AI Drafter 
TaxTMI 
TaxTMI 
2024 (10) TMI 1053
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....veni Engineering & Industries Ltd., (Sugar Unit) Sabitgarh, Tehsil-Khurja, Distt-Bulandshahar (ii) I confirm the demand of interest as per applicable rate in terms of Rule 14 of Cenvat Credit Rules, 2004 read with Section 75 of the Finance Act,1994 read with Section1 1AA of the Central Excise Act, 1944. (iii) I also impose a penalty of Rs. 25,00,590/-(Rupees Twenty Five Lakhs Five Hundred and Ninety only) upon M/s Triveni Engineering & Industries Ltd., (Sugar Unit) Sabitgarh, Tehsil-Khurja, Distt-Bulandshahar, under Rule 15 of the Cenvat Credit Rules, 2004, read with Section 78 of the Finance Act,1994 read with section 11AC of the Central Excise Act, 1944." 2.1 Appellant is manufacturer and also a service recipient and registered with department both as manufacturer and service recipient for payment of service tax on the specified services under reverse charge mechanism. 2.2 During course of audit it was observed that appellant has availed inadmissible CENVAT credit on- (i) invoices issued by the Merchant exporter to the tune of Rs 24,78,840/-, wherein particulars of service/ job is mentioned " Being export facilitation fee for mandatory export of m....
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....e appellant and Shri Sandeep Pandey, Authorized Representative for the revenue. 3.2 Arguing for the appellant learned chartered accountant submits that: • Definitions of input service has been wrongly interpreted by the authorities below to hold that these services do not fall under the definition as contained in rule 2 (l) of the Cenvat Credit Rules, 2004; • Authorities below have wrongly concluded that the activities undertaken by the appellant through the merchant exporter are more akin to trading of goods and hence covered by Negative List under Section 66 D (e) of the Finance Act, 1994 • The gateway system was used for monitoring of electricity supply which have been used by tehm in the process of manufacture. In case were the electricity was wheeled out they have reversed the proportionate credit. • Deniual of credit would result in cascading of taxes • Extended period of limitation could not have been invoked. • No penalty could have been imposed upon the appellant • As demand itself is not sustainable so the demand of interest also need to be set aside. • Reliance is p....
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....uld be made Tradable' among the sugar factories on mutually agreeable terms and conditions. 10. As allowed vide para 2 of the DFPD Circular dated 18/09/2015, for fulfilment of their exportobligation of said 8505.70 MT MTEQ sugar quota, the appellant had signed/entered into a specific tripartite agreement dated 16/12/2015 with M/s. Shri Dutt India Pvt. Ltd., Mumbai, Maharashtra as a Merchant Exporter and M/s. Sahyadri SSK Ltd., as a sugar source mill. As per the tripartite Agreement, Merchant Exporter M/s. Shri Dutt India Pvt. Ltd., Mumbai agreed to procure 6786.00 MT raw/VHP brown sugar from Source Sugar Mill i.e., M/s. Shayadri SSK Ltd., to fulfill MIEQ sugar export quota allocated to the appellant. Further all the expenses/cost relating to transportation of sugar from Source Sugar Mill to the port of export and other expenses were born by the said M/s. Shri Dutt India Pvt. Ltd. 11. In the process, the third party, i.e., M/s. Shri DuttIndia Pvt. Ltd. raised bills on two counts charging service tax namely:- (a) 'export facilitation fee' equal to commission payable to the third party for finding importers abroad and facilitate in export related documents an....
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....r the purpose of levy of service tax and therefore, Cenvat Credit is not available of services used for 'Trading of Goods'. (C) Under Rule 2(l) of CCR'04, "input service" means "any service used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto 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, legal services, inward transportation of inputs or capital goods and outward transportation upto the place of removal." In the instant case, the service provided by the Merchant Exporter in course of trading of goods procured from third parties cannot, by any stretch of imagination, be treated as used by the appellant, directly or indirectly, in or in r....
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....ectly invoked for raising the demand and imposition of penalty. F All the case laws/judicial pronouncement cited by the appellant in support of their defence are relating to the Cenvat Credit availed on inputs/input services used in relation to goods manufactured by the person taking Credit. But in the instant case, the services were used in relation to traded goods not manufactured by the appellant in his factory and therefore all such relied upon case laws are not applicable in the instant case, 13. Relating to Cenvat Credit availed on the invoices issued by UP Sugar Mills Cogen Association for ' Contribution to install Gateway System", I find that such "Gateway System" is installed at the gate of the manufacturing unit to provide real time power value (KW) to SLDC via internet (by using mobile SIM Telemetry System) used by SLDC (state load dispatch center) to ensure about the surplus power exported or imported by a unit over a period of time and linked to U.P. Sugar Mills Cogen Association Communication Gateway System. The said system installed at the entrance/gate of the unit is used by the state load dispatch center (SLDC) to monitor power import. All the....
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....ors, and that too for a price (sale) the "process and the use test" fails. In such a case, the nexus between the process and the use gets disconnected. In such a case, it cannot be said that electricity generated is "used in or in relation to the manufacture of final product, within the factory". Therefore, to the extent of the clearance of excess electricity outside the factory to the joint ventures, vendors, grid etc. would not be admissible for CENVAT credit as such wheeled out electricity, cleared for a price, would not fall within the definition of "input" in Rule 2(g) of the CENVAT Credit Rules, 2002. This view is also expressed in para 9 of the judgment of this Court in the case of Collector of Central Excise v. Solaris Chemtech Limited - 2007 (214) E.L.T. 481 (S.C.). Further, our view is supported by the observations of this Court in the case of Vikram Cement v. Commnr. of Central Excise, Indore - 2006 (194) E.L.T. 3 (S.C.) which is quoted below :- "It appears to us on a plain reading of the clause that the phrase "within the factory of production" means only such generation of electricity or steam which is used within the factory would qualify as an immediate prod....
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....ice; 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 upto the place of removal, and includes services used in relation to setting up, 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 up to the place of removal, procurement of inputs, activities relating to business such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry and security, inward transportation of inputs or capital goods and outward transportation up to the place of removal; (xvii) Before adverting to the merits of the issue, reference may be made to various decisions rendered in the context of the expression input service as defined under Rule 2(l) of the Rules. This court in the case of Parth Poly Wooven Pvt. Ltd. (supra) has, after referring to various decisions on the question of interpretation of the said rule as well as interpretation of statutory p....
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....ant was never disclosed to the department and suppressed from the departmental authorities at the time of filing the return. It has been held that the discovery of certain facts during the course of audit which are not available on the returns is an act of suppression for invoking the extended period of limitation. In para 12 (E) of the impugned order specific findings have been recorded for invoking the extended period o limitation. 4.7 In case of Applied Solar Technologies (India) Pvt. Ltd. [2023 (70) G.S.T.L. 378 (Tri. - Del.)] delhi bench has observed as follows: "24. The third issue that arises for consideration is regarding the invocation of the extended period of limitation in the show cause notice. The relevant portion of the show cause notice invoking the extended period of limitation is reproduced below : Whereas, from the facts discussed above, it further appears that "8. the assessee, by doing so, had intentionally and wilfully suppressed the details of providing/receiving that impugned taxable services and did not file prescribed ST-3 Returns containing the details correctly therein with the intention to short payment/non-payment of the applicable ....
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....is providing a taxable service and is undertaking another activity which is neither a service nor manufacture. In such a situation, the only correct legal position appears to be that it is for the assessee to segregate the quantum of input service attributable to trading activity and exclude the same from the records maintained for availing credit. This cannot be done in advance as it may not be possible to foretell the quantum of trading activity as compared with taxable activity. The obvious solution would be to ensure that once in a quarter or once in a six months, the quantum of input service tax credit attributed to trading activities according to standard accounting principles is deducted and the balance only availed for the purpose of payment of Service tax of output service. 17. .... 18. .... 19. ..... 20. This Court is also of the opinion that the invocation of the extended period of limitation was warranted in the circumstances of the case. Being conscious of its trading activity and that it was not liable to service tax (since it did not include the amounts earned from that business, in its returns) meant that the assessee was aware of....
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....Central Excise Law to disclose the details of the credit or to submit the duty paying documents, which in our opinion is false and an attempt to deliberately contravene the provisions of the Act, 1944 and the rules made thereunder with an intent to evade the duty. 34. In our opinion, the facts of the present case clearly suggest willful suppression of material facts by the assessee as well as contravention of the provisions of the Act and rules framed thereunder with an intent to evade the demand of duty as would be covered by Clauses IV and V of Section 11A(1) of the Act, 1944. Therefore, the invocation of the extended period of limitation in the facts of the present case is fully justified." Applying the ratio of the above High Court judgment, I find that the extended period has rightly been invoked and penalty has rightly been imposed in this case." 4.11 Appellant has relied upon the decisions as follows, to submit that extended period could not have been invoked: A. Zee Media Corporation Limited [2018 (18) GSTL 32 (ALL). B. L G Electronics India Pvt Ltd [2024-VIL-424-CESTAT-ALH-ST] C. Progressive Stampings (P) Ltd. [2024-VIL-394-C....