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2026 (1) TMI 321
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....the visiting Officers. Statement of various persons of the Appellant's Sugar Mills were recorded, wherein they only stated that there is shortage of goods, but none of the persons had stated that there was any clandestine removal of the goods by the Appellant. The Cenvat Credit was proposed to be disallowed amounting to Rs.1,50,45,349/- on various grounds. Further, Service Tax of Rs.4,74,760/- was proposed to be demanded under the category of Transportation of Goods by Road Service on the ground that since the freight was borne by the Appellant, thus they were liable to pay the Service Tax on the freight amount under reverse charge mechanism. This is the second round of litigation before the Tribunal. In the first round, the matter was remanded back to the Adjudicating Authority vide Final Order No.71214/2018 dated 21/06/2018, wherein it was mentioned that as regards the clandestine removal of goods, the Authority should look into the corroborating and other evidence to prove that the goods have been removed in a clandestine manner in view of the Hon'ble Allahabad High Court's judgement in the case of Commissioner of Central Excise, Kanpur Vs. Minakshi Castings reported as 2011 (27....
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....us Commissioner of Central Excise & Service Tax, Raipur reported as 2019 (21) G.T.L. 174 (Tri.-Del.) (c) Commissioner of Central Excise & Service Tax, Raipur reported as 2019 (21) G.T.L. 174 (Tri.-Del.) Commissioner of Central Excise, Raipur Versus M.S.P. Steel & Power Ltd reported as 2017 (357) E.L.T. 275 (Tri. -Del.). (d) Mahavir Polyplast (P) Ltd. Versus Commissioner of Cus., C. Ex., Kanpur 2013 (287) E.L.T. 139 (Tri.Del.) . (e) Commissioner of C.Ex. & S.T., Chandigarh Versus Kewal Garg reported as 2019 (369) E.L.T. 315 ( P&H) (f) Commissioner of C.EX. & S.T., Ludhiana Versus Anand Founders & Engineers reported as 2016 (331) E.L.T. 340 (P & H). Thus, in the absence of any other evidence except shortage, it cannot be alleged that the goods have been removed in a clandestine manner and neither tax can be demanded nor penalty can be imposed. Amount involved: 49,41,225/- ii Whether Cenvat Credit taken on HR Coils, Sheet, Shape, Section, Angle, Rod, Plate, etc. which was used for making base structure, shades and civil work in the factory would be admissible; (ii) The credit was disallowed on the ground that the item did not qualify ....
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....dhiana V/S IOL Chemicals & Pharmaceuticals Ltd. as reported 2023 (383) E.L.T. 705 (P &H). iv Whether Cenvat credit taken on HR Coils, Sheet, Shape, Section, Angle Road, Plate etc. which were cleared from the factory as such would be allowable; (iv) The Cenvat Credit has been disallowed on the ground that inputs/capital goods received in the factory were cleared from the factory were liable for reversal of Credit under Rule 3(5) of the Cenvat Credit Rules 2004. The matter is not being contested on merits, but is being contested on limitation. Amount involved: 69,277/- v Whether Cenvat credit taken on Weighbridge s installed outside the factory premises would be valid; (v) The Credit is disallowed on Weigh Bridge installed outside the Factory. The Weigh Bridge was used for weighment of Sugarcane during the crushing season. The issue covered by following decisions: (a) Triveni Engg. & Inds. Ltd. Vs Commissioner of C.Ex., Meerut-II reported as 2014 (303) E.L.T. 129 (Tri. -Del.) . Amount involved: 11,99,744/- vi Whether Cenvat Credit taken on computers installed in offices of the party would be legally correct; (vi) The issue was with respect to....
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.... Sulara Chemicals Pvt. Ltd. V/s Commissioner of C.E. Bolpur reported as 2002 (145) E.L.T. 230 (Tri). 4. The learned Advocate vehemently pleaded that since there is no evidence to prove that the goods have been removed in a clandestine manner, there was no reason for confirming the demand of Central Excise Duty as well as imposition of penalty. Further he has relied upon the judgements to support that the Cenvat Credit cannot be denied. He also submitted that Service Tax was not payable as the Appellant had not borne the freight amount and the liability to bear the freight was that of the farmers, who were to transport the Sugarcane. 5. The learned Departmental Representative reiterated and justified the findings of the Adjudicating Authority. 6. Heard both the sides and perused the appeal records. 7. We have gone through the submissions of the Appellant as well as learned Departmental Representative on various issues in dispute. As regards, the first issue regarding the shortage of the goods, it is to be mentioned that the matter was earlier remanded by the Tribunal to the Adjudicating Authority to consider any other evidence except shortage of goods to prove that the g....
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...., the denial of Credit of Rs.97,12,535/- on Iron and Steel Structure used for making Base Structure and other Foundations and Civil Work, the sole ground of the Adjudicating Authority for denial of Credit is that the issue is decided against the Appellant in the case of Vandana Global Ltd. Vs. Commissioner of Central Excise & Customs reported as 2010 (253) E.L.T. 0440 (Tri.-LB). We find that the period involved in the instant case is prior to 07.07.2009. The decision of the Tribunal has been held to be not a good law by the Hon'ble High Courts in the following cases:- (a) Vandana Global Ltd. Vs Commissioner of C.EX. & CUS., Raipur reported as 2018 (16) G.S.T.L. 462 (Chhattisgarh). (b) Mundra Ports & Special Economic Zone Ltd. Vs C.C.E. & Cus reported as 2015 (39) S.T.R. 726 (Guj.). (C) Principal Commissioner of Central Goods & Services Tax, Commissionerate, Ludhiana Vs. IOL Chemicals And Pharmaceuticals Ltd. Reported as 2023 (385) E.L.T. 705 (P & H) as affirmed by Hon'ble Supreme Court in case of Principal Commissioner, CGST Vs. IOL Chemicals & Pharmaceuticals Ltd. reported as 2023 (386) E.L.T. 163 (SC). Following the above decisions, we hold that Cred....
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....he farmers during the crushing season. The said Weigh Scales of smaller capacity are not permanently removed from the Appellant's factory and the issue regarding the eligibility of Credit on Weigh-Scale has been decided in the case of Sugar Mills itself and is cited as Triveni Engg. & Inds. Ltd. Vs. Commissioner of C.Ex., Meerut-II reported as 2014 (303) E.L.T. 129 (Tri. -Del.) hence, we hold that credit cannot be denied. 12. As regards, the Credit of Rs.17,986/- on Computers installed in the Office, it is to be mentioned that the same is covered by the decision of the Tribunal in case of Maruti Suzuki India Ltd. Vs. CCE & ST, Gurugram, reported as (2023) 4 Centax 108 (Tri.-Chd). Following the said decision, we hold that Credit cannot be disallowed. 13. As regards, the demand of Service Tax on Freight paid to the farmers under reverse charge basis, it is to be mentioned that the Appellant is not bearing the freight amount, but the freight is borne by the farmers, as the Appellant deducts the amount of freight from the bills of the farmers and hence the Appellant is not liable to bear the freight amount . Similar issue has been covered by the following decisions of the Tribuna....
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....hri Malhotra, in his statement dated 25.10.2008, though admitted the shortage of sugar detected by the visiting officers but he could not explain the reasons thereof. He simply stated that Shri Jasvinder Singh (Sales manager) and Shri Yogendra Singh (Godown & Sale in-charge) looked after the sale of sugar but none of them was available in the unit on 24/25-10-2008. He also stated that Shri Jasvinder Singh used to sit in their head office at Chandigarh and Shri Yogendra Singh was on leave. The value of 50500 Qtls of sugar which was found short in stock was reported to be Rs. 8,45,87,500.00 involving duty amounting to Rs. 49,41,425/- (Rs. 35,85,500/- BED Rs. 12,12,000/- Sugar Cess Rs. 95950/- Ed Cess + Rs. 47975/- SHE Cess). The value was calculated on the basis of sale invoice No. 252 dated 23.10.2008. On 25.10.2008, the amount of duty of Rs. 49,41,425/- (Rs. 35,85,500/- BED + Rs. 12,12,000/- Sugar Cess + Rs. 95950/- Ed Cess + Rs. 47975/-SHE Cess) involved on the said shortage of sugar was debited by M/s RSL vide PLA Entry No. 03 dated 25.10.2008 and intimated the debit particulars vide letter dated 25.10.2008 addressed to the Assistant Commissioner, Central Excise Division Moradaba....
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.... availed Cenvat credit amounting to Rs 4.30 crores Approx during the period from 01.01.06 to 31.03.08 on the basis of Cenvatable invoices (RUD-9). The visiting officers apprehended that the quantum of inputs reportedly used in fabrication of capital goods was not justified with reference to the quantity used in fabrication / erection thereof in the factory. It was observed that quantity of inputs was much higher than the one required for fabrication of items found installed in the unit. Whereas prima facie, from the perusal of the documents the visiting officers who laid their hands on them and also going by the averments made by some of the responsible officers of M/s RSL in their respective statements indicated herein below, it transpired that the capital goods found installed in the unit were purchased from outside sources. In the sequence, summons under Section 14 of the Central Excise Act 1944 were, inter-alia, issued to Shri S.P Tomer, Chief Engineer and Shri Anurag Mehrotra, Manager Accounts and their statements recorded, which are discussed herein below:- 5. Shri S.P Tomer, Chief Engineer in his statement dated 09.02.09 (RUD-10),inter-alia, stated- (i) Tha....
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.... loading & unloading system were purchased from outside. Only base of the said system and prefab for power house was fabricated in the unit; (xii) That numbers of turbine in the plant are 02; That one turbine of 6MW (make Kessels) was purchased from outside and one turbine of 2.5MW (make Triveni) is old which was transferred from other unit at Amritsar; that no part of said turbine was fabricated in the unit; (xiii) That juice sulphitor system and syrup sulphotor system were fabricated in the unit and these items are used for clarification of juice after heating and syrup after evaporation house; (xiv) That complete clarifier was purchased from outside side and no part of clarifier was fabricated in the unit; (xv) That complete unit of ESP were purchased from M/s Alstom, Calcutta and no part of said unit was fabricated in the unit; (xvi) That all movable parts like chains, link and electrical parts of Bagasse Feeding System were purchased from outside and only base of the Bagasse Feeding System was fabricated in the unit; (xvii) That the base of Mill house crane loading and unloading system was fabricated in the unit and all mov....
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....iling house 01 385.340 32404.20 12486656 1766656 47.610 432.9 50 15 Pre Fab For boiler house 01 147.390 32404.20 4776146 675746 18.210 165.6 00 TOTAL 56 4823.71 157208578 6308578 5299968 596 5419. 71 7. Shri Anurag Mehrotra (Manager Accounts) of M/s RSL, in his statement dated 09.02.2009, (RUD-11), inter-alia, stated that he was. working as Manager Account in the unit from Nov'07 and looking after work relating to accounts; that prior to Jan'09, he was working in the guidance / direction of Shri K.L Benerjee (Chief Manager Account) but after transfer of Shri Benerjee in the month of Jan'0g he independently worked and reported to Shri D.B.S Gill, G.M (Accounts), who sits in Head office at Chandigarh; that when the goods reached at the site, the said goods were entered in the store. As a measure of procedure adopted by M/s RSL in this behalf after receiving the goods in store, SRV (Store Receipt Voucher) IS being maintained (RUD-12); that prior to 12" Feb'07, the SRVs were maintained manually and thereafter the said SRVs are being maintained in Computer; that an issue sli....
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....9;07 (RUD-14). The said invoices bear the dated signatures of the said Shri Mehrotra. Therefore, he was again summoned on 31.03.09 for appearance before the investigating officer on 08.04.2009. 10. The said Shri Mehrotra appeared on 06.04.2009 instead of 08.04.2009 and his statement was recorded. In his statement dated 06.04.09 (RUD-15), the said Shri Mehrotra on being specifically asked as to who signed the aforesaid invoices he stated that the said invoices were issued under his signature and that he was working with M/s RSL since Oct'06. Shri Mehrotra further stated that Syrup Sulphitor system, Tanks for intermediate storage and syrup sulphitor system are the parts of boiling house and that the quantity of inputs were issued under the goods belonging to boiler house. However, on perusal of drawing submitted by M/s RSL, it appears that Syrup Sulphitor System is part of clarification. 11. Summons were also issued to Shri D.B.S Gill, G.M (Finance) of M/s RSL Vide their letter dated 04.04.2009 (RUD-16) M/s RSL informed that said Shri D.B.S Gill was very upset and under treatment of Doctor due to sudden and untimely death of his son. However, Shri Pramod Sharma,....
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....o have been manufactured by M/s RSL within their factory, it is apparent that fabrication/ manufacture took place up to March'07. Thus, it appears that no material of iron & steel was used in fabrication of aforesaid items at S. No. (1) to (16) on or after 01.04.07. 13. The said materials of iron & steel namely H.R/S.S Coil, Plates, Shape & Section, Bar & Rod, H.R/S.S Sheet/plate, Joist, Channel, and Angle etc are not covered under the definition of capital goods' as defined under Rule 2(a) of the Cenvat Credit Rules 2004. However, M/s RSL has claimed. Cenvat credit on the said items treating them as input of capital goods, in terms of Explanation-2 of Rule 2(k) of Cenvat Credit Rules 2004. Explanation 2 of said Rules provides that "input include goods used in the manufacture of capital goods which are further used in the factory of the manufacturer". The said material of iron & steel was used in fabrication of base structure, shades and other civil work which are not covered under the definition of "capital goods". As . M/s RSL maintains computerized records, a print out of stock ledger of the material of iron & steel was taken from the CPU resumed from the Belwar....
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.... M.T weight of pre fab + 18.210 M.T waste) in the pre fab of boiler house and 2.430 M.T (2.160 M.T weight of Pipe + 0.270 M.T waste) in the pipe of boiler was used (ii) M/s RSL shown to have used 1389.325 M.T of the said materials in boiling house (details as per Annexure-A-2). Out of said quantity of 1389.325 M.T, 1046.858 M.T was used from cenvatable material on which they had availed credit amounting to Rs. 37,06,662/-. Whereas Shri S.P Tomer & Shri Anurag Mehrotra stated that the said quantity was used in the fabrication of Syrup sulphitor system & Intermediate storage tanks which are parts of boiling house and pre fab of boiling house (iii) M/s RSL shown to have used 413.378 M.T of the said materials in Clarification station (details as per AnnexureA-3). Out of said quantity of 413.378 M.T, 405.637 M.T was used from cenvatable material on which they had availed credit amounting to Rs. 15,00,415/-. Whereas Shri S.P Tomar stated that 254.630 M.T (226.630 M.T Juice Sulphitor system + 28.000 M.T waste) was used in the ' fabrication of Juice Sulphitor System which is the part of Clarification station. (iv) M/s RSL shown to have used 1161.285 M.T ot th....
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....as fabricated in the unit in which 594.710 M.T (529.310. M.T weight of base + 65.400 M.T waste) of said material was used but in the ledger only 128.697 M.T shown to issued in the name of Bagasse carrier. (ix) M/s RSL shown to have used 0.476 M.T of said materials in turbine (details as per Annexure-A-9). Whereas Shri S.P Tomer stated that number of turbines in the plant are 02. 01 Turbine is 06 MW make Kessel which was purchased from outside and other one is 2.5MW make Triveni which was transferred from their other unit at Amritsar. He further stated that no turbine or any part of said turbine was manufactured in the unit. (x) M/s RSL shown to have used 30.260 M.T of the said materials in the fabrication of ESP & ESP System (details as per Annexure-A-10) on which they had availed credit amounting to Rs. 1,20,737/-. Shri S.P Tomer stated that Complete ESP was purchased from M/s Alstom Calcutta and no part of said unit was fabricated in the unit. (xi) M/s RSL shown to have used 265.395 M.T of the said materials in the fabrication of continuous pan (35 Ton) (details as per Annexure-A-11). Out of said quantity of 265.395 M.T, 230.499 M.T was used from cenvat....
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....ystem, Syrup Sulphitor system, Tanks for intermediate storage, Ducting of boiler, Pipe for boiler, Molasses storage tank, Base of Cane unloading system, Base of Mill house crane loading & unloading system, Base of Bagasse feeding system, Base of Power house-crane loading & unloading system, Structure for cane unloading, Pre fab for power house, Pre fab for mill house, Pre fab for boiling house, Pre fab for boiler house and Exhaust / Vapour pipe line by Shri S.P Tomar and the balance quantity of 2737.305 M.T was stated to have been used in fabrication of items namely, base of machines, shades of machines and other civil work surrounding the machines as stated by Shri Anurag Mehrotra and Shri Pramod Sharma. Out of said quantity of 2737.305 M.T, a quantity of 2009.583 M.T was used from Cenvatable materials on which they availed credit amounting to Rs 73,52,066/-. 17. Further, M/s RSL also shown to have used the said materials of iron & steel in he aforesaid items mentioned at S. No. 01 to 14 during 01.04.2007 to 31.10.2008, [sub para (i) to (xiv) of para 15] whereas as per records i.e. ER1 returns (RUD-18) and invoices issued for captive use (RUD-14), the complete plant was o....
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....ine and other miscellaneous civil work as eligible to credit of duty. In view of the above, it appears that M/s RSL was not eligible for credit on the materials which was used in fabrication of base structure of machines, shades and other miscellaneous civil work. Thus, it appears that M/s RSL wrongly availed credit amounting to Rs. 1,10,46,078/- (Rs. 73,52,066/- availed on 2009.583 M.T of said materials used in the base, shades & other civil work during 01.01.2006 to 31.03.2007 + Rs. 36,94,012/- availed on 1009.832 M.T used in the fabrication of shades & other civil work during 01.04.07 to 31.10.08) and the same is liable to be disallowed and recovered from them. 19 Shri S. P Tomar also stated to have used a quantity of 1084.222 M.T of said material in the fabrication of base structure of Cane Unloading System, base structure of Mill House Crane Loading & Unloading System base of Bagssee feeding system and Exhaust/ Vapour Pipe Line. Out of said quantity of 1084.222M.T, 622.912 M.T was used from Cenvatable materials on which M/s RSL availed Cenvat credit amounting to RS. 23,60,469/- The details are as below- S. No. Materials issued in the fabrication of the base of i....
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....ed in the fabrication of said systems and pipe line in terms of Rule 2(a) of the Cenvat Credit Rules, 2004. Thus it appears that M/s RSL wrongly availed said credit amounting to Rs. 23,60,469/- and the same is liable to be disallowed and recovered from them 22 M/s RSL also shown to have used the said materials namely H.R/S.S Coil, Plates, Shape & Section, Bar & Rod, H.R/S.S Sheet/plate, Joist, Channel, and Angle etc in fabrication of Structure of Cane Unloader, Pre Fab for Power House Pre Fab for Mill House, Pre Fab for Boiling House and Pre Fab for Boiler House. The said items also do not appear to be the "goods" in view of the position discussed in para 20 above and, as such, M/s RSL were also not eligible for credit to the extent of inputs used in the fabrication of said structure. However, since M/s RSL have paid duty on the said pre fab & structure of said item as per details given in Col. (7) against SI. No. 11 to 15 of table to para 6 above, no demand of Cenvat credit availed on`the materials of iron & steel used in fabrication of said structure and pre fab may be required to be raised 23 M/s RSL also shown to have issued 94.569 M.T of said materials of iro....
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....hat M/s RSL wrongly availed credit amounting to Rs 82,099/- on paints & varnish and Rs 2,69,696/- on welding electrodes and the same is liable to be disallowed and recovered from them. 25 Further, during the course of physical verification of capital goods on 31.10.2008, it was found that M/s RSL purchased 50 weighbridges and availed cenvat credit on the said weighbridges. Out of said 50 weighbridges, 41 weighbridges involving credit amounting to Rs. 11,99,744/- (details as per Annexure-G) were installed at their cane collection centers outside the factory premises. M/s RSL have removed the said weighbridges from the factory without reversal of amount equal to credit availed on the said weighbridges. As per Rule 3(5) of the Cenvat Credit Rules 2004, M/s RSL were required to reverse an amount equal to the credit availed in respect of said 41 weighbridges but they did not reverse the same. Ms RSL also purchased 21 computers and availed cenvat credit on the said computers. Out of said 21 computers, 07 computers involving credit amounting to Rs. 17986/- were installed in heir office. As per Rule 2(a) of the Cenvat Credit Rules, 2004, the definition of capital goods does not in....
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....ntre outside the factory premises without reversal of credit availed thereon 11,99,744/- Rs.11,99,744/- vide RG-23A Part-ll entry No. 119 to 131 all dated 12.11.08 07 Computers Cenvat credit availed on the computers installed in their office 17,986/- Total 1,50,45,349/- 36,99,744/- 28- M/s RSL though took the credit of duty paid on the said materials of iron & steel otherwise than as prescribed under the Cenvat Credit Rules, 2004 and never informed the department about the use of such items in fabrication of base structures, shades and other miscellaneous civil work in any manner. Similarly, M/s RSL also concealed the fact of using weighbridges outside. the factory premises and also the use of computers in their office from being brought to the notice of the department. Further, they also did not inform the department of having removed the materials of iron & steel to their other unit. Thus, it appears that M/s RSL have wrongly taken and utilized the Cenvat credit in respect of inputs in contravention of the provision of Rule 3 of tine Centvat Credit Rules, 2004 read with Rule 2 of the Rules ibid, by suppression of f....
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.... presence on or after his joining on 28.10.08. 30- Again, summons were issued to the aforesaid Shri P.K Malhotra, who was head of the unit, Shri D.B.S Gill and Shri Anil Sharma. Shri Pramod Sharma, President (Commercial) of M/s RSL Group appeared before the Superintendent, Central Excise Commissionerate Meerut-II on 06.04.2009 and he submitted a letter dated 04.04.2009 (RUD-16). In the said letter, M/s RSL mentioned that Shri P.K Malhotra and Shri Anil Sharma have already left the company and their whereabouts are not known to them. They also informed that Shri D.B.S Gill is very upset due to sudden and untimely death of his son. Shri Pramod Sharma also offered himself for queries in the matter in place of Shri D.B.S Gill. Shri Promod Sharma in his statement dated 06.04.2009 (RUD-17) stated that physical stock verification was done in presence of Shri P.K Malhotra who has since left the company and accordingly, they have debited the duty involved in the shortage of sugar. In view of above, M/s RSL failed to give any explanation about the shortage of 50500 Qtls of sugar detected by the officers on 24/25-102008. They, however. admittedly paid the duty amounting to Rs. 49,41,....
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....service tax against these petty contractors, as they are not issuing any consignment note. However, he admitted payment of Rs. 1.53 crores approx. towards freight to said contractors. He further stated that he will discuss the issue with top management of the company and they will pay the service tax, if they are liable to pay the same on the said amount of freight paid by them. 33 A print out of ledger of said contractors were taken on 20.01.2009 (RUD-26) from the CPU resumed from the Belwara unit on 24/25-10-2008 in presence of Shri Gagandeep Singh, authorized person of M/s RSL. The proceedings of unsealingof CPU on 20.01.2009 was also recorded in the Panchnama dated 20.01.2009 (RUD- 27) and a statement of Shri Gagandeep Singh under Section 14 of the Central Excise Act 1944 was also recorded on 21.01.2009 (RUD-21). On scrutiny of said ledger of contractors, it appeared that M/s RSL have made payments to the tune of Rs. 1,53, 64, 400/- during the period from 01.04.07 to 31.10.2008 to the sugar-cane transporters who transported the sugarcane from sugar-cane collection centers to the said unit. The contractor wise details of payment made & their liability to service tax tow....
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....e date of payment of the said amount under Rule 14 of the Cenvat Credit Rules 2004 read with Section 11AB of Central Excise Act 1944; (iii) Penalty should not be imposed upon them under Rule 15 of the Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944. B. (i) The Central Excise duty amounting to Rs. 49,41,425/- (Rupees forty nine lakhs forty one thousand four hundred and twenty five only) (Rs 35,85,500/- BED + Rs. 12,12,000/- Sugar Cess + Rs. 95950/- Ed Cess + Rs. 47975/-SHE Cess) involved on 50500 Qtls of sugar found short in stock on 24-10-2008 should not be demanded and recovered from them under proviso to Section 11A of the Central Excise Act 1944. Since the said mount has already been paid by them vide PLA, entry no. 03 dated 25.10.08, the same is to be appropriated in the Govt. account. (ii) Penalty should not be imposed upon them under Rule 25 of the Central Excise Rules 2002 read with Section 11AC of the Central Excise Act 1944 C. (i) The service tax amounting to Rs 4,74,760/- (Rupees four lakhs seventy four thousand seven hundred and sixty only) (Rs. 460932/- S. Tax + Rs 9219/-Ed Cess + Rs. 4609/- SHE Cess) ....
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....ppellant at any point of time, either during the investigation or during any stage subsequently. On the contrary difference has been admitted and the duty due of alleged shortages has been paid by the appellant without offering any explanation in respect of such shortages thereby admitting the shortage and the short payment of duty thereof. 4.0 As factum of production is not in dispute the observations made in the order prepared by learned Brother with regard to receipt of raw material etc. are totally irrelevant, those need not have been investigated and the same is the admitted fact and the admitted facts do not need to establish by way of evidence proving production by way of showing the receipt of raw material, consumption of power etc. Hon'ble Supreme Court in the case of M/s System and Components Pvt. Ltd. 2004 (165) ELT 136 (SC) has held as follows:- "4.The Collector (Appeals) relied upon a Circular issued by the Board of Central Excise dated 25th September, 1986 and held that Receivers, Surge Drums and Flash Vessels were classifiable under Tariff Item No. 73.11 and the Drain Pot under 73.10. It was held that the oil separator would be classifiable under 84.79 an....
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....on of facts, or contravention of any of the provisions of this Act or rules made thereunder with intent to evade payment of duty, the person is liable to pay the duty as determined under sub-section (2) of Section 11A and shall also be required to pay penalty equal to the duty so determined. 12. The Supreme Court in Union of India v. Rajasthan Spinning & Weaving Mills - 2009 (238) E.L.T. 3 (S.C.) (Para 19), held that it is clear that penalty under Section 11AC, as the word suggests, is punishment, for an act of deliberate deception by the assessee with the intent to evade duty by adopting any of the means mentioned in the section. 13. In the present case, the Tribunal has found that there is no material or evidence of any kind to support the findings, that there was clandestine removal, which did not tally with the physical stock. In substance it was found that there was shortage of finished goods. The shortage of finished goods, by itself could not unless it is related to clandestine removal of finished goods for which there was no material evidence, infer evasion of excise duty, and thus no penalty can be imposed." 6.0 From the above, it is observed that it i....
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....st and the further liability imposed by way of penalty etc. ought not to have been imposed. However, we do not get any clarity from the order of the Tribunal with regard to the acceptance and the statements made under Section 14 of the Central Excise Act, 1944 duly recorded by the Excise authorities coupled with the acceptance of the fact and position and the undertaking to pay the demand so raised upon them, against which compliance also was done over a period of time. 14. The Court therefore fails to appreciate as to why the statements duly recorded under statutory provisions of Section 14 of the Central Excise Act, 1944 was ignored or not taken into consideration by the appellate Tribunal. Nowhere did the private respondents plead that the allegation of clandestine removal was made against them. The department all along sought clarity from them for such huge difference in the physical stock vis-à-vis their book of accounts and only explanation offered by the respondents Company was that the goods have been "dislodged". 15. Since it is a case of acceptance and failure to explain the huge variation in the stock and the variations were not having been dispu....
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....rocurement of raw material would pale into insignificance. The Tribunal's remarks were merely in the nature of passing thoughts. Vulnerability of such observations would not vitiate the order itself." 10.0 In the case of M/s R.S. Industries 2014 (301) ELT 382 (Tri.-Kolkata) Kolkata Bench of this Tribunal has held as follows:- "6. It is clear from the said statement that shortage had been admitted and the applicable duty was paid. No question was raised in ascertaining the reason of such shortage. Accordingly, no explanation was also furnished by the said employee. In these circumstances, it is difficult to accept the contention of the ld. AR for the Revenue that the shortage quantity was removed from the factory clandestinely without payment of duty, when no further investigation had been carried out by the Department. I find force in the contention of the ld. Advocate that such shortages could be on account of various factors, including the practice of determining the weight on applying average weight of each bundle. In absence of cogent evidences or admission of removal of goods clandestinely from the factory without payment of duty, in my opinion, the ingredients of ....
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....cardex which were prepared separately for manufactured items and bought out items have been destroyed and are not available. We therefore called for the computerised record from June 1988 onwards till date along with the RG-1 figures to verify that no debit entries were made in RG-1 register in respect of bought out items which were in balance in June 1988 in RG-1 register. But the appellants could not produce either the computerised records or the RG-1 figures. We thereafter made an attempt to tally figures in balance sheet based on inventory prepared by the appellant and to compare the same with the RG-1 register to verify whether the difference between the RG-1 figures and the balance sheet figures was on account of bought out items which remain to be debited from the RG-1 register from June 1988 onwards or not but the appellants again showed their inability to show us the RG-1 register or the figures as they were not available with them. In view of this we hold that the appellants have not been able to produce a single documentary evidence to establish that the stock of bought out items existing in June 1988 continued to be reflected in the RG-1 register & that no debit entry i....
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....counted clearance of 269.712 MTs found by investigation in para 28 of the show cause notice. It is therefore required that without any hesitation the adjudicating authority has to re-compute the duty liability of the appellant in respect of 449.712 MTs which is aggregate of 180 MTs of goods as well as 269.712 MTs of goods clandestinely removed as established from evidence gathered and recovered in the course of search and show cause notice provided basis. There was misplaced sympathy on the evaders. This can be said following the principle laid down by Hon'ble High Court of Himachal Pradesh in the case of Commissioner of Central Excise v. International Cylinders Pvt. Ltd. - 2010 (255) E.L.T. 68 (H.P.). The Hon'ble Court held that no law can be interpreted in a manner so as to give premium to illegal and criminal activities. It is basic commonsense that no person will maintain authentic records of the illegal activities or unaccounted manufacturing done by it. Therefore in absence of authentic record to show above clearances, preponderance of probability comes to rescue of Revenue and the plea of set off of offence fails. The echoing evidence on record established that investigation....
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....pugned order has referred the decision of Hon'ble Allahabad High Court while distinguishing the decision of M/s Minakshi Casting referred above, the adjudicating authority has referred the decision of Hon'ble Allahabad High Court in case of M/s Bajrang Petro Chemicals TIOL-2254-HC-All wherein following has been held:- "9. We heard both the parties at length and gone through the materials available on record. From the record, it appears that there was a huge shortage of finished goods for which no explanation was offered by the appellant at the time of stock checking. It means that the appellant had admitted the shortage and paid the duty accordingly. Thus, the appellant was unable to give any suitable explanation for the shortage of the finished goods. This is an admission by the appellant that the goods found short had been removed without payment of the duty. The method for clandestinely removal of the goods is not required to be explained. Since, it is a case of the shortage of the finished goods for which the appellant has no explanation, so the provision of Section -11AC for levy of the penalty and Section 26 for levy of the penalty on the authorized signatory would b....
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....heading 860692]] of the First Schedule to the Excise Tariff Act; ......... used - (1) in the factory of the manufacturer of the final products, [ * * * ]; or (1A) outside the factory of the manufacturer of the final products for generation of electricity [or for pumping of water for captive use within the factory; or (2) for providing output service; (B) motor vehicle designed for transportation of goods including their chassis registered in the name of the service provider, when used for - (i) providing an output service of renting of such motor vehicle; or (ii) transportation of inputs and capital goods used for providing an output service; or (iii) providing an output service of courier agency; (C) motor vehicle designed to carry passengers including their chassis, registered in the name of the provider of service, when used for providing output service of - (i) transportation of passengers; or (ii) renting of such motor vehicle; or (iii) imparting motor driving skills; (D) components, spares and accessories of motor vehicles which are capital goods for t....
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....ct of such inputs or capital goods and such removal shall be made under the cover of an invoice referred to in Rule 7." From the above statutory provisions, it can be seen that prior to 1-3-2003 when the new Rule 3(4) came into operation, when inputs or capital goods on which Cenvat credit has been taken are removed as such from the factory, manufacturer of the final product had to pay an amount equal to the duty of excise which is leviable on such goods at the rate applicable to the same on the date of removal and on the value determined for such goods under Section 4 or 4A of the Central Excise Act. In short, prior to 1-3-2003, the computation of central excise on the goods removed on as such basis was on transaction value. On 1-32003, significant change was made inasmuch as on removal of goods as such from the factory, the manufacturer of final product had to pay amount equal to the credit availed in respect of such inputs or capital goods and such removal had to be made under the cover of an invoice referred to in Rule 7. We may at this stage record that such provision is found in later Rule 2004 in Rule 3(5) thereof. 13. With this brief recording of Legislati....
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.... undertaking, as the case may be, or used in the intermediate product cleared for export, or used in providing output service which is exported, the Cenvat credit in respect of the input or input service so used shall be allowed to be utilized by the manufacturer or provider of output service towards payment of duty of excise on any final product cleared for home consumption or for export on payment of duty or service tax on output service and where for any reason such adjustment is not possible, the manufacturer or the provider of output service shall be allowed refund of such amount subject to such safeguards, conditions and limitations, as may be specified by the Central Government by notification. In case of Technico Engineers Pvt Ltd [2014 (313) ELT 707 (T)] following has been held: 2. We have heard both sides. We find that under Rule 57U credit is not admissible on capital goods removed as such and an assessee is required to reverse the credit in such a situation. Admittedly, the goods were removed as such and, therefore, the appellants are liable to duty which they have already paid. The levy of interest is challenged on the ground that removal was not by the ass....
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....an office would not be admissible. The party in their reply have submitted that computer is not equipment or appliance but is a machine. So the said exclusion clause would not be applicable in this case. In this regard I find that term 'machine' has been defined under Section Note 5 of Section XVI of the Central Excise Tariff as below:- "5. For the purposes of these Notes,the expression "machine" means any machine, machinery, plant, equipment, apparatus or appliance cited in the headings of Chapter 84 or 85." From the above, it is clear that equipment or apparatus is a machine. There is no difference between term 'machine' and equipment or apparatus. Hence I do not find any force in the argument of the party. In view of the provisions o rule 2(a)(A)(i) of the Cenvat Credit Rules,2004, 1 disallow the Cenvat credit of Rs.17,986/ taken on 7 computers which were used in their office." From the above it is evident that the CENVAT Credit has been sought in respect only those computer which were installed and utilized by the appellant in their office and not within the factory of manufacture, by referring to the exclusion clause in definition of as per Rule 2 (....
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....(Appeals) has attained finality and department has not filed any appeal then now the department is not permitted to take a contrary stand as held in the case of Rosmerta Technologies (supra). 9. Further, I find on the analysis of the definition of 'input service' as provided in Rule 2(l) of Cenvat Credit Rules, 2004 that the computer networking is specifically included in the 'includes clause' of the definition of input services." From the facts of the case as reproduced from the decision of Chandigarh Bench, referred by the Appellant reproduced above it is evident that issue for consideration by the bench in that case was in respect of networking services availed by Maruti Suzuki, as input services. The issue was not at all in respect of admissibility of CENVAT Credit in respect of Computers not used in factory of production but in the office of Appellant. This decision is clearly distinguishable. Once something has been excluded by way of exclusion clause in the definition then the same cannot be said to be covered within the ambit of the definition. In case of Solar Industries India Ltd. [2018-TIOL-2245CESTAT-MUM] Bombay Bench observed as follows: ....
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....act that on the amendments indicates 'when such services are used primarily for consumption of its employees, CENVAT credit cannot be allowed.' The above reference could be held good only with reference to the services mentioned in clause (C) and not those mentioned Clause (A) & (B). While deciding the matter the bench did not make any distinction between the services covered under clauses (B) and (C). Such interpretation which has been done ignoring the specific provisions in law cannot be but per in curium and hence cannot be binding precedence. Accordingly, the submissions made vis-à-vis relying on this judgments cannot be a reason for allowing the credit in respect of rent-a-cab service in the present case. Affirming the said decision Hon'ble Bombay High Court as reported at [2022 (60) ELT GSTL 216 (Bom)] observed as follows: 5.We have heard the Learned Counsel for the parties at length and we have perused the order passed by the Tribunal disallowing the claim for Cenvat credit. It was found by the Tribunal that by virtue of the amendment dated 1-4-2011 rent-a-cab service had been excluded from the definition of the term "input service". The same was in three....
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....e amended provisions. The service provided was mere in the nature of personal service to its employees which is not permitted to be treated as "input service". This decision of Bombay High Court has been affirmed by the Bombay High Court as reported at [2022 (64) GSTL 257 (SC)] Thus I do not find any merits in the submissions made by the appellant 22. In respect of the admissibility of the CENVAT Credit in respect of Materials of iron & steel namely Shape, Section, Angle, Rod, Plates, HR Coil, Channel, Joist etc used for fabricating which were used in the fabrication of base structure, shades and other miscellaneous civil work appellant has relied upon the decisions as follows: ⮚ Vandana Global Ltd. [2018 (16) GSTL 462 (Chattisgarh)] ⮚ Mundra Ports & Special Economic Zone Ltd [2015 (39) STR 726 (Guj)] ⮚ IOL Chemicals and Pharmaceuticals Ltd. [2023 (385) ELT 705 (P&H)] as affirmed at [2023 (386) ELT 163 (SC)] Taking note of the above decisions learned Member (Judicial) has held that this credit would be admissible. 23. To discuss the issues involved I reproduce the relevant text from these decisions: * Mundra Ports & ....
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....input credit. According to learned Counsel for the appellant, the appellant is not manufacturer and, therefore, the provisions of Explanation 2 of Rule 2(k) would be applicable only to the factory and manufacturer. The appellant is neither having any factory nor he is manufacturer. The appellant is a service provider of port. We need not go into this question as to whether the appellant is a factory or manufacturer or service provider in view of the fact that it is not disputed by Mr. Y.N. Ravani, learned counsel appearing for the Revenue in this Tax Appeal that the appellant provides service on port for which he is getting jetty constructed through the contractor and the appellant has claimed input credit on cement and steel. The cement and steel were not included in Explanation 2 from 2004 up to March, 2006. The Cenvat Credit Rules, 2004 were amended in exercise of the powers conferred by Section 37 of the Central Excise Act, 1944 with effect from 7-7-2009, the date on which it was notified by the Central Government from the date of the notification. According to learned Counsel for the appellant, this amended definition would apply only to the factory or manufacturer and would n....
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.... intention behind amendment was to clarify. The coverage under the input from where this intention has been gathered by the Tribunal has not been mentioned in the judgment. There is no material to support that there was any legislative intent to clarify any existing provision. For the same reason, as mentioned above, the decision of the Apex Court in Sangam Spinners Limited v. Union of India and Others, reported in (2011) 11 SCC 408 = 2011 (266) E.L.T. 145 (S.C.) would not be applicable to the facts of the instant case. * Vandana Global Ltd. [2018 (16) GSTL 462 (Chattisgarh)] "2. By the order dated 17-6-2008 the Principal Bench of the Tribunal referred the following issues for consideration to the Larger Bench : (a) Whether the term "capital goods" can include plant, structures, embedded to earth? (b) Whether the goods like angles, joists, beam, channels, bars, flats which go into fabrication of such structures can be treated as 'inputs' in relation to their final products as inputs for capital goods, or none of the above? (c) Whether the credit can be allowed in respect of goods like angles, joists, beam, channels, bars, flats which go into f....
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....l of this judgment shows that the Chhattisgarh High Court had again considered the same question of law and observed as under :- "4. In the light of the contents of the impugned order of the Tribunal and submissions of the assessee and the Revenue following substantial questions of law are formulated for consideration : (A) Whether the term 'capital goods' excludes the structures embedded to earth? (B) Whether the goods like angles, joists, beams, bars, plates, which go into fabrication of such structures are not to be treated as 'input' used in relation to their final products as inputs for capital goods, or none of the above? (C) Is the amendment brought in CENVAT Credit Rules, 2004 as per Rule 2 of the CENVAT (Amendment) Rules, 2009 retrospective in nature considering is it clarificatory to be applied to all matters which arise before 7-7-2009, the date of commencement of the CENVAT (Amendment) Rules, 2009 : hereinafter referred to as 'Amendment Rules'. 5. The impugned order of the Tribunal had come up for consideration before different High Courts either cited as precedent or as relied upon by the Tribunal in different other matters.....
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....n invoked by the revenue, regard being had to the fact that conflicting views of the Tribunal expressed in different Benches was prevailing at that time. In these circumstances, this Court is of the opinion that no substantial question of law is involved. From perusal of the above observations made by the Hon'ble Apex Court it is evident they have decided the upholding the order of Hon'ble High Court only on limitation. On the admissibility of the credit it is evident that court has observed that it is considering the same issue in matters pending before it. Hence this decision cannot be said to be according finality on the question of admissibility of the credit on these goods. 24. From the perusal of decision of Hon'ble Gujarat High Court and Hon'ble Chhattisgarh High Court it is observed that both these Hon'ble Court have decided the issue holding that the amendments made in the CENVAT Credit Rules, 2004 (amending Explanation 2 to the Rule 2 (k)) cannot be held to be retrospective and hence cannot be applied for denying the credit in respect of this goods for period prior to this amendment. These decision do not lay down that the CENVAT Credit for the period prior to amend....
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....puts, there should be a nexus between the inputs and the final products. In the present case the manipulation/fabrication of raw materials involved in fabrication of structure which in turn is used for fixing of machines will render such nexus tenuous. It is clear that such structure far remote linkages are not within the scope of the term "used for". I also place reliance on the decision of the Hon'ble Supreme Court in the case of Saraswati Sugars Mills CCE [2011 (270) ELT 465 (SC)] where it has been held that credit on iron and steel sheets and angles used for the fabrication of a plant as steel structures would not be admissible. In view of the Apex Court's observation I hold that no Cenvat credit would be admissible on material of iron & steel used for making structure 27.1 It is also found that admissibility of Cenvat credit on the material of iron and steel has also been clarified by the CBEC vide circular No.964/07/2012-CX dated 02.04.2012 as those structural components which are to be used essentially as a part of Boiler System would be classifiable as parts of Boiler only under Heading 8402 of the Tariff. It is further clarified that since these structural....
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....ing and unloading system, bagasse feeding system and exhaust/vapour pipe line. 1 find that Shri S.P. Tomar in his statement, taken during the investigation, stated that all moveable parts of aforesaid machines were purchased outside. For installation said items, base structures were fabricated by embedding with earth on permanent basis. The said base structures thus cease the character of goods In the case of Quality Steel Tubes Pvt Ltd [1995(75)ELT 17(SC)], the Hon'ble Supreme has observed thus:- "Goods which are attached to the earth and thus become immoveable do not satisfy the test of being goods within the meaning of the Act nor it can be said to be capable of being brought to the market for being bought and sold." In view of the above settled position the base of aforesaid systems are not goods and so they can neither be treated as capital goods nor component spares or accessories of capital goods. I am, therefore, of the view that Cenvat credit amounting to Rs.23.60,469/- taken on 622.912 MT of materials of iron & steel would not be admissible to the party 29. It is an undisputed fact that the factory was made functional in April,2007. It indic....
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....nufacturing plant. It is also submitted that the Notification requires to be strictly construed and since the assessee does not fall within the ambit of the Notification, it is not entitled for the benefit of the Notification. The Notification : 6. To resolve the controversy, we need to notice the relevant Notification and Rule 57Q of the Rules. The relevant portion of Notification No. 67/95-C.E., dated 16-3-1995 is as under :- "In exercise of the powers conferred by sub­section (1) of Section 5A of the Central Excise Act, 1944... the Central Government being satisfied that it is necessary in the public interest so to do hereby exempts (i) capital goods as defined in Rule 57Q of the Central Excise Rules 1944 manufactured in a factory and used within the factory of production; (ii) ... from the whole of the duty of excise leviable thereon which is specified in the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986)." The Rules : Rule 57Q of the Central Excise Rules, 1944 reads :- "(1) All goods falling under heading Nos. 82.02 to 82.11; (2) All goods falling under Chapter 84 (other ....
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....btract words in order to grant or deny the benefit of exemption notification. In Bombay Chemicals (P) Ltd. v. CCE - (1995) Supp (2) SCC 64 = 1995 (17) E.L.T. 3 (S.C.), a three Judge Bench of this Court held that an exemption notification should be construed strictly, but once an article is found to satisfy the test by which it falls in the notification, then it cannot be excluded from it by construing such notification narrowly. 8. Now coming to Rule 57Q of the Rules, these rules are framed under the Statute. While interpreting the Rules, which are framed under the Statute, they should be read as a Part of the Statute itself and require to be interpreted as intra vires to the Act under which they have been issued. Having said that, now let us consider the submission of learned counsel Shri Lakshmikumaran for the assessee who contends that Iron and Steel structural manufactured by the assessee within its factory used for the purpose of installation of sugar manufacturing plant are components of the capital goods and therefore, exempt from payment of excise duty by virtue of Notification No. 67/1995-C.E., dated 16-3-1995. However, Shri Swami, learned counsel for the....
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....ry to make an article, a component part is that it goes in to the composition of another article. If an article is an element in the composition of another article made out of it, such an article may well be described as a component part of another article. It may be that the final product made may be in the nature of a compound in which case, the elements forming component parts may not be capable of any more separate identification. Equally, it may be that when a machinery is assembled out of several parts forming that machinery, those machinery, those parts, even after there being filled may retain their individuality or identity.' 11. The meaning of the expression 'components' as defined in the dictionary is accepted and adopted by this Court in the case of Star Paper Mills v. Collector of Central Excise - (1989) 4 SCC 724 = 1989 (43) E.L.T. 178 (S.C.); and the same is quoted with approval in CCE v. Allied Air Conditioning Corporation - 2006 (202) E.L.T. 209 (S.C.). 12. In order to determine whether a particular article is a component part of another article, the correct test would be to look both at the article which is said to be component part and the compl....
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.... Lakshmi Cement v. Collector of Customs, (2000) 10 SCC 224 = 1919 (114) E.L.T. 778 (S.C.), this Court while drawing a distinction between component and spare parts observed : "It pertains to the meaning of the phrase "component parts". The Tribunal, in the impugned order, drew a distinction between component parts and spare parts, following its earlier decision in the case of Vaz Forwarding (P) Ltd. v. Collector of Customs1. Component parts, according to it, were those which were initially used in the assembly or manufacture of a machine and spare parts were those parts which were used for the subsequent replacement therein of worn-out parts. The decision in Vaz Forwarding (P) Ltd.1 and other decisions of the Tribunal were considered by a Larger Bench of the Tribunal in Jindal Strips Ltd. v. Collector of Customs2. The Larger Bench took the view that a spare part was a replacement part to replace a damaged or worn-out component but it was, nevertheless, a component part. "Component" was the genus and "spare" was a species thereof; it was a component which was used for replacement. The Larger Bench judgment found that the distinction drawn in Vaz Forwarding (P) Ltd.1 was a d....
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.... pan, crystallizers, sugar grader, elevator, cooling tower etc. Our Analysis and Conclusion : 19. It appears to us, in the light of the meaning of the expression 'component parts' that the iron and steel structures are not essential requirements in the sugar manufacturing unit. Anything required to make the goods a finished item can be described as component parts. Iron and Steel structures would not go into the composition of vacuum pans, crystallizers etc. If an article is an element in the composition of another article made out of it. such an article may be described as a component of another article. Thus, structures in question do not satisfy description of components'. Therefore, in our opinion, the Tribunal was right in the view it took. 20. Sri V. Lakshmi Kumaran, learned senior counsel, submits that the Iron and Steel structures are fabricated at the site of the work for use in the construction of the various machineries and, therefore, can be classified under sub-heading 7308.50 under Chapter 73 of the Schedule to the Act, which attracts nil rate of duty. Therefore, it is contended that even if his other contention is not accepted, the assessee....
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....the capital goods of Clauses (a) to (c) of Explanation (1) of Rule 57Q and classifiable under any Chapter heading are eligible for availing of MODVAT Credit. However, while denying exemption under the notification, the Tribunal has concluded that the goods in question, which comes under Chapter Heading 73 of the Tariff Act has not been specified in the table below Rule 57Q. We do not find fault with the reasoning of the Tribunal, since the Circular, on which reliance is now placed by the learned counsel, was not produced before the Tribunal and. therefore, going by the language employed in Rule 57Q, there is justification for the Tribunal for coming to the aforesaid conclusion. Since in view of the circular, which is now brought to our notice, the Tribunal was not correct to reject the claim of the assessee on the aforesaid ground. However, this finding of ours will not assist the assessee, since we have held that Iron and Steel structures are not the components of machineries used in the installation of Sugar Manufacturing Plant. 23. Before we conclude, we must further observe that Shri Lakshmikumaran drew our attention to the judgment of this Court in CCE v. Rajasthan Sp....
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....equipments such as vacuum pan, crystallizers, sugar grader, elevator, etc., HR plates (black steel) are used in boiler of sugar plant to keep temperature high, MS bars, shapes and sections are used for erection of new cooling tower, chequered plates and ITR plates are used to construct the platforms, the cane carrier chain and spares are used to transfer the raw material/semi processed material from stage to other, as the capital goods in the terms of Rule 57Q, treating these items as the parts and components of the plant. The question which arose before the Tribunal was that whether these items used for fabricating structures to support and install various machineries of the sugar plant are capital goods in terms of the Rule 57Q. The Tribunal while allowing the MODVAT credit found that these items, except MS sections and shapes, used for raising structure to support the various machines, parts of machineries of the plant would be covered by the explanation to Rule 57Q as a capital goods. The Tribunal referred to its own decision in Malvika Steel Limited's case [1998 (97) E.L.T. 530 (Tribunal)] and without semblance of any discussion, has partly allowed the assessee's appeal. In vi....
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.... self-assessment by the supplier and the supplier classified the 'Guide Car' under Chapter subheading 8428.90, though it was classifiable under Chapter subheading 8603.00. That thereafter the appropriate authority classified the 'Guide Car' under Chapter sub-heading 8603.00. Therefore, it will relate back to the original claim and/or relate back to the date of supply/self-assessment. 11.1 Now so far as the reliance placed upon the decision of this Court in the case of Cotspun Limited (supra) is concerned, the same shall not be applicable to the facts of the case on hand. In the case before this Court, it was a case of an approved classification list sought to be corrected subsequently and to that it is observed that the levy of excise duty on the basis of an approved classification list is the correct levy, at least until the correctness of the approval is questioned by the issuance of a show cause notice to the assessee. Therefore, on facts, the aforesaid decision shall not be applicable to the facts of the case on hand. 12.In view of the above and for the reasons stated above, the present appeal with respect to Modvat credit claimed by the appellant on 'Guide Ca....
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....rasive [2017-TIOL-174CESTAT-DEL] where it has been held that invocation of extended period is justified in case of clandestine removal. 36.1 It is further noticed that the party have mis-declared the nature of items for availing Cenvat credit which was otherwise not admissible to them. As per rule 9 of the Cenvat Credit Rules,2004 burden' lies on the assessee to avail correct Cenvat credit. This burden was not discharged by the party. They availed Cenvat credit on those items which were not within purview of inputs or capital goods. In the statements recorded during investigation, the fact relating to wrong availment of Cenvat credit was admitted by the party. The facts regarding wrong availment of Cenvat credit came to notice to the department only when the officers of the department verified the records. All above activities of the party indicate suppression and misdeclaration on the part of the party. In this regard reference is made to the decision of the Hon'ble Allahabad High Court in the case of Rathi Steel & Power Ltd [2015TIOL-HC-ALL-CX] where the Court has held that non- declaration of details of inputs to the department by an assessee is a deliberate con....
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.... Excise Act, 1944, in view of the decision of Hon'ble Supreme Court in the case of Rajasthan Spinning and Weaving Mills Ltd. [2008 (239) ELT 3 (SC)], holding as follows: 14. Sub-section 1A of Section 11A provides that in case the person in default to whom the notice is given under the proviso to sub-section 1 makes payment of duty in full or in part as may be accepted by him, together with interest under Section 11AB and penalty equal to 25% of the accepted amount of duty within thirty days of the date of receipt of notice then the proceeding against him would be deemed to be conclusive (without prejudice to the provisions of Sections 9, 9A and 9AA) as provided in the proviso to sub-section 2 of Section 11A. Sub-section 1A and the proviso to sub-section 2 were inserted with effect from July 13, 2006 and, therefore, have no application to the periods relevant to the two appeals. 15. Sub-section 2B of Section 11A provides that in case the person in default makes payment of the escaped amount of duty before the service of notice then the Revenue will not give him the notice under sub-section 1. This, perhaps, is the basis of the common though erroneous view that no p....
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....able thereon and twenty-five per cent of the consequential increase of penalty have also been paid within thirty days of the communication of the order by which such increase in the duty takes effect - Explanation. - For the removal of doubts, it is hereby declared that - (1) the provisions of this section shall also apply to cases in which the order determining the duty under sub-section (2) of section 11A relates to notices issued prior to the date on which the Finance Act, 2000 receives the assent of the President; (3) any amount paid to the credit of the Central Government prior to the date of communication of the order referred to in the first proviso or the fourth proviso shall be adjusted against the total amount due from such person.] 17. The main body of Section 11AC lays down the conditions and circumstances that would attract penalty and the various provisos enumerate the conditions, subject to which and the extent to which the penalty may be reduced. 18. One cannot fail to notice that both the proviso to subsection 1 of Section 11A and Section 11AC use the same expressions : "....by reasons of fraud, collusion or any....
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....ng questions have referred to Hon'ble President for referring the matter to Third Member for resolution in difference of opinion recorded:- A. Whether in respect of shortages deducted vis-à-vis the statutory records admitted by the appellant and duty paid in respect of such shortages- the demand in second round of litigation cannot be set aside without any explanation being put forth in respect of such shortages, as has been held by Member (Judicial) or such demand needs to be confirmed even without charge of clandestine clearance as held by Member (Technical); B. Whether the penalty imposed under Rule 25 of the Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act, 1944 is to be upheld for the alleged reading to such shortages, admitted by the appellant can be set aside as held by Member (Judicial) or needs to be upheld as held by Member (Technical). C. Whether demand made by disallowing the CENVAT Credit should be set aside along with interest and penalties as held by Member (Judicial) or the demand made is to be upheld in all other respect except for the demand in respect welding electrodes, paints and varnishes. The demand....
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....ound short consequent to physical verification is sustainable in law or not? A.1 The learned Counsel for the Appellant submits that the view taken by the Member (Judicial) is legally correct as the same has been taken on the basis of various decisions of the Tribunal and the High Courts on this issue. He further submits that he has earlier filed the written submissions, which have been reproduced by the Member (Judicial) in the interim order. The learned Counsel further submits that the issue as to whether mere shortage can lead to a conclusion of clandestine removal had been decided in earlier round of litigation by the Tribunal and specific finding was given to that mere shortage by itself does not lead to the conclusion of clearance of goods in a clandestine manner; the Tribunal while giving this finding had relied upon the decision of Hon'ble Allahabad High Court in the case of CCE, Kanpur vs. Minakshi Castings [2011 (274) ELT 180 (All.)]. He further submits that in the Final Order dated 21.06.2018 passed by the Tribunal in first round of litigation, it had been recorded that the law on this issue has been settled and the Adjudicating Authority had to decide the issue in vie....
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.... matter of fact and does not involve any interpretation of law; and in the present case, the shortage has been admitted and the duty has been paid without any protest; the only issue is for waiver of penalty which cannot be waived because no sufficient reason has been given for shortages. He further submits that penalty can also be imposed in the absence of suitable explanation for shortage of goods. He supports the findings of the Member (Technical) on this aspect which are recorded in para 6 of the interim order by the Member (Technical). He relies on the decision of Hon'ble Allahabad High Court in the case of M/s Bajrang Petro Chemicals [TIOL-2254-HC-All] to prove that once the shortage has been accepted, the demand can be confirmed. He also relies on the for imposition of penalty in case of shortage, if the same is not explained: * M/s Chicago Pneumatic India Pvt Ltd [2008 (221) ELT 373 (Tri. Mum.)] * Shri Rama Machinery Corp Ltd [2017 (348) ELT 540 (Tri. Chennai)] * CCE vs. International Cylinders Pvt Ltd [2010 (255) ELT 68 (HC of Himachal Pradesh)] A.3 After considering the submissions made by both the sides on this issue, I find that the present....
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....s - 2010-TIOL-693-HC-DEL-IT, it was held that inculpatory statement by itself is not sufficient without the matters having been further investigated. Accordingly, I find no reasons to confirm the said demands and set aside the same." Further, I find that the Hon'ble Punjab & Haryana High Court in the case of CCE, Chandigarh vs. Kewal Garg (supra) has considered the issue of clandestine removal/shortage and upheld the order of the Tribunal by dismissing the appeal of the department. Further, I find that the Hon'ble Punjab & Haryana High Court in the case of CCE, Ludhiana vs. Anand Founders & Engineers (supra) has once again considered the similar issue and has held as under: "6. The Commissioner (Appeals) set aside the findings of the clandestine removal of the goods recorded by the adjudicating authority by holding that the assessee's record which were admittedly lying in the adjoining sister concern M/s. Adhunik Industrial Corporation were not scrutinized. Further, it was held that the assessee had clarified the stock position vide letter dated 9-8-2008 which was rejected summarily as an after-thought without making the verifications. Shri Kamal Kant in his statemen....
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....on which has not been challenged by the department, I am of the considered opinion that the view taken by the Member (Judicial) is legally correct, accordingly, I affirm the finding recorded by the learned Member (Judicial). B. The second issue is whether the Cenvat Credit taken on HR Coils, Sheet, Shape, Section, Angle, Rod, Plate etc which were used for making base-structure, shades and civil-work in the factory, would be admissible or not? B.1 The learned Counsel for the Appellant submits that the credit was disallowed on the ground that these items did not qualify as capital goods in view of the decision of the Larger Bench of Tribunal in the case of Vandana Global Ltd vs. CCE, Raipur [2010 (253) ELT 440 (Tri. LB)]. The learned Counsel further submits that the said decision of the Larger Bench, on the basis of which the credit was denied, has been set aside by the Hon'ble Chhattisgarh High Court as reported in 2018 (16) GSTL 462 (Chhattisgarh)]. He further submits that the Hon'ble Gujarat High Court in the case of Mundra Ports & Special Economic Zone Ltd vs. CCE [2015 (39) STR 726 (Guj.)] has also held that the Cenvat Credit is admissible for the impugned items before pri....
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....nnot be treated to be clarification of particular thing or goods and/or input and as such, the amendment could operate only prospectively. In our opinion, the view taken by the Tribunal is based on conjectures and surmises as the Larger Bench of the Tribunal used the expression that intention behind amendment was to clarify. The coverage under the input from where this intention has been gathered by the Tribunal has not been mentioned in the judgment. There is no material to support that there was any legislative intent to clarify any existing provision. For the same reason, as mentioned above, the decision of the Apex Court in Sangam Spinners Limited v. Union of India and Others, reported in (2011) 11 SCC 408 = 2011 (266) E.L.T. 145 (S.C.) would not be applicable to the facts of the instant case. 9. Mr. Ravani has also vehemently urged that since jetty was constructed by the appellant through the contractor and construction of jetty is exempted and, therefore, input credit would not be available to the appellant as construction of jetty is exempted service. The argument though attractive cannot be accepted. The jetty is constructed by the appellant by purchasing iron, cem....
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....d in 2023 (386) ELT 163 (SC). In view of these circumstances, I am clearly of the opinion that the Appellant are entitled to Cenvat Credit on these items, therefore, in this regard the view taken by the Member (Judicial) is legally correct, accordingly, I hold the same view. B.4 As regard the another issue whether credit can be allowed on capital goods after the factory has become operational, the learned Counsel has submitted that only allegation is that the capital goods were received after the factory became operational and there is no allegation that the capital goods were not received in the factory. He has also submitted that it is irrelevant that the factory became operational or not; capital goods can be received even after the factory has become operational and the capital goods are regularly received in the factory and hence, credit cannot be disallowed. Argument of the learned Counsel has a force that credit cannot be disallowed on capital goods simply because the same was received when the factory was in operation. On this issue also, I support the view of Member (Judicial). C. The third issue is whether the Cenvat Credit taken on paints used for coating of ....
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....shing season; the said weigh scales of smaller capacity are not permanently removed from the Appellant's factory and the issue regarding the eligibility of credit on weigh scales has been decided in the case of Triveni Engg. & Inds. Ltd. (supra)"; hence, the Member (Judicial) has allowed the credit. I do not find any infirmity in the finding of the Member (Judicial) on this aspect which is based upon the earlier decision of the Tribunal in the case of Triveni Engg. & Inds. Ltd. (supra) and accordingly, I hold the same view. F. The sixth issue is whether the Cenvat Credit taken on Computers installed in Offices of the party, would be legally correct or not? I find that this issue is squarely covered by the decision of the Tribunal in the case of Maruti Suzuki Ltd vs. CCE, Gurugram [(2023) 4 Centax 108 (Tri. Chan.)]. By following the said decision, the Member (Judicial) has allowed the credit. I do not find any infirmity in the finding of the Member (Judicial) on this aspect also and accordingly, I hold the same view. G. The seventh issue is whether the Appellant are liable to pay service tax under reverse charge mechanism on freight amount paid for transportation of sugarca....