TaxTMI 
TaxTMI 
2026 (1) TMI 1284
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..... 2. Facts of the case, as projected, are that the M/s Bharat Aluminium Company Limited, P.O. Balco Nagar, Korba, Chhattisgarh-495684 (hereinafter referred to as "the respondent/assessee"), holding Central Excise Registration No. AAACB1290NXM002, is engaged in the manufacture of aluminium and aluminium products classifiable under Chapter 76 of the Central Excise Tariff Act, 1985. In the course of its manufacturing activities, the respondent was availing CENVAT credit on inputs, capital goods and input services in terms of the CENVAT Credit Rules, 2004. The respondent was procuring coal from South Eastern Coalfields Limited (SECL), a subsidiary of Coal India Limited, which coal was used as an essential input in the manufacture of aluminium. On the basis of intelligence gathered, the Department initiated proceedings against SECL alleging undervaluation of coal supplied to its customers by not including statutory levies such as royalty, stowing excise duty, clean energy cess, transit fees and other charges in the assessable value, despite such levies being statutorily payable. Accordingly, a show cause notice was issued to SECL, Bilaspur, demanding differential excise duty on the a....
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....dent preferred an appeal before CESTAT. The Tribunal, vide the impugned Final Order No. A/50761/2019-EX(DB) dated 07.01.2019 (Annexure-A/1), allowed the appeal and set aside the Order-in-Original. The Tribunal held that in identical matters it had already been decided that there was no element of fraud, collusion, wilful misstatement or suppression of facts with intent to evade payment of duty on the part of SECL and, therefore, the bar under Rule 9(1)(b) of the CENVAT Credit Rules, 2004 was not attracted. Consequently, the respondent was held entitled to avail CENVAT credit on the basis of the supplementary invoices. Being aggrieved by the aforesaid impugned final order dated 07.01.2019, passed by the CESTAT, the Revenue has preferred the present appeal before this Hon'ble Court under Section 35-G(1) of the Central Excise Act, 1944, raising substantial questions of law for consideration. 4. Learned counsel appearing on behalf of the appellant-Revenue submits that the impugned final order passed by the learned CESTAT is legally unsustainable, as the Tribunal has failed to consider and adjudicate upon the core and determinative issue involved in the present case, namely, the avai....
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....ed and detailed Order-in-Original without meeting, analyzing or rebutting the specific findings recorded therein, particularly those relating to confirmation of demand against SECL, invocation of extended period, and imposition of penalty under Section 11AC. The Tribunal was duty-bound to deal with these findings before setting aside the Order-in-Original. Learned counsel also submits that the Tribunal has erroneously relied upon the pendency of an altogether different issue, namely, whether royalty is a tax, which is pending consideration before the Hon'ble Supreme Court. The said issue has no nexus with the controversy involved in the present case, which solely concerns the statutory embargo under Rule 9(1)(b) of the CENVAT Credit Rules. Reliance on such pendency is therefore wholly misconceived. It is further submitted that, in similar matters arising out of identical facts, the Tribunal itself has adopted a contrary approach. In the case of M/s Trimula Industries Ltd., Singrauli, the Tribunal adjourned the matter sine die awaiting the verdict of the Hon'ble Supreme Court, whereas in the present case, on the same set of facts, the Tribunal has straightaway allowed the credit. Su....
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....e documents on the basis of which CENVAT credit can be availed, and a supplementary invoice is specifically recognized as a valid document for availing such credit. Rule 9(1)(b) permits availment of CENVAT credit on supplementary invoices except in a narrowly carved out situation, namely, where the additional amount of duty becomes recoverable from the manufacturer or importer by reason of fraud, collusion, wilful misstatement, suppression of facts or contravention of statutory provisions with intent to evade payment of duty. It is further submitted that a plain and harmonious reading of Rule 9(1)(b) makes it abundantly clear that the said provision is attracted only when the ingredients analogous to those required for invoking the extended period of limitation under Section 11A of the Central Excise Act, 1944, including the existence of mens rea or intent to evade duty, are clearly established against the manufacturer issuing the supplementary invoices. In the present case, the appellant-Department proceeded against SECL on the issue of valuation of coal under Section 4 of the Central Excise Act, 1944 by seeking inclusion of royalty and other charges as additional consideration. T....
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....of demand does not automatically attract the statutory bar unless mens rea is unequivocally established. It is well-settled law that where duty becomes payable pursuant to resolution of conflicting judicial views or interpretation of law, mens rea cannot be attributed to the assessee. Consequently, allegations of fraud or suppression cannot be sustained in such circumstances. Reliance in this regard has been rightly placed on binding judicial precedents. Learned counsel further submits that SECL being a Public Sector Undertaking, allegations of fraud or intent to evade payment of duty cannot be casually attributed in the absence of identification of any beneficiary of such alleged fraud. Reliance is placed on the judgment in CCE v. Rajasthan Renewable Energy Corporation Ltd., 2018 (15) GSTL 661 (Raj), wherein it has been held that mala fide intent cannot be readily presumed in the case of a PSU. In view of the above, it is submitted that the differential duty paid by SECL cannot be said to have been paid on account of fraud, collusion, wilful misstatement or suppression of facts with intent to evade duty. Consequently, the exception carved out under Rule 9(1)(b) is not attracted, a....
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....ufacturer or importer or from any other premises from where the goods are sold by, or on behalf of, the said manufacturer or importer, in case additional amount of excise duties or additional duty leviable under section 3 of the Customs Tariff Act, has been paid, except where the additional amount of duty became recoverable from the manufacturer or importer of inputs or capital goods on account of any non-levy or short-levy by reason of fraud, collusion or any wilful mis-statement or suppression of facts or contravention of any provisions of the Excise Act, or of the Customs Act, 1962 (52 of 1962) or the rules made thereunder with intent to evade payment of duty. Explanation.-For removal of doubts, it is clarified that supplementary invoice shall also include challan or any other similar document evidencing payment of additional amount of additional duty leviable under section 3 of the Customs Tariff Act; or xxx xxx xxx" 9. Likewise Section 4(1) of the Central Excise Act, 1944 speaks as under : "4. Valuation of excisable goods for purposes of charging of duty of excise.--- xxx xxx xxx xxx xxx xxx (3) For the purposes of this ....
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....:- (a) where any duty of excise has not been levied or paid or short-levied or short-paid erroneously refunded, by reason of fraud or collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, the person who is liable to pay duty as determined under sub-section (10) of section 11A shall also be liable to pay a penalty equal to the duty so determined; (b) where details of any transaction available in the specified records, reveal that any duty of excise has not been levied or paid or short-levied or short-paid or erroneously refunded as referred to in sub-section (5) of section 11A, the person who is liable to pay duty as determined under sub-section (10) of section 11A shall also be liable to pay a penalty equal to fifty per cent of the duty so determined; (c) where any duty as determined under sub-section (10) of section 11A and the interest payable thereon under section 11AA in respect of transactions referred to in clause (b) is paid within thirty days of the date of communication of order of the Central Excise Officer who has....
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....e raised consequent upon payment of differential central excise duty by SECL on additional consideration received in respect of coal supplied, such as royalty, stowing excise duty, forest cess, terminal tax, Chhattisgarh Vikas Upkar, Chhattisgarh Paryavaran Upkar, transit fees and other similar charges. 12. The record further shows that proceedings were initiated by the Department against SECL by issuance of show cause notices alleging non-payment and short-payment of central excise duty on the aforesaid additional consideration, which had been collected from customers but was not included in the assessable value of coal. The said notices invoked the extended period of limitation on allegations of suppression of material facts with intent to evade payment of central excise duty. During the course of investigation, the Assistant Commissioner, Central Excise, Bilaspur, addressed a communication to the General Manager of SECL seeking information regarding supplementary invoices issued by area offices of SECL at various locations under Bilaspur jurisdiction during the period from 2010-11 to 2014-15. 13. In response thereto, SECL furnished details indicating that it had deposited ....
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....he strength of supplementary invoices issued by M/s SECL, which had been issued pursuant to payment of differential duty confirmed by invoking the extended period of limitation. The authority also recorded that the collection of additional charges by SECL from its customers without inclusion in the assessable value formed the basis for invocation of extended limitation, indicating non-payment and short-payment of duty on such consideration. 15. From a perusal of the record, it is evident that the Commissioner, Central Excise and Customs, Raipur, has passed a detailed and reasoned order, comprehensively examining each and every facet of the controversy. The adjudicating authority has categorically held that the respondent had illegally availed the benefit of CENVAT credit, which it was otherwise not entitled to. The Order-in-Original elaborately discusses, in considerable detail, the merits of the case and records a clear finding that the respondent/company was not eligible to avail CENVAT credit on the strength of supplementary invoices issued by M/s South Eastern Coalfields Limited (SECL). 16. The core issue relating to the admissibility of CENVAT credit on the basis of supp....
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....reported in 2018 (8) TMI 952 (CESTAT, New Delhi), wherein the pendency of similar matter before the Hon'ble Supreme Court in the case of South Eastern Coalfields Ltd. and others, and also other cases referred to therein, has been considered, and it has been held that it is an admitted position that the demand raised by the department against M/s SECL is under challenge before the Hon'ble Supreme Court and, therefore, the CENVAT credit can be availed by the manufacturer on the strength of supplementary invoices, as such amount of duty cannot be said to have been paid on account of any non-levy or short-levy by reason of fraud, collusion or any wilful misstatement or suppression of facts or contravention of any provision of the Central Excise Act/Rules with intent to evade payment of duty." "5. Also, in Final Order No. 52625/2018 dated 23.07.2018 passed in Excise Appeal No. 51278/2018, titled M/s Birla Corporation Ltd. vs. CGST, CC & CE, Udaipur, this Tribunal, while allowing the appeal, held that there was no element of fraud or suppression on the part of the appellant and that the issue was recurring in nature. Accordingly, it was held that the appellant was entitled to av....
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....after regular hearing." 21. Further, in the matter of Kranti Associates (P) Ltd. v. Masood Ahmed Khan, reported in (2010) 9 SCC 496, Hon'ble Supreme Court has held that reasons are the heartbeat of every conclusion; without them, the order becomes lifeless. It was held as under : "47. Summarising the above discussion, this Court holds: (a) In India the judicial trend has always been to record reasons, even in administrative decisions, if such decisions affect anyone prejudicially. (b) A quasi-judicial authority must record reasons in support of its conclusions. (c) Insistence on recording of reasons is meant to serve the wider principle of justice that justice must not only be done it must also appear to be done as well. (d) Recording of reasons also operates as a valid restraint on any possible arbitrary exercise of judicial and quasi-judicial or even administrative power. (e) Reasons reassure that discretion has been exercised by the decision-maker on relevant grounds and by disregarding extraneous considerations. (f) Reasons have virtually become as indispensable a component of a decision-making process as observi....
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....of law, requirement of giving reasons for the decision is of the essence and is virtually a part of "due process". 48. For the reasons aforesaid, we set aside the order of the National Consumer Disputes Redressal Commission and remand the matter to the said forum for deciding the matter by passing a reasoned order in the light of the observations made above. Since some time has elapsed, this Court requests the forum to decide the matter as early as possible, preferably within a period of six weeks from the date of service of this order upon it." 22. Likewise, in the matter of CIT v. Chenniappa Mudaliar, reported in (1969) 1 SCC 591, Hon'ble Supreme Court has held as under : "7. The scheme of the provisions of the Act relating to the Appellate Tribunal apparently is that it has to dispose of an appeal by making such orders as it thinks fit on the merits. It follows from the language of Section 33(4) and in particular the use of the word "thereon" that the Tribunal has to go into the correctness or otherwise of the points decided by the departmental authorities in the light of the submissions made by the appellant. This can only be done by giving a decision on th....