TaxTMI 
TaxTMI 
2025 (6) TMI 179
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....Act,1944; (ii) I confirm the demand of wrongly utilized CENVAT credit of Ed Cess & SHED Cess, for payment of Central Excise duty amounting to Rs.5,10,029/- (Rs. Five Lacs Ten Thousand Twenty Nine only) under Rule 14(1)(i) of Cenvat Credit Rules, 2004 read with Section 11A(4) of Central Excise Act,1944; (iii) I confirm the demand of interest on above said confirmed demands of Rs.1,00,556/- and 5,10,029/-, on the party under Rule 14(1)(ii) of CENVAT Credit Rules, 2004 read with Section 11AA of Central Excise Act, 1944; (iv) I impose a penalty of Rs.6,10,585/- (Rs. Six lakh ten thousand five hundred eighty-five only) upon the noticee under Rule 15(2) of Cenvat Credit Rules, 2004 read with Section 11AC of Central Excise Act, 1944 in respect of above mentioned confirmed demands of Rs. 1,00,556/- and 5,10,029/- only; (v) I confirm the demand of CENVAT credit amounting to Rs.1,12,442/-(Rs. One Lac Twelve Thousand Four Hundred Forty Two only) under Rule 14(1)(i) of Cenvat Credit Rules, 2004 read with Section 11A(4) of Central Excise Act, 1944. (vi) I drop the demand of Service Tax of Rs.2,48,046/- (Rs. Two Lacs Forty-Eight Thousand Forty-Six onl....
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....igher Education Cess amounting to Rs. 1,70,009/-on Input Services, Totaling Rs. 5,10,029/- for payment of Central Excise duty during the month of March'15. As per provision of Rule 3(7)(b) of CENVAT Credit Rules, 2004, the credit of balance of Ed. Cess and SHED can only be utilized for the discharge of Ed .Cess and SHED respectively. The same cannot be utilized for discharge of Basic Excise duty on the finished goods. • they availed services of M/s Security and Intelligence Services (India) Limited, Lucknow for security of residential colony which has no relation to the manufacture of final products and clearance of final products upto the place of removal. Thus, security services provided in the residential colony does not fall under the definition of input service in terms of Rule 2() of the CENVAT Credit Rules,2004. Thus, CENVAT credit amounting to Rs.1,12,442/ - utilized by the appellant was inadmissible. • Non- payment of service tax amounting to Rs. 2,48,046/- on the Liquidation Damage charged due to non-fulfillment of obligation under category of declared service in terms of section 66EC of the Finance Act, 1994. • They paid Managem....
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....e Hundred and Twenty One only) should not be demanded and recovered from them under proviso to Section 73 of the Finance Act'1994. (viii) Short paid service tax Rs 4,895/- including Ed Cess & SHE Cess (Rs. Four Thousand Eight Hundred Ninety five only) should not be demanded and recovered from them under proviso to Section 73 of the Finance Act'1994 and since the auditee has deposited the said amount, why the same should not be appropriated. (ix) Not paid Service Tax amounting to Rs.1,15,269/- including Ed Cess, S.H.Ed. Cess,SBC & KKC (Rs. One Lac Fifteen Thousand Two Hundred Sixty-Nine only) should not be demanded and recovered from them under proviso to Section 73 of the Finance Act,1994. (x) Interest should not be demanded & recovered from them on the aforesaid amount of Service Tax under Section 75 of Finance Act, 1994. (xi) Since the auditee has deposited the interest amounting to Rs.5,435/- on the payment of Service Tax amounting to Rs. 4,895/-, why the said interest should not be appropriated. (xii) the penalty should not be imposed upon them under section 76 of the Finance Act, 1994; and (xiii) the penalty should ....
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.... (T-All)]. • The decision of Hon'ble Delhi High Court to the contrary in the case of Cellular Operators Association of India [2018 (14) GSTL 522 (Del)] relying on the decision of Hon'ble Supreme Court in the case of B K Industries [1993 Supp. (3) SCC 621], relied in the impugned order, may not lay down the correct law as it goes contrary to the findings recorded by the Hon'ble Supreme Court in the case of Unicorn Industries [2019 (370) ELT 3 (SC)] • As per the inclusive definition of 'input service' under Rule 2 (l) of the Credit Rules, the security services procured by the appellant for residential colony fall under the definition of input service in terms of Rule 2(l) of the CENVAT Credit Rules,2004. Reliance is placed on the decision in the case of ITC Limited [2013 (32) STR 288 (AP)] • The entire demand is time barred and penalty imposed under Section 78 of the Act & Rule 15 of the CENVAT Credit Rules, 2004 read with Section 11 AC of the Central Excise Act,1944 are not sustainable. 3.3 Authorized representative reiterates the findings recorded in the impugned order. 4.1 I have considered the impugned order along with the subm....
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....at the definition of capital goods primarily includes machinery items; components, spares and accessories of the same; and a few other things which have been specifically added such as pollution control equipment; moulds, dies etc.; refractories; tubes and pipes and fittings thereof; and storage tank. The moulds, dies, refractories, tubes and tank have been specifically added as they would not get classified and included as machinery items but it has been specifically and additionally included perhaps considering their functional utility to the manufacturing process. By specifically including these items, credit in respect of duty paid on such items has been-allowed which would not otherwise get coverage under the term 'capital goods' 4.6 From the facts of the instant case, it is apparent that the appellant has availed cenvat credit on various items viz. channels, rods, angles, bars etc. considering them as "capital goods" and not "input". They have availed 50% of credit on duty paid or these goods in terms of the provisions of Rule 4 (2)(a) of the CCR which read as under: "The Cenvat credit in respect of capital goods received in a factory or in the premi....
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....ircumstances, transactions, events of each case, are required to be considered analyzed and weighed against the circumstances et al to be the same in the referred cases. I also find that the Hon'ble Supreme Court in the case of Punjab National Bank vs. R.L. Vaid 2004 (172) E.L.T. 24 (S.C.), has held at Para 5, as under: 5. We find that the High Court has merely referred to the decision in R.K. Jain's case (supra) without even indicating as to applicability of the said decision and as to how it has any relevance to the facts of the case. It would have been proper for the High Court to indicate the reasons and also to spell out clearly as to the applicability of the decision to the facts of the case. There is always peril in treating the words of a judgment as though they are words in a Legislative enactment and it is to be remembered that judicial utterances are made in the setting of the facts of a particular case. Circumstantial flexibility, one additional or different fact may make a difference between conclusions in two cases. 4.10.1 Similarly, the Hon'ble Supreme Court in the case of CCE, Bangalore vs. Srikumar Agencies 2008 (232) E.L.T. 577 (S.C.)....
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....uct on or after the 1st day of March, 2015 can be utilized for payment of the duty of excise leviable under the First Schedule to the Excise Tariff Act: Provided also that the credit of balance fifty per cent, Education Cess and Secondary and Higher Education Cess paid on capital goods received in the factory of manufacture of final product in the financial year 2014-15 can be utilized for payment of the duty of excise specified in the First Schedule to the Excise Tariff Act; Provided also that the credit of Education Cess and Secondary and Higher Education Cess paid on input services received by the manufacturer of final product on or after the 1st day of March, 2015 can be utilized for payment of the duty of excise specified in the First Schedule to the Excise Tariff Act." 5.1 From the above legal provisions, it can be seen that credit of Education Cess and Secondary and Higher Education Cess paid on inputs/capital goods/input services received by the manufacturer of final product on or after the 1st day of March 2015 can be utilized for payment of the duty of excise. Since in the present case credit of Ed Cess & SH Ed Cess utilized for payment of centr....
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....nd taxable services with effect from 1st March, 2015, pursuant to the Finance Act, 2015. By Notification No. 14/2015-CE dated 1st March 2015, the Central Government in public interest had granted exemption to all goods falling in the First Schedule of the Central Excise Tariff Act, 1885 from whole of EC leviable thereon under Section 93 of the Finance (No.2) Act, 2004. Similarly vide Notification No. 15/2015-CE dated lst March, 2015, the Central Government in public interest had exempted all goods falling in the First Schedule of the Central Excise Tariff Act, 1985 from whole of SHE leviable under Section 138 of the Finance Act, 2007 5.4 Omission of a provision signifies deletion of that provision and is normally not treated as different from repeal. The repeal/ omission in the present case was not made retrospectively, but applied prospectively. Manufacturers were entitled to take benefit of EC and SHE credit on the EC and SHE payable on manufactured goods on or before the cutoff date, i.e., 1st March, 2015. They have not been allowed to take credit after the said date for the simple reason that EC and SHE ceased to be applicable and were no longer payable after the said ....
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....ed and Others versus State of Orissa and Others, (1961) 2 SCR 537 had elucidated that "a cess can be in the form of a tax or a fee, though both are compulsory extraction of money. In case of a fee, there is an element of quid pro quo, while in tax this is not required, even if the tax being collected is used to constitute a specific fund, which does not become part of the Consolidated Fund, and its application can be regulated and confined to its purpose* 5.7 More relevant and important for the present context and issue would be the judgment of the Supreme Court in B.K. Industries and Others versus Union of India and Others, 1993 Supp (3) SCC 621, wherein validity of levy of cess under Vegetable Oil Cess Act, 1983 was challenged. The cess was levied for the purpose of National Oil- seeds and Vegetable Oils Development Board Act, 1983 and was in addition to excise duty leviable under the Central Excise Act or law for the time being in force. In the Budget Speech delivered on 28th February, 1986 for the year 1986-87, it was decided to dispense with the cess on vegetable oil. It was also stated in the Budget Speech that cess collected since 1st April, 1986 would be refunded. ....
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....s any service i. used by a provider of taxable service for providing an output service, or ii. used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products from the place of removal, and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relation to such factory or premises, advertisement or sales promotion, market research, storage upto 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 upto the place of removal; 6.1 It can be seen that the definition of input service is expressed in the form of means' and includes'. Means' part of the definition contains, inter alia, service used by the manufacturer whether directly or indirectly or in relation to the manufacture of final products and clea....
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....benefit of CENVAT credit is not allowable. In the present case, in our ppinion, rendering taxable services at the residential colony established by the assessee for the benefit of the employees, is not an activity integrally connected with the business of the assessee and therefore, the Tribunal was not justified in holding that the services such as repairs, maintenance and civil construction rendered at the residential colony constitutes input service' so as to claim credit of service tax paid on such services under Rule 2(l) of the CENVAT Credit Rules, 2004" 6.3 The Hon'ble Gujarat High Court in the similar case of Commissioner of Central Excise & Customs Vs M/s. Gujarat Heavy Chemicals Ltd in its judgment dated 11.05.2011 held as under: "In the present case, the act of providing residential quarters by the manufacturer to its employees was voluntary. Providing further security service in such residential quarters was also an act voluntary in nature. No connection between the security service provided by the manufacturer in the residential quarters maintained for the workers as having any direct or indirect relation in the activity of manufacture of the ....
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....claimed that these goods should be treated as inputs as defined by Rule 2(k) ibid. They have used these goods for the manufacture of the capital goods used in manufacture of the finished goods. 4.5 Hon'ble Supreme Court has in case of Saraswati Sugar Mill [2011 (270) ELT 465 (SC)] Hon'ble Supreme Court has category held that as follows: "19. It appears to us, in the light of the meaning of the expression 'component parts' that the iron and steel structures are not essential requirements in the sugar manufacturing unit. Anything required to make the goods a finished item can be described as component parts. Iron and Steel structures would not go into the composition of vacuum pans, crystallizers etc. If an article is an element in the composition of another article made out of it. such an article may be described as a component of another article. Thus, structures in question do not satisfy description of components'. Therefore, in our opinion, the Tribunal was right in the view it took. 20. Sri V. Lakshmi Kumaran, learned senior counsel, submits that the Iron and Steel structures are fabricated at the site of the work for use in the construction of the various ....
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....September 1999. The Circular is dated 2-12-1996. Therefore, it was applicable to the disputed period. It is not disputed and it cannot be disputed that the Circular provides that all parts, components, accessories, which are to be used with the capital goods of Clauses (a) to (c) of Explanation (1) of Rule 57Q and classifiable under any Chapter heading are eligible for availing of MODVAT Credit. However, while denying exemption under the notification, the Tribunal has concluded that the goods in question, which comes under Chapter Heading 73 of the Tariff Act has not been specified in the table below Rule 57Q. We do not find fault with the reasoning of the Tribunal, since the Circular, on which reliance is now placed by the learned counsel, was not produced before the Tribunal and. therefore, going by the language employed in Rule 57Q, there is justification for the Tribunal for coming to the aforesaid conclusion. Since in view of the circular, which is now brought to our notice, the Tribunal was not correct to reject the claim of the assessee on the aforesaid ground. However, this finding of ours will not assist the assessee, since we have held that Iron and Steel structures are n....
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....r of Central Excise, Meerut, 2001 (135) E.L.T. 1239 (Tri.-Del.), the appellant is a manufacturer of sugar and availed a MODVAT credit on the joints, channels, angles and MS Beams used in fabricating supporting structures for installation of equipments such as vacuum pan, crystallizers, sugar grader, elevator, etc., HR plates (black steel) are used in boiler of sugar plant to keep temperature high, MS bars, shapes and sections are used for erection of new cooling tower, chequred plates and ITR plates are used to construct the platforms, the cane carrier chain and spares are used to transfer the raw material/semi processed material from stage to other, as the capital goods in the terms of Rule 57Q, treating these items as the parts and components of the plant. The question which arose before the Tribunal was that whether these items used for fabricating structures to support and install various machineries of the sugar plant are capital goods in terms of the Rule 57Q. The Tribunal while allowing the MODVAT credit found that these items, except MS sections and shapes, used for raising structure to support the various machines, parts of machineries of the plant would be covered by the ....
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.... inputs. Hon'ble Gujarat High Court has in case of Mundra Ports & Special Economic Zone Ltd [2015 (39) S.T.R. 726 (Guj.)] category held as follows: "8. Mr. Y.N. Ravani, learned counsel for the Revenue has placed reliance on the decision of the Larger Bench of the Tribunal in Vandana Global Limited v. Commissioner of Central Excise, Raipur, 2010 (253) E.L.T. 440. We have carefully gone through the decision of the Larger Bench of the Tribunal. We do not find that amendment made in Cenvat Credit Rules, 2004 which come into force on 7-7-2009 was clarificatory amendment as there is nothing to suggest in the Amending Act that amendment made in Explanation 2 was clarificatory in nature. Wherever the Legislature wants to clarify the provision, it clearly mentions intention in the notification itself and seeks to clarify existing provision. Even, if the new provision is added then it will be new amendment and cannot be treated to be clarification of particular thing or goods and/or input and as such, the amendment could operate only prospectively. In our opinion, the view taken by the Tribunal is based on conjectures and surmises as the Larger Bench of the Tribunal used the express....
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....us there is no merits in the claim of the appellant that these goods be treated as inputs. Further I also note that appellant has taken cenvat credit in respect of these goods fully aware that the credit would not be admissible in respect of these goods under the category of capital goods or inputs, they have contravened the provision of Rule 9 (5) of the Cenvat Credit Rules, 2004 with intent to utilize the same for payment of central Excise duty. Impugned order has in para 4.11 recorded the reasons for invoking the extended period of limitation which have not been refuted by the appellant. Thus I hold that extended period of limitation has been rightly invoked for making this demand. 4.10 Whether the CENVAT Credit of Rs 1,12,442/- taken by the appellant in respect of security services provided in the residential colony would be admissible to them. Appellant has claimed credit of security services provided in the residential colony, under the category of input services as defined by the Rule 2 (l) of the Cenvat Credit Rules, 2004. Appellant has relied upon the decision of tribunal in the case of Ultratech Cement Ltd. [2018 (13) GSTL 160 (T-Del)] in their support. However I fi....
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....e. Respondent assessee, manufacturer of soda ash, has provided residential quarters for its workers. In such residential quarters, the assessee also provided security services. Can such security services be stated to be service used by the manufacturer directly or indirectly in or in relation to the manufacture of final product? Our answer has to be in the negative. We do not see any connection between the security service provided by the manufacturer in the residential quarters maintained for the workers as having any direct or indirect relation in the activity of manufacture of the final product. This is also the view of the Bombay High Court in the case of Manikgarh Cement (supra). 12. We may notice that the Apex Court in the case of Maruti Suzuki Ltd. (supra) was of the opinion that the electricity generated by the assessee and cleared to grid for distribution would not be part of manufacturing activity and be categorized as input used in manufacture of final product. We are conscious that the said decision of the Apex court is referred to Larger Bench. However, at this stage, the ratio laid down therein prevails." 4.11 In case of Manikgarh Cement [2010 (20) S.T.R. ....
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.... (ii) ....., and includes services .......; but excludes services,- (A) ...... (B) (C) such as those provided in relation to outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness centre, life insurance, health insurance and travel benefits extended to employees on vacation such as Leave or Home Travel Concession, when such services are used primarily for personal use or consumption of any employee;'; From the perusal of the above amendment made in 2011, it is evident that service which were meant for personal consumption of the employees have been kept out of the purview of the definition of the input services. The intention of the amendment is evident from the use of phrase 'when such services are used primarily for personal use or consumption of any employee;". Though security services are not specifically stated in the first part of the exclusion clause however, the above phrase make it evident that services meant for personal consumption of employees have been excluded. This view is in line with the decision of Hon'ble High Court of Gujarat and Bombay whe....
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....SHE paid on input service in respect of invoice, bill, challan or Service Tax certificate or transportation of goods by levy was received by the provider of output service on or after 1st day of June, 2015. Credit of balance fifty per cent of EC and SHE paid on capital goods received in the factory of a manufacturer of final product in the financial year 2014-15 for payment of excise duty and Service Tax was also provided. These, as elucidated and explained, were new benefits and concessions granted, as cross utilization was earlier not permitted and allowed. Any new concession or benefit given, would not in law on stand-alone basis, confer a legal right to claim vested right to a concession or benefit which has not been granted. Of course, this amended provisions can be relied as a secondary fact to support the main argument that EC and SHE were subsumed. 9. The first aspect to be examined is the statutory effect of withdrawal of EC and SHE on excisable goods and taxable services with effect from 1st March, 2015 and 1st June, 2015 respectively, pursuant to the Finance Act, 2015. By Notification No. 14/2015-CE, dated 1st March, 2015, the Central Government in public intere....
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....and concession beyond those granted, even though they were never available earlier. 11. It is in the aforesaid context and background that the petitioners have harped and heavily relied upon the word "subsumed" used in the speech of the Finance Minister while presenting the Budget Speech, as also in the explanation memorandum to the Finance Bill, 2015 and the TRU letter. It would not be correct to understand and interpret the word "subsumed" used as asserted by the petitioners. A Finance Bill or a Budget has financial and tax implications. It is an economic, political and policy statement. Interplay of politics and economics gets reflected in the statement made and relied. Raising or increasing taxes often meets resistance, and on most occasions has to be justified and explained. The statements and explanations given in the present context would show that the Government had decided to increase excise duty and Service Tax marginally and at the same time had decided to withdraw or abolish EC and SHE. Any exercise of increasing taxes and withdrawing a cess or a tax is undertaken keeping in mind several aspects. This can include revenue collection in the form of increased taxe....
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.... National Oil-seeds and Vegetable Oils Development Board Act, 1983 and was in addition to excise duty leviable under the Central Excise Act or law for the time being in force. In the Budget Speech delivered on 28th February, 1986 for the year 1986-87, it was decided to dispense with the cess on vegetable oil. It was also stated in the Budget Speech that cess collected since 1st April, 1986 would be refunded. However, the cess was withdrawn vide repeal Act, effective from 1st April, 1987. Relying upon the aforesaid speech on the Floor of the House, the submission was that the statement made constitutes an enforceable right and vegetable oil cess paid between 1st March, 1986 and 31st March, 1987, when the repeal Act was made effective, should be refunded. Plea of enforceable right was rejected in the following words :- "9. We find it difficult to agree. It is not brought to our notice that the budget proposals contained in the Finance Minister's speech were accepted by the Parliament. The cess having been imposed by a Parliamentary enactment could be rendered inoperative only by a Parliamentary enactment. Such repealing enactment came only in the year 1987 with effect from A....
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....yment of central excise duty during the month of March 2015, was reflected in ER-1 return of the appellant. Thus this demand made by invoking extended period of limitation by a show cause notice dated 09.10.2019 cannot be upheld. I also find that the impugned order does not record any findings on the issue of limitation. Order in original records that the appellant has never disclosed the fact of utilization of the accumulated CENVAT Credit of Edu Cess and SHE Cess during the month of March 2015 for payment of Central Excise duty, is contrary to the fact that the appellant had filed the ER-1 returns for that period, wherein the said utilization of credit would have been reflected. The demand has been made after the decision of Hon'ble High Court referred earlier. A change in opinion on the basis of subsequent decision of High Court cannot be reason for invoking the extended period of limitation. 4.16 Whether penalty have been rightly imposed upon the appellant. In para 4.9 and 4.12 I have specifically held in favour of invocation of extended period of limitation for making demand of inadmissible CENVAT Credit availed by the appellant. As I have held in favour of invocation of....