TaxTMI 
TaxTMI 
2025 (4) TMI 966
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....iod March 2010 to March 2012 wherein the Department noted that the appellant was engaged in providing exempted (trading service) as well as taxable service, but had failed to reverse the proportionate credit as per Rule 6(3) of the CCR. When the issue was raised by the audit officers, the appellant reversed proportionate credit of Rs. 6,57,523/-, for the period 2010-2011, along with interest of Rs. 2,35,313/-. For the period 2011-2012 and 2012-2013 (till September 2012), the appellant had reversed the entire common credit availed, along with interest. A Show Cause Notice dated 30.09.2015 was issued to the appellant for the period 2010-2011 to 2014-2015, under proviso to S. 73(1) of the Act, proposing a demand of Rs. 4,34,29,598/- along with interest. The SCN alleged that the appellant had failed to reverse the credit (5/6% of value of exempted service) towards exempted services as per Rule 6(3) of the CCR, during the period 2011-2012 to 2014-2015. It was also alleged that the appellant had availed credit on the basis of photocopies/ without the documents and thus, such credit was inadmissible. The said show cause notice was adjudicated by the Commissioner vide the impugned order wh....
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....ade by the Appellant cannot be rejected merely on the ground that the appellant has failed to follow the procedure prescribed in the Cenvat Credit Rules, 2004. In this regard, learned Counsel relied upon the following judgements:- • Jai Balaji Industries Ltd. vs. Commissioner of C. Ex. & S.T., Raipur- 2017 (352) E.L.T. 86 (Tri.-Del) • Bhingar Urban Co-Op. Bank Ltd. vs. C.C.E., Cus. & S.T., Aurangabad- 2016 (41) S.T.R. 673 (Tri.-Bom) • Jubilant Motor Works (South) Pvt. Ltd. vs. Commissioner of GST & Central Excise, Chennai- (2024) 17 Centax 239 (Tri.-Mad).) 3.2 Learned Counsel further stated that for the period October 2012 - March 2015, the contention of the appellant that no reversal was required as no common credit was availed, was rejected on the ground is that the same was not certified properly, was not a valid ground to raise a demand. Learned Counsel further stated that the CA certificate produced for the period 2014-2015 was rejected by stating that the same is not comprehensive and watertight. Learned Counsel submitted that it is settled law that a CA certificate is an expert evidence and the same cannot be brushed aside, unless th....
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....ssion. He stated that in order to raise a demand under proviso to S. 73(1), there has to be fraud, suppression, etc. In the present case, there is no such finding of any fraud suppression by the appellant and hence, the invocation of extended period is bad in law. He relied on the following decisions:- • Mount Everest Breweries Ltd. vs. Commissioner of CGST & Central Excise- (2024) 18 Centax 340 (Tri.-Del) • GD Goenka Pvt. Ltd. vs. Commissioner of Central Goods and Services Tax- (2023) 11 Centax 2 (Tri.-Del) • Oil and Natural Gas Corporation Ltd. vs. Commissioner of Central Excise and Service Tax- (2024) 20 Centax 589 (Tri.-Del) 3.5 In addition, Learned Counsel submitted that it is a settled law that extended period cannot be invoked when demand is raised pursuant to audit. In this regard, he relied upon the following case laws:- • Kalya Constructions Pvt. Ltd. vs. Commissioner of Central Excise, Udaipur- (2024) 21 Centax 199 (Tri.-Del) • Computer Science Corporation India Pvt. Ltd. vs. Commissioner of Service Tax- (2024) 18 Centax 495 (Tri.-All) • Rungta Sons Pvt. Ltd. vs. Commissioner, Central Excise....
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.... 6. These are the issues before us for decision:- (i) Whether the proportionate credit reversal for the period April 2011-Sept. 2012 is sufficient compliance to Rule 6(3) of the Cenvat Credit Rules, 2004. (ii) Whether credit is required to be reversed for the period Octber 2012-March 2015. (iii) Whether credit availed on photocopies of documents is admissible. (iv) Whether extended period is rightly invoked. 7. We take up each issue individually. Learned Counsel for the appellant submitted that as long as the proportionate credit was reversed by the appellant for the period 2011-2012 and upto September 2012. We find that the impugned order has held that as the appellant did not give any intimation to the Range Officer as required under the Cenvat Credit Rules, 2004, the appellant could not have exercised the option of proportionate reversal of cenvat credit. We find that this issue is no more res-integra. Once the appellant have reversed proportionate credit on common input service attributable to the exempted service, along with interest, it restores the position of cenvat credit not having been availed at all, and the demand for 5%/6% of t....
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....moval of the exempted final product. If this debit entry is permissible to be made, credit entry for the duties pald on the inputs utilised in manufacture of the final exempted product will stand deleted in the accounts of the assessee. In such a situation, it cannot be said that the assessee has taken credit for the duty paid on the inputs utilised in the manufacture of the final exempted product under Rule 57A. In other words, the claim for exemption of duty on the disputed goods cannot be denied on the plea that the assessee has taken credit of the duty paid on the inputs used in manufacture of these goods. 8. The appeal is therefore, allowed. The order of the Customs, Excise and Gold (Control) Appellate Tribunal dated 17th May, 1995 is set aside. There will be no order as to costs." 7.1 Similarly, in the case of PI Industries vs. CCE - 2023 (6) TMI 455 CESTAT, the Tribunal has held as follows:- "4. He also submits that it is an accepted principle of law that reversal of Cenvat Credit attributable to exempted goods or service amount to not taking Cenvat credit at all. However, the Learned Commissioner while appropriated entire amount of Cenvat credit along w....
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.... in respect of common input service used in the manufacture of exempted goods the demand equal to 10%/5% will not sustain. Therefore, we do not find any merits in the impugned order confirming demand for the period April 2008 to June 2009." 7.2 In the case of Jost's Engineering Co. Limited vs. CCE, Mumbai - III- 2015 (320) ELT 157 (T), the Mumbai Bench of the Tribunal passed the following order:- "5.2 In the present case it is an admitted fact the appellant did not maintain separate accounts for the input services used in or in relation to the manufacture of product dutiable as well as exempted products even though they maintained such accounts in respect of inputs. Therefore, two options were available to them, i.e., either to pay 5%/10% of value of the exempted goods or pay an amount equal to the credit attributable to the input services used in or in relation to manufacture of exempted goods subject to the provisions of Sub-Rule (3A). When the mistake was pointed the appellant reversed not only the credit taken on input services used in the manufacture of exempted goods but also the credit taken on input services used in the manufacture of dutiable goods. In other wo....
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....Tribunal in Foods, Fats & Fertilisers Ltd. v. Commissioner of Central Excise, Guntur [2009 (247) E.L.T. 209 (Tri.-Bang.)], this amendment being procedural, is held to be retrospective in operation. Further, the Finance Act, 2010 has retrospectively amended Rule 6 of the CENVAT Credit Rules, whereby reversal/payment of proportionate credit attributable to inputs used in the manufacture of exempted goods, either before or after the clearance of such goods is an option available to a manufacturer not maintaining separate records for receipt, consumption and use of common inputs, taking credit on common inputs used for manufacture of dutiable and exempted final products." Hence, the said demand cannot be sustained. 8. We now take up the second issue. Learned Counsel has submitted that for the period October 2012 to March 2015, the appellant did not avail credit on common inputs/service. It has also been submitted that a CA Certificate to this effect was submitted. The adjudicating authority has rejected the appellant's contention that the CA Certificate was only for the year 2014-2015. However, a copy of the CA Certificate for October 2012 - March 2013 (dated 18.03.2019) ha....
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....nce a evidence of producing the original invoices before the Jurisdictional Officer has been submitted, unless it is evidenced that the seal/signature was forged, the submission deserves to be accepted. 10. As regards the extended period, it is on record that the appellant's records were audited in the year 2012. It is seen that the CBIC issued a detailed manual, Service Tax Audit Manual, 2011. The audit records of an assessee is a very detailed process undertaken by the Department. It involves several preparatory steps before actually visiting the premises of the assessee for audit of the records. The steps are as follows:- (i) Profiling of a taxpayer- Audit requires a strong database for profiling each assessee/taxpayer so that risk-factors relevant to an assessee/taxpayer may be identified in a scientific manner and audit is planned and executed accordingly. Some of the relevant data has to be collected from the assessee/taxpayer during the course of audit, while the rest is to be extracted from the registration documents and returns filed by the assessee/taxpayer as well as from his annual report, reports/returns submitted to regulatory authorities or other agencies....
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....elp in explaining and discussing the objections with the assessee/taxpayer and other follow up action. (vi) Checking of cross utilization of credit on inputs and input services: While carrying out audit of Central Excise cases, the Service Tax return filed by the assessee/taxpayer should also be scrutinized in order to ensure that CENVAT credit claimed in both the returns does not vary and vice versa. Further, where both the returns are filed in the same Commissionerate, audit of both the activities should be undertaken simultaneously. If these returns are being filed separately (one with the Excise Commissionerate and the other with the Service Tax Commissionerate, then this can be tackled by undertaking integrated audit for Central Excise and Service Tax. While undertaking the combined audit, both the Central Excise and Service Tax returns should be scrutinized in order to verify whether CENVAT credit claimed in both the returns is different. (vii) Apprising the assessee/taxpayer of irregularities noticed and ascertaining his view point: It is important that the auditor discusses all the objections with the assessee/taxpayer before preparing draft audit report. ....