TaxTMI 
TaxTMI 
2025 (4) TMI 565
X X X X Extracts X X X X
X X X X Extracts X X X X
.... maintenance of motor vehicle. 2. The Appellant is engaged in manufacture and sale of gold, diamond and silver jewellery and registered under the service tax law. Based on the intelligence report regarding evasion of excise duty on the goods manufactured and cleared without payment of duty, violating the conditions of exemption notification, etc., proceedings were initiated and on conclusion of the investigation, show cause notice was issued and thereafter Adjudication authority as per the impugned order, confirmed the demand of central excise duty along with interest and also imposed penalties. Aggrieved by said order, present appeal is filed before the Tribunal. 3. When the appeal came up for hearing, the Learned Counsel for the Appellant submits that the entire demand is barred by limitation since the demand is made for the period from 01.03.2016 to 30.06.2017 and Show Cause Notice (SCN) was issued on 03.01.2021. In this regard, Ld. Counsel for the Appellant submits that there is no allegation of suppression of facts. The Appellant had paid appropriate duty on sale of gold and reported in ER-8 returns. Therefore the allegation that the Appellant failed to classify th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....old, office or religious use. Further as per explanations provided in the Harmonized Commodity Description and Coding system (HSN), heading 7114, inter alia, include other articles for domestic or similar use such as table centre-pieces, vases, mantelpiece ornaments, plates, medals and medallions (other than those for personal adornment) etc. Considering the same, Adjudication authority held that articles of silver, other than articles of silver jewellery classifiable under CETH 7113, including lamps, bowls, spoons, table-ware etc., manufactured by the assessee, are rightly classifiable under Central Excise Tariff Item entry 7114 11 10 of the First Schedule to Central Excise Tariff Act, 1985 and confirmed the demand of central excise duty at the tariff rate of 12.5% ad valorem on these goods. 5. As regards the classification of the goods whether they are falling under CETH 7113 or 7114, Learned counsel also draws our attention to sample copies of the invoices, where it is clearly mentioned the gross weight and the other particulars and if any precious stone is available, it is separately shown in the invoices. Moreover in the impugned order, Adjudication authority also held that....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Appellant to produce details of articles of silver jewellery and silver manufactured removed by them, it is held that during the relevant period, the appellant has manufactured and cleared articles of silver jewellery studded with precious stones. Thus the finding regarding classification of the goods as falling under CETH 7114 is unsustainable, since there is no evidence to prove that the goods manufactured by the appellant are articles of silver jewellery, studded with diamond, ruby, emerald or sapphire and in the absence of any finding regarding quantification of duty against goods falling under CETH 7113 and under CETH 7114, separately. 8. Regarding applicable rate of duty, Ld counsel submits that as per the Notification No. 12/2012-CE dated 17.03.2012, articles of silver jewellery is exempted, unconditionally. Thereafter, as per the Notification No. 12/2016-CE dated 01.03.2016, articles of jewellery where subject to 1% of excise duty and articles of silver jewellery other than the studded diamond, ruby, emerald or sapphire was subject to 'nil' rate of duty. Both the goods were subject to fulfilling the condition no. 16 as per the notification produced below:- (....
X X X X Extracts X X X X
X X X X Extracts X X X X
..../2016-CE dated 01.03.2016. Thereafter, vide Notification No. 26/2016-CE dated 26.07.2016, Chapter Heading 7113 was further widened to (1) Articles of jewellery (II) Parts of articles of jewellery, both at the rate of 1% duty subject to fulfillment of the condition No.16 as above. However, articles of silver jewellery other than the studded diamond, ruby, emerald or sapphire were brought under (III) having 'nil' rate of duty subject to condition No. 16. The condition No. 16 remain the same from 01.03.2016 to 02.02.2017 and during the relevant period, the goods manufactured by the appellant were subject to 'nil' rate of duty since they have complied with condition No. 16 regarding non-availment of Cenvat credit on inputs or capital goods used in the manufacturing of these goods. However, as per the Notification No. 6/2017-CE dated 02.02.2017, condition No. 52A was introduced against the Serial No. 199 of the Notification 12/2012-CE where the condition of not availing the cenvat credit of inputs or capital goods used in the manufacture of these goods is added with inputs or capital good or service tax or input services. Condition no 52A is reproduced below:- '....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Rules, 2004, the Assessee has the option to select method of reversal and once reversed, it amounts to credit not availed at all. Learned counsel relied on the following decisions:- 1. CCEx. Vs.. Bombay Dyeing & Mfg. Co. Ltd., 2007 (215) ELT 3 (SC). 2. Chandrapur Magnet Wires (P) Ltd., Vs.. CCE, Nagpur, 1996 (81) E.L.T. 3 (S.C.). 3. Hello Minerals Water Pvt. Ltd., Vs. Union of India, 2004 (174) E.L.T. 422 (All.) 4. Franco Italian Co. Pvt Ltd., Vs. Commissioner, 2000 (120) E.L.T 792 (Tribunal-LB) 5. Tiara Advertising Vs. UOI, 2019 (30) G.S.T.L. 474 (Telangana) 6. Agrawal Metal Works Pvt. Ltd., Vs. Commr. of CGST, Alwar, 2022 (65) G.S.T.L. 372 (Tri. - Del.) 7. Hamdard (Wakf) Laboratories Vs. Commr., Cus., C. Ex. S.T., Ghaziabad, (2023) 4 Centax 62 (Tri.-All.) 8. Rohan Motors Ltd. Vs. Commr. of Customs, C. Ex. & S.T., Noida, 2024-VIL-301-CESTAT-ALH-ST 9. M/s Mercedes Benz India (P) Ltd. Vs. Commissioner of Central Excise, Pune-1, 2015 (40) STR 381 CESTAT-Mum 10. Satyakala Agro Oil Products Ltd., Vs. CCE, Guntur, 2008 (223) ELT 441 (Tri Bang) 11. CCE, Ahmadabad-II Vs. Maize Products, 200....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tails of export as submitted in reply to Show Cause Notice (SCN): Invoice No. Date Value Shipping Bill No. Shipping Bill Date Airway Bill NO. Airway Bill Date KJ/30 11/03/2016 9,777,696 6424189 14/03/2016 176-20177555 14/03/2016 KJ/31 15/03/2016 11,156,646 6479986 16/03/2016 176-20177485 16/03/2016 Mar'16 Total 20,934,342 KJ/32 11/06/2016 62,392,698 8218709 13/06/2016 176-61642464 13/06/2016 KJ/33 04/08/2016 736,259 9275210 05/08/2016 176-63993274 05/08/206 KJ/34 07/11/2016 42,869,925 2092940 07/11/2016 176-33652894 08/11/2016 KJ/35 19/01/2017 22,014,861 3570267 20/01/2017 176-33664304 20/01/2017 2016-17 Total 128,013,743 16. The Ld Counsel further submits that the finding given by the Adjudication authority on this aspect is contradictory. As per paragraph 74 of the impugned order, it is held that:- "74. Verification of the assessee's sales turnover for the period under investigation revealed that they had manu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....paying duty and export of the goods can be followed. After receipt of the report from the committee, Government issued various Notifications and Circulars i.e Notification No 26/2016-Central Excise to 29/2016-Central Excise and Notification No. 33/2016-Central Excise (N.T.) to 40/2016-Central Excise (N.T.) and Circular No. 1040/28/2016-CX to No. 1045/33/2016-CX to give effect to such accepted recommendations. Though duty was levied with effect from 01.03.2016, the Government prescribed the procedure for registration itself by Notification No. 38/2016-CE (NT) dated 26.7.20216. Likewise, ER-8 return was notified vide Notification No. 37/2016-CE (NT) dated 26.07.2016. The Government again vide Circular No. 1042/30/2016-CX., dated 26-7-2016 has clarified that Exporters may continue to export articles of jewellery, as provided by the Circular No. 1021/9/2016-CX, dated 21-3-2016, on self-declaration and submission of Letter of Undertaking [LUT] to customs without the need to get such LUT ratified by the jurisdictional Central Excise authorities, till the detailed procedures in this regard are put in place. This clearly shows that the of intention Government is to help the industry, as du....
X X X X Extracts X X X X
X X X X Extracts X X X X
....der to protect the risk of price fluctuations of the stock of goods, Appellant had entered into an agreement to hedge its gold inventory and it cannot be considered as trading. Learned Counsel draws our attention to the judgment of the Hon'ble Supreme Court in the matter of Sales Tax Officer Pilibhit Vs. Bhudh Jayaprakash (1954 (1) SCC 892), wherein the Hon'ble Apex Court considered the distinction between sale and the agreement to sell and held that a liability to be assessed to sales tax can arise only if there is a completed sale under which price is paid or is payable and not when there is only an agreement to sell, which can only result in a claim for damages. It would be contrary to all principles to hold that damages for breach of contract are liable to be assessed to sales tax on the ground that they are in the same position as sale price. In appellant's case, demand under Rule 6 (3) of Cenvat Credit Rules 2004 is confirmed only on the ground that the appellant had entered into hedging and considering it as trading of goods, an exempted service and there by it is held that appellant failed to exercise the option under sub-rule (3) of Rule 6 of CENVAT Credit Rules, 2004 and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... SCN No. 01/2021 CE dated 18.02.2021 is issued earlier proposing rejection of CENVAT credit availed by the Appellant. Learned counsel for the appellant further draws our attention to Order dated 18.07.2024 issued by Appellate authority dropping the demand. Facts being so, the said demand is also unsustainable. 21. As regarding penalty, appellant had mentioned the facts and figures in their books of account and it is submitted when the appellant disclosed the said details in the financials, thus in the absence of any fraud, collusion etc., with an intention to evade duty, no penalty can be imposed. The learned counsel also relies on the judgment of Hon'ble High Court of Kerala in matter of CC Vs. Cochin Minerals and Rutiles Ltd., reported in 2010 (259) ELT (182) Kerala, wherein it is held that when there is no scope as to whether duty was payable or not, penalty cannot be imposed under the provisions of the Act. Learned counsel relied on the following decisions also in this regard:- 1. Tamil Nadu Housing Board Vs. CCE, Madras, 1994 (74) ELT 9 (SC) 2. Hindustan Steel Ltd., Vs. The State of Orissa, 1978 (2) E.L.T. (J 159) (S.C.) 3. Commissioner of Customs....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ting Authority has not travelled beyond the SCN as the very issue to be decided was whether the Appellant was eligible for exemption under Notification No. 12/2012-CE and under the same chapter heading 7113 there are three sub-categories and it was the duty of the Original Adjuciating Authority to determine the eligibility under all the two sub-categories.; one of the sub-categories is other than studded silver jewellery and the Commissioner has rightly given his findings on the same (Para 70 of the OIO); the Appellant has produced only sample invoices and has ensured only Invoices which did not involve studded jewellery has been produced in the Appeal memorandum; however, Appellant has not denied that they have cleared studded silver jewellery during the proceedings; the only claim made is that the quantity and value of such clearances has not been separately quantified, this cannot be a ground for summarily dismissing the demand as the onus is on the appellant to prove the quantum of plain silver jewellery as they are claiming the exemption; even if they agree that it was studded jewellery they are eligible for 1% duty cannot be accepted in as much as the condition specified in t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... according to us on the challenge to the extended period of limitation ground alone the appellants are bound to succeed. Section 11A of the Act postulates suppression and, therefore, involves in essence mens rea. 10. The expression "suppression" has been used in the proviso to Section 11A of the Act accompanied by very strong words as 'fraud' or "collusion" and, therefore, has to be construed strictly. Mere omission to give correct information is not suppression of facts unless it was deliberate to stop the payment of duty. Suppression means failure to disclose full information with the intent to evade payment of duty. When the facts are known to both the parties, omission by one party to do what he might have done would not render it suppression. When the Revenue invokes the extended period of limitation under Section 11A the burden is cast upon it to prove suppression of fact. An incorrect statement cannot be equated with a willful misstatement. The latter implies making of an incorrect statement with the knowledge that the statement was not correct. 12. As far as fraud and collusion are concerned, it is evident that the intent to evade duty is built into these ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... including an optional scheme for payment of excise duty, stock position, job-work, dead stock, removal of semi-manufactured jewellery. etc., exclusively for appellant industry. Hence it clear that the normal procedures prescribed for other goods doesn't apply to articles of jewellery. The dispute in the present appeal is regarding classification of the goods and appellant was filing ER-8 returns from time to time. Moreover the Appellant has not collected the excise duty from the customers on sale of the goods. All the transactions are duly accounted in the books of accounts and the same were audited by the Central Excise Audit team from time to time. Considering the Judgment of the Hon'ble Supreme Court in the matter of Continental Foundation Jt. Venture (supra) and Densons Pultretaknik (supra), in the absence of any mis-statement or willful suppression of facts or contravention of any of the provisions of law with intent to evade payment of duty, there was no justifiable reason for invoking the extended period of limitation. 29. As regarding issue on merit related to classification of the goods and demand of duty, we find that regarding sale of studded silver jewellery, th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....3 as per Notification No. 26/2016-CE dated 26.07.2016. The appellant had claimed that the goods are falling under the category-(III) since the goods are other not studded with diamond, ruby, emerald and sapphire and the applicable tariff rate was 'nil' if the appellant complied with condition No. 16. Further, as per the condition No. 16, appellant has not availed Cenvat credit on inputs or capital goods used in the manufacturing of these goods. Thus, appellant is entitled for claiming exemption of duty till 02.02.2017. Thereafter, as per the Notification No. 6/2017 dated 02.02.2017, condition No. 52A was introduced against the serial No. 199 of the Notification 12/2012, where the condition of not availing the cenvat credit of inputs or capital goods used in the manufacture of these goods is added with inputs or capital good or service tax on input services. Thus, appellant complied with condition No. 52A also since they have not availed cenvat credit of inputs or capital goods used in the manufacture of these goods and by reversing cenvat credit availed against service tax on input services used in the manufacture of these goods. Accordingly, they are entitled for claiming ....