TaxTMI 
TaxTMI 
2025 (6) TMI 179
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....ilized 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 only) (including SBC & KKC) demanded from them under proviso to Section 73(1) of the Fina....
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....s 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 Management Fee amounting to Rs. 3276809/- to foreign company M/s LafargeHolcim, Switzerland but did not pay service tax amounting to Rs. 4,91,521/- on said payment under reverse charge mechanism. * T....
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....t 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 not be imposed upon them under Section 78(1) of the Finance Act, 1994. 2.4 The show cause notice was adjudicated as per the order in original referred in para 1.2 above. 2.5 Aggrieved appellant filed the appeal before Commissioner (Appeal), which has been dismissed as per the impugned order. 2.6 Aggrieved....
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....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 submissions made in appeal and during the course of arguments. 4.2 Appellant is contesting impugned order only in respect of three demands as stated in para 3.2 above. In fact they had before the First Appellate authority also contested these three demands only. Impugned order records the findings as follows: "4.2 The appellant has contested that the disputed items viz. M.S. Angles, Channels M.S Rods etc. had been used for manufacture of capital goods, therefore, qualify for inputs within the meaning of Rule 2(k) of the CENVAT Credit Rules, 2004. On....
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.... 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 premises of the provider of output service at any point of time in a given financial year shall be taken only for an amount not exceeding fifty per cent of the duty paid on such capital goods in the same financial year" 4.7 The above said provisions of Credit Rules are specifically meant for "capital goods" only and are not applicable to cenvat credit in respect of inputs. Thus, it is amply clear that the cenvat credit of duty paid on the above referred goods were taken by the appellant considering them as "capital goods" only and not "inputs" 4.8 The appellant has contested that the said "Iron & Steel" items are used for manufacture of capital goo....
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....sion 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.), inter alia, held, as under: Precedents - Court decision not statute - Reliance thereon without discussion of facts - Decisions not to be relied upon without discussing similarity of facts - Judgments of courts not to be construed as statutes - Circumstantial flexibility, additional or different fact may make a world of difference between conclusions in two cases 4.11 As regards to appellant contention that demand is time barred, I observe that the appellant has not declared to the department the particulars and nature of the ineligible capital goods on which they have availed cenvat credit but, the facts came under the knowledge of Department at the time of Audit of records of the appell....
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....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 central excise duty belongs to period prior to 01.03.2015, therefore, the same cannot be utilized for discharge of Basic Excise duty on the finished goods in terms of Rule 3(7)(b) of CENVAT Credit Rules 2004. The appellant has misconstrued the provisions of Notification No. 12/2015- Central Excise (NT) dated 30.04.2015 in their favour which is not applicable in their case inasmuch as credit of Ed Cess & SH Ed Cess belongs to period prior to 01.03.2015. 5.2 The appellant has also contested that they claim a vested right to avail benefit of the unutilized amount of Ed Cess or S H Ed Cess credit, which was available and had not been set off as on 1st March, 2015 for payment of tax on excisable goods. The contention is that EC and SHE were s....
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....peal. 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 date. The provisos added to Rule 3, sub-rule (7) in clause (b) are really in the nature of concessions confined to a limited and narrow set of cases and are not of general application. Noticeably, they expand the scope and give benefit of utilization of accumulated EC and SHE against payment of excise duty, which was not the position prior to 1st March, 2015. 5.5 It is in the aforesaid context and background that the appellant has 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 appellant. A Finance Bill or a Bu....
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.... 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. 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 31stMarch, 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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....apital 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 clearance of final products from the place of removal. This definition, of course, is worded to include variety of services used not only for, but in relation to manufacture of final products and also for clearance of final products upto the place of removal. Despite such wide connotation of the term input service' as defined in rule 2(l) of the Cenvat Rules, the question is whether the present case would be covered in the said definition. Facts are short and not in dispute. The appellant, manufacturer of Cement has provided residential quarters for its workers and in such residential quarters, the appellant also provided security services. I observe that in the present case, the act of providing residential quarters by the manufacturer to its employees is not a statuary requirement rather it is voluntary act of benevolence o....
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....mployees 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 final product. Revenue Appeal allowed". 6.4 In view of the above facts & judicial pronouncements, I am of the considered view that the CENVAT credit amounting to Rs. 1,12,422/- utilized by the appellant on the security service provided in township area are not admissible to them, therefore, the same is recoverable under Rule14 of the CENVAT Credit Rules, 2004 along with interest under Section 11AA of the Central Excise Act,1944 6.5 So far as the submission of the appellant about suppression of facts and invocation of extended period of limitation, is concerned, it is observed that under the self-assessment procedure prescribed under the statute, the appellant were required to avail & utilize the CENVAT credit correctly, whereas inadmissible CENVAT credit taken on security services could be detected only during scrutiny of their records by the departme....
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....ion 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 machineries and, therefore, can be classified under sub-heading 7308.50 under Chapter 73 of the Schedule to the Act, which attracts nil rate of duty. Therefore, it is contended that even if his other contention is not accepted, the assessee should not be fastened with any duty liable under the Act. This issue was neither raised nor canvassed by the assessee before the Tribunal. Therefore, we cannot permit the learned counsel to argue this issue before us for the first time. Therefore, this contention of the learned counsel is rejected. 21. Now coming to the last contention canvassed by the learned counsel that the Tribunal is not correct in holding that the assessee failed to establish that the steel structures are components of the capital goods as specified in the Table below Rule 57Q of the Rules and, therefore, are not eligible for exemption under the notification. This issue requires to be answered with refer....
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....ar, 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 not the components of machineries used in the installation of Sugar Manufacturing Plant. 23. Before we conclude, we must further observe that Shri Lakshmikumaran drew our attention to the judgment of this Court in CCE v. Rajasthan Spinning and Weaving Mills Ltd. - 2010 (255) E.L.T. 481 (S.C.) where the appeal preferred by the Revenue is dismissed. The facts in the said case were that the respondent-assessee availed MODVAT credit on steel plates and M.S. channels, as capital goods in terms of Serial No. 5 of the Table given below Rule 57Q, used for erection of the chimney for the diesel generating set. The parties were ad idem that diesel generating set falls under chapter Heading 85 which is mentioned at Serial No. 3 of the Table and also the chimney is an accessory in terms of Serial No. 5 of the Table given below 57Q. The issue which was agitated before the Court was whether the Steel plates and MS Channels used in the fabrication of chim....
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....e 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 explanation to Rule 57Q as a capital goods. The Tribunal referred to its own decision in Malvika Steel Limited's case [1998 (97) E.L.T. 530 (Tribunal)] and without semblance of any discussion, has partly allowed the assessee's appeal. In view of our findings and the conclusion in the earlier part of the judgment, we cannot agree with the reasoning of the Tribunal." 4.6 Further I find that subsequently appellant has changed his stand and by relying on the decisions of this tribunal and various High Court, they have claimed that this credit would be admissible to them under the category of inputs, as these goods have been used by them for the manufacture of capital goods used within their factory. Appellant has made this claim only on the basis of the decisions without showing as to how these decisions would be applicable in their case. Assuming the claim made by the appellant is admissible, then also the same will have to be established by way of the docu....
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.... 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 expression that intention behind amendment was to clarify. The coverage under the input from where this intention has been gathered by the Tribunal has not been mentioned in the judgment. There is no material to support that there was any legislative intent to clarify any existing provision. For the same reason, as mentioned above, the decision of the Apex Court in Sangam Spinners Limited v. Union of India and Others, reported in (2011) 11 SCC 408 = 2011 (266) E.L.T. 145 (S.C.) would not be applicable to the facts of the instant case." 4.8 Relying on this decision Chhattisgarh High Court has in case of Vandana Global [2018 (16) G.S.T.L. 462 (Chhattisgarh)] held as follows: "5. The impugned order of the Tribunal had come up for consideration before different High Courts either cited as precedent or as relied upon by the Tribunal in different other matters. The Gujarat High Court in Mundra Ports & Special Economic Zone Ltd. - 2015 (39) S.T.R. 726 (Guj.) referred to the co....
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....e 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 find that the issue is squarely covered by the decision of Hon'ble Gujarat High Court in case Gujarat Heavy Chemicals Ltd. [2011 (22) S.T.R. 610 (Guj.)] wherein following has been held: 9. Having thus heard the learned counsel for the parties, short question that confronts us is whether the security service provided by the respondent at the residential quarters maintained for the workers would be included in the term 'input service' as defined in Rule 2(l) of the Cenvat Credit Rules. Term 'input service' has been defined in Section (sic) 2(l) as under : l ""Input service" means 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....
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....erred 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. 456 (Bom.)], Hon'ble Bombay High Court has held as follows: 8. In our opinion, establishing a residential colony for the employees and rendering taxable services in that residential colony may be a welfare activity undertaken while carrying on the business and such an expenditure may be allowable under the Income Tax Act. However, to qualify as an input service, the activity must have nexus with the business of the assessee. The expression 'relating to business' in Rule 2(l) of CENVAT Credit Rules, 2004 refers to activities which are integrally related to the business activity of the assessee and not welfare activities undertaken by the assessee. 9. Applying the ratio laid down by the Hon'ble Apex Court in the case of Maruti Suzuki Limited v. Commissioner of Central Excise, Delhi (supra), we hold that unless the nexus is established between the services rendered and the business carried on by the assessee, the benefit of CENVAT credit is not allowable. In the present case, in our opinion, rendering taxable services at the residential colony e....
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....with the decision of Hon'ble High Court of Gujarat and Bombay wherein even in respect of the un-amended definition they have ruled against the admissibility of the credit. The reliance placed on the decision of Hon'ble High Court of Andhra Pradesh in case of ITC Limited [2013 (32) STR 288 (AP)] taking contrary view in respect of un-amended definition do not support the case of the appellant. Thus I hold against the admissibility of CENVAT Credit in respect of these services. As the fact that appellant has availed CENVAT Credit in respect of the security services provided in the residential colony was never disclosed to the department hence extended period of limitation for making this demand has been rightly invoked for making this demand. Impugned order has in para 6.5 recorded the reasons for invoking the extended period of limitation which have not been refuted by the appellant. 4.13 Whether appellant could have utilized the CENVAT Credit of Ed Cess and SHE Cess for payment of Central Excise duty during the month of March 2015. Impugned order relies upon the decision of the Hon'ble Delhi High Court in case of Cellular Operators Association of India [2018 (14) GSTL 522 (Del)] ....
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....h, 2015, the Central Government in public interest had granted exemption to all goods falling in the First Schedule to 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-C.E., dated 1st March, 2015, the Central Government in public interest had exempted all goods falling in the First Schedule to the Central Excise Tariff Act, 1985 from whole of SHE leviable under Section 138 of the Finance Act, 2007. In respect of taxable services, the Finance Act, 2015 had omitted Section 95 of the Finance (No. 2) Act, 2004, which imposed EC on taxable services, vide Section 153 and Section 140 of Finance Act, 2007 and SHE on taxable services vide Section 159, with effect from the date as notified by the Central Government in the Official Gazette. These exemptions and omissions were given effect from 1st March, 2015 for excisable goods and 1st June, 2015 for taxable services, as mentioned earlier. 10. 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, bu....
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....ction in the form of increased taxes on one hand, and withdrawal or reduction of cess or another tax so as to curtail the adverse impact due to increase. Budgets do, and are, a balancing exercise. We would not read and hold that EC and SHE for excisable goods and taxable services had continued and were applicable even after 1st March, 2015 or 1st June, 2015 respectively, in the manner that they got included in, and formed a part of, the higher tax rate applicable to excise duty and Service Tax. Noticeably, the Service Tax rate had gone up by 2%, from 12% to 14%, with the intent to increase it further in view of implementation of the General Goods and Services Tax in future. In the case of excise duty, the increase was only marginal, from 12% to 12.50%. Pertinently, no statement or assertion was made that the benefit of unutilized EC and SHE credit would be given against excise duty and Service Tax. The use of the words "subsumed" with reference to the two cesses could well indicate that there would not be an increased tax burden being put on the payers or the consumers, as EC and SHE were being withdrawn. Noticeably, the two cesses and the excise duty and the Service Tax were alway....
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....h effect from April 1, 1987. Not only that. The repealing Act expressly provided in Section 13 that the cess due before the date of said repeal, but not collected, shall be collected according to law as if the Cess Act is not repealed. This provision amounts to a positive affirmation of the intention of the Parliament to keep the said imposition alive and effective till the date of the repeal of the Cess Act. In the face of the said statutory provisions, no rights can be founded - nor can the levy of the cess be said to have been dispensed with - by virtue of the alleged decision referred to in the Finance Minister's speech or on account of the letter dated August 11, 1986. The Finance Minister's speech is not law. The Parliament may or may not accept his proposal. Indeed, in this case, it did not accept the said proposal immediately but only a year later. It is only from the date of the repeal that the said levy becomes inoperative." We did not go as far in the present case for the explanation and reasons elucidated and given in paragraph 11 above. Use of the word "subsumed" in the context of the present case does not help and assist the petitioners in the manner asserted. No p....