TaxTMI 
TaxTMI 
TaxTMI 
2025 (8) TMI 1552
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....of ball bearing and axle box falling under Chapters 84 and 86 of the First Schedule to the Central Excise Tariff Act, 1985 and has both central excise registration as well as service tax registration. Apart from the Khatipura Unit, the appellant has other manufacturing units located at Niwai (Rajasthan), Manesar (Haryana), and Vadodara (Gujarat), which are separately registered with the central excise department. The appellant also has an office at Kolkata having Input Service Distributor [ISD] registration which distributes credit to all the units of the appellant. 3. The department audited the records of the appellant from 29.11.2017 to 11.12.2017 and observed that the ISD office at Kolkata had wrongly distributed the ISD credit by ignoring the turnover of the Vadodara unit which resulted in excess credit to the Khatipura Unit. The department asked the appellant to reverse the excess availment of credit. In response, the appellant reversed the credit in its Form GSTR-3B returns filed for the month of May 2018 and communicated this fact to the department by a letter dated 12.06.2018. By a letter dated 05.12.2018 the Assistant Commissioner, Vadodara was also informed about the r....
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....ils regarding availment of CENVAT credit and as such did not discharge the onus of declaring its liability under the self-assessment regime. The invocation of the extended period of limitation was, therefore, upheld. 8. Feeling aggrieved by the order dated 30.09.2020 passed by the Additional Commissioner, the appellant filed an appeal before the Commissioner (Appeals). 9. The Commissioner (Appeals), by order dated 13.10.2021, dismissed the appeal and upheld the entire demand of CENVAT credit with interest and penalty. 10. This appeal has been filed to assail the aforesaid order passed by the Commissioner (Appeals). 11. Shri B.L. Narasimhan learned counsel for the appellant assisted by Shri Dhruv Tiwari and Ms. Mehak Mehra made the following submissions: (i) The entire duty demand confirmed is beyond the normal period of two years as the show cause notice was issued on 31.12.2019 proposing demand of CENVAT credit for the period from April 2016 to June 2017. The appellant had no intention to act dishonestly and had always acted in accordance with the statutory provisions and every relevant fact was on record. The appellant did not engage in any suppression or wil....
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....the following decisions: (a) M/s. G.D. Goenka Private Limited vs. The Commissioner of Central Goods and Services Tax, Delhi South-Service Tax Appeal No. 51787 of 2022 dated 21.08.2023; (b) M/s. Continental Engines Ltd. vs. Commissioner, Central Excise & Service Tax, Alwar (Raj.)-Excise Appeal No. 52700 of 2018 dated 11.07.2023. (iii) The entire dispute pertains to the alleged excess availment of CENVAT credit in contravention of rule 7 of the 2004 Credit Rules and rule 9(6) of the 2004 Credit Rules. When the appellant availed CENVAT credit on the basis of invoices issued by the ISD, the correctness of the distribution of such credit can be determined only by initiating proceedings, if any, at the end of such ISD. The department has no jurisdiction to examine the correctness of distribution of credit by the ISD at the end of the appellant by initiating proceedings against the appellant. In support of this submission, learned counsel placed reliance on the following decisions: (a) M/s. Bharat Sanchar Nigam Ltd. vs. The Commissioner of Central Excise and Service Tax, Chandigarh-I-Service Tax Appeal No. 50714 of 2015 dated 12.01.2024; (b) Co....
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....with departmental officers could have been undertaken. Having failed to discharge their statutory obligation, it can be said that the appellant suppressed facts with intention to avoid duty liability; and (iv) The extended period of limitation was correctly invoked in the facts and circumstances of the case. 13. The submissions advanced by the learned counsel for the appellant and the learned authorized representative appearing for the department have been considered. 14. The first and foremost issue that arise and consideration in this appeal is as to whether the extended period of limitation was correctly invoked in the present case because if this issue is decided in favour of the appellant it would not be necessary to examine the other issues on merits that have been raised by the appellant. It is for this reason that the learned counsel for the appellant and the learned authorized representative were heard only on this issue. 15. The period involved in this appeal is from April 2016 to June 2017 and the show cause notice was issued on 31.12.2019. The entire period is covered by the extended period of limitation contemplated under section 11A(4) of the Central....
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....rve a notice to the person chargeable with the duty requiring him to show cause why he should not pay the amount specify in the notice. Sub-section (4) of section 11A, however, provides that where any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded, by reason for fraud; or collusion; or any wilful mis-statement; or suppression facts; or contravention of any of the provisions of the Act or Rules made thereunder with intent to evade payment of duty, the Central Excise Officer shall, within five years from the relevant date service notice on such person requiring into show cause why he should not pay the amount specified in notice with interest and penalty. 18. It is clear that to invoke the extended period of limitation, there has to be, amongst others, suppression of facts. Even assuming that there is suppression, it is necessary that such suppression is wilful and with an intent to evade payment of central excise duty. This is what the Supreme Court and the Delhi High Court have held. 19. In Pushpam Pharmaceutical Co. vs. Commissioner of Central Excise, Bombay-1995 (78) E.L.T. 401 (SC), the Supreme Court examined wheth....
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....The show cause notice invokes the extended period of limitation and the relevant paragraph is reproduced below: "7. The assessee had contravened the provisions of CENVAT Credit Rules, 2004 by suppressing the facts with an intent to avail and utilize CENVAT credit wrongly. Had the AG Audit of the assessee not been conducted, the above fact of their wrong availment and utilization of Cenvat Credit would have remained undetected. In view of the above wrongly availed & utilized Cenvat Credit to the tune of Rs. 94,70,738/- appears recoverable in terms of Rule 14 of Cenvat Credit Rules, 2004 read with Section 11A of the Central Excise Act, 1944 and Section 73 of the Finance Act, 1994 from the assessee. The assessee also appear liable to pay interest on the amount of Rs. 94,70,738/- in terms of Rule 14 of the Cenvat Credit Rules, 2004 read with Section 11AA of the Central Excise Act, 1944 and Section 75 of the Finance Act, 1994. They also appear liable for penalty in terms of Rule 15 of Cenvat Credit Rules, 2004 readwith Section 11AC of the Central Excise Act, 1944 and Section 78 of the Finance Act, 1994 and," (emphasis supplied) 22. The Commissioner (Appeals) recorded the ....
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....ot by itself be sufficient for invocation of the extended period of limitation. Nothing prevented the officers of the department from scrutinizing the returns filed by the assessee. It also needs to be noted that it is not the case of the department that the appellant had avoided giving any particulars required to be mentioned in the returns or that it had mis-stated certain facts in the returns. The order mentions that a burden is cast upon the appellant to correctly state facts in the era of self-assessment. As noted above, the officers of the department could have scrutinized the returns filed by the appellant and sought information from the appellant in case there was any doubt. The conditions set out in section 11A (4) of the Central Excise Act for invoking the extended period of limitation had to be scrupulously followed by the department. 24. In this connection it will be useful to refer to a decision of the Tribunal in G.D. Goenka and the relevant portions are reproduced below: "14. In this appeal, the case of the Revenue is that the appellant had wilfully and deliberately suppressed the fact that it had availed ineligible CENVAT credit on input services. The po....
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....ay require to scrutinise them, the appellant cannot be faulted because as an assessee, the appellant neither makes the Rules nor designs the format of the Returns. So long as the assessee files the returns in the formats honestly as per its self assessment, its obligation is discharged. 18. Another ground for invoking extended period of limitation is that the appellant had not sought any clarification from the department. We find that there is neither any provision in the law nor any obligation on the assessee to seek any clarification. It was held by the High Court of Delhi in paragraph 32 of Mahanagar Telephone Nigam Ltd. vs. Union of India & Ors. [2023-TIOL-407-DELHI HIGH COURT] as follows: "32. As noted above, the impugned show cause notice discloses that the respondents had faulted MTNL for not approaching the service tax authorities for clarification. The respondents have surmised that this would have been the normal course for any person acting with common prudence. However, it is apparent from the statements of various employees of MTNL that MTNL did not believe that the amount of compensation was chargeable to service tax and therefore, there was no requi....
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....CENVAT credit would not have come to light. It would have come to light if the central excise officer had discharged his responsibility under section 72. 21. This legal position that the primary responsibility for ensuring that correct amount of service tax is paid rests on the officer even in a regime of self-assessment was clarified by the Central Board of Excise and Customs [CBEC] in its Manual for Scrutiny of Service Tax Returns the relevant portion of which is as follows: 1.2.1A The importance of scrutiny of returns was also highlighted by Dr. Kelkar in his report on Indirect Taxation (Report of the Task Force on Indirect Taxation 2002, Central Board of Excise and Service Tax, Government of India.). The observation made in the context of Central Excise but also found to be relevant to Service Tax is reproduced below: It is the view that assessment should be the primary function of the Central Excise Officers. Self-assessment on the part of the taxpayer is only a facility and cannot and must not be treated as a dilution of the statutory responsibility of the Central Excise Officers in ensuring correctness of duty payment. No doubt, audit and anti-evas....