5,14,168/-is not warranted. Accordingly, we set aside the demand confirmed in the impugned order on this count. 14. Regarding the appeal filed by the Revenue against dropping of the demand of CENVAT credit of Rs. 89,61,000/- availed on brand promotion services of the brand "Lux" received through 2 IPL franchises namely M/s. Sahara Adventure Sports Ltd and M/s. KPH Dream Cricket Pvt Ltd for the period FY 2013-2015, we observe that the CENVAT Credit was proposed to be denied in the impugned order on 2 counts: • the said service had been rendered in relation to exempted final product w.e.f. 01.03.2013 and thus contravened Rule 6(1) of the CCR, • invoices were addressed to head office instead of manufacturing unit. 14.1. We observe that once CENVAT credit on input services is legally taken and utilized, it ne....
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....ed on such inputs till the date of exemption, they vest in the assessee and the assessee cannot be divested of that credit as the law does not provide for the same. Therefore the authorities taking advantage of the notification exempting the final product cannot claim reversal of Cenvat credit either in respect of final product which have come into existence on the date of the notification or on the inputs stored in the godown or the work in progress and finished products......................................." 14.4. Though the aforesaid observations were made in the context of inputs prior to insertion of Rule 11(3), we observe that it will be equally applicable to input services as well inasmuch as there was no provision equivalent to Rule 11(3) for input services during the relevant period. We also find that the SLP against the above ruling was dismissed by the Hon'ble Supreme Court as reported in 2015 (320) ELT A185 (S.C.). Thus, we hold that the adjudicating authority has rightly dropped the demand for reversal of CENVAT credit of Rs.89,61,000/- on brand promotion services provided by 2 IPL franchises, which was availed by the Appellant-Assessee on 25.02.2013, i.e., prior t....
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....- was availed on Packing Materials. Total Availed credit in 2012-13 remains unchanged." 16.1. The Appellant-Assessee has submitted that the demand of Rs. 1,20,66,182/- has been raised on the Appellant-Assessee on the ground that the Appellant did not reverse an amount equivalent to the CENVAT credit availed on input (PV Yarn) and lying on stock as on 28.02.2013 i.e., the date just before the date on which the final product manufactured by the Assessee got exempted. It is submitted that vide the Show Cause Notice dated 27.02.2014, demand of Rs. 31,24,345/- was raised by the Department under Rule 11(3)(ii), representing an amount equivalent to CENVAT credit availed by the Appellant-Assessee on inputs contained in final product lying in stock as on date of the exemption. For the purpose of calculating such amount, the Department considered CENVAT credit availed on PV Yarn/Spun Yarn to be Rs. 23,64,695/- i.e., the amount initially arrived at by the Appellant-Assessee. While adjudication of the aforesaid Show Cause Notice, the Assessee vide its written submission dated 03.09.2014 stated that the correct amount of CENVAT credit availed on PV Yarn/Spun Yarn would be Rs. 1,44,31,147/- i....
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....duty could be raised within a period of 1 year from the relevant date. In the instant case, the demand has been confirmed for the period pertaining to FY 2011-12 to FY 2012-13 up to February 2013 and the instant Show Cause Notice has been issued on 25.02.2015 by invoking extended period of limitation under Section 11A (5) of the CER, alleging wilful suppression of facts and mis-declaration. We observe that no material/evidence has been adduced by the Department to prove as to how the Appellant had wilfully suppressed the facts or made any mis-declaration. We observe that the records of the appellant were periodically audited by the department. Further, a team of officers from the anti-evasion unit of the Department visited the factory of the Appellant-Assessee on 07.03.2013 for the purpose of ascertaining the details of finished goods and inputs lying in stock with regard to implementation of Rule 11(3)(ii) of the CENVAT Credit Rules, 2004. We observe that during the visit on 07.03.2013, the Departmental officers specifically scrutinized the records to verify the details with respect to this issue only. The Show Cause Notice dated 27.02.2013 was issued to the Appellant-Assessee on ....