TaxTMI 
TaxTMI 
2025 (1) TMI 1696
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....CCR in short), demands Rs.49,28,260/- as cenvat credit wrongly availed on ineligible capital goods, demands interest on the aforementioned amounts at the appropriate rates as per the provisions more specifically detailed in the OIOs, imposes penalties amounting to Rs.75,20,256/- under provisions of Rule 15 of CCR read with provisions of Section 11AC of the Act, and further appropriates the amounts paid towards demand of ineligible capital goods credit, interest paid and penalty paid, as more specifically detailed in the OIOs. 2. Facts, to the extent they are relevant for determining the disputes herein are that, the appellant M/s. Saint Gobain India Private Limited (formerly Saint Gobain Gyproc India Ltd and earlier to that known as M/s. India Gypsum Ltd.) are engaged in the manufacture of "Gypsum plaster", "Gypsum Plaster Board" and "Jointing Compound which they have classified under sub heading No 38249090, No.6809 11 00 and No.6809 90 00, respectively, of Central Excise Tariff Act, 1985 (CETA in short) and under sub heading 38249090 of CETA from October 2014. The genesis of the present dispute is in an audit conducted on the records of the appellant during October 2011 ....
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....r availing cenvat credit on the common input/input services used for manufacture of both dutiable goods (i.e, gypsum plaster board) and exempted goods (i.e. jointing compound) without maintaining separate accounts as contemplated under Rule 6 (2) of CCR. The SCN dated 08.09.2015 for the period from April 2014 to Nov 2014 (upto 14.11.2014) and SCN dated 26.11.2015 for the period from Nov 14 (from 15.11.2014) to September 2015, both did not have any demand of inadmissible cenvat credit availed on capital goods and apart from the demand of duty on sale of jointing compound under section 11D(1A), only sought payment of the amount recoverable at the rate specified under Rule 6(3)(i) of the CCR for availing cenvat credit on the common input/input services used for manufacture of both dutiable and exempted goods without maintaining separate accounts as contemplated under Rule 6 (2) of CCR. The third SCN dated 26.11.2015, while noticing that the appellant appeared to be paying duty on jointing compound classifying the same under tariff item 38249090 proposed to classify it under tariff sub heading 2520, and while demanding Rs.65,88,076/- amount recovered from customers under th....
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.... at all as the issue in the said order in original was eligibility to avail credit on capital goods which were put to use at the time when the final products were exempt and had subsequently become dutiable. It was submitted that therefore, as the CESTAT order would reveal, the question of classification of jointing compound was never an issue. It is the submission of the learned counsel that proposal to reclassify being absent in the SCN the proposal to invoke section 11D and discussions thereto are irrelevant. He would submit that legally, admittedly and factually no proposal for classification of jointing compound being present, the Section 11D demand and consequential Rule 6 (3)(i) demand are non-est. 5. The counsel submits that, in the alternate, the demand under Section 11D is not legal as the appellant has collected and paid the duty on jointing compound and much more in cash and thus there cannot be one more recovery of the amount collected and paid. The learned counsel draws attention to the table at page 90 of the Appeal paperbook indicating that the excise duty paid in CENVAT by the appellant was Rs.43,90,42,716-, the excise duty paid in PLA was Rs.46,05,23,337/....
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.... delay is sought to be justified by alleging suppression, which is untenable. Further it is submitted that extended period of limitation cannot be invoked for second show cause notice is issued for the same issue of classification of jointing compound. The Department was in knowledge of the entire factual gamut when they issued the show cause notice No. 15- 60/2011 dated 21.02.2011 for the previous period (April 2005 to December 2007) to the Appellant herein. In this regard, reliance is placed paragraph 9 of Nizam Sugar Factory v. CCE [2006 (197) E.L.T. 465 (S.C.). It is submitted that the entire demand has been proposed and confirmed by relying upon the documents submitted by the Appellant and hence the allegation of non-disclosure of material facts is baseless and hence extended period has been wrongly invoked. Reliance is placed on Anand Nishikawa Co Ltd vs Commissioner of Central Excise, Meerut 2005 (188) E.L.T. 149 (S.C.). Reliance is also placed on paragraph 3(l) of Zee Telefilms Ltd vs Commissioner of C.Ex. (Appeals), Mumbai-IV 2006 (4) S.T.R. 349 (Tri. - Mumbai) wherein the Hon'ble Tribunal held extended period cannot be invoked when the credit availed by the assessee ....
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....he learned A.R. also submitted that as the appellant had not produced any evidence as to how the goods are capital goods/components spares and accessories of capital goods available at their factor and falling under capital goods covered under Rule 2(a)(i) of CCR, the denial of cenvat credit on capital goods is also in order. As regards limitation and penalties imposed, the learned A.R. reiterates the findings in the impugned order in original. 8. Heard both sides, perused the appeal records, written submissions/synopsis and compilation of statutes and case laws submitted as relied upon. 9. At the outset, we deal with the submission of Shri. Raghavan Ramabdaran that the finding of the Adjudicating Authority that the issue of classification of jointing compound is already decided by the commissioner of C.Ex, Thane vide the OIO dated 10.10.2011 is incorrect and it was not the issue at all and Shri. Raghavan Ramabdran's further submission that the OIO dated 10.10.2011 was set aside by the Hon'ble Tribunal Mumbai vide Final Order No. A/85421/2022 dated 17.03.2022 in Appeal No. E/79/2012 and a perusal of the decision of the Honble CESTAT will reveal that the question of classifica....
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....rough the entire records of the case, written submissions made by the noticees, oral submissions made by them during the hearing, and the relevant provisions of law on the subject matter. There are mainly two issues involved that is, to be decided in the present case, first, whether the Cenvat credit availed by the assessee on the capital goods which were used by them for manufacture of a product which was exempt at the time of taking such credit is correct and second, whether another product manufactured by them and classified under a particular heading with applicable rate of duty has been misclassified, and upon proposed revised classification will be exempt from duty." (emphasis supplied) 12. Thereafter, the Tribunal in para 4.9 and 4.10 has held as under: "4.9 Thus it is quite evident that even if at the time of the receipt of the capital goods, the finished goods manufactured and cleared by the appellant were exempt from payment of duty or attracted duty at "nil" rate, but subsequently the capital goods were utilized for manufacture and clearance of the goods on payment of duty, then the CENVAT credit in respect of such capital goods could not be denied subject to....
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....he receipt of the capital goods, the finished goods manufactured and cleared by the appellant were exempt from payment of duty or attracted duty at 'nil' rate, but subsequently since the capital goods were utilized for manufacture and clearance of the goods on payment of duty, then cenvat credit in respect of such capital goods could not be denied in terms of the amendment to rule 6(4), therefore, consciously chose not to dwell on the issue of classification/misclassification of the finished goods, which was indeed raised by the impugned order. 14. The aforesaid narrative is to put things in perspective, namely that the verbal and written submissions as aforementioned on the above aspects, were at variance with the appeal records and documents produced before us. This, to our mind, is disconcerting, to say the least. We would expect every advocate being an officer of the court, though appearing for a client, to assist us fairly in carrying out our functions, which would entail stating facts without economising on truth. 15. Be that as it may, the fact remains that the aforementioned OIO dated 10.10.2011 wherein the adjudicating ....
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....ESTAT, the adjudicating authority proceeds on the premise that the said finding holds good. This would be so, since on that date, the OIO dated 10.10.2011, continued to prevail as it was set aside only by the Final Order No. A/85421/2022 dated 17.03.2022 of the Tribunal. It is also pertinent that while the appellant had obtained a waiver of pre-deposit dues and a stay of recovery of the same when the appeal was pending before CESTAT, vide Order No.S/1288/12/EB/C-II dated 29.05.2012, which, from the records, is seen to be filed along with the appellant's correspondence dated 10-01-2014 with the jurisdictional range superintendent; nevertheless neither in their reply nor in the present proceedings before the adjudicating authority, this was stated. The appellant presumably has not brought the existence of the stay to the fore, since the stay was prima facie on considering the aspect of time bar and not on a prima facie appreciation of merits. In any event, the stay order was merely a postponement of their determined liabilities to prevent the recovery of demanded dues and which operated at the risk of the appellant, pending the hearing of the Tribunal. Such stay does not ....
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....H 2520 and their contentions as to why such classification is untenable as against their prevailing classification. So the preliminary submissions as to the tenability of SCN, absent a proposal to reclassify the jointing compound under CETH 2520 is devoid of substance. 18. Be that as it may, de hors the dispute on classification as nothing much turns on it for the reasons further elucidated infra, the pertinent question that needs to be answered is whether the demands under Section 11D and under Rule 6(3)(i) of the CCR, made on the Appellant can sustain in the facts and circumstances of the Appellant's case. 19. Shri. Raghavan Ramabadran had submitted in the alternate, that the demand under Section 11D is not legal as the appellant has collected and paid the duty on jointing compound and much more in cash and thus there cannot be one more recovery of the amount collected and paid. 20. The provisions of Section 11D, relevant for consideration of the matter, is reproduced as below: Duties of excise collected from the buyer to be deposited with the Central Government. 11D (1) Notwithstanding anything to the contrary contained in any order or direction of the....
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....th the Government Exchequer. This is an essential prerequisite for the Department to thereafter issue a notice under Section 11D (2). 22. We notice that the Adjudicating Authority has in para 32 of the impugned OIO tabulated the details furnished by the appellant which indicates that the excise duty paid in CENVAT by the appellant was Rs.43,90,42,716/-, the excise duty paid in PLA was Rs.46,05,23,337/- and thus the total excise duty paid was Rs.89,95,66,054/-. The feeble reason provided by the Adjudicating Authority to sustain the demand under Section 11D is that the appellant has not produced any evidence to prove that jointing compound was cleared on duty by challan/PLA only. We are unable to concur with such a specious finding of the Adjudicating Authority which ignores the fact that payment of duty can be made, either through PLA or utilising Cenvat Credit Account, and are licit payments of duty and it is the sum of duties paid through PLA and that paid utilizing the Cenvat Credit pool, which is taken as the total payment of duty on the final products manufactured and cleared. When the said table reflects that Rs.46 crore is paid from PLA it is ample indication that the reve....
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....% duty etc." As the amounts recovered from the buyers are not retained by the assessees, the question of deposit cannot arise, whether under Section 11D or any other provision. A reading of Section 11D makes it clear that what is required is that amounts collected as duty should not be retained by the manufacturers and should be deposited with the revenue. This was the view that Division Bench took in the case of Nu-Wave shoes. We may read the relevant part of that order: "Admittedly, Rule 57CC(1) is applicable in the present case. It is not the case of the Department that the assessees have been charging an amount over and above 8 of the price of the exempted variety of footwear from their customers and in fact, the show cause notice proceeds on the basis that only the amount reversed by debit in the credit account from 1-91996 to April, 1997 has been charged from the customers. For the period 23-7-1996 to 31-8-1996, the show cause notice itself recognises that the assessees have been reversing Modvat credit proportionately on a prorata basis on inputs used in the manufacture of exempted variety of footwear and that the amount so reversed has been charged from the custome....
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.... be case where goods are removed/cleared without effecting their sale. In such a case Section 11D is not attracted. It is attracted only when goods are sold. The purport of this section is in accord with Section 11B and cannot be faulted." 9. The scheme of Central Excise duty payment is that a manufacturer removed goods from the factory of production after payment of duty. While selling the goods, the manufacturer recovered the duty so paid. In doing so, an assessee is recouping the tax already paid. The arrangement is not that the assessee first collected the tax from the buyer of the goods and then remits the amount to the government. Section 11D has to be read keeping this scheme in view. Therefore, the provisions for "every person who is liable to pay duty........ and has collected any amount from the buyer of any goods in any manner representing as duty of excise, shall forthwith pay the amount so collected to the credit to the Central Government" has application only when equivalent duty had not been deposited at the time of removal of the goods. The scheme of the law is that manufacturers shall not collect amounts falsely representing them as central excise duty and....
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....it is an admitted fact that the appellant has not considered the jointing compound as exempt or attracting NIL rate of duty and instead was clearing the said jointing compound on payment of duty and when the submission of the appellant that such payment of duty on jointing compound stands declared in its returns filed with the Department, which averment has not been controverted, the demands made under Rule 6(3)(i) cannot be considered in isolation and in exclusion to the payment of duty on jointing compound which the appellant has already made treating it as a duty payable product and the effect of such payment. 26. The OIOs record the duty that the appellant has collected from the customers on jointing compound and which has been demanded under Section 11D/Section 11D (1A). The appellant's contention that the said duty has already been paid into the Government coffers and has also been reflected in their returns remains uncontroverted. It is seen that the amount under Rule 6 (3)(i) that the appellant is called upon to pay for not maintaining separate account for the inputs and input services used in the manufacture of the said jointing compound, if it were to be exempted....
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....sment on decoiled HR/CR coils cleared from the factory of the assessee on payment of duty has neither been reversed nor it is held that the assessee is entitled to refund of duty paid at the time of clearing the decoiled HR/CR coils. In these circumstances, the CESTAT following its decision in the case of Ashok Enterprises - 2008 (221) E.L.T. 586 (T), Super Forgings - 2007 (217) E.L.T. 559 (T), S.A.I.L. - 2007 (220) E.L.T. 520 (T) = 2009 (15) S.T.R. 640 (Tribunal), M.P. Telelinks Limited - 2004 (178) E.L.T. 167 (T) and a decision of the Gujarat High Court in the case of CCE v. Creative Enterprises reported in 2009 (235) E.L.T. 785 (Guj.) has held that once the duty on final products has been accepted by the department, CENVAT credit availed need not be reversed even if the activity docs not amount to manufacture. Admittedly, similar view taken by the Gujarat High Court in the case of Creative Enterprises has been upheld by the Apex Court [see 2009 (243) E.L.T. A121] by dismissing the SLP filed by the Revenue. 11. Therefore, in the facts of the present case, in our opinion, no fault can be found with the decision of the CESTAT in passing the impugned order". 29. Again, in CCE, Ba....
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....Singh, Principles on Statutory Interpretation (12th Edition) page No. 676.]." 33. The principles of law with regard to the interpretations of the word "substitute" has already been settled in matter of Zile Singh v. State of Haryana & Ors. reported in (2004) 8 SCC 1 and the relevant portions of the above decision are quoted below : "23. The text of Section 2 of the Second Amendment Act provides for the word "up to" being substituted for the word "after". What is the meaning and effect of the expression employed therein - "shall be substituted"? 24. The substitution of one text for the other pre-existing text is one of the known and well-recognised practices employed in legislative drafting. "Substitution" has to be distinguished from "supersession" or a mere repeal of an existing provision. 25. Substitution of a provision results in repeal of the earlier provision and its replacement by the new provision (see principles of Statutory Interpretation, ibid., p. 565). If any authority is needed in support of the proposition, it is to be found in West U.P. Sugar Mills Assn. v. State of U.P., State of Rajasthan v. Mangilal Pindwal, Koteswar Vitta....
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....asons elucidated supra, non-est in law. 37. We are therefore refraining from deciding on the classification of jointing compound in the present matter for more reasons than one. Firstly, as per our findings above, the dispute of classification for the relevant period are rendered inconsequential as the demands are even otherwise unsustainable. Secondly, the classification for the period of dispute in the present matter becomes a purely academic exercise, since it is the categorical averment of the appellant that after the period of present dispute till September 2015, on and from October 2015, the classification of jointing compound under chapter heading 3824 which the appellant has claimed for the disputed period in the present matter, is the classification the appellant has continued to adopt till date, which therefore is nearly a decade, and there has been no dispute raised by the Revenue thereafter on the classification of jointing compound as being made by the appellant. Lastly, if a lis can be conclusively decided on narrow points that arise in a particular proceeding, it is the discretion of this Tribunal to decide the matter only on such points, without deali....
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....not produced evidence cannot be countenanced. In fact, if that be the case, it was for the adjudicating authority to have spelt out what exactly is the proof that the adjudicating authority was expecting the appellant to adduce. The appellant have also provided in para D of their written submissions/synopsis, a note of the use of the disputed items as spares, parts and components of the eligible capital goods, duly supported by the case laws being relied on to substantiate their contentions. We have perused the same and are satisfied that given the manner in which they are stated to be put to use in the capital goods available at the appellant's factory premises, they would qualify as components, spares and accessories of the capital goods as contended by the appellants. We also find that it is settled law that the scope of entry "components, spares and accessories" in the definition of capital goods is not restricted to the components, spares and accessories falling under Chapter 82, 84, 85 or 90 of CETA, 1985 alone but covers all spares, components and accessories of specified goods irrespective of their classification under any chapter and is thus not chapter specific. The relia....