TaxTMI 
TaxTMI 
2025 (11) TMI 120
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....rating under the CENVAT scheme and duly registered with the excise authorities. They were also engaged in the execution of water supply projects on a turnkey basis for which it was also registered with the Services Tax authorities. 2.1. DI pipes are, inter alia, used for transportation of water. During the relevant period, apart from clearing goods on payment of excise duty, the Appellant had also supplied DI pipes to various Central and State Government Departments/Agencies executing drinking water projects for human/animal consumption in different parts of the country on the strength of certificates from competent public authorities (District Collector/District Magistrate/Deputy Commissioner), inter alia, claiming the benefit of exemption Notification No. 6/2002 (substituted by 47/2002). The essentiality certificates from the competent public authorities were furnished to the jurisdictional authorities before effectuating exempted clearances thereunder. 2.2. The clearance of excisable goods under an exemption notification invariably results in a CENVAT loss on inputs and input services used in the manufacture of such goods in view of Rule 6 of the CENVAT Credit Rules (CCR).....
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....after, the matter was adjudicated and the impugned order dated 07.06.2019 came to be passed, partially dropping the demand in favour of the appellant, while confirming the balance as follows: a. With respect Serial No. (1) of the Table A above, the Ld. Adjudicating Authority allowed the benefit of exemption to pipes used beyond the first storage facility, resulting in dropping of demand to the tune of Rs. 19,34,85,383/-. Balance demand of Rs. 6,62,60,643/- was confirmed. b. With respect to Serial No. (2) of the Table A above, the Ld. Adjudicating Authority dropped the demand of Rs. 7,55,30,006/- pertaining to the period when separate records were not maintained by the Appellant and Rs. 1,49,01,761/- based on a communication from IVRCL specifically admitting that they had received the goods totally exempted. Balance demand of Rs. 14,46,70,979/- was confirmed. c. Personal penalty was confirmed only with respect to the Co-Appellant to the tune of Rs. 1,00,00,000/. 4.1. At this juncture, it has been pointed out by the Ld. Counsel for the appellant that the ld. adjudicating authority has specifically observed that the demand of Rs.6,62,60,643/- has been con....
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....te in denying the benefit of exemption basis its own interpretation of the purport and scope of the exemption as categorically held by the Courts/Tribunal in the following cases: * Indian Hume Pipe Co. Ltd. Vs. CCE, Tiruchirappalli [2017 (358) E.L.T. 732 (Tri. - Chennai) * The Indian Hume Pipe Vs. Commr. of C. Ex., Tirunelveli [2017 (9) TMI 695 (Tri. Chennai)]. * Jain Irrigation Systems Ltd. Vs. Commr. of C. Ex. & Cus., Nashik [2017 (358) E.L.T. 677 (Tri. - Mum.)] * Commr. of Cus. (Imports), Mumbai Vs. Tullow India Operations Limited [2005 (189) E.L.T. 401 (SC)] * P & C Constructions P. Ltd. Vs. Commr. of Cus. & C. Ex., Salem [2018 (18) G.S.T.L. 462 (Tri. - Chennai)] (iv) The ld. adjudicating authority has negated the acceptance of such certificates on the ground that the order of the Tribunal in the case of Indian Hume Pipes (supra) has been challenged by the Department before the Hon'ble Supreme Court and the same has been stayed by the Apex Forum. In this regard, it is being submitted that the departmental petition has since been withdrawn, and the stay has been vacated. Therefore, the judgement of the Tribunal is fully opera....
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....ter projects does not qualify as a WTP, without even summoning the competent public authorities, which issued the essentiality certificates, to enquire into the process and machinery employed in the water supply projects. The said observation is also contradictory to the judgement of the Tribunal in the case of the Indian Hume Pipe (supra) whereby it was held that water can be treated even through simple processes and does not require an elaborate establishment of machinery. Moreover, the appellant has controverted the observations of the ld. adjudicating authority with respect to each of the work order as contained in Paragraph 14 of the impugned order on a sample basis in the convenience compilation. (ix) Notification does not contemplate actual use but intended use and therefore the benefit cannot be denied based on eventual actual use: (x) The Exemption Notifications do not stipulate any end use requirement. The only condition prescribed under the said notifications is to furnish certificate from the competent authorities certifying the intended use of the final goods. The Appellant cannot be expected to do a policing on the end use of such final goods. Once s....
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....n of the same in the excise invoices, it cannot be said that any excise duty was charged from the customers. Hence, demand cannot be sustained under Section 11D of the CEA. Reliance in this regard is placed on the following judgements: * Electrosteel Castings Limited Vs. Commissioner of Central Excise, Kolkata - III [2018 (11) TMI 907 (Tri. - Kol.)] * Mayfair Polymers P. Ltd. vs. Commr. of Central Excise, Ahmedabad [2009 (234) ELT 663 (Tri. - Ahmd.)] * Shree Shyam Pulp and Board Mills Ltd. Versus Commr. of C.Ex., Meerut-II [2018 (364) ELT 205 (Tri. - All.)] * Poddar Industrial Corporation Versus Commissioner of C.Ex., Patna [2003 (158) ELT 473 (Tri - Kolkata)] * Todi Rubber Pvt. Ltd. Versus Commissioner of Central Excise, Nagpur [2018 (361) ELT 737 (Tri. - Mumbai)] * Commissioner of Central Excise, Aurangabad Versus Tapi R.C.C. [2005 (186) ELT 107 (Tri. - Bom.)] [Affirmed by Bombay High Court in 2015 (318) ELT A47 and 2016 (342) ELT 16] (iii) Periodical demands were also raised under Section 11D on some of the work orders which are also covered in the instant proceedings but was subsequently dropped by the Ld. Adjudicat....
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....ount could not be put to dis-advantage vis-à-vis an assessee not maintaining separate accounts in the matter of reimbursement of CENVAT loss incurred under both the options, prescribed in Rule 6: (viii) In a case where an assessee does not maintain separate records with respect to inputs/input services used in dutiable and exempted goods, it has been held by the Larger Bench of the Tribunal in the case of Unison Metals Vs. Commissioner of Central Excise, Ahmedabad - I [2006 (4) STR 491] and has also been clarified by the Board vide its circular bearing No. 870/8/2008-CX dated 16.05.2008 that provisions of section 11D is not attracted on the collection of 8% CENVAT loss from the customers. Relying upon the same, demand for the period when the Appellant was maintaining separate records has been dropped by the Ld. Adjudicating Authority in the instant proceedings. It cannot be denied that the Appellant continued to suffer CENVAT loss even during the period when separate records were being maintained, in the form of credit foregone. Therefore, when such loss was allowed to be collected when no separate records were maintained, the appellant cannot be put a disadvantage ....
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....7 (351) E.L.T. 313 (Tri. - All.)] (ii) The instant proceedings have been kept in abeyance for a period of more than 12 years without any reasons whatsoever and therefore the revival of the proceedings after such an inordinate delay is in clear violation of principles of natural justice. It is a trite law that show cause notice which have not been adjudicated for a long period of time deserves to be quashed. Reliance in this regard is being placed on the judgement of Surendralal Girdharilal Mehta Vs. Union of India [2018 (364) ELT 81 (Cal. HC)] and G.D. Traders Vs. Commissioner of Customs (Port), Kolkata [2025 (3) TMI 790 (Tri. Kol.)]. (iii) Extended period of limitation cannot be invoked against the Appellant in the instant case as there was no suppression and/or misrepresentation of facts and accordingly imposition of penalty is not sustainable. (iv) The entire demand in the instant case has been raised beyond the normal period of limitation by invoking Section 11A(1) of the CEA. In terms of the submissions made above, Section 11A is itself not applicable in the instant case therefore the question of invocation of extended period of limitation does not a....
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....e demand is itself not sustainable, personal penalty under Rule 26 cannot be imposed. Reliance in this regard is placed on Shri Mahavir Ferro Alloys Pvt. Ltd. and Shri Vicky Jain Managing Director Versus Commissioner of CGST & C. Ex. [2025 (2) TMI 477 - (Tri. - Kol.)] 7. On the other hand, the Ld. Authorized Representative of the Revenue supported the impugned order qua confirming the demand against the assessee-appellant along with the penalties imposed thereon on the appellants, but contested the aspect of non-imposition of penalty on other co-noticees by the ld. adjudicating authority. 8. After hearing the parties, we find that the following issues emerge: - (A) Whether duty can be demanded under Section 11A of the Central Excise Act, 1944 on the ground that the appellant-company has incorrectly availed the benefit of exemption as provided under Notification No. 06/2002 on the allegations of (i) No water treatment plant ("WTP"), (ii) Pipes supplied to such projects were not used for the intended purpose, without disputing the veracity and authenticity of the certificates based on which the exemption was claimed and/or the use of such pipes in the water supply proj....
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....ditions specified in the Annexure to this notification, and referred to in the corresponding entry in column (6) of the said Table : Provided that nothing contained in this notification shall apply to goods falling under sub-heading No. 3605.10 against S. Nos. 65, 66, 67 and 68 of the said Table on or after the 1st day of April, 2002 : Provided further that nothing contained in this notification shall apply to the goods specified against S. Nos. 193, 195, 199 and 200 of the said Table on or after the 1st day of March, 2005. Explanation. - For the purposes of this notification, the rates specified in columns (4) and (5) of the said Table are ad valorem rates, unless otherwise specified :- Table S. No. Chapter or heading No. or sub-heading No. Description of goods Rate under the First Sch-edule Rate under the Second Sch-ed-ule Co-ndi-tion No. (1) (2) (3) (4) (5) (6) "196A 84 or any other Chapter The following goods, namely :- (1) All items of machinery, including instruments, apparatus and appliances, auxiliary equipment and their components/ parts required for setting up of water treatment plants; ....
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....e competent authority of the State Government. Thus, these pipes are meant for intended use, as per the said Notification. 10.1. In the impugned order, however, the ld. adjudicating authority has neither disputed the said fact nor proved that the certificate on the basis of which exemption is claimed by the appellant is a fake/fabricated certificate. 10.2. In these circumstances, we hold that the benefit of the exemption Notification No. 06/2002-C.E. dated 01.03.2002, as amended vide Notification No. 47/2002-C.E. dated 06.09.2002, cannot be denied to the assessee-appellant. 11. The said view has also been taken by this Tribunal in the decision rendered in the case of M/s. The Indian Hume Pipe Co. Ltd. & ors. v .Commissioner of Central Excise, Tirunelveli [2017 (9) TMI 695 - CESTAT, Chennai] wherein it has been observed as under: - "8. On the first issue regarding the liability of the appellant under Notification No. 6/2002-CE, we note that all supplies of pipes are made in terms of the certificate issued by the jurisdictional District Collectors. The certificates categorically mentioned the requirement of pipes for the projects referring to the above mentioned Not....
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....es that are not conversant with such projects. Thus, where certificates are the qualification for exemption, it is not open to the Central Excise authority to overrule that certification. This has been unambiguously enunciated by the Hon'ble Supreme Court in re Dalmia Dadri Cement Ltd." 11.3. In this regard, it is also relevant to refer to the judgement in the case of Commissioner of Customs (Imports), Mumbai v. M/s. Tullow India Operations Ltd. [2005 (189) E.L.T. 401 (S.C.)], wherein the Hon'ble Supreme Court has made the following observations: - "35. The essentiality certificate, thus, must be treated to be a proof of the fact that the importers have fulfilled the conditions enabling them to obtain the benefit under the exemption notification. 36. The principles as regard construction of an exemption notification are no longer res integra; whereas the eligibility clause in relation to an exemption notification is given strict meaning wherefor the notification has to be interpreted in terms of its language, once an assessee satisfies the eligibility clause, the exemption clause therein may be construed liberally. An eligibility criteria, therefore, deserv....
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.... similar set of circumstances had observed that it is not open for the Central Excise authority to overrule the certificate issued by a competent a public authority. The said principle has been enunciated by the Hon'ble Supreme Court in the case of State of Haryana v. Dalmia Dadri Cement Ltd. - 2002-TIOL-262-SC-CT = 2004 (178) E.L.T. 13 (S.C.). The relevant portion of the Supreme Court judgment is reproduced as under : "10. We are unable to accept the submission of Mr. Bana that, in order to get the exemption it must be shown that the goods in question, namely, the cement supplied by the assessee in this case was actually used in the generation or distribution of electrical energy. It must be noted that the important words used in the relevant provisions are goods for use by it in the generation or distribution of such energy (emphasis supplied by us). On a plain reading of the relevant clause it is clear that the expression "for use" must mean "intended for use". If the intention of the legislature was to limit the exemption only to such goods sold as were actually used by the undertaking in the generation and distribution of electrical energy, the phraseology used in the....
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....ion therefore to be decided is whether the Revenue is entitled to order recovery of such amount under Section 11D as It stood at the relevant time. 10. From the impugned order we find that the adjudicating authority has recorded a categorical finding that the appellant has not collected the amount @8% by showing separately in the invoices during the relevant period. The Tribunal in the case of Mayfair Polymer Pvt. Ltd. (supra) had occasion to examine a similar situation. For a similar period (prior to amendment of Section 11D), the Tribunal has observed as follows: "7. We have carefully considered the submissions from both sides. As the assessee has availed the exemption available to small scale unit, they were paying at different rates during the course of each financial year, depending upon the actual clearances effected by them. In the normal course, when the rates depending upon value of clearances, the assessee would have collected the price and applicable rate of duty in which case, the sale price would be different depending upon the actual rate of duty during the course of year. The assessee has chosen to supply to their customer at a fixed price, in terms....
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....for seeking recovery under Section 11D. Similar views have been expressed by the Tribunal in the other cases cited by the appellant and we do not find it necessary to repeat the observations of the Tribunal in other cases. 11. It is not in dispute that the appellant have not indicated in their invoices the amount of 8% separately as excise duty. Hence, in the line with the decision of the Tribunal (supra) we are of the view that the demand cannot be sustained. 12. The reference to Section 11D as it stood at the relevant time also makes it clear that the Section will have no application to exempted goods. Section 11D was made applicable to goods which are wholly exempted or chargeable to the 'Nil' rate of duty only after its amendment w.e.f. 10.05.2008. This fact has also been circulated by CBEC at the time of amendment vide their instructions dated 29.02.2008. 13. In view of the above discussions, we set aside the impugned order and allow the appeal." 13.1. Further, we find that this issue has also been dealt with in the case of M/s. The Indian Hume Pipe Co. Ltd. & ors. v. Commissioner of Central Excise, Tirunelveli [2017 (9) TMI 695 -....
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....he decisions in the appellant's own case for the subsequent period (supra) and M/s. The Indian Hume Pipe Co. Ltd. (supra) is squarely applicable to the facts of this case. Therefore, following the same, we hold that the demand of duty of Rs.14,46,70,979/- under Section 11D of the Act is also not sustainable. Accordingly, we set aside the same. 14. As no demand of duty is sustainable against the assessee, we hold that no penalty can be imposed on the appellant-company as well as its AGM / DGM (Commercial), namely, Shri Rajesh Daga, the appellant no. 2 herein. Accordingly, the penalties imposed on the appellant-company and Shri Rajesh Daga are dropped. 15. The Revenue has filed an appeal against the non-imposition of penalties on the co-noticees to the Show Cause Notice. As we have already held that no demand of duty is sustainable in this case, therefore, we find that the question of imposition of penalties does not arise. In view of this, we do not find any merit in the Revenue' appeal and accordingly, the same is rejected. 16. In view of the above, we pass the following order: - (1) No demand is sustainable against the appellant-company under Sections 11A and 11D....