TaxTMI 
TaxTMI 
2024 (10) TMI 2
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....No. AAACG4447JXM001. The appellants also import bottle closures and sell them. They have been filing periodical Central Excise returns as a manufacturer of excisable goods and discharge appropriate duty payable thereon. The appellants pay royalty on sale of domestically manufactured bottle closures as well as on the imported bottle closures; and also discharges service tax on such royalty payment under Reverse Charge Mechanism (RCM) basis. The appellants also avail CENVAT credit of the duty paid on the inputs, capital goods and the tax paid on input services under the provisions of CENVAT Credit Rules, 2004 (hereinafter referred to as 'the CCR, 2004'). Upon introduction of GST regime w.e.f. 01.07.2017, the appellants have duly taken the registration with jurisdictional GST authorities vide GSTIN 30AAACG4447J1ZV. 2.3 During the course of audit of records of the appellants, it was observed by the department that the appellants had trading sale of goods viz., imported bottle closure valued at Rs. 7,19,38,951/- during the F.Y. 2016- 17, which the department had interpreted as exempted service in terms of Section 66D(e) of the Finance Act, 1994. Further, during the scrutiny of the ....
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....nd recovered from them under the provisions of Rule 14 of the CCR read with the provisions of Section 11AA of the Central Excise Act, 1944 as amended, from the date when the said amount became payable till the date of payment of the said amount; (iii) a penalty should not be imposed on them under the provisions of Rule 15 of the CCR read with the provisions of Section 11AC of the Central Excise Act, 1944 for contravening the provisions of Rule 6 of the CENVAT Credit Rules, 2004. 4.1 In adjudication of the said SCN dated 16.01.2020, the Original authority had confirmed the demands proposed in the SCN on the basis of the following findings: (i) The appellants have failed to adduce any documentary evidence showing that they were maintaining separate accounts of input services used in the provision of the impugned exempted service. (ii) As the title of Rule 6 of the CCR, 2004 is "Obligation of a manufacturer or producer of final products and a provider of output service" and the word "shall" has been used in every obligatory provision which is indicative that a manufacturer or producer of final products or service provider is required to maintain the accounts as prescribed in th....
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....7,15,52,781/- and sale price of the same is Rs. 7,19,38,951/-. Thus, the difference of sale price and the cost of the traded goods is Rs. 3,86,170/- and 10% the cost price is Rs. 71,55,278. As such, he found that 10% amount of cost price is more than the amount of difference between sale price and cost price of the traded goods. Therefore, he had held that the appellants are required to reverse 7% of Rs. 71,55,278/- under the provisions of Rule 6(3) (i) of the CCR read with Explanation I (c) to Rule 6 of the CCR, 2004, which works out to Rs. 5,00,869/-. Accordingly, while confirming the said demand, the amount determined by the appellants as payable as per their calculation and which was already reversed for Rs. 2,24,435/- along with interest of Rs. 1,21,527/- and penalty of Rs. 33,665/- before the issuance of the impugned SCN was adjusted and appropriated. Further, original authority also imposed mandatory penalty on the appellants under Section 11AC of the Central Excise Act, 1944, read with under Rule 15 of the CCR, 2004. 4.3 In the appeal preferred by the appellants against the above Order-in- Original dated 20.05.2020, the learned Commissioner (Appeals) vide impugned order da....
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....placed reliance on the following judgments: (i) Orion Appliance Limited Vs. C.S.T., 2010 (19) S.T.R. 205 (Tri.- Ahmd.) (ii) Gulf Oil Corporation Ltd., Vs. CCE., 2014 (33) S.T.R. 298 (Tri.- Ahmd.) (iii) Pushpam Pharmaceuticals Company v. Commissioner of Central Excise, Bombay2002 TIOL 235S.C. (iv) Commissioner of Central Excise Vs. HMM Limited - 1995 (76) E.L.T. 497 (S.C.) (v) Bisazza India Pvt. Ltd. Vs. Commissioner of Central Excise & Service Tax, Ahmedabad -(2023) 4Centax 319 (Tri.-Ahmd.) (vi) BHEL-GE Gas Turbine Services Private Limited Vs. Commissioner of Customs, C. Excise & S.T., Secunderabad - 2021 (44) G.S.T.L. 399 (Tri.-Hyd.) 6. Learned Authorised Representative (AR) reiterated the findings made by the Commissioner (Appeals) in the impugned order and submitted that in view of the specific provisions for reversal of CENVAT credit provided under Rules 6 of the CCR, the appeal is not permissible. Accordingly, he submitted that the impugned order is sustainable in law and prayed for rejection of the appeal filed by the appellants. 7. Heard both sides and perused the records of the case. I have also considered the additional written submissions given in the form o....
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....d further that if any part of the value of a taxable service has been exempted on the condition that no CENVAT credit of inputs and input services, used for providing such taxable service, shall be taken then the amount specified in clause (i) shall be seven per cent of the value so exempted: Provided also that in case of transportation of goods or passengers by rail, the amount required to be paid under clause (i) shall be an amount equal to two per cent of value of the exempted services. Explanation 1.-If the manufacturer of goods or the provider of output service, avails any of the option under this sub-rule, he shall exercise such option for all exempted goods manufactured by him or, as the case may be, all exempted services provided by him, and such option shall not be withdrawn during the remaining part of the financial year. Explanation 2.-No CENVAT credit shall be taken on the duty or tax paid on any goods and services that are not inputs or input services. Explanation 3.-For the purposes of this sub-rule and sub-rule (3A),- (a) "non-exempted goods removed" means the final products excluding exempted goods manufactured and cleared upto the place of removal; ....
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....) and follow the procedure provided under sub-rule (3A), the Central Excise Officer competent to adjudicate a case based on amount of CENVAT credit involved, may allow such manufacturer or provider of output service to follow the procedure and pay the amount referred to in clause (ii) of sub-rule (3), calculated for each of the months, mutatis mutandis in terms of clause (c) of sub-rule (3A), with interest calculated at the rate of fifteen per cent per annum from the due date for payment of amount for each of the month, till the date of payment thereof." 8.3 From the facts of the case, it is seen that the appellants are paying service tax on royalty charges to their overseas principals in respect of the 'bottle closures' manufactured domestically in their factory as well as in respect of the 'bottle closures' imported and sold as it is. In respect of such royalty payment, treating the same as services provided to the appellants by the overseas principals in non-taxable territory, the appellants had discharged the service tax liability as recipient of service. The department had interpreted that since royalty charges are paid in respect of both domestically manufactured and import....
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....t the appellants have duly followed the procedure and conditions prescribed in complying with the obligations under CENVAT Credit Rules, 2004, and had also complied with for payment of CENVAT credit when pointed out by the audit wing of the department along with interest and penalty. Further, the value of 'trading of goods' taken as a basis in the SCN at Rs.7,19,38,951/- in paragraph 10 of the original order and the consequent amount of CENVAT to be paid under Rule 6(3)(i) of the CCR of 2004 in that paragraph and the same amount dealt in paragraph 10.1 of the impugned order, is not disputed by the appellants. However, they had pleaded that the amount of Rs. 2,24,435/- worked out for the period June, 2016 to December, 2016 as per worksheet provided by them before the learned Commissioner (Appeals), represent the correct amount that is required to be paid along with applicable interest and penalty. In this regard, I find that Hon'ble Supreme Court have dealt with the issue of invoking extended period in the case of Collector of Central Excise Vs. Chemphar Drugs & Liniments - 1989 (40) E.L.T. 276 (S.C.) and held that for invoking extended period for demand of duty, something positive ....
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....of the option by the appellants under Rule 6(3AA) of the CCR, 2004. 8.7 I find that the order of the Tribunal in the case of Bisazza India Pvt. Ltd. (supra) relied upon by the appellants also support the above decision in the impugned order providing the option to choose the method of compliance under Rule 6 of the CCR of 2004 to the assessee-appellants. The relevant paragraph in the said order is extracted and given below: "6. The second issue involved is whether the Adjudicating Authority has discretion to choose which method of compliance with the requirement of Rule 6 of Cenvat Credit Rules, 2004 is to be followed by the assessee or not. I find there is no authority in law which gives Revenue to exercise such discretion. There is plethora of decisions which says that discretion of choosing method of compliance with Rule 6 is exclusively with the assessee. In these circumstances the impugned order on this count, cannot be sustained. Therefore, the impugned order remanding the matter to the lower authority to quantify the amount to be reversed is modified to the extent that reversal will be done as per the choice of method of compliance of the appellant in terms of Rule 6 of C....