TaxTMI 
TaxTMI 
2024 (12) TMI 1559
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....d 20102011 to 2014-2015, as detailed in the SCN dated 20.10.2015, and order for its recovery from the Noticee under the section 73 (1) of the Act, along with interest under section 75 of the Act. 2. I also order for recovery of the amount of Rs. 3,25,80,796/- (Rs. Three Crore Twenty Five Lakhs Eight Thousand Seven Hundred and Ninety Six only) calculated @ 5%/ 6% of value of exempted service viz. Trading activity, rendered during the period 2010-2011 to 2014-2015, from the Noticee, as detailed in the SCN dated 20.10.2015, in terms of Rule 6 (3) (1) of CENVAT Credit Rules, 2004 under Rule 14 ibid read with Explanation (1) to Rule 6 (3) and section 73 (1) of the Act, along with interest under Rule 14 of the said rules, read with section 75 of the Act. The amount of Rs. 5,51,543/- paid by the Noticee in the context is ordered to be appropriated against the above demand. 3. I impose a penalty of Rs. 10,000/- (Rs. Ten Thousand only) under section 77 of the Act on the Noticee. 4. I impose penalties of Rs. 96,28,033/- (Rupees Ninety Six Lakhs Twenty Eight Thousand and Thirty Three only) under section 78 of the Act and of Rs. 3,25,80,796/- (Rs. Three Crore Twenty ....
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....al Commissioner in the impugned order. Aggrieved, this appeal is filed. Submissions on behalf of the appellant. 8. Learned counsel made the following submissions on behalf of the appellant: i) The demand of an amount of Rs. 3,25,80,796/- calculated @5%/ 6% of the value of the exempted goods under Rule 6(3)(1) of CCR was confirmed although the appellant reversed proportionate amount of CENVAT credit taken on common input services attributable to the exempted services. This reversal was not accepted by the Commissioner for the reason that no intimation as per Rule 6(3A) of CCR was given by the appellant. ii) An amount under Rule 6(3) of CCR cannot be demanded from the appellant because it had not chosen this option and it is not open to the department to choose an option for the appellant and force it. Reliance is placed on M/s Tiara Advertising versus Union of India 2019 (30) G.S.T.L. 474 (Telangana) in which the High Court of Telangana clearly held that the it is not open for the Revenue to choose an option for the appellant. iii) The amount demanded under Rule 6(3) of CCR is much larger than the total amount of CENVAT credit taken by the appellant ....
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....tute the sale price of such vehicles. These amounts were collected by the appellant towards handling of vehicles which was a service which it provided to the customers. Therefore, service tax has to be paid on these charges. ii) Under Rule 6(2) of CCR, the appellant had the option of reversal of proportionate common credits taken following the procedure prescribed under Rule 6(3A) of CCR. This procedure requires the assessee to intimate the Range officer. Since the appellant had not intimated, it was not covered by Rule 6(3A) of CCR. It had to pay an amount equal to 5%/6% of the value of the exempted services. The demand has been confirmed accordingly. iii) Extended period of limitation was correctly invoked and penalties were correctly imposed. iv) The impugned order is correct and proper and calls for no interference. Findings 10. The two issues to be decided in this appeal are (a) demand for recovery of an amount under Rule 6(3)(1) of CCR; and (b) demand of service tax. Demand of an amount under Rule 6(3)(1) of CCR 11. The CCR, 2004 were framed by the Central Government under Section 37 of the Central Excise Act and Section 94 of the Financ....
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....) or (c) applicable to him. The clause in dispute is (b) which reads as follows :- "(b) if the exempted goods are other than those described in condition (a), the manufacturer shall pay an amount equal to ten per cent of the total price, excluding sales tax and other taxes, if any, paid on such goods, of the exempted final product charged by the manufacturer for the sale of such goods at the time of their clearance from the factory ; 14. This Rule 6 (3) of CCR was amended w.e.f. 01.03.2008 and a new Rule 6 (3A) of CCR was also introduced. After amendment, Rule 6 (3) & Rule 6 (3A) of CCR read as follows :- (3) Notwithstanding anything contained in sub-rules (1) and (2), the manufacturer of goods or the provider of output service, opting not to maintain separate accounts, shall follow either of the following options, as applicable to him, namely :- (i) the manufacturer of goods shall pay an amount equal to ten per cent of value of the exempted goods and the provider of output service shall pay an amount equal to eight per cent of value of the exempted services ; or (ii) the manufacturer of goods or the provider of output service shall pay an amo....
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....ue of exempted services provided, during the preceding financial year and D denotes total CENVAT credit taken on inputs during the month minus A; (iii) The amount attributable to input services used in or in relation to manufacture of exempted goods or provision of exempted services (provisional) = (E/F) multiplied by G, where E denotes total value of exempted services provided plus the total value of exempted goods manufactured and removed during the preceding financial year, F denotes total value of taxable and exempted services provided, and total value of dutiable and exempted goods manufactured and removed, during the preceding financial year, and G denotes total CENVAT credit taken on input services during the month; (c) The manufacturer of goods or the provider of output service, shall determine finally the amount of CENVAT credit attributable to exempted goods and exempted services for the whole financial year in the following manner, namely :- (i) The amount of CENVAT credit attributable to inputs used in or in relation to manufacture of exempted goods, on the basis of total quantity of inputs used in or in relation to manufacture of said exempte....
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....t attributable to exempted goods and exempted services, monthwise, for the whole financial year, determined provisionally as per condition (b) ; (2) CENVAT credit attributable to exempted goods and exempted services for the whole financial year, determined as per condition (c), (3) Amount short paid determined as per condition (d), alongwith the date of payment of the amount short-paid, (4) Interest payable and paid, if any, on the amount short-paid, determined as per condition (e), and (5) Credit taken on account of excess payment, if any, determined as per condition (f) ; (h) Where the amount equivalent to CENVAT credit attributable to exempted goods or exempted services cannot be determined provisionally, as prescribed in condition (b), due to reasons that no dutiable goods were manufactured and no taxable service was provided in the preceding financial year, then the manufacturer of goods or the provider of output service is not required to determine and pay such amount provisionally for each month, but shall determine the CENVAT credit attributable to exempted goods or exempted services for the whole year as prescribed in condition ....
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....r Magnet Wires (P) Ltd. versus Collector of Central Excise, Nagpur 1996 (81) E.L.T. 3 (S.C.). Paragraph 7 of the judgment reads as follows:- "7. In view of the aforesaid clarification by the Department, we see no reason why the assessee cannot make a debit entry in the credit account before removal of the exempted final product. If this debit entry is permissible to be made, credit entry for the duties paid 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". 18. Secondly, Rule 6(2) of CCR only requires the appellant to maintain separate accounts for receipt, consumption and inventory of inputs and input services used in manufacture of dutiable final products and manufacture of exempted goods or provision of taxable services and ....
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....ase. Presently, we find that the second respondent has brazenly exercised power under a provision which was not even available to him, as it was an enabling provision put in place for the benefit of the assessee, and arrived at a wholly unreasonable, if not absurd, result. That apart, the second respondent did not even choose to deal with the binding case law cited before him while dealing with the issues arising for consideration. This arrogant and arbitrary approach adopted by the second respondent cannot be countenanced. It would therefore not be necessary for the petitioner to go through the motions of a statutory appeal to challenge the same. The contention of the respondents as to the maintainability of the writ petition is therefore rejected. 14. Further, we may reiterate that Rule 6(3) of the Cenvat Credit Rules, 2004, merely offers options to an output service provider who does not maintain separate accounts in relation to receipt, consumption and inventory of inputs/input services used for provision of output services which are chargeable to duty/tax as well as exempted services. If such options are not exercised by the service provider, the provision does not co....
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....mitation was five years during the entire period. The relevant periods and the limitation were as follows: Show cause notice dated 20.10.2015 (Period April 2010 to March 2015) Financial Year Normal Period of Limitation as per Section 73 Whether notice issued within normal or extended period 01.04.2010 to 30.09.2010 One year from the relevant date - 25.10.2010 Extended Period 01.10.2010 to 31.03.2011 One year from the relevant date - 25.04.2011 Extended Period 01.04.2011 to 30.09.2011 One year from the relevant date - 25.10.2011 Extended Period 01.10.2011 to 31.03.2012 One year from the relevant date - 25.04.2012 Extended Period 01.04.2012 to 27.05.2012 One year from the relevant date - 25.10.2012 Extended Period 28.05.2012 to 30.09.2012 18 months from the relevant date - 25.10.2012 Extended Period 01.10.2012 to 31.03.2013 18 months from the relevant date - 25.04.2013 Extended Period 01.04.2013 to 30.09.2013 18 months from the relevant date - 25.10.2013 Extended Period 01.10.2013 to 31.03.2014 18 months from the relevant date - 25.04.2014 Normal Period 01.04.2014 to 30.09.2....
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.... 1994 is liable to be invoked for recovery "an amount". Thus, the Noticee also appears liable for penal action under Rule 15 of Cenvat Credit Rules, 2004 read with section 78 of the Finance Act, 1994 for violation of Rule 6 of the CENVAT Credit Rules, 2004". 29. The appellant's submissions regarding invoking extended period of limitation in its reply to the SCN as well as before us are as below: "6.9 However, without prejudice, it is submitted that, the Noticee has a strong belief that there cannot be any levy of service tax on the recoveries made in relation to sale of vehicle and there was neither any bonafide intention of the Noticee to evade payment of tax nor there was fraud, collusion, willful misstatement or suppression of facts by the assessee and therefore there is no reason or occasion for invoking the larger period of limitation. 6.10 It is stated that SCN has been issued for extended period which can be invoked only if the circumstances stipulated in proviso to section 73 (1) of Finance Act, 1994 are satisfied. However, in the absence of such circumstances and without specifying any plausible reason for invoking extended period, period of more t....
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.... in case of (a) fraud; (b) collusion; (c) wilful misstatement; (d) suppression of facts; or (e) violation of the Act or Rules with an intent to evade payment of tax. The reasoning of the Commissioner is that since the appellant had not disclosed the fact of collection of "handling charges" from its customers, it amounts to withholding of material facts for assessment with ulterior motives. 33. According to the appellant, it had no such motives and it was and is still of the view that these charges were not exigible to service tax. Therefore, it had not assessed service tax including these amounts in the taxable value of goods. It was registered with the Service Tax department and had been filing ST-3 Returns. 34. The submissions of the appellant deserve to be accepted on this question. ST-3 returns only require aggregate value of the taxable services to be indicated and the service tax to be self-assessed. The assessee is under no obligation to indicate individual transactions. In the process, the appellant may wrongly self-assess service tax. If the assessee either does not file the return at all, or having filed it, does not self-assess the service tax correctly, Section 72....
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....he amounts were received by the appellant as: a) Recovery towards fuel supplied with the vehicle sold; b) Recovery towards car decoratives and chocolates supplied; c) Recovery towards sale of optional accessories; and d) Recovery towards vehicle handling charges. 39. According to the learned counsel, service tax cannot be charged on any of the above four because they were all in the nature of sales. Sale of fuel, sale of car decoratives and chocolates and sale of optional accessories are clearly in the nature of sale. As far as the handling charges are concerned, he submits that handling charges also form part of the value of the vehicles sold and hence are liable to VAT/CST and therefore, they are not liable to service tax. He relies on the judgment of Karnataka High Court in Central Arecanut & Cocoa Marketing & Processing Co-operative Ltd. versus State of Karnataka 2014(46) taxmann.com 243 (Karnataka) in support of this contention. 40. According to the learned authorised representative for the Revenue, these additional amounts recovered by the appellant and recorded in its books of account as other miscellaneous applications were not towa....