TaxTMI 
TaxTMI 
2025 (6) TMI 758
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....oods and service tax paid on input services under CENVAT Credit Rules, 2004. 2.1 M/s. Wichitra Auto Ltd. (WAL), presently known as M/s. Transenergy Pvt. Ltd., Chennai the Appellant in appeal No. E/42404/2015 is a dedicated supporting manufacturer of BIPL and is engaged in the manufacture of Hose Assembly falling under Chapter subheading 40093200 of the Central Excise Tariff Act, 1985. M/s. WAL while manufacturing Hose Assembly are sending some of the intermediate products such as Hose End Assembly, Sleeves, etc. for plating at BIPL and after the said process, receives them back and use them in the further manufacture of Hose Assembly. These intermediate goods were being transmitted to and fro without payment of duty, under the cover of job-work challans. From July 2012 onwards, WAL opted to send the components to BIPL on payment of Central Excise duty. BIPL availed the CENVAT credit of the duty so paid and after completion of necessary process, BIPL again returned the job worked components on payment of duty. On verification of the records of BIPL, it appeared that BIPL instead of taking landed cost of material received and adding the applicable job work charges to arrive at the c....
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.... the said amount of Rs.1,11,94,846/- to WAL, on the basis of which WAL thereafter availed CENVAT credit, a Show Cause Notice No.5/2015 dated 16.02.2015 was issued to WAL proposing to disallow the said CENVAT credit along with interest thereon and proposing to impose of penalty under Section 11AC of the Central Excise Act, 1944 read with Rule 15(2) of the Central Excise Rules, 2002. After due process of law, proposals in the Show Cause Notice stood confirmed vide Order-in-Original No. 18/2015 dated 31.08.2015 along with imposition of equivalent penalty. 2.6 Aggrieved by the respective impugned Orders-in-Original, the appellant BIPL has preferred the appeal No. E/41377/2015 taking exception to the impugned Order-in-Original No. LTUC/82/2015-C dated 30.03.2015 and the appellant WAL has preferred the appeal No. E/42404/2015 against the impugned Order-in-Original No. 18/2015 dated 31.08.2015, and are before this Tribunal. 3. The Ld. Counsel Mr. P.R. Renganath appeared on behalf of both the Appellants and argued the matter. He submitted that BIPL manufactures a number of automobile parts. About 6,000 items move on payment of duty to various other locations of the Appellant. In as much ....
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.... it was decided that goods would move on duty payment and the determination of value though was made on manual basis. Thus, BIPL took into consideration the value declared by WAL in their duty payment challans, added the conversion cost for plating at the BIPL's premises plus margin to arrive at the value on which duty was paid accordingly. However, as the movement of all materials from BIPL had always been through system generated documents to ensure proper material accounting, the movement for these goods for which value was computed as stated above, also were through system generated challans for control purposes and the value arrived at above manually was entered in the system for calculating the amount of duty. This method was followed until October, 2012. 3.3 The Ld. Counsel further submitted that however from October 2012, the system generated cost data for the items moved by BIPL to WAL. The system recognized only the bare purchase cost of the material and the cost of conversion at the BIPL's end (plus profit), as was the case with respect to the other 6,000 items that BIPL was clearing to various other locations. The system did not recognize that the items moved by BIPL t....
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.... submit that in asmuch as the completed final product suffered full duty, there is no loss to the Revenue. He submits that when the entire exercise is neutral, the appellant could not be said to have evaded payment of duty as held by the Supreme Court in the case of Nirlon Ltd. Vs. Commissioner of Central Excise, Mumbai [2015 (320) ELT 22 (SC)] and also CCE, Chennai IV v. Tenneco RC India Pvt Ltd, 2015 (323) ELT 299 (Mad). It is further submitted that the reason to hold that the appellant has deliberately suppressed material facts in the Order-in-Original is that the appellant has not opted to pay penalty of 1% per month as prescribed under Section 11A(6) of the Central Excise Act, 1944. It is his argument that non- payment of penalty cannot establish suppression rather the question of payment of any such payment of penalty would arise only if there is a suppression. 3.7 The Ld. Counsel argues that mistakes can be either deliberate / intentional or unknowing / unintentional. Thus, the mere fact that the mistake of a party came to light only upon another party's question cannot establish that the mistake was necessarily deliberate / intentional. Whether the mistake was deliberate o....
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...., as imposed in the impugned Order-in-Original No. 18/2015 dated 31.08.2015, is tenable. 8. We note that in the impugned Order-in-Original No. LTUC/82/2015-C dated 30.03.2015, the Ld. Adjudicating Authority, despite recording the contention of the appellant BIPL that their actions were Bonafide and the short payment of duty occurred due to system error, has neither adverted to, nor controverted, the detailed affidavit filed by the Vice President Finance (Corporate) of BIPL, elaborately detailing the fact circumstances that has resulted in the short payment of duty which is contended to be an inadvertent error. The contentions of the appellant that the entire transactions as has occurred, is even otherwise revenue neutral, too remains undisputed by the Ld. Adjudicating authority. 9. While it is conceded that the appellant has discharged the entire duty demanded along with interest, even before the issue of show cause notice; that they did not opt to pay the penalty of 1% per month prescribed under Section 11A(6) of the CEA 1944 along with the reason that, had it not been for the verification of the records of the appellant by the officers of the department the issue would not have....
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....ated that the two types of goods were different in nature. The question is about the intention, namely, whether it was done with bona fide belief or there was some mala fide intentions in doing so. It is here we agree with the contention of the learned Senior Counsel for the appellant, in the circumstances which are explained by him and recorded above. It is stated at the cost of repetition that when the entire exercise was revenue neutral, the appellant could not have achieved any purpose to evade the duty. 10. Therefore, it was not permissible for the respondent to invoke the proviso to Section 11A(1) of the Act and apply the extended period of limitation. In view thereof, we confirm the demand insofar as it pertains to show cause notice dated 25-2-2000. However, as far as show cause notice dated 3-3-2001 is concerned, the demand from February, 1996 till February, 2000 would be beyond limitation and that part of the demand is hereby set aside. Once we have found that there was no mala fide intention on the part of the appellant, we set aside the penalty as well." The aforesaid decision of the Apex Court has been followed in CCE, Chennai IV v. Tenneco RC India Pvt Ltd, 2015 (32....
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.... of extended period of limitation. Therefore, when the appellant is contending that it is entirely due to inadvertence that the said mistake has occurred, justifiably there arose no occasion for the appellant to pay the said penalty prescribed under Section 11(6). We are of the considered view that in the absence of any of the aforesaid ingredients of sub-section (4) there was no necessity for the appellant to have paid the penalty stipulated under Section 11(6) and the finding of the adjudicating authority in this regard is unsustainable. 13. All these factors when viewed cumulatively and objectively, persuade us to accept the appellant BIPL's contention that it was an inadvertent error and that there was no mala fide intention on their part to evade or avoid tax. If at all, it was a bona fide error actuated by the facts and circumstances as detailed in the affidavit of the concerned personnel. In this regard, the reliance placed by the appellant BIPL on the decision in CCE, Calcutta-II v Indian Aluminum Co. Ltd, 2010 (259) ELT 12 (SC) to contend that in a case of Bonafide mistake penalty under Section 11AC cannot be imposed, is apposite. We note that a similar view has also been....