Maan Steel and Power Limited v. Commissioner of CGST & CX, Siliguri

GST update /2026-27/0084

8GST UPDATE

Demand of tax, interest and penalty does not hold valid if there is no substantive and corroborative evidence available.

Excise Appeal No.: 75073 of 2023

Tribunal: CESTAT (Kolkata)

Case Title: Maan Steel and Power Limited v. Commissioner of CGST & CX, Siliguri

Outcome: Appeal was allowed

Judgement Date: 16.07.2026

BRIEF FACTS OF THE CASE:

• A letter was served to the M/s Maan Steel (hereinafter referred to as Appellant) by the range office of GST seeking clarification about whether the appellant reversed the credit for the clearance of coal, shown in ER-1, which was used in the manufacturing. Consequently, appellant submitted details of clearances in his reply pertaining to the period 2011-12, 2012-13 and 2013-14. There was no action taken by the revenue department for 3 years. However, after 3 years, department sought submission of ‘As such’ sale of coal in prescribed format for the period May 2014 to June 2017 via a letter. Consequently, appellant submitted reply against the same. Pursuant to which, department issued a show cause notice (SCN) to the appellant in which it was alleged that appellant had reversed lesser amount of CENVAT credit with the intent to evade tax and thus proposed recovery of the same along with applicable interest and penalty invoking the extended period of limitation. The said demand was confirmed by adjudicating authority in his order. Later on, appellant preferred an appeal against the order passed by adjudicating authority before Appellate authority. However, order-in-original was upheld by the appellate authority. Being aggrieved by the order, appellant preferred appeal before Hon’ble Tribunal.

QUESTION BEFORE HON’BLE TRIBUNAL:

• Whether demand of tax along with interest and penalty is valid raised merely on the basis of assumptions and presumptions ?

• Whether extended period of limitation is valid where the appellant has disclosed all the details clearly in statutory returns and forms?

BRIEF ARGUMENTS BY APPELLANT:

Appellant submitted following contentions: -

Country of origin is mentioned on the invoices raised on the buyers of coal:

• That the fact of removal of imported coal is evident from the invoices raised by the appellant on the buyers, wherein the country of origin was appropriately mentioned, hence, the contention of the department that domestic coal was removed is not valid.

CENVAT credit availed has already been reversed by the Appellant:

• Furthermore, the appellant has already discharged the amount of tax equivalent to credit availed on such quantity of the coal which is covered in the instant matter. Hence, there is no requirement to reverse any extra amount of credit.

Procured substantially almost of the coal was imported:

• That the 92% of the coal was imported from outside India, hence, contention of the department treating entire sale quantity of coal as coal procured domestically is arbitrary and unsustainable.

Show cause notice possess incorrect details and invalid allegations:

• Furthermore, that the SCN has wrongly alleged that coal purchased by the appellant attracted 6% CENVAT duty and Education cess is contrary to the facts of the record and also provided the details of quantity the coal procured via import and domestically along with the quantity of coal removed.

• That the Appellant maintains the details of domestic and imported coal duly segregated both physically and in accounting terms, even though it is shown in consolidated manner in the annual financial statements as there is no requirement to shown bifurcation imposed by the accounting standard. Furthermore, it is universally accepted fact that there is huge difference between the quality as well as size of the imported coal and domestically procured coal and the imported coal is far superior to the domestic coal. Hence, in normal business practice, nobody mix both the quantity of coal as doing so would lead to fetching of lesser price of the imported coal.

• Along with that, reliance was placed upon the judgement of CESTAT in the case of M/s Dhanbad Fuels Limited v. Commissioner of Central Excise [2026-TIOL-1092-CESTAT-KOL] in which it was held that appellant had procured two grades of coal and had availed CENVAT credit on the higher grade coal. The entire case was solely based upon the scrutiny of ER-6 returns. Furthermore, there was no independent investigation or verification undertaken by the Department to establish that the coal on which CENVAT credit. Along with that, tribunal observed on the basis of scrutiny of ER-6 and ER-1 returns that the figures disclosed therein were consistent with each other. Hence, there was no corroborative evidence to establish that only the CENVAT credit availed coal had been cleared to third parties, leading to non-substantiation of the allegations raised in the show cause notice.

Therefore, impugned order should be set aside.

BRIEF ARGUMENTS BY REVENUE DEPARTMENT:

Revenue Department contended that:

• That the appellant failed to produce the evidence which substantiate the fact of import of 92% of total coal.

• That the appellant contravened Rule 3(5) provisions , due to the failure to reverse the CENVAT credit availed with respect to the quantity of coal cleared.

FINDINGS & JUDGEMENT:

Following are the findings of the Tribunal in the instant case:

Based on the contentions of both the parties, following are the observations and judgment of the Tribunal:

• That the appellant uses coal as raw material in manufacturing of the finished goods and thus, CENVAT credit is allowed. The instant case, is in respect to the coal cleared by them ‘as such’ for domestic consumption. The CENVAT credit is available @1/2 % in imported coal and 5/6% in domestic coal. However, revenue treated all the clearances during the disputed period as domestic procured coal clearance, thereby, requiring the appellant to reverse CENVAT credit @6% whereas, the appellant contention was that they have cleared only the imported coal which requires reversal @1/2% which has already done by them in the invoices and ER-1 returns.

• Furthermore, perusal of copies of invoices and purchase orders itself makes clear that coal was imported from ‘South Africa’. Along with that, from the perusal of the ER-1 returns for the respective period it was observed that proper details of clearance were mentioned in the returns.

• Treatment of revenue that the entire clearance was solely from the domestic procured coal was without any corroborative evidence. Thus, the demand was held to be legally invalid and thus was set aside.

• Along with that, as there was proper supply of details and information in the statutory returns by the appellant, there cannot be invocation of extended period of limitation. For this reliance was placed on the judgement in the case of Dhanbad Fuels Limited Vs Commissioner of CGST & CX, Siliguri Commissionerate(supra).

Thus, the appeal filed by the appellant was allowed and the impugned order was set aside.

CA Pradeep Jain_

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