TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 389
X X X X Extracts X X X X
X X X X Extracts X X X X
....er Notification No.30/2004-CE dated 09.07.2004. The appellant also exported cotton yarn under DEPB scheme. The appellant took CENVAT credit of service tax paid on the input services and utilized it towards payment of duty on their final products cleared for export under claim for rebate of duty paid. The appellant had not availed CENVAT credit of duty paid on inputs. 2.2 Consequent to the verification of accounts by the department, the Joint Commissioner of Central Excise, Madurai, had issued a Show Cause Notice No.39/2014-CE dated 04.07.2014 to the appellant wherein it was alleged that the amount of CENVAT credit for reversal under Rule 6(3A) of CCR,2004 did not include the value of the final products exported without payment of duty under Notification No.30/2004-CE dt.09.07.2014, value of goods exported under DEPB scheme, and the value of goods cleared for job work and the value of waste yarn under the category of "exempted goods". Hence, the Show cause notice alleged that there was a short payment (Reversal) of an amount of CENVAT credit of Rs.38,45,720/- attributable to common input services used in the manufacture of exempted goods and proposed to recover the above amount w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on of letter of undertaking, the appellant had duly followed all the procedures relating to export. 3.7 Regarding the second issue of cotton yarn waste, the appellant submitted that the lower appellate authority has not given any finding for inclusion of the value of waste yarn cleared during the impugned period under the category of "exempted goods" and had included the same under the category of "exempted goods" for quantifying the credit to be reversed in terms of Rule 6(3A) of CCR, 2004. 3.8 The LAA had also included the value of goods cleared to job workers for quantifying the credit to be reversed in terms of Rule 6(3A) of CCR. The appellant had already included the value of the goods so cleared under the category of "exempted goods" for working out the quantum of credit to be reversed. Therefore, to include the value of goods cleared for job work would tantamount to double jeopardy and is not sustainable in law 3.9 The Appellants have placed reliance on various decisions to substantiate the fact that there is no short reversal of CENVAT credit by them. 3.10 Finally, the Ld. Advocate has also argued on the grounds of limitation that the entire allegation against t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed for reversal of Credit and, iv. Whether extended period of limitation is invokable in this case? We now take up the issues in seriatim: - 7.1 As regards the first question, the appellant submitted that the very purpose of execution of letter of undertaking (previously known as Bond) was to ensure that the goods cleared without payment of duty from the factory gate which are exported and on submission of proof of export with the competent central excise authority, the duty liability fastened on such export goods would get extinguished. The appellant had not executed such letter of undertaking for export of their product on the bona-fide belief that their product was exempted from payment of duty under Notification No.30/2004-CE and therefore execution of letter of undertaking was not necessary. But for non-execution of letter of undertaking, the appellant had duly followed all the procedures relating to export. Export goods were stuffed under the physical supervision of central excise officers. The very fact of export has not been disputed in the impugned order. Therefore, for non-execution of LUT, the substantial right granted vide Rule 6(6) (v) of CCR, 2004, in a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....entral Excise, Madurai 2024 (8) TMI 990 - CESTAT CHENNAI ii. Adisankara Spinning Mills Pvt Ltd. Versus Commissioner of Central Excise, Madurai2025 (1) TMI 1092 - CESTAT CHENNAI iii. M/s. Sri Velayutham Spinning Mills (P) Ltd. Versus Commissioner of GST & Central Excise, Madurai 2024 (8) TMI 1207 - CESTAT CHENNAI 7.6 We have perused all the above decisions and find that the facts are identical to the situation at hand. Interestingly we also find that all the above decisions are on common issues and have emanated from various impugned orders passed by the Commissioner (Appeals) Madurai in all those cases. 7.7 In the case of Sri Velayutham Spinning Mills (P) Ltd. Versus Commissioner of GST & Central Excise, Madurai 2024 (8) TMI 1207 - CESTAT CHENNAI in Para 5 of the Decision it has been held as follows: - "5. On perusal of the impugned order, I find that the issue stands covered by the decision in the case of M/s. Drish Shoes Ltd. (supra), wherein the Hon'ble High Court has analyzed the issue as to whether credit is eligible on the duty paid on inputs and input services used in the manufacture of exempted goods which are exported. The said question of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd 7.3 it has been held that: - "7.1 The second demand is with regard to the requirement of including the turnover of yarn waste cleared by the appellant. The Department is of the view that the credit on inputs contained in the waste is not eligible and has to be reversed by the appellant. As pointed out by the Ld. Counsel for the appellant, Rule 57D of the erstwhile MODVAT scheme had specifically mentioned that the credit on inputs contained in waste is eligible. Paragraph 3.7 of the Supplementary Instructions issued by the Department after introduction of the CENVAT Credit Rules, 2002, reads as under: "3.7 CENVAT credit is also admissible in respect of the amount of inputs contained in any of the waste, refuse or bye product. Similarly, CENVAT is not to be denied if the inputs are used in any intermediate of the final product even if such intermediate is exempt from payment of duty. The basic idea is that CENVAT credit is admissible so long as the inputs are used in or in relation to the manufacture of final products, and whether directly or indirectly." It is very much clear from the above Instructions issued by the Department that credit is admissible....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ptember 2011 during the hearing held on 07.08.2025 which contain the details of the Cotton yarn sent for Job work As the returns are being filed regularly every month with the Range and the details are also available in the ACES, and the verification should have been done in the initial stage itself by the Lower Adjudicating Authority or by getting a verification report from the Range officer instead of this unwanted exercise at this stage. We are convinced from the submission of the appellant that they have already included the value of the goods so cleared under the category of "exempted goods" for working out the quantum of credit to be reversed. Therefore, to include the value of goods cleared for job work would tantamount to double jeopardy and is not sustainable in law. The ER-1 returns submitted by them also shows the Job work turnover. 9.5 Therefore, in view of the above findings, we find that Job work turnover cannot be included in the value of Exempted goods and this question framed by us is answered in favour of the Appellant. 10. From the discussions made above, and also following the decisions cited supra, we are of the view that the contention of the Department ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....entral Excise Officers in ensuring correctness of duty payment. No doubt audit and anti-evasion have their roles to play, but assessment or confirmation of assessment should remain the primary responsibility of the Central Excise Officers". 11.5 We now proceed to take a look the provisions invoked in the impugned Order for imposition of Penalty. Rule 15(2) of CENVAT Credit Rules, 2004 In a case, where the CENVAT credit in respect of input or capital goods or input services has been taken or utilised wrongly by reason of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of the Excise Act, or of the rules made thereunder with intent to evade payment of duty, then, the manufacturer shall also be liable to pay penalty in terms of the provisions of [clause (c), clause (d) or clause (e) of sub-section (1) of section 11AC of the Excise Act. 11AC. Penalty for short-levy or non-levy of duty in certain cases. -- (1) The amount of penalty for non-levy or short-levy or non-payment or short-payment or erroneous refund shall be as follows-- (c) where any duty of excise has not been levied or paid....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rein the Apex Court has held that it is a cardinal postulate of law that the burden of proving any form of mala fide lies on the shoulders of the one alleging it. In the case of Uniworth Textiles Ltd. v. CCE, Raipur [2013 (288) E.L.T. 161 (S.C.)], it was held that mere non-payment of duties is not equivalent to collusion or wilful misstatement or suppression of facts, otherwise there would be no situation of which ordinary limitation period would apply. Inadvertent non-payment is to be met within the normal limitation period and the burden is on Revenue to prove allegation of wilful misstatement. The onus is not on the assessee to prove their bonafides. In the case of CCE v. Chemphar Drugs Liniments [2002-TIOL-266- SC-CX = 1989 (40) E.L.T. 276 (S.C.)],(Relied upon by the Appellant) the Supreme Court held that something positive other than mere inaction or failure on the part of the assessee or conscious or deliberate withholding of information when assessee knew otherwise, is required before it is saddled with the liability of the extended period. 11.10 We find that the Appellant has filed the ER 1 returns in time along with worksheets for reversal of Credit, and the goods are S....